Dear CIGAs,

My friend, former partner, respected colleague and ace floor trader Yra Harris today said:

"Oh the birds are singing, the hills are alive with the sounds of music and the carry trade is in full swing. Today was the paradigm of the easy funding for the world for if you were an asset class that could not rally you must have been tied to causing the existence of flesh eating bacteria. With the G20 shown to be a paper tiger, the IMF giving its seal of approval to the debased dollar carry trade – the animal spirits ran wild. The dollar was down against everything but the yen for the yen is the second favorite funding currency with similar fundamentals to the dollar."

My comment is simple.

The floors of the dollar’s downward elevator are about to open up wide.

The freefall is near. Armstrong’s few days are just around the corner.

The Winter is going to be very cold for the US dollar Be advised. Take precautions immediately if you have not already.

Here Is Today’s Question:

Why did the legitimate winner of the Afghanistan Presidency withdraw from the runoff election?

Understand this intrigue, and you will understand the thinking that you can buy yourself out of modern wars. The problems is that you can’t buy zealots.

It only takes a few zealots with the right weapons to screw up the best of sell outs.

 

Jim SInclair’s Commentary

Gold at $1100 plus can get your attention. You know this is for real.

English bull dogs are not made too well. They overheat in a Siberian winter just because they looked at a picture of Florida. If they overheat, and you do not cool them down fast, you lose you pal.

She was watching the quote on gold too closely like some CIGAs I know. I so love bulldogs, but they are not easy, ever. When has anything worthwhile ever been easy?

Jim Sinclair’s Commentary

USA’s Veterans Day is coming.

All this sacrifice was given for freedom, for honor, for the constitution.

All at the orders to die came from old men who were not there.

Has it all been in vain?
Where is Honor?
Where is Freedom?
Where is the Constitution?

How many banksters have been in harms way in service of their country?

Jim Sinclair’s Commentary

This fellow will be found out when he is examined by the new in British service, "see you naked" airport scans.

Can you imagine how gross it is going to be looking at that scanner all day?

You will have sickening visuals that will stick in your mind for all eternity.

Jim Sinclair’s COmmentary

The question is how much of these two are related.

Keep in mind that the equity market in the Weimar Republic went to infinity and their currency went to zero. It is impossible to tell.

Note that the countdown of days is ending soon, and look at where gold and the dollar are.

Keep in mind that Armstrong is right in having said that when the currency goes into a freefall it happens all of a sudden without pre-announcement.

My view here is to stick with insurance and allow the wild people to play the general equities market.

Insurance will pay off.

You might recall my radio interview in March of this year. You also might recall Monty and Dan calling for a bottom in that period in the general equities markets.

Let me tell you bottoms are simple. Tops are hard. You leave when you are satisfied and a little at a time.

Click here to download Jim’s Bloomberg interview in MP3 format…

 

Jim Sinclair’s Commentary

My answer is probably not. The dollar looks just awful no matter how many patriotic talking heads think it is required to say otherwise.

Also what makes you think that the dollar carry trade is made up of long only investors? They are wild ass all sides traders.

The dollar carry trade, i.e. Wall Street, got the green light from the Fed for the next year at the least.

Does Disaster Loom from Dollar Funded Carry Trades?
November 09, 2009
Karl Denninger

The U.S. currency dropped against 12 of its 16 major counterparts asthe International Monetary Fund said traders are probably using the dollar to fund so-called carry trades around the world and it may still be overvalued.

I hope everyone here in The United States takes a moment to understand what this means. Let me lay it out for you:

When the global economy truly recovers oil will skyrocket up to or beyond the $150 where it was in late 2008. If the dollar is indeed still "overvalued" and going to 40 as many technicians predict, oil will likely reach $300 a barrel. This will in turn drive gasoline prices north of $6, heating oil will reach $7-8/gallon, and diesel will be commensurate with heating oil.

This will in turn decimate the trucking industry. Now you know why Buffett bought BNI. Many things he may be, but dumb isn’t one of them. Trucks will of course remain for terminal-to-door deliveries but for long-haul they will simply be uneconomic. Those who currently are employed in this business will lose their jobs. All of them.

The middle class will be decimated. Those who live in suburbia, who are primarily middle-class Americans, will find themselves faced with commuting costs that are double or more what they pay now. Those in the middle class who live in the Northeast where heating oil is the primary fuel for winter, where natural gas infrastructure does not exist to replace heating oil, will find themselves choosing between heat and food in large numbers.

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Jim Sinclair’s Commentary

Arrogance, insensitivity and madness. The Demons of Lanka were saints compare to these guys. Ravana was Mother Theresa compared to these guys.

Who are these guys claiming to be doing the work of the Almighty?

Wall Street Bonuses Rise as Big 3 May Pay $30 Billion 
By Michael J. Moore and Ian Katz

Nov. 9 (Bloomberg) — Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co.’s investment bank, survivors of the worst financial crisis since the Great Depression, are set to pay record bonuses this year.

The firms — the three biggest banks to exit the Troubled Asset Relief Program — will hand out $29.7 billion in bonuses, according to analysts’ estimates. That’s up 60 percent from last year and more than the previous high of $26.8 billion in 2007. The money, split among 119,000 employees, equals $250,400 each, almost five times the $50,303 median household income in the U.S. last year, data compiled by Bloomberg show.

The three will award more in stock and defer more cash payments under pressure from regulators to tie pay to long-term results, compensation experts said. They may still face public wrath over the size of bonuses after the government injected capital into all the major financial institutions following Lehman Brothers Holdings Inc.’s collapse in September 2008.

“Wall Street is beginning to resemble Clark Gable as Rhett Butler in the film ‘Gone With the Wind’: ‘Quite frankly, my dear, I don’t give a damn,’” Paul Hodgson, a senior research associate on compensation at the Portland, Maine-based Corporate Library, said in an e-mail. “It doesn’t seem as if even political threat, disastrous PR, envy, rising unemployment rates and home repossessions is enough to get any of these people to refuse the bonuses they have ‘earned.’”

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Jim Sinclair’s Commentary

Yes, the death of the dollar is a slow death until one day soon at 11:14 AM when the bottom drops out.

As Armstrong so correctly has written, when it comes, it is sudden and out of nowhere without a specific reason.

It has always been that way and will always be that way.

Save all Armstrong articles and keep your Compendiums as record of history from the beginning of this mess.

Is the Dollar Dying a Slow Death?
By MICHAEL SCHUMAN / HONG KONG
Friday, Nov. 06, 2009

The U.S. dollar seems to have as many lives as a cat. Even before 2008’s financial crisis, as the dollar slumped against other major currencies, countless pundits and economists predicted its demise as the global economy’s No. 1 currency. The doomsayers seemed vindicated when the U.S. economy descended into the worst recession since the 1930s, with its financial sector in tatters. How could an already weakened greenback maintain its value as American economic prowess withered? But then — surprise! — investors around the world decided the good old greenback was a safe haven in a time of great uncertainty. The dollar was resurrected, reversing years of slow decline.

That strength turned out to be temporary. A ballooning U.S. budget deficit and escalating government debt has made the dollar currency non grata in many quarters once again. An index that measures the greenback’s value against a basket of major currencies, including the euro and yen, has fallen about 15% from a three-year high reached in March and is now hovering near a 14-month low. Economists and analysts expect the dollar to lose a lot more ground. Daisuke Uno, chief strategist at Japan’s banking giant Sumitomo Mitsui, believes the Japanese currency could strengthen to 50 yen to a dollar by 2011 (from around 90 today) due to continued weakness in the U.S. economy. Harvard historian Niall Ferguson says the dollar could slide by as much as 20% on a trade-weighted basis over the next 12 months. The process may be protracted, he argues, but the dollar is dying. In 10 years’ time, he said in October, "it won’t be such a dollar-dominated world. I’m sure of that."

