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Dear CIGAs,
CIGA Bruce (below) says stop watching. Gold is going to a minimum of $1650.
Jim Sinclair’s Commentary
The following article by Armstrong presents conclusions based on fact, not opinion. It makes present time comparisons that must draw your attention to the equity markets in the Weimar experience.
It helps explain the increasing prices of goods and materials in a period of at best modest demand. It refers to the large currency exiting from the US, which may well have to do, among others things, with those huge profits made since April of 2009 by the financial industry.
It is a thesis, as I see it, for Martin Armstrong’s courage to state, at risk to all he has, his reputation in markets, the conclusion that gold is going to $5000.
It explains the stair step that Trader Dan has been outlining for us. This is a time for data, not opinions as opinions lead to confusion. Data leads to actionable conclusions.
It is more foundation for me to say gold will trade at $1224, $1278, $1650 and then of to Alf and Armstrong’s numbers.
Conclusions most recently from Martin Armstrong concerning the trend of dollar outflows:
“ What we must do is dissect the whole economic structure and study HOW it works in order to understand the solutions. We cannot proceed just on OPINIONS. Where’s the proof? Where’s the study? Where is the evidence of what you say is correct?
What has taken place over the years post World War Two is that the concentration of wealth in the United States caused a false sense of invincibility. The housing market had a good run. From roughly the 1955 period, we have seen about a 52-year rally into 2007. It appears we may have reached a major high in real estate and this is of great concern. For if this is the case, then what in fact we are actually looking at is a serious contraction in what people believe has been their long term Piggy Bank.
This trend is converging with the retirement of the baby boomers. It is also converging with the securitization of real estate pools that created the 2007 high in February. This combines even still with the dangerous problem we have of the debt that is also starting to implode on a STATE and NATIONAL basis.
Effectively, because we are not the financial capital of the world as we were in the 1930s, the trend that emerges will be different as well. When capital was fleeing Europe and rushed to the dollar driving that up in price so that we then turned to protectionism, the opposite is now taking place whereas the dollar is falling as capital is fleeing, so if we see anything, the high degree of imports will be inflationary in the US, not deflationary.
With the banking system still in deep denial and capital beginning to show signs of caution shortening its maturity even in sovereign debt, the long-term horizon will also collapse. The more difficult it becomes to fund long term, the greater the deflationary effect will be in housing. Never the less, this will not (deflation) be any national trend.
What we have is an inflation pressure in other sectors that we will see manifested in stocks and commodities. It is the real estate that is still leveraged and will take a serious impact upon exclusively real estate. If funds are not available to provide long-term mortgages, then the prices in this sector will continue to fall. That is not the same fate that is shares by the rest of the financial world.
It is the lack of liquidity in the real estate market that is the problem. Prices reflect the ability to borrow 30 years of future income. As that contract, prices collapse.
We do not have that of leverage in stocks and commodities.
Consequently, The future that lies ahead is not as easy as most would want you to think. The core interrelationships will shift and change. We are facing a serious problem with the real estate sector as a whole, and this will be reflected again in the second phase of the major crash that began 2007.15 precisely to the day. The banking crisis is not over either. As this turmoil brews you will see every fundamental idea of how market function will be laid bare on the sidewalk of ruin. This is not the time for opinions. This is time for serious work."
Jim Sinclair’s Commentary
Along with Trader Dan’s presentation of US international debt, consider this fact as a reason why $1650 may well be wrong and $5000 be right.
Chinese consumers embrace gold
By Chris Flood , Financial Times, 19 Nov 2009
Chinese consumers’ demand for gold reached record levels in the third quarter as the 60th anniversary of the founding of the People’s Republic of China on October 1 provided a boost to sales of jewellery and commemorative items.
Consumer demand for gold in China reached 120.2 tonnes in the third quarter, up 12 per cent on the same period last year, while jewellery demand increased 8 per cent to 93.5 tonnes, according to the World Gold Council which released its latest supply and demand update on Thursday.
