Dear CIGAs,

Gold’s independent action among other stimulants is a product of the recognition of three factors:

1. The financial problems of the Western world have infected the imitators.

2. The solution will be the same wherever it occurs, which is Quantitative Easing.

3. There currency based inflation will not only occur but it will be everywhere except certain Asian nations.

NYSE MAC DESK MID-DAY MARKET UPDATE:
DOW 10290 (-20 points), S&P500 1089 (-2.5 points), Crude $76.32/barrel (+.27).

MARKET DRIVERS: (Dubai and its finance arm Dubai World continue to dominate the markets as it seeks to restructure its debt liabilities. Investors are also keeping a close look on the results of Black Friday as consumer consumption is a key indicator of economic recovery. On the economic front, jobs data will dominate with Non-Farm Payroll numbers out Friday.)

The United Arab Emirates Central Bank said it stands behind Dubai’s local and foreign lenders after Dubai’s government said last week that Dubai World would seek a standstill agreement with creditors and extension of loan maturities until at least May 30 2010.

Jim Sinclair’s Commentary

If the Brits are then we are not far behind them as the problems have the same basis and the solutions so far are the same.

Same plus same equals the same, just larger.

Is Britain on the brink of financial armageddon?
By JAMES PALUMBO
Last updated at 11:07 PM on 27th November 2009

He’s one of our top entrepreneurs who recently put all his investments into cash. The reason: He believes Britain faces bankruptcy. You may disagree with his bleak analysis but you can’t afford NOT to read it

A year ago, the world reacted with astonishment as Iceland technically went bust. It seemed inconceivable that a modern democratic nation could have such parlous finances that only an emergency $6billion bail-out from the International Monetary Fund enabled its economy to keep functioning.

This week, we witnessed a similar crisis in the Middle East but on a far, far more dangerous scale, as Dubai effectively defaulted on £48billion of loans.

Unless its more prudent and oil-rich neighbour, Abu Dhabi, launches a rescue plan then

Dubai – once a gilded monument to financial success – will effectively be insolvent.

Which leads us to a haunting question: as the country in the world hardest hit by the credit crunch, with gross domestic product (GDP) projected to decline by almost five per cent in 2009, could Britain be next?

Let’s think the unthinkable for a moment. These are the facts.

Even before the financial crisis, the British Government spent roughly £30billion more per year than it earned in tax revenues. This money, of course, had to be borrowed from international investors.

Today, the Government needs up to £200billion a year for at least the next three years in order to meet its spending commitments. But the Government’s estimates invariably understate its true need, and they have to be continually revised upwards.

More…

Jim Sinclair’s Commentary

As expected.

UAE moves to quiet fears.
In an apparent effort to calm global markets, the central bank of the United Arab Emirates said it will give affected banks a liquidity line of unspecified size after Dubai shocked markets on Wednesday with news of a standstill on some $60B of debt for Dubai World. Reports suggest European banks could be on the hook for some $40B. The central bank said it was standing behind local and international banks in the U.A.E. with a special additional liquidity facility linked to their current accounts at the central bank, at the rate of 50 bps above the 3-month Eibor. It said nothing about helping Dubai, but stated that the U.A.E. banking system "is more sound and solid than a year ago." The lifeline news helped sooth some nerves after big losses late last week, sending the MSCI Emerging Markets Index to its biggest gain in two weeks on Monday.

Jim Sinclair’s Commentary

With unemployment at a 17.5% real level, what did they expect?

Black Friday: more people spent less.
U.S. consumers flocked to buy cheap laptop computers and other specials the day after Thanksgiving, but heavy discounts meant that major retailers hauled in just 0.5% more in sales this period than a year earlier ($41.2B vs. $41B), even as the number of shoppers at stores and on web sites rose to 195M from 172M a year earlier. Recession-pressed shoppers spent an average $343.31, less than $372.57 a year ago. The NRF still expects spending to fall by 1% this season.

Jim Sinclair’s Commentary

There isn’t a chance in hell that the Fed is going to do anything to cause problems for two reasons:

1. If they do they are congressional history.

2. This recovery is more a product of FASB than it is a product of real economic recovery.

Fed to Conduct ‘Small Scale’ Triparty Reverse Repos (Update2)
By Daniel Kruger and Christopher Wellisz

Nov. 30 (Bloomberg) — The Federal Reserve said it will test one of the tools for an eventual withdrawal of the central bank’s unprecedented monetary stimulus while stressing that the trials themselves don’t represent any change in policy.

The New York Fed said it will conduct “small scale, real value” three-way reverse repurchase transactions in coming weeks. The tests are “a matter of prudent advance planning by the Federal Reserve,” the statement said, and “no inference should be drawn about the timing of any change in the stance of monetary policy in the future.”

Policy makers led by Fed Chairman Ben S. Bernanke are considering how to withdraw the more than $1 trillion they have pumped into the financial system to combat the deepest recession since the 1930s. Along with raising the overnight bank lending rate, Fed officials have said they may use reverse repos, pay interest on excess bank reserves and sell securities directly to investors to withdraw or neutralize cash in the banking system.

“We don’t think it’s any indication that they’re likely to implement an exit strategy soon, or even in the next several quarters,” said Michael Pond, an interest-rate strategist in New York at Barclays Capital Inc., one of 18 primary dealers that trade with the Fed. “It’s important for the Fed to make sure the market is aware that the tools they do have work, even if they’re not ready to use them yet.”

More…

What Assets Dubai Could Be Forced To Sell

Dubai will attempt to reassure markets and investors on Monday on how it plans to restructure its beleaguered conglomerate Dubai World. It could lead to a fire sale of prize assets. Following are details of key assets and high-profile holdings.

DUBAI WORLD ASSETS
Reuters – Published: 9:00AM GMT 30 Nov 2009

One of the world’s largest port operators is arguably the crown jewel in its trophy cabinet. Its 2007 IPO, the regions largest to date, raised almost $5bn, but its share price has fallen by more than two thirds of its original value. The firm went to reassure investors on November 26 it was not part of Dubai World’s restructuring. Dubai World was in talks with a private equity firm to sell a stake in the port operator.

STANDARD CHARTERED
Istithmar bought a 2.7pc stake worth about $1bn in October, 2006. The bank signaled on Friday its exposure to Dubai World would not be material.

MGM MIRAGE
In 2007, Dubai World invested about $5bn in casