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Jim Sinclair’s Commentary
"When the COT takes on governments, the COT loses."
-Jim Sinclair
This is extremely bullish for Gold as it proves our point that central banks would take all and any gold that becomes available for sale.
IMF Sells Gold to Central Bank of India
By Sandrine Rastello
Bloomberg News
Tuesday, November 3, 2009
WASHINGTON — The International Monetary Fund said it is selling 200 metric tons of gold to the Reserve Bank of India for about $6.7 billion, its first sale of the precious metal in nine years.
The sale accounts for almost half the 403.3 tons that the Washington-based lender in September agreed to sell as part of a plan to shore up its finances and lend at reduced rates to low- income countries.
"This transaction is an important step toward achieving the objectives of the IMF’s limited gold sales program, which are to help put the fund’s finances on a sound long-term footing and enable us to step up much-needed concession lending to the poorest countries," IMF Managing Director Dominique Strauss- Kahn said in an e-mailed statement yesterday.
The transaction, which involved daily sales from Oct. 19-30 at market prices, is in the process of being settled, the IMF said in the statement. The average price in the transaction with India was about $1,045 an ounce, an IMF official said on a conference call with reporters.
The lender has said it is ready to sell directly to central banks and later make transactions on the open market if necessary. The IMF official declined to say whether other central banks have expressed interest in purchases.
The 403.3 tons the IMF board agreed to sell amount to one- eighth of its stockpile. Gold prices reached a record of $1,072 an ounce on Oct. 14 and have gained 45 percent from a year ago.
Jim Sinclair’s Commentary
Former partner Yra Harris had an interesting comment on gold that we should take serious consideration of.
"Tonight there is a story out of India concerning the Indian central bank’s interest in buying 200 tons of IMF GOLD.
This is putting a bid to gold now as this is deemed very bullish as it takes a huge uncertainty out of the market and puts the Gold into strong hands.
One has to ask – where is China and what do they have to say about this?"
Jim Sinclair’s Commentary
Nothing changes. OTC derivative creation will go on until it stops itself.
Competing OTC Derivatives Bills Progress Through the House
November 2, 2009
"And here is an interesting article from Harpers entitled "An Object Lesson in Governmental Failure: Derivatives Reform."
Below is an excerpt from this Davis Polk memo that describes key provisions of two competing over-the-counter derivative bills being considered in the House, comparing their similarities and differences:
Two competing bills to reform the over-the-counter derivatives markets are awaiting action by the House of Representatives: a bill to enact the "Over-the-Counter Derivatives Markets Act of 2009" reported by the Financial Services Committee, chaired by Barney Frank, and a bill to enact the "Derivatives Markets Transparency and Accountability Act of 2009" reported by the Agriculture Committee, chaired by Collin Peterson.
Each of the Frank Bill and the Peterson Bill is based on the proposal released by the Obama Administration on August 11, 2009, and since their earlier releases as discussion drafts, they have moved incrementally closer to each other. The bills share many common features, but several important differences remain to be reconciled. It is expected that Chairman Frank and Chairman Peterson will work to reconcile the differences before a bill moves to the House floor.
And here is an interesting article from Harpers entitled "An Object Lesson in Governmental Failure: Derivatives Reform."
Jim Sinclair’s Commentary
Now Madam Secretary of State look at TURKEY!
Breaking America’s Silence on Pakistan
Hillary Clinton’s truth-telling is necessary and overdue.
By SUMIT GANGULY
Secretary of State Hillary Clinton delivered an especially blunt, if long overdue, message to Pakistan last week. Talking to reporters in Lahore, she said she found it "hard to believe" that local authorities did not know where key members of al Qaeda had taken refuge. Her message set off another firestorm of criticism from both the government and the Pakistani press.
Though belated, Mrs. Clinton’s remarks were entirely apt and, one hopes, mark a departure from U.S. policy under former President George W. Bush, and more recently, under President Barack Obama. Apologists for Pakistan in both administrations argued it was necessary to overlook the country’s unwillingness to be more forthcoming on counterterrorism operations because of the U.S. dependence on Pakistan’s goodwill to supply the International Security Assistance Force in Afghanistan. Though superficially correct, this reasoning overlooks the fact that Pakistan extracts significant rents for the use of its territory for this purpose and has also been the beneficiary of some $11 billion in American largesse over the past eight years.