The rapid growth in China’s gold jewellery market following years of import and price controls runs in parallel with a huge expansion in the country’s platinum jewellery market where demand is on course to double this year, according to a report by Johnson Matthey released earlier this week.
However, China was the sole market to see positive growth in gold jewellery demand in the third quarter with large year-on-year falls being recorded in India and the Middle East.
India, still the world’s largest gold jewellery market, saw demand fall to 111.6 tonnes in the third quarter, down 42 per cent year-on-year.
The WGC said high gold prices were the biggest constraint on India’s gold jewellery demand along with the poor monsoon which affected incomes in rural areas.
However, jewellery demand in India has shown an improvement in 2009 after dropping to its lowest levels in at least twenty years in the first three months of this year.
Jim Sinclair’s Commentary
Wall Street is booming while Main Street is suffering.
Mortgage delinquencies hit record high
Mortgage group’s quarterly report raises worries about housing recovery
updated 11:37 a.m. ET, Thurs., Nov . 19, 2009
WASHINGTON – A rising proportion of fixed-rate home loans made to people with good credit are sinking into foreclosure, adding to concerns about the strength of the economic recovery.
Driven by rising unemployment, such loans accounted for nearly 33 percent of new foreclosures last quarter. That compares with just 21 percent a year ago, when high-risk subprime loans made during the housing boom were the main reason for default.
At the same time, the proportion of homeowners with a mortgage who were either behind on their payments or in foreclosure hit a record-high for the ninth straight quarter.
Jim Sinclair’s Commentary
A step closer, but the battle will be Royal.
Panel votes to audit the Fed; cap its spending at $4 trillion
Measure would audit the Fed’s monetary policies such as interest rates
By Ronald D. Orol, MarketWatch
WASHINGTON (MarketWatch) — Rep. Ron Paul, who has sought to audit the Federal Reserve for 26 years, has inched ever so much closer to his goal.
A key congressional panel on Thursday approved legislation introduced by the Texas congressman that – for the first time in the central bank’s 95-year-history — would require government audits of Federal Reserve monetary policy, as well as how much the central bank has lent and will lend to specific banks.
Fed Chief Ben Bernanke and other key members of the Obama administration, including Treasury Secretary Tim Geithner, had vigorously opposed the move.
The measure was approved by the House Financial Services Committee as it considered broad bank regulatory reform legislation, and included a package of other measures weakening the Fed’s power and capping how much it can lend or guarantee.
The committee is now poised to pass the entire bill and has scheduled its final vote on the legislation for December 1.
Jim Rickards: If gold is money again, it goes to between $4,000 and $11,000
Submitted by cpowell on 01:25PM ET Thursday, November 19, 2009. Section: Daily Dispatches
4:15p ET Thursday, November 19, 2009
Dear Friend of GATA and Gold:
Jim Rickards, director of market intelligence for McLean, Virginia-based consulting firm Omnis, was allowed onto CNBC again today to make gold-friendly comments. You may recall his blunt statement on CNBC back in September: "When you own gold, you’re fighting every central bank in the world":
Today Rickards remarked that the United States and China are devaluing their currencies against each other in a game of chicken, that gold should easily reach $2,000 per ounce next year just as a matter of supply and demand, and that if gold should start being considered money again, it would have to rise to between $4,000 and $11,000 to support the big increase in the world’s money supply.
You can watch Rickards’ comments at the CNBC archive here:
http://www.cnbc.com/id/15840232?video=1336090735&play=1
Just please don’t tell CNBC that this is all GATA-type stuff.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Jim Sinclair’s Commentary
Stay the Course! What do you think your class 2 gold shares will be earning at $5000 gold?
What do you think these shares will be worth if your management cares more for their stockholders than their own pocket, and pays out in gold or cash as dividends?
Is $6,300 fair value for gold?
