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Dear Extended Family,
Well here we go again. The Wave of Fear is breaking but one more and unnecessary time.
The Gold banks do everything possible to hammer gold on even a hint of an intraday dollar rally. Under $1000 she goes and off goes the community into deep depression.
You need to understand you did nothing to put it above $1000. Most of the community are observers only, but make sure you understand what you are observing. What you are seeing are huge cash buyers making deals in and independent of the cash market while huge short selling is attempting to hold an imaginary line between $1005 and $1010.
It is a battle between the Titans at this time which is remarkable and to be admired. There is a government put sitting below $1000 that will act. In fact it has been acting for a very long time.
Not that long ago China had no to very little gold and the next day they are a player amongst gold holding central banks.
Relax.
Gold is going to $1225, $1650 and then on to Alf’s numbers. The shorts will do everything possible to prevent that but they will not be able to. Keep in mind please that Armstrong is totally correct.
When CONFIDENCE in a currency collapses it does so in days. This is going to be a very cold winter for the US dollar. That you can take to a solid bank if you can find one.
Regards,
Jim
Jim Sinclair’s Commentary
Think about the thesis offered by Jim Rogers.
As Green Shoots turn out to be illusions and we return to economic pressure, the crisis will surface anew in the real economy and regional banks. Bailouts cannot be abandoned as systemic risk is everywhere.
CIT could be the catalyst for this as Lehman was for the "Too Big to Fail." CIT needs much more than just a paper shuffle plan of turning lenders at each other’s throats. The real economy must have lenders and factors at reasonable rates and terms to survive.
The US dollar is NO safe haven.
US Faces Retro 70s Inflation: Jim Rogers
Published: Thursday, 1 Oct 2009 | 5:42 AM ET
The US faces high inflation because of the weak dollar and the Federal Reserve’s policy of printing money to counter the effects of the crisis, legendary investor Jim Rogers told CNBC Thursday.
Price rises in the US are already steeper than the inflation rate reported by the government, Rogers added.
"There’s no question the US is vulnerable to hyperinflation down the road or certainly the inflation we saw in the 1970s, I would expect that to come back in the foreseeable future, certainly in the next few years," he said.
"The true inflation rate in America? It’s certainly at least 6 or 7 percent, the US government lies about it, as you know, everybody who shops knows that prices are up, everybody except the US government, and I wish we knew where they shopped so we can shop there too and get good prices."
Rogers repeated his view that the Fed’s quantitative easing program is "debasing the currency" and said he was "extremely worried" about the fate of the dollar over the long term.
Jim Sinclair’s Commentary
Here is Stratfor’s comment on Iran:
"At its core, the brewing crisis is this: Israel is too small a territory to tolerate a nuclear-armed Iran, and too militarily weak to guarantee that it can deal with the problem on its own. However, an Israeli strike would certainly generate Iranian retaliation against shipping in the Persian Gulf, which in turn would force the United States to act against Iran directly. So the question in STRATFOR’s collective mind is whether or not any concessions Iran grants on its nuclear programs will be sufficient to satisfy Israel’s security concerns. The Obama administration is obviously a player, and the onus is on the Americans to act, but the decisions that truly matter will be made in Israel, not the United States."
Jim Sinclair’s Commentary
FDIC confirmed that the most recent Georgia Bank failure that will cost them $800 million to $1 billion was not on their troubled bank list.
There was a 12 fold increase in the number of non functioning loans in 30 days at this institution.
That has to be quite scary that there are banks capable of failing that are not known or even suspected.
Banks have a tendency to refuse to categorize loans as non performing until there is no light at the end of a false tunnel.
The dollar is NO safe haven.
Jim Sinclair’s Commentary
Iran plays their high stakes poker game.
Today’s report on talks with Iran did not approach a clear definition of what is the end point to be gained. Iran will always go to the brink and then back down in words but not in action. Each time this occurs their program continues to advance.
When the Iranians do not wish to please, they speak pleasingly. The West goes for it each time as it is politically expedient and on and on it goes, deadline after deadline.
Jim Sinclair’s Commentary
The game of high stakes poker continues.
Who is being dealt the better hand by Iran’s proposal?