Jim Sinclair’s Commentary
Isn’t this better than gambling you rear off?
Pandit ‘Near Death’ Hoard Signals Lower Bank Profits (Update1)
By Bradley Keoun
Nov. 2 (Bloomberg) — Citigroup Inc. and JPMorgan Chase & Co. are hoarding cash as if another crisis were on the way.
Citigroup has almost doubled its cash to $244.2 billion in the year since Lehman Brothers Holdings Inc. filed for bankruptcy, the biggest such stockpile of any U.S. bank. The lender, which last year came so close to a funding shortfall it had to get a $45 billion government infusion, is under pressure from the Treasury Department and regulators to keep more money on hand for emergencies, even as markets improve.
The caution, which may help restore confidence in the financial system, offers little comfort to shareholders, who can expect to see shrinking returns as banks put money into liquid investments that yield one-twelfth the interest rates of loans.
“It’s a smart longer-term move, but it will take down the rates of returns these companies can generate,” said Eric Hovde, chief executive officer of Washington-based Hovde Capital Advisors LLC, a hedge fund with $1 billion of financial-industry and real estate investments. “If you start to see more economic stabilization, then liquidity levels would start dropping, but they’ll never go back to the insane level they were pre- crisis.”
Jim Sinclair’s Commentary
For those that believe the Euro will not top the 1.5025, take note. It will.
Weak Dollar Won’t Hamper Europe’s Recovery
By Jeffrey Donovan
Nov. 2 (Bloomberg) — The euro’s surge against the U.S. dollar won’t hinder Europe’s recovery from the worst recession in 60 years because revived global trade will blunt the impact of a stronger currency, the Royal Bank of Scotland Plc said.
The CHART OF THE DAY shows that euro-area export-related orders rose in October for the seventh time in eight months, according to data compiled by Markit Economics. The gain came even as competitiveness was hurt by the euro’s 17 percent advance in the same period.
“The impact of world trade on euro-area gross domestic product is more than three times larger than that of exchange- rate movements,” said Silvio Peruzzo, an economist at RBS in London. “In the euro area, world demand matters more than the currency.”
French Finance Minister Christine Lagarde said on Oct. 28 that she wants to see a strong dollar, echoing comments by other officials that the weakening U.S. currency may hinder the nascent recovery in the euro zone by making the area’s exports too expensive. Demand from emerging markets and from within the euro area means that such concerns may be overstated, Peruzzo said.
Quotes from the great depression
September 1929
"There is no cause to worry. The high tide of prosperity will continue." — Andrew W. Mellon, Secretary of the Treasury.
October 14, 1929
"Secretary Lamont and officials of the Commerce Department today denied rumors that a severe depression in business and industrial activity was impending, which had been based on a mistaken interpretation of a review of industrial and credit conditions issued earlier in the day by the Federal Reserve Board." — New York Times
December 5, 1929
"The Government’s business is in sound condition." — Andrew W. Mellon, Secretary of the Treasury
December 28, 1929
"Maintenance of a general high level of business in the United States during December was reviewed today by Robert P. Lamont, Secretary of Commerce, as an indication that American industry had reached a point where a break in New York stock prices does not necessarily mean a national depression." — Associated Press dispatch.
January 13, 1930
"Reports to the Department of Commerce indicate that business is in a satisfactory condition, Secretary Lamont said today." – News item.
January 21, 1930
"Definite signs that business and industry have turned the corner from the temporary period of emergency that followed deflation of the speculative market were seen today by President Hoover. The President said the reports to the Cabinet showed the tide of employment had changed in the right direction." – News dispatch from Washington.
January 24, 1930
"Trade recovery now complete President told. Business survey conference reports industry has progressed by own power. No Stimulants Needed! Progress in all lines by the early spring forecast." – New York Herald Tribune.
March 8, 1930
"President Hoover predicted today that the worst effect of the crash upon unemployment will have been passed during the next sixty days." – Washington Dispatch.
May 1, 1930
"While the crash only took place six months ago, I am convinced we have now passed the worst and with continued unity of effort we shall rapidly recover. There is one certainty of the future of a people of the resources, intelligence and character of the people of the United States – that is, prosperity." – President Hoover
June 29, 1930
"The worst is over without a doubt." – James J. Davis, Secretary of Labor.