By Ambrose Evans-Pritchard
Last updated: November 19th, 2009
The last parabolic spike in gold took off when central banks joined the fray in the 1970s, hoarding bullion with the same enthusiasm as gold bugs.
Dylan Grice from Société Générale says it smells much the same today.
He sees an eery similarity between the decision of India’s central bank to buy half the IMF’s entire sale of gold, and the move by France’s central bank to start converting dollars into gold in 1965 — which was, of course, the start of the slippery slope leading to the collapse of Bretton Woods and the closure of the US gold window under Nixon.
In the gold mania that followed, the price rose to levels that matched the US dollar monetary base (it reached 140pc at the peak). If that were to occur today after Ben Bernanke’s go at the printing press, gold would have to reach $6,300 an ounce. The US owns 263m ounces of gold while the Fed’s monetary base is $1.7 trillion. Simple equation.
Gold has had its ups and downs, of course. It is trading today at roughly the same real price as in the mid-13th Century — when an ounce bought a light suit of chain mail.
Jim Sinclair’s Commentary
Stay the Course.
Think $1224, $1278, $1650 and then on to the Alf and Armstrong’s numbers.
Gold price may move into uncharted territory
18 Nov 2009, 2100 hrs IST, REUTERS
LONDON: With record-high gold moving further into uncharted territory, analysts who study past chart patterns to predict future behaviour are getting acclimatised and see any correction as an opportunity to lengthen exposure.
Even as chart signals show signs of strain they say the market’s long-term uptrend is intact, in line with the dollar’sdownward trajectory, with prices targeting $1,200 an ounce by the end of 2009 and an eventual target of $1,500 by mid-2010.
Gold has stunned bulls and bears alike, racing up some 30 percent this year to date and registering a record high at $1,149.15 earlier on Wednesday.
On a fundamental basis the market has found plenty of support, moving as a function of the dollar’s weakness. Central banks have come into play, with Asian giants China and India emerging as buyers, while worries aboutinflation have also brought out the metal’s attraction as a hedge.
From a technical standpoint, the rally looks tired. Gold’s Relative Strength Index (RSI), measuring the velocity and magnitude of price direction, stands at 81.7 on a 14-day basis — a rise above 70 indicates that the market is overbought.
Jim Sinclair’s Commentary
This is demand driven.
U.K. Royal Mint Quadruples Production of Gold Coins (Update1)
By Thomas Biesheuvel and Nicholas Larkin
Nov. 19 (Bloomberg) — The U.K.’s Royal Mint, established in the 13th century, more than quadrupled production of gold coins in the third quarter after demand for the metal increased as investors sought to hedge against a weakening dollar.
Output rose to 32,735.8 ounces from 7,500.2 ounces a year before, according to data obtained by Bloomberg News under a Freedom of Information Act request. Production in the first nine months more than tripled to 100,391.3 ounces, the data show.
Gold is set for a ninth annual gain as countries have cut interest rates to near zero percent and spent $2 trillion to pull the global economy out of the worst recession since World War II. The metal reached a record in London yesterday and has gained about 30 percent this year, while the dollar has dropped 7.8 percent against a basket of six currencies.
“There’s still a total lack of confidence in the financial system,” David Russell, a director at Dublin-based brokerage and bullion dealer GoldCore Ltd., said in an interview. “Investors are seeing the benefits of diversifying into gold. Smaller investors are clued into the fact that inflation possibilities are a worry for the future.”
Sales of American Eagle gold coins by the U.S. Mint more than doubled in the first nine months to 954,000 ounces, its Web site showed. Harrods Ltd., the London department store, began selling gold bars and coins for the first time in October.
Jim Sinclair’s Commentary
There is a war here in which politics want influence over banks for Fed decisions.
One way is by loading the entire Fed line of command.
Fed Presidents, Lawmakers Step Up Clash on Appointment Process
By Scott Lanman
Nov. 19 (Bloomberg) — Federal Reserve regional bank presidents and U.S. lawmakers intensified a clash over giving Congress a greater say in appointing the central bank officials, who are now named in part by private-sector banks.