So has the dollar finally used up the last of its nine lives? There are worrying signs that the world is losing its appetite for dollars. The International Monetary Fund announced on Nov. 2 it was selling 200 metric tons of gold to India’s central bank for $6.7 billion. News of the purchase sent gold prices to an all-time high. The move was widely seen as part of an effort by central banks around the world to diversify their extensive U.S. dollar holdings. Steven Englander, chief U.S. currency strategist at Barclays Capital in New York City, figures that in the second quarter, dollars accounted for only 37% of new reserves accumulated by central banks worldwide. That’s the lowest proportion on record for any quarter during which reserves increased significantly. At a time when many central banks are boosting their reserves, they are choosing to buy euro and yen instead. "Central banks are doing more than talking about reducing the concentration of [the U.S. dollar] in their reserve portfolios. They are actually acting on their statements," Englander wrote in an October report.

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Jim Sinclair’s Commentary

As time goes on and men age, many seek redemption for their deeds. I once heard from a great teacher that "sincere regret extinguishes debt."

The emphasis is SINCERE.

Do you recall the last economic upset in Asia due to a currency raid that was blamed on one person who made billions?

Soros Calls for More Global Regulation of Currency
Written by Mike Telzrow
Monday, 09 November 2009 11:00

In an October 23, 2009 interview with Chrystia Freeland of the Financial Times, George Soros advocated a “new global currency system,” and called the decline of the dollar necessary. Under Soros’ new system, China would figure prominently in the creation of a new world financial order. “You need a new world order that China has to be part…they have to buy in, they have to own it in the same way that the United States owns the current order,” opined Soros. The man who once bet against the British pound stopped short of predicting the end of the dollar but characterized a managed decline in the value of the dollar as a "healthy, if painful adjustment," citing the United States as a drag on the world economy. He further conceded that the coordinated policies of the G20 have helped move the world in the direction of establishing a new financial world order.

When asked about the financial reforms in the United States, Soros called for greater bank regulation opining that financial markets do not “tend towards equilibrium,” but rather are prone to create asset “bubbles.”  Soros also advocated compensation regulation at the so-called “too-big-to-fail” institutions like Goldman Sachs.

As Charles Scaliger noted in his article "The Diminishing Dollar" in The New American magazine for November 9:

"The creation of a true global central bank is perhaps the gravest threat now under serious consideration to America’s financial sovereignty, but it is by no means the only one. A myriad of new proposals for international regulation of financial institutions and transactions is little less troubling."

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Jim Sinclair’s Commentary

Doran the Man sends the community two very instructive articles.

Fascinating facts, history, and a list of all the world’s paper with ink on it.

Click here to read the article…

Click here for a book on the subject…

 

Jim Sinclair’s Commentary

Rumor mills blast out that Russia is a seller of gold and Russia says they are a buyer of gold.

Now which do you think got more media coverage?

You’re right, the sell rumor, not the buy fact.

UPDATE 1-Russia c.bank may cut rates again in ‘09, buy gold
(AFX UK Focus) 2009-11-09 10:33
By Yelena Fabrichnaya

MOSCOW, Nov 9 (Reuters) – Russia’s central bank does not exclude further rate cuts before the end of 2009 and may buy gold from the state repository, Gokhran, the bank’s first deputy chairman, Alexei Ulyukayev, said on Monday.

"We will buy (gold) only if conditions are adequate," Ulyukayev told reporters.

Last month, Russian media reported that the government planned to sell 25 tonnes of gold, possibly on the local market, from the repository.

Ulyukayev said Monday that the regulator may further cut its benchmark lending rates this year. The central bank has administered eight cuts this year, bringing its benchmark refinancing rate to annualised 9.50 percent.

Easing inflationary pressures have been the main factor allowing the regulator to facilitate its monetary policy and provide a stimulus for domestic lending.

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Jim Sinclair’s Commentary

Fly the friendly sky, but for your sake do not land in Pakistan.

Market Bomber Kills 13 in Northwest Pakistan
By Ayaz Gul
08 November 2009

Police in northwestern Pakistan say that a suicide bomber has killed at least 13 people and wounded dozens of others.  Taliban militants have stepped up attacks in the country in recent weeks in retaliation for a military offensive in South Waziristan. 

The deadly suicide blast occurred near a crowded market on the outskirts of northwestern city of Peshawar and was aimed at a local anti-Taliban mayor who died in the attack.

The slain tribal leader was once a Taliban supporter, but he switched loyalty to the government recently and mobilized villagers to form a tribal militia against militants in his area.  Since turning against the militants more than a year ago, Abdul Malik had survived several attempts on his life.  He had stopped near the cattle market, says an eyewitness, to meet his friends when the bomber struck.

The eyewitness says that a young man in his early 20s walked up to the mayor and blew himself up as soon as a security guard tried to check his identity.  He says the powerful explosion immediately killed most of the people, including the anti-Taliban mayor.

Taliban militants have repeatedly struck in different parts of Pakistan, killing scores of civilians and security forces.  Authorities believe the violence is retaliation for the ongoing military offensive in South Waziristan, where extremists linked to al-Qaida and Taliban have set up bases.  Late last month, a powerful car bombing in Peshawar left more than 100 people dead, all of them civilians.

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Jim Sinclair’s Commentary

Wonder of wonders. Freddie is in the can.

Freddie Mac Loses $5 Billion in Third Quarter
11/09/2009 BY: BRITTANY DUNN

The third quarter results have been released, and Freddie Mac is posting a loss. A $5 billion loss.

Compared with the net income of $768 million during the second quarter, this $5 billion loss comes to a total of $6.3 billion after the dividend payment of $1.3 billion on its senior preferred stock to the United States Treasury.

The resulting net loss of $6.3 billion for common stockholders, or $1.94 per diluted common share during the third quarter increased significantly, compared to a net loss attributable to common stockholders of $374 million, or $0.11 per diluted common share, during the second quarter of 2009.

The GSE’s positive net worth during the third quarter increased to $10.4 billion, from $8.2 billion during the second quarter. Because of this, no additional funding was required from Treasuryfor the third quarter.

An $8.5 billion decrease in unrealized losses recorded in accumulated other comprehensive income (AOCI) is attributed to this improvement in net worth. This came as a result of improved fair values for the company’s available-for-sale (AFS) securities, partially offset by the third quarter 2009 net loss.

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Jim Sinclair’s Commentary

Turkey is playing a field much too controverted for them.

You can be sure that they will be victims when the s**t hits the fan.

Iran, Turkey discuss Turkish role in nuclear fuel deal
Updated: Monday, November 09, 2009
16:50GMT—11:50AM/EST

Washington, 9 November (WashingtonTV)—Iranian and Turkish officials on Monday held talks on a proposal from the chief of the United Nations’ nuclear watchdog for Iran’s uranium to be sent to Turkey for temporary safekeeping, the Bloomberg news agency reported on Monday.

The option, suggested by International Atomic Energy Agency Director-General Mohamed ElBaradei, was discussed by officials from the two countries on the sidelines of an economic summit in Istanbul, said Turkish Foreign MinisterAhmet Davutoglu.

Iran has been reluctant to agree to an IAEA-brokered nuclear fuel deal, under which it would ship most of its low-enriched uranium abroad for further processing, to be used in a research reactor in Tehran.

In a bid to salvage the deal, ElBaradei has suggested that Iran’s low-enriched uranium be sent to a third country, such as Turkey, and held there until Iran gets the fuel for its reactor.

Asked how Turkey views the proposal, Davutoglu told Bloomberg news that Ankara “always wants to help” to resolve disputes.

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Jim Sinclair’s Commentary

"Those whom the God’s wish to destroy, they make mad first."

Mad as in bonkers, nuts, paddles out of the water, elevators that do not go to the top floor…

The chief executive of Goldman Sachs, Lloyd Blankfein, believes banks serve a social purpose and are doing "God’s work."

"We help companies to grow by helping them raise capital. Companies that grow create wealth. This, in turn, allows people to have jobs that create more growth and more wealth. We have a social purpose," he said.

