Hi Frank,

Jim Sinclair once wrote that when we look back on gold we will see that it went up in a straight line as much as any market can. Graph these numbers and take a look:

3/31/04    – 427
6/30/04    – 392
9/30/04    – 418
12/31/04  – 437
3/31/05    – 427
6/30/05    – 435
9/30/05    – 468 
12/31/05  – 516  
3/31/06    – 581
6/30/06    – 613
9/30/06    – 598 
12/31/06  – 636 
3/31/07    – 663
6/30/07    – 647
9/30/07    – 743 
12/31/07  – 834
3/31/08    – 915
6/30/08    – 924
9/30/08    – 870 
12/31/08  – 880
3/31/09    – 918 
6/30/09    – 926
9/30/09    – 1006 (estimate)

5 1/2 years of data seems to validate Jim’s opinion.  For all of the volatility, the trend has been inexorably upward.  Most of the volatility is contained within the quarter as the quarter end price is little changed from the previous quarter end price during corrections.

CIGA Mike

Dear Jim,

The strategy continues to steadily unfold.

Respectfully yours,
Monty

China boosts int’l use of RMB with sovereign bond sale in Hong Kong

HONG KONG, Sept. 28 (Xinhua) — The launch of Renminbi sovereign bonds in Hong Kong on Monday shows China’s efforts to boost the international use of the yuan step by step, officials and analysts said.

The bond issue, worth only 6 billion yuan (878.5 million U.S. dollars), marked a key milestone in the internationalization of the RMB.

Hong Kong was chosen for, and will benefit from, the milestone bond sale thanks to its unique position as the international financial center providing desired cushion against the potential risks when the program was launched, analysts said.

More…

Jim,

Nominal and real home prices continue to deteriorate as household leverage unwinds.  As long as these trends are in place don’t expect the strategy of infinite QE to ease.  In other words, don’t expect the dollar to rally.

CIGA Eric

Click charts to enlarge in PDF format

Long Term Secular Trends
By CIGA Eric 9/30/09

Money talks, and bull sh*t walks.

Click charts to enlarge in PDF format

Guys,

How long will it taking before people realize that monetary inflation will trump weak demand as a determinant for price for key strategic international commodities?

CIGA Eric

Crude and gasoline futures rise on supply data
Oil prices rise after government reports unexpected drop in US gasoline supply
By Chris Kahn, AP Energy Writer
On Wednesday September 30, 2009, 2:55 pm EDT

NEW YORK (AP) — Oil prices climbed more than 5 percent, surpassing $70 a barrel Wednesday after a government report said the nation’s gasoline supply dropped unexpectedly and demand increased from last year.

Benchmark crude for November delivery added $3.90 to settle at $70.61 a barrel on the New York Mercantile Exchange. Brent crude rose $3.06 to $68.55 a barrel on the ICE Futures exchange in London.

The Energy Information Administration put U.S. gasoline stockpiles at 211.5 million barrels last week, a drop of 0.8 percent from the prior week. It also said demand for gasoline over the four weeks ended Sept. 25 was 5.4 percent higher than last year.

The price of oil, which is used to make gasoline, rose as investors placed some final bets on the last day of the quarter. Crude prices have waffled between $59 and $75 during the past three months, but equities markets surged during the quarter as investors became increasingly confident that the economy was healing.

Despite the drop last week, gasoline supplies are still considered to be well above normal. They’re nearly 11 percent higher than they were last year, and much of last week’s drop came as many U.S. refiners cut back on their operations.

More…