St. Louis Fed President James Bullard said yesterday proposed legislation to subject some officials to Senate confirmation is a “blatant politicization” of the Fed. Separately, seven House Democrats called for an “exploration of possible changes” in how the Fed is governed, saying there’s an “inherent conflict” in the way presidents are named.
Proposed legislation in the Senate risks higher inflation if there’s too much political pressure on the Fed to keep interest rates low while the economy rebounds, some former Fed officials say. Lawmakers say private-sector banks have too much influence at the Fed, and that the regional Fed bank presidents focus too much on inflation at the expense of job growth.
“This is going to be a big battle,” said former Fed Governor Lyle Gramley, now a senior economic adviser to New York-based Soleil Securities Corp. “The danger is the new arrangement will politicize the Fed to the point that they don’t do what’s necessary” when the central bank needs to raise interest rates, he said.
The powers and autonomy of the 12 regional Fed presidents are under threat on several fronts in Congress.
Jim Sinclair’s Commentary
Ignore the top callers and stay the course!
Housing savant Paulson now looks to gold
Paulson & Co. to buy shares of gold-related investments in 2010. Paulson to invest $250 million.
By Hibah Yousuf, CNNMoney.com staff reporter
Last Updated: November 18, 2009: 6:13 PM ET
NEW YORK (CNNMoney.com) — Billionaire John Paulson, who earned his hedge fund billions when he bet against the housing bubble, is waging a new noteworthy bet.
Paulson is investing as much as $250 million in a new gold fund next year.
His hedge fund, Paulson & Co., will launch the fund Jan. 1, 2010 and will buy shares of gold miners and make other investments related to the precious yellow metal, a source familiar with the firm’s plans told CNNMoney.com. Paulson discussed the fund at a meeting with investors on Tuesday
Jim Sinclair’s Commentary
Business may be booming on Wall Street, but main street is deep in the non retrievable tank.
U.S. Mortgage Delinquencies Reach a Record High
By DAVID STREITFELD
Published: November 19, 2009
Nearly one in 10 homeowners with mortgages were at least one payment behind in the third quarter, the Mortgage Bankers Association said Thursday.
That is the highest figure since the association began keeping records in 1972. It is up from about one in 14 mortgage holders in the third quarter of 2008.
“Clearly the results are being driven by changes in employment,” Jay Brinkmann, the association’s chief economist, said on a conference call with reporters. Five million more unemployed people over the last year has turned into about two million more overdue loans, he added.
The association’s delinquency numbers do not include those who are actually in foreclosure, a figure that also rose sharply, to 4.47 percent of all loans. A year ago, it was 2.97 percent.
The combined percentage of those in foreclosure as well as delinquent is 14.41 percent, or about one in seven mortgage holders. About 52 million homeowners have mortgages.
Jim Sinclair’s Commentary
In today’s speculative world of mega-bucks what difference does position limits make?
The answer is absolutely nothing
Sharks off the British coast: Oil tankers refuse to unload until prices rise… keeping YOUR fuel costs soaring
By RAY MASSEY
Last updated at 12:09 PM on 19th November 2009
These tankers have been parked off our shores for months, refusing to unload their oil until prices have risen even higher. The delay makes millions for speculators… and keeps your petrol costs soaring.
Laden with fuel, three oil tankers sit idly within sight of the British coastline, playing a waiting game that is driving up petrol prices for hard-pressed motorists.
They are part of a flotilla of ten vessels refusing to unload their cargo until market speculation has driven up its price to the level they want.
And as the value of that cargo is currently rising by over £1million a day, driven partly by profiteering traders and speculators, it is unlikely to see a petrol station any time soon.
With such tactics, it is not hard to see why prices at the pumps are forecast to have risen by 26 per cent in a year by this Christmas.
Jim Sinclair’s Commentary
Do not give up your gold insurance as top callers would like you to. Think $1650 and then think Alf and Armstrong.