Iran Agrees to Send Enriched Uranium to Russia
By STEVEN ERLANGER and MARK LANDLER
Published: October 1, 2009
GENEVA — Iran agreed on Thursday in talks with the United States and other major powers to open its newly revealed uranium enrichment plant near Qum to international inspection in the next two weeks and to send most of its openly declared enriched uranium to Russia to be turned into fuel for a small reactor that produces medical isotopes, senior American and other Western officials said.
Iran’s agreement in principle to export most of its enriched uranium for processing — if it happens — would represent a major accomplishment for the West, reducing Iran’s ability to make a nuclear weapon quickly and buying more time for negotiations to bear fruit.
If Iran has secret stockpiles of enriched uranium, however, the accomplishment would be hollow, a senior American official conceded.
The officials described the long day of talks here with Iran, the first such discussions in which the United States has participated fully, as a modest success on a long and complicated road. Iran had at least finally engaged with the big powers on its nuclear program after more than a year, and had agreed to some tangible, confidence-building steps before another meeting with the same participants before the end of this month.
Marc Faber: Equities Safer than Dollars
September 29, 2009
Here is a terrifying interview with Marc Faber, editor of the Gloom Doom & Boom Report. I find it unsettling how calm and polite he is as he lays out the case for an inevitable collapse of the US dollar hegemony and the destruction of our economic system.
And in case you think he is some sort of doomsayer who just now happens to be correct, keep in mind that throughout his lengthy career, he has made some unbelievable calls – both long and short. So he clearly is not a perma-bear of the Howard Ruff variety. The last time Ruff was on CNBC hoarsely growling his ever pessimistic prognosis, I wondered if this was a contrarian signal from the trading gods. With hindsight’s approval we know that it most certainly was.
In contrast, Marc Faber was bullish at almost the exact bottom of the market earlier this year. So while he is a long term bear, he is the rare breed that is actually able to bob and weave, catching shorter term rallies. Listen to the full interview (in three parts) to find out his case for the utter collapse of capitalism as we know it:
Jim Sinclair’s Commentary
They simply will never stop. The dollar’s fate is set in stone.
The dollar will, with short counter-bearish trend rallies, look as much as a fishing line as any market can when viewed in retrospect.
Beware the Current Bull Market in Derivatives
"There’s one statistic, however, that should give investors pause: the growth in the total dollar value of derivative contracts at the top too-big-to-fail banks in the United States."
September 30, 2009
Matthew Goldstein
The Dow is near 10,000 again. The business press is full of stories about the resurgence in mergers, IPOs and even so-called blank check companies.
There’s one statistic, however, that should give investors pause: the growth in the total dollar value of derivative contracts at the top too-big-to-fail banks in the United States.
In the second quarter of this year, the notional value of derivatives contracts at JPMorgan Chase (JPM), Goldman Sachs (GS), Bank of America (BAC) and Citigroup (C) increased by $1.92 trillion, to $191 trillion. Shockingly, Citi is responsible for most of that gain from the end of the first quarter.
Overall, the total dollar value of outstanding derivatives transactions at the top 25 U.S. commercial banks was $203 trillion, according to the Office of the Comptroller of the Currency, meaning that the nation’s four biggest banks account for 94 percent of the industry’s total exposure to derivatives.
Now the concentration of derivatives at a handful of banks isn’t new. It’s even to be expected, bank regulators say.
Jim Sinclair’s Commentary
Here is an example of the disconnect between Americans and Wall Street Washington Americans.
What Americans really want
As a nation, we’re mad. For business and political elites, the message should be clear: Restore trust
By Frank Luntz
September 27, 2009
I listen to America — in focus groups, telephone interviews, town halls and polls in all 50 states — for a living. It used to be fun. Now it’s become painful.
For 15 years, average Americans have exuded optimism and energy, whether they were talking about their political preferences, their employment aspirations or simply what they had for breakfast.
But that was before the economic meltdown one year ago. What a difference a year makes.
Today, Americans are boiling mad, and the elites from Washington to Wall Street to West Hollywood don’t get it. It can best be summarized by 12 short words bellowed by Howard Beale, the deranged TV anchor in the movie "Network": "I’m as mad as hell, and I’m not going to take this anymore."
The frightening reality is that where there was hope, now there is cynicism. Where there were dreams, now there is disillusion. Instead of courage and resolve, I hear blame and finger-pointing.
