![[Most Recent USD from www.kitco.com]](http://www.weblinks247.com/indexes/idx24_usd_en_2.gif)
Dear CIGAs,
Today’s major event was FOMC’s unanimous decision to keep "Interest rates exceptionally low" for an "extended period of time."
This means that US dollar will remain the carry trade currency of choice as we transit to new ground with a major reserve currency as a carry trade currency. There are no rules or experience with this phenomenon.
Professor Roubini says $2000 gold is nonsense. I agree. It is probably going to a minimum of Alf’s lowest estimate of $3000.
Professor Roubini might consider the old saying of "Never say never."
I can’t tell you how many emails have I received telling me that gold would NEVER trade over $1000. One caller told me gold would never trade over $1000 in his lifetime, so I enquired how old he was. He hung up.
Gold: It’s All About the Dollar and (Yes Dr. Roubini), Inflation
November 04, 2009
Dian L. Chu
Gold prices surged to a new high Tuesday on news that India’s central bank bought $6.7 billion worth of gold from the International Monetary Fund (IMF). December gold jumped as high as $1,087, before settling at $1,084.90 an ounce on the NYMEX breaking the previous record of $1,072 an ounce on Oct. 14. Prices are now up 22.7% for the year heading for a ninth straight annual increase. (Fig. 1, click to enlarge)
Unusual Correlation
Historically, gold moves in an opposite direction to stocks because of bullion’s traditional role as a safe haven in times of crises. But gold has recently climbed in tandem with rising equities. For example, the Dow Jones Industrial Average, a bet on the economic recovery, is up about 15% this year. (Fig. 2,click to enlarge)
This unusual correlation is driven mostly by excess liquidity, return of risk appetite, and a weakening U.S. dollar. The creation of the U.S. national marketable debt to a record $7.01 trillion to revive growth, along with the Federal Reserve’s maintaining the benchmark interest rate near zero since December 2008, and the prospect of heavy government borrowing to fund deficits, threatens to weaken the dollar and fuel inflation and increased economic volatility later.
Economic uncertainty, inflation worries and the weakening U.S. dollar helped push gold to a new high this year. Weakness in the dollar benefits gold, which is often used as an alternative asset hedge to a depreciating dollar. The Dollar index (DXY) has declined about 10% this year. (Fig. 2) Right now, the general trend is still for further dollar weakness on the back of the Fed’s easy monetary approach, which will be supportive for the whole commodities complex.
Jim Sinclair’s Commentary
Big deal?
Fed Sees No Need to Raise Rates Soon
By EDMUND L. ANDREWS
Published: November 4, 2009
WASHINGTON — The Federal Reserve signaled on Wednesday that it isn’t close to raising interest rates, saying the economy remains weak even though the recession appears to be over.
The central bank said it would keep its benchmark interest rate at virtually zero, repeating its long-standing mantra that economic conditions were likely to warrant “exceptionally low” rates for “an extended period.”
For practical purposes, analysts said, that means policymakers are still at least six months away from tightening monetary policy.
It was unclear whether Fed policymakers even discussed changing their language on interest rates, which would mark a first step toward a shift in policy. Some officials have worried that even discussing a change in language, which would be disclosed when minutes of the meeting are published two weeks from now, would send the premature signal that higher rates were imminent.
Jim Sinclair’s Commentary
This is a last resort in the system for privacy. It is in danger because of what happened in London.
1. Have nothing in your box that you cannot explain.
2. Have paper records of the acquisition of everything in your box.
3. Have nothing in your box that would embarrass you if it was on the front page of the New York Times.
4. Consider a safe room in your house for your private items.
5. I had a friend whose name was Yeknod. He always advised 2 feet of concrete.
How Safe Is Your Safe-Deposit Box?
By ELISABETH LEAMY
A woman says the state took her property and sold it for a fraction of its cost.
The 50 U.S. states are holding more than $32 billion worth of unclaimed property that they’re supposed to safeguard for their citizens. But a "Good Morning America" investigation found some states aggressively seize property that isn’t really unclaimed and then use the money — your money — to balance their budgets.
Unclaimed property consists of things like forgotten apartment security deposits, uncashed dividend checks and safe-deposit boxes abandoned when an elderly relative dies.
Banks and other businesses are required to turn that property over to the state for safekeeping. The problem is that the states return less than a quarter of unclaimed property to the rightful owners.
Not-So-Safe-Deposit Boxes
San Francisco resident Carla Ruff’s safe-deposit box was drilled, seized, and turned over to the state of California, marked "owner unknown."
Jim Sinclair’s Commentary
John Embry knows his field.
Click here to read the latest from John Embry…
Jim Sinclair’s Commentary
Face East is the battle cry of world economics.
Japanese FM calls off US visit
Wed, 04 Nov 2009 09:27:45 GMT
Japan’s foreign minister has cancelled a trip to the US meant to improve bilateral ties as relations between the two countries are strained by a row over a US base in Japan.