August 29, 1930
"American labor may now look to the future with confidence." – James J. Davis, Secretary of Labor.
Jim Sinclair’s Commentary
This is something that occurred in the 70s and will occur again.
I think we discussed this a few years ago.
Central Banks Will Become Net Buyers of Gold, WGC CEO Says
By Nicholas Larkin
Nov. 2 (Bloomberg) — Central banks will become global net buyers of gold, the World Gold Council’s chief executive officer said today at a conference in Edinburgh.
“I believe that central banks will be net buyers over time,” Aram Shishmanian told the conference.
Jim Sinclair’s Commentary
CIT is to Middle American business what Lehman was to OTC derivatives.
US businesses at risk as lender CIT Group files for bankruptcy
guardian.co.uk, Monday 2 November 2009 10.31 GMT
Thousands of small and medium-sized businesses in the US face financial difficulties and could go out of business after lender CIT Group filed for bankruptcy protection last night.
Although the company will keep operating, it is unlikely to be able to make the same number of loans as before. CIT provides working capital to small firms such as shops, their suppliers and restaurants, many of whom are already struggling in the recession.
In one of the biggest corporate failures in US history, CIT made its filing in the New York bankruptcy court yesterday, after a debt-exchange offer to bondholders failed. CIT said most of its bondholders have agreed a prepackaged reorganisation plan which will reduce total debt by $10bn (£6.1bn) while allowing the company to continue to do business.
The collapse is also bad news for US taxpayers, who stand to lose the $2.3bn provided last year to prop up the troubled lender.
Creditors will end up owning the company, while common and preferred shareholders – including the US government – will be wiped out by the plan. This is the government’s biggest loss yet through its Troubled Asset Relief Programme (Tarp).
Jim Sinclair’s Commentary
In light of the general lack of demand for new cars, government preference for GM things look quite dire for Chrysler.
GM, Chrysler facing more shortfalls
By William Ehart
Congressional overseers and many analysts are skeptical about the post-bailout prospects of success for General Motors Corp. and Chrysler Group LLC, and some say they will need to raise more cash as early as next year.
Observers see little chance of another taxpayer bailout given the opposition to providing the automakers with $75 billion this spring and the administration’s statements that it does not intend to commit more money to the sector.
But that doesn’t mean they won’t need greater funding — and the capital markets may be no more receptive than the government, especially given the risk of "political interference," as a congressional oversight panel put it.odge pickup truck will soon be a collectors item.
Indicating its own concern for GM and Chrysler’s sales, the administration said last week it is in talks to provide a third bailout to GMAC Financial Services, GM’s former finance unit now 35 percent owned by the government. The lender is a huge source of auto loans, and its failure could decimate sales at the two automakers.
The company, scorched by subprime home loans and struggling with impaired loans to Chrysler dealers, has already received $12.5 billion in aid and might receive up to $5.8 billion more — possibly making the government the majority owner of another major corporation.
Jim Sinclair’s Commentary
Marc Farber makes the simplest yet most compelling case for gold.
Marc Faber: ‘Gold a Bargain Compared to S&P500′
November 01, 2009
Mac Slavo
Well known economic analyst Marc Faber still likes gold, especially when compared to equity prices. In his October 2009 Gloom Boom & Doom report, Faber discusses his long-term outlook for the shiny yellow metal:
Some pundits will argue that precious metals are expensive, but this isn’t my view. Why would anyone not own some gold, rather than US dollars, when interest rates are near zero? Dollars can and will be printed en masse, whereas the supply of precious metals is extremely limited.
For those still trying to decide whether gold/silver, Marc Faber lays out a pretty simple and effective argument. In addition to the historical evidence for a depreciating dollar, the current policies instituted by the Obama administration, The Fed and Treasury clearly point to not only continued degradation of the US dollar, but an acceleration in its declining purchasing power. Dr. Faber is not saying one should put all of their net worth into gold, but securing at least a part of personal assets with precious metals will certainly not hurt. Though Faber focuses on the US dollar in this particular GBD Report, he has repeatedly stated that gold will rise against most paper currencies for the same reasons as described above.