According to my research, 72% of Americans agree with Howard Beale — they really are "mad as hell." Second, 57% now believe that their children will inherit a worse America than they did, and just 33% believe their children will have a better quality of life than they have.
Jim Sinclair’s Commentary
Look very close between the US and the Euro.
Euro-zone joblessness hits decade high.
Euro-zone unemployment rose to 9.6% in August from 9.5%, the highest rate in over 10 years and in line with consensus. Spain was worst off at 18.9%, while Netherlands’ 3.5% and Austria’s 4.7% were the least severe
Jim Sinclair’s Commentary
Every day, everywhere and each day China is buying additional natural resources.
The West has no plan and apparently does not give a damn.
China’s CNOOC In Talks To Enter Uganda’s $5B Oil Proj-Sources
OCTOBER 1, 2009, 5:41 A.M. ET
LONDON (Dow Jones)–China state-owned CNOOC Ltd. (CEO) has become the latest company to enter talks with Uganda over a large Tullow Oil PLC-led (TLW.LN) project, people familiar with the matter said this week.
CNOOC company representatives approached the Ugandan presidency in early September and held talks with officials at the state house, said an official in Uganda President Yoweri Museveni’s office.
The news follows confirmation by Nigerian government officials that CNOOC had sought to enter Nigerian oil blocks underused by major international oil companies. CNOOC’s interest in Tullow’s Ugandan project shows China is also interested in expanding on the continent …
Jim Sinclair’s Commentary
Today’s Green Shoots:
Job losses narrow.
ADP reported 254,000 job losses in September, far worse than the 200K forecasted, while revising August to -277,000 from -298,000. September’s losses were the least severe since July 2008, as job cuts have diminished significantly over the last two quarters. "Nevertheless, employment, which usually trails overall economic activity, is likely to decline for at least several more months, with losses continuing to diminish," ADP said.
Chicago ISM disappoints.
Business activity in the U.S. Midwest failed to return to growth in September, with ISM’s business barometer dropping unexpectedly to 46.1 vs. consensus of 52 after an even 50 (above 50 indicates growth) in August. New orders dipped to 46.3 from 52.5.
Jim Sinclair’s Commentary
One of the interesting points of this morning’s Bernanke testimony is when ONE dollar is counted as two.
The answer is when the FDIC obtains prepayment of insurance dues from the banks who are allowed to count those prepayments as reserve assets that they can lend on.
Cut it anyway you want. The bottom line is the FDIC is borrowing from the Banks to give away the money.
FDIC: A New Concern for Bank Liquidity
October 01, 2009
Zachary Scheidt
What’s $10 billion between friends? That’s what the FDIC is asking a handful of large banks as the insurance operation attempts to rebuild its balance sheet. Currently, the FDIC is reeling from the losses it has taken as nearly 100 banks have gone belly up this year. As the black list of troubled banks continues to grow, the FDIC is running short on capital used to guarantee deposits.
Now before you go and pull your money out of the bank and put it under a mattress, please understand that the FDIC is not insolvent. Even under the worst case scenario where the coffers turn up completely empty, the US Treasury will extend a credit line to insure the deposits, so we are far from a place which warrants a run on the bank. But since the FDIC wants to make sure that line of credit is never actually used, they are asking four of the largest banks to pre-pay a hefty chunk of fees in order to shore up the balance sheet.
The request comes at a time when banks are struggling to re-build their ownbalance sheets and instill confidence in their financial soundness. While a fully functioning FDIC is in the best interest of all banks, prepayment is certainly not a pleasant scenario for these large banks. The institutions in question are Bank of America (BAC), Wells Fargo & Co. (WFC), JPMorgan Chase & Co. (JPM) and Citigroup (C). All four of these institutions appear to have pulled back from the brink of disaster, although Citi will still likely post a loss for 2009.
The FDIC is very much an insurance program where banks are charged premiums and in return their depositors are guaranteed against a loss (for deposits up to a maximum limit). The premiums vary by bank and are calculated based on the financial soundness of each institution. While the rates may seem too small to be significant (typically 0.12% to 0.45%), earnings on these deposits are extremely low due to the low interest rates, so the premiums certainly eat into profit. If banks are required to pay 3 years worth of these premiums by the end of 2009, it would be a significant cash-flow iss