The planned meeting between Japanese Foreign Minister Katsuya Okada and US Secretary of State Hillary Clinton would have come just days before US President Barack Obama’s visit to Tokyo next week.
"The visit this time was cancelled as the Japanese side could not coordinate the timing amid various scheduling demands such as parliamentary sessions," Hirofumi Hirano, the chief cabinet secretary, told reporters on Wednesday.
"I don’t think it will affect relations between Japan and the United States," he added.
Analysts say the victory of the Democratic Party of Japan (DPJ) in August is the sign of a significant change in relations between the two countries.
Jim Sinclair’s Commentary
Today in the Iran / Pakistan / Turkey / Israel story.
Israeli military attacks and takes over Iranian ship
Wednesday November 04, 2009 09:35
author by Saed Bannoura – IMEMC News
An Iranian ship was attacked in international waters in the Mediterranean Sea by the Israeli navy early on Wednesday morning, while apparently on its way to Lebanon.
According to Israeli media sources, no Cabinet meeting was held in advance of the decision to attack the ship, and a small number of Cabinet officials may have given the go-ahead for the attack.
Israeli officials told the Associated Press that the ship contained weapons including anti-tank missiles, but no official information has been released on the contents of the ship or the reason for its illegal seizure by the Israeli military. Col. Avital Leibovich with the Israeli military confirmed to reporters that the ship had been seized, but gave no details.
The Israeli Defense Minister Ehud Barak told Israeli newspaper Ha’aretz, "This is another success in the endless struggle against attempts to smuggle weapons and military equipment whose goal is to strengthen terrorist elements who threaten the security of Israel."
Jim Sinclair’s Commentary
Outrageous. This never needed to happen.
OTC derivatives turned a normal economic correction into a total disaster.
The pain and suffering caused by these super rich paper shuffling demons beats "Vlad the Impaler."
They are proud of themselves. I hope they do not breed.
U.S. Home Vacancies Rise to 18.8 Million on Defaults (Update1)
By Kathleen M. Howley
Oct. 29 (Bloomberg) — About 18.8 million homes stood empty in the U.S. during the third quarter as banks seized properties from delinquent borrowers and new home sales fell in September.
The number of vacant properties, including foreclosures, residences for sale and vacation homes, rose from 18.4 million a year earlier and 18.7 million in the second quarter, the U.S. Census Bureau said in a report today. The record high was in the first quarter, when 18.95 million homes were vacant. The homeownership rate, meaning households that own their own residence, stood at 67.6 percent.
The worst U.S. housing crash since the Great Depression has led to a record number of foreclosures and shaved almost a third off property values. The S&P/Case-Shiller Index of 20 cities in August was 29 percent below its 2006 high, after rising for four consecutive months.
“We are bumping along the bottom of the housing market,” said James Lockhart, vice chairman of WL Ross & Co. and the former director of the Federal Housing Finance Agency. “There is the potential for another swing down.”
Sales of new U.S. homes fell 3.6 percent in September to an annual pace of 402,000, the Commerce Department said yesterday. That was lower than the 440,000 median forecast of 75 economists surveyed by Bloomberg News.
Jim Sinclair’s Commentary
Look who is famous – our own CIGA JB Slear!
HUGE gold story developing… investors are draining gold vaults
Friday, October 30, 2009
From Market Skeptics:
In order to secure gold at the lowest possible price, US investors are turning to the complex, lengthy process of taking delivery of gold futures contracts. By buying gold contracts in deliverable months and wait for them to expire, sophisticated investors are emptying COMEX warehouses. The incredible hassle of trying to pry gold out of COMEX warehouses appeals to investors because no other place in the US offers a price equal to the COMEX exchange. Nothing even comes close.
Guiding investors through the delivery process are gold and silver brokers like JB Slear who specialize in helping high net worth clients take delivery of gold and silver futures contracts. These advisors are necessary because, as investors are discovering, that there is trouble at COMEX warehouses…
Jim Sinclair’s Commentary
Turkey today.
Israeli envoy in Turkey pelted with eggs
By JPOST.COM STAFF
Israeli ambassador in Turkey Gabi Levy was pelted with eggs on Wednesday by Turkish university students, according to various reports.
Turkish daily Hurriyet reported that during Levy’s visit to the Black Sea Technical University, a group of students congregated around him, shouting slogans such as "Israel’s child killers are not wanted in our universities," calling Israel a "fascist" country and hurling eggs at Levy’s car until security personnel intervened.
Several students were arrested, and the ambassador was forced to cut short his visit to the institution.
The ambassador was slated to speak at the university during a tour of historic Turkish city of Trabzon.
"The people of Israel have a great interest in the [Black Sea] region," Levy was quoted as saying, referring in his speech to the influx of Israeli tourism in the area.
Also during Levy’s Black Sea visit, the mayor of coastal city Rize, Halil Bakirci, criticized Israel’s "policy of occupation" and said that Turkey’s stance on Israel would "not change as long as it continues," according to a report in Turkish publication Turkiye.