…returning to the argument that gold is expensive, it would appear that it is actually still a bargain compared to the S&P 500. At present, gold sells at about the same level as the S&P 500, but if I am right about the size of future US fiscal deficits and about the Fed neglecting to protect the purchasing power of the US dollar, I could envision a time when gold will sell for at least two or three times the value of the S&P 500. Also, if an investor were convinced that equities will do better than gold, he should consider investing in a basket of gold and silver shares, which are relatively depressed compared to the price of gold.
Jim Sinclair’s Commentary
Consider these problems in light of the FASB allowing banks to value their OTC derivatives at whatever value the bank determines their value to be true.
(Scroll down the article to watch the video)
Click here to watch the video…
Gold may touch $4,000 during this bull run’
2009-11-02 17:40:00
Here are 10 compelling reasons why gold is going to do well this year.
The Stimulus Effect: Including $1 trillion in cash infusions, the stimulus plan will pump $9.7 trillion into the economy, according to Bloomberg. As the Globe & Mail reports flatly, “Many believe that the monetary stimulus efforts will cause a spike in inflation,” driving gold higher.
COMEX Traders Predict $1,600 Gold… by December:If gold trades at or above $1,600 by December, some 100,000 call option contracts will be “in the money.” Big-money players Goldman Sachs and JPMorgan are reportedly helping to drive the action, ahead of a huge purchase of gold futures contracts.
“Big Money” Inflows: In 2008, NYC-based hedge fund Paulson & Co’s flagship fund returned 37%, as the world markets burned. Paulson’s bullish on gold, big time, including the Mar. 17 purchase of 39.9 million shares of AngloGold, worth $1.28 billion. Other major hedge funds are piling into gold, too, including Eton Park Capital, Green light Capital and Hayman Advisors.
China’s Doubling Down! China just revealed that it has doubled its gold holdings to 1,054 tons. Yet that still only equals 1.6% of its overall reserves. As China moves out of U.S. Treasuries and into gold, this will help fuel the next leg of the run-up.
Demand Building across the Board: Worldwide demand for gold jumped by $29.7 billion in the first quarter, a 36% bolt, according to the World Gold Council. Demand for gold ETFs (Exchange Traded Funds) rocketed 540%… another trigger for the coming gold boom.
The Paper Dollar’s 30% Drop: Since 2001, the U.S. Dollar Index has tanked 30%… while gold has risen 300%. With all the downward pressure on the dollar, and inflation on the way, this trend is about to pick up steam.
Gold/Dow Ratio Signals $8,000 Gold: During major gold bull markets (and corresponding equity bears), gold and the Dow converge at a 1-to-1 ratio. During the last gold bull, the Dow sank to 850 and gold rose to $850. The Dow is now over 8,000… But even if it fell to 4,000, we could see $4,000 gold before this bull run is over!
U.S. Treasury Dept. Signals $5,468 Gold: Currently, the U.S. government holds about 286.9 million ounces of gold. It has printed about $1.569 trillion worth of paper dollars. If each dollar were backed by gold, that would put the price at $5,468.80 an ounce.
Riding the “Commodity Super Cycle”: Jim Rogers expects the Commodity Super Cycle to drive commodity prices higher for another eight years… including gold. And he’s stockpiling the yellow metal by the day. Every pullback, says Rogers, is another buying opportunity. Considering he’s been dead right on every major trend of the past 40 years, we wouldn’t bet against him.
Historic Model Predicts $6,214 Gold: During the last gold bull, the yellow metal ran from $35 an ounce to $850, a 24-fold increase. This bull started with gold at $255.95, meaning that if historic trends hold, the price target would be $6,214 an ounce.
Jim Sinclair’s Commentary
Here is a good deal for SOP Pakistan management.
Amnesty bill threatens Pakistani government split
Mon Nov 2, 2009 9:07am EST
By Zeeshan Haider
ISLAMABAD (Reuters) – A proposed parliamentary bill offering an amnesty on corruption charges to Pakistan’s president and other senior politicians could split the government after a key coalition partner said he would oppose it.
The National Reconciliation Order (NRO) was introduced by former President Pervez Musharraf in a bid to strike a power-sharing deal with former Prime Minister Benazir Bhutto, and is due to be floated in parliament this week.
Bhutto, as well as another former prime minister, Nawaz Sharif, were exiled abroad and reluctant to return because of a slew of corruption cases lodged against them until Musharraf introduced the amnesty law.
