Jim Sinclair’s Commentary

The following is courtesy of CIGA Eric.

Watching the Bond Market
7/13/09 By Eric

COT Futures & Options Commercial Traders Weighted Stochastic:  Commercial traders fading the rally. If the negative outflow persists, it will generate a bearish setup (signal). Bearish setups tend to front-run trend changes.

(Click charts to enlarge)

COT Table:

USTBD COT F&O:

USTBD COT O:

This is one of the most important markets to watch right now.

Jim Sinclair’s Commentary

Courtesy of CIGA Gordon

Jim,

You recently posted an article titled "AIG May Have Zero Value After Rescue." Attached is a follow-up article from Barron’s describing how the shorts benefited after AIG’s reverse stock split last week. Immediately following the 20-to-1 reverse split, the stock continued to fall another 52% from around $23 to $11. The shorts are having a field day.

Also attached is an article stating that General Electric has finally been revealed as "a financial company masquerading as an industrial conglomerate," a fact which you mentioned on your web site over two years ago. George Ortel, the manager of an independent research firm, believes $2 represents fair value for GE common stock. I expect the shorts will devour GE the same way buzzards devour dead carcasses.

Glad to know your trip is going so well. Keep up the great work!

Best Regards,
CIGA Black Swan

Jim,

I didn’t know that the DTCC held custody of all stocks and bonds. I didn’t know that: [excerpt]

"stock certificates used to be in citizen’s names, then it changed over to the stock brokers name and “now, it appears the rules were then changed so the brokers are not allowed any longer to put the stocks in their own name. Instead, what they typically do is to put the stocks into the name of “Cede and Company” or “Cede & Co” or some such variation. And the broker might tell you that it is just a fictitious name, and will explain why it is really more practical to do that than to put it in your name. The problem with that is that it appears that Cede isn’t just some dummy name, but an actual corporation that DTCC controls. And, well, if you ask anybody about this, who actually knows about it, they will naturally tell you that it is all a formality. If there’s a national U.S. emergency and/or the U.S. government becomes unable to pay its debts, well, they might just not give you your stocks back. [That's a definite possibility - as early as Sept]. Because legally they own them. Something to think about. It is a private company, owned by the same people [major bankers] who own the Federal Reserve Bank.”

From Wikipedia:
“DTCC is a member of the U.S. Federal Reserve System, and a registered clearing agency with the Securities and Exchange Commission.” The European based equivalent of DTCC is called Euroclear and Wikipedia states, “It was founded in 1968 as part of J.P. Morgan & Co.”

This is a very interesting article that I found by my own research.

CIGA Jux.

Dear Jux,

Companies can, if they know how to and care to, still issue share certificates.

1. The stockholder requests direct registration with the company’s transfer agent via their stock broker. This is still permitted.

2. The stockholder then contacts the transfer agent themself (no broker involved) and requests the certificate delivered in the stockholder’s name which if the company permits will be forthcoming.

This requires your investment to be in a company sensitive to the wishes of its stockholders.

This is a vanishing advantage that I have been telling people about for years but less than 10% of stockholders are willing to do.

Laziness is rampant among investors.

Jim

Jim,

Maybe that job at McDonald’s just does not suit you well after a long career at the car plant. A more manly job would be to get your hard hat on and grab a shovel.

CIGA BJS

Job woes? Experts say gold mining to become a growth industry amid recession
Amy Fuller, THE CANADIAN PRESS

Job seekers watching employment prospects wither and lay-offs mount amid the recession might consider joining the gold rush, and a northern Ontario school is hoping to educate that next wave of underground workers.

Many investors see gold as a hedge against inflation – when the dollar sheds value and can’t buy as much, people hoard gold. In recent years, the price has hovered under US$1000 an ounce.

Mining consultant Alan Gorman says base metal prices dropped considerably after the economy collapsed last year. Now, companies are doing more exploration for gold, hoping to revive old mining sites or find new ones in Canada and Africa.

More…

Jim,

U.S. treasury bonds. It’s only a matter of when.

CIGA Eric