He also said he believed big profits and bonuses at banks were a sign that the world economy was recovering.

Click here to read the full article…

Jim Sinclair’s Commentary

CIGA Erik’s comment on Goldman doing the "Work of God" is precious:

"If there was a word it would be hublivious – a combination of hubris and oblivious until the end."

Trader Dan’s is a little more to the point. We do not dare mention this to Trader Dan as he was last seen screaming something about bringing back the inquisition. Never go near a professional trader when he/she is going wild!

 

Jim Sinclair’s Commentary

This is interesting when you consider it is from the New York Times that opted to take gold off its price reporting front page in the 70s.

Inside the Global Gold Frenzy
By NELSON D. SCHWARTZ
November 8, 2009

HERE, in a corner of Switzerland where Italian is spoken and roughly one-third of the world’s gold is refined into bars and ingots, business is booming. Every day, bangles, bracelets and necklaces arrive in plastic bags — from souks in the Middle East, from pawn shops in Asia and from corner jewelers in Europe and North America.

“It could be your grandmother’s gold or the gift of an ex-boyfriend,” said Erhard Oberli, the chief executive of Argor-Heraeus, a major refiner here that processes roughly 400 tons of gold a year. “Gold doesn’t disappear.”

Amid a global frenzy fed by multibillion-dollar hedge funds, wealthy speculators and governments all rushing to stock up on the precious yellow metal, the price of gold briefly surpassed $1,100 an ounce on Friday, a record high.

Long considered the ultimate refuge for nervous investors, gold has climbed as the dollar has steadily weakened, budget deficits have expanded in the United States and Europe, and central banks have continued to pump trillions of dollars into weak economies, creating fears of another asset bubble that will ultimately pop.

“It’s not that gold has changed, but gold buyers have changed,” said Suki Cooper, a precious-metals strategist for Barclays Capital. “It’s a structural shift we’re seeing on the investing side, from Asian central banks right down to individual investors buying ingots and coins.”

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Jim Sinclair’s Commentary

The correct answer is that paper will always be there, and certain paper will be elected as a reserve currency.

Gold will come out on top for you and I as the only means of preserving the buying power of all we have worked for.

Which will come out on top: paper or gold?
Printing presses have been pumping out dollars and pounds. Little wonder many are seeking a more trusty store of value
William Rees-Mogg
November 9, 2009

Last week the price of gold rose to $1,100, the highest ever recorded. Gold is still an important measure of the world economy. The theory of the 19th-century gold standard was that gold was “real money” in the same way as landed property was “real estate”. All types of paper money are capable of being created by banks or governments, so the supply is potentially unlimited. It was observed that gold holds its purchasing power over centuries, whereas paper money tends to depreciate towards the value of zero.

Of course, the rise in the gold price reflects the weakness of the dollar as well the strength of gold. I have been writing about the significance of the gold price since the early 1970s. The latest rise in price reflects the significance of gold as part of the world’s monetary reserves.

The immediate cause of the rise was a purchase of 200 tonnes of gold bullion by the Reserve Bank of India from the International Monetary Fund. The Indian purchase is quite large in terms of the gold market, but not particularly large in terms of the Indian reserves. India’s reserves now amount to $277 billion, of which this new purchase of gold amounts to only $6.7 billion.

The significance of the purchase is that it may be the start of a new phase in the struggle between gold and paper. Since 1971, when President Nixon ended the convertibility of the dollar into gold under the Bretton Woods Agreement, the world’s central banks have tended to be net sellers of gold and net buyers of dollars. Now the Indians have decided that they have more dollars than they want.

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Jim Sinclair’s Commentary

Whatever is required by any of the international good old boys will be provided to infinity. Now doesn’t $1650 sound a tad low for a projection on gold?

British government mounts world’s largest bank bailout
By Jean Shaoul
9 November 2009

Alistair Darling, the Chancellor of the Exchequer, has just announced the world’s biggest bailout for a single bank in a bid to rescue the Royal Bank of Scotland (RBS).