Read this for an excellent outline of the Formula on a worldwide basis.
Food inflation in India is plus 14.55%
States faced with three brutal options in 2010: inflation, high taxation or default
- Public announcement GEAB N°39 (November 16, 2009) –
16/11/2009
As anticipated by LEAP/E2020 last February, in the absence of major reappraisal of the international monetary order, the world is now entering the phase of geopolitical dislocation of the global systemic crisis. In 2010, as protectionism and the economic and social depression will gain momentum, a large number of States will be compelled to choose between three brutal options: inflation, high taxation or defaulting on their debt. A growing number of countries (USA, United Kingdom, Euroland [1], Japan, China [2],…) have used all their budgetary and monetary cartridges in the 2008/2009 financial crisis and are now left with no other alternative. Nevertheless, out of ideological reflex or in an attempt to avoid by any means having to make such painful choices, they will try to launch new stimulus plans (under different names) even though it is now clear that the huge public effort made in the past months to boost the economy is having no impact on the private sector. Indeed the consumer-as-we-knew-him in the past decades is dead, with no hope of resurrection [3]. Knowing that nearly 30 percent of Western countries’ economies are now made of « economic zombies » (financial institutions, companies and even states, whose signs of life are only due to central banks’ liquidity injections), it is possible to confirm the inevitability of the “impossible recovery” [4]. The international and social (within each country) « everyman for himself » rule is beginning to prevail, as well as a general impoverishment of the ex-Western world, United States in the first place. In fact the West is being scuttled by leaders unable to face the reality of a post-crisis world, who keep resorting to methods from yesterday’s world despite their proved inefficiency.
In this 39th issue of the GEAB, our team has therefore chosen to develop anticipations on general developments in 2010, a year when key states will see their choices be restricted to three brutal options, inflation, high taxation or default, which they will struggle to escape from in vain. Knowing that one of the reasons why stimulus plans are doomed to fail is that the consumer-as-we-knew-him in the past thirty years is dead, we analyze this phenomenon in this issue of the GEAB, as well as fallout for companies, and for the marketing and advertizing businesses. In the field of geopolitics, we present a number of LEAP/E2020 anticipations regarding Turkey by 2015 with regards to both NATO and the EU. Of course, we also present our usual monthly recommendations, as well as the results of the last GlobalEurometre survey.
Jim Sinclair’s Commentary
There are so many next disasters out there that there is no chance of the anything but expansion in monetary and now fiscal policy.
Have you noticed the boom in road building?
Toll warns of FHA train wreck.
Homebuilder Toll Brothers (TOL) said the FHA has created a potential "train wreck" because it insures home purchases made with down-payments as small as 3.5%. FHA loans accounted for about 8% of the mortgages Toll closed last quarter, while the agency guarantees 20% of all single-family loans. While the FHA’s insurance reserve ratio has fallen to an all-time low, a senior government official denied that the FHA is the next sub prime mortgage crisis.
Jim Sinclair’s Commentary
Pakistan yesterday.
19 slain in courthouse bombing in Pakistan
Blast is seventh attack in less than two weeks in troubled northwest region
PESHAWAR, Pakistan – A suicide bomber killed 19 people Thursday outside a courthouse in northwestern Pakistan, the latest attack in an onslaught by Islamist militants fighting back against an army offensive in the nearby Afghan border region.
The bombing was the seventh attack in less than two weeks in and around Peshawar, the largest city in the northwest. The attacks have killed more than 80 people.
The bomber, who arrived in a taxi, was being searched by police officers at the gate of the city’s lower court when he detonated explosives on his body, government official Sahibzada Anees said.
Several damaged motorbikes were strewn about the site, and firefighters sprayed water on a charred, smoking white car.
‘Beasts … killing our children’
Dr. Saib Gul of the city’s Lady Reading Hospital said 19 people were killed in the attack and 51 had been wounded. At least three of the dead were police.