One year after an initial bailout, the government is to put an additional £25.5 billion into RBS, in which it already has a 74 percent stake. In addition it has set aside a further £8 billion in case the bank runs into further trouble, as is widely expected. While RBS insists it will only use this £8 billion in a dire emergency, the annual fee for this sum indicates a high probability of failure.

In order to maintain the fiction that this is still a private and not a publicly owned bank, the government’s additional equity stake, equivalent to a further 12 percent stake, will not have voting rights, allowing RBS to retain its listing on the London Stock Exchange.

Despite the bailout, there is to be no attempt to control the bank’s activities. It will be business as usual as far as proprietary trading is concerned—trading in risky financial instruments. While the government has announced a cap on cash bonuses for top banking executives, this is only a deferment for three years and still leaves numerous ways of circumventing the cap.

The Treasury will also underwrite £282 billion of its toxic assets, less than the £325 billion RBS had applied for in February. This is in return for the bank agreeing to accept a larger proportion of the costs should it prove unable to recover the book value of its assets.

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Jim Sinclair’s Commentary

As long as the Fed cooperates with Wall Street and it is certain it will, no audit will take place.

Ron Paul: We need to audit the Federal Reserve, now more than ever!
Sunday, November 8, 2009
By NewsWax

Show: Morning Meeting
Channel: MSNBC
Date: 11/05/2009

Transcript:

Dylan Ratigan: The bill no longer audits the Fed. In fact, the legislation gives Congress no control over the Fed’s authority to make monetary policy. That, perhaps, is a worthwhile debate, but it does not require any transparency either in the Fed’s secret agreements with foreign central banks, not to mention the monies that are pushed out to our own banks. Committee chair Barnie Frank told his constituents back in August that Congressman Paul’s plan would pass, likely in October. For the record it is now November and there is still no vote and if there were to be a vote it would be on a gutted version of the bill! Thirteen committee Democrats currently signed on to this shell of the Fed audit bill and now we’ll wait up and see if they’ll stand up for real change or just push through more false solutions in Washington DC.

Joining us now is Republican Committee member Ron Paul who originally proposed Audit the Fed. He will present and amendment before the full vote to get real reform back into the legislation. Chrystia Freeland is also here.

Representative Paul, in brief explain to all of us why you think it is so important that the American taxpayer be able to see what is going on inside of the Federal Reserve? Why does that matter, why should we care so much?

Ron Paul: It’s because everybody uses dollars as our currency and it’s an international currency. So it is very, very important, and yet it’s managed by a small group of people really run by the Federal Reserve board chairman and they decide each and every day how much money there should be printed that week and what the interest rates should be. So they are the central economic planners. And since they can create credit out of thin air and take care of their friends and buddies, which means that the burden is placed on the taxpayers… not directly with a tax but indirectly by devaluing their money. And that means that every time a price goes up, whether it’s medical care cost or education, you’re really paying a tax.

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Jim Sinclair’s Commentary

Judging from the level of courage amongst the sheeple and the use of armed forces to put down citizen demonstrations, the answer is NO!

As Foreclosure Nightmares Increase, Will More Homeowners Pay Off Their Bankers in Violence?
By Scott Thill, AlterNet. Posted November 9, 2009

The economic crisis revealed late-capitalism’s central offense: Human beings are being transparently treated if they were mere transactions. And they’re going postal over it.

Anger and discontent are reaching a boil as a lethal combination of economic corruption and political collusion are deleveraged across the United States.

From recent rampages in Orlando, Fla., to mortgage-related torture in Los Angeles, certain members of the citizenry seem to have had their fill of being manipulated for the financial gain of others, and they’re firing back with force.

And the situation threatens to burn hotter as the winter holidays — always a peak period for domestic violence, due mostly to financial stress — approach to spark its frazzled strands. The economic crisis revealed late-capitalism’s central offense: Human beings are being transparently treated if they were mere transactions. And they’re going postal over it.

"They left me to rot," Jason Rodriguez said when asked why he went on a shooting rampage at the Orlando engineering firm Reynolds, Smith and Hills that had fired him two years ago.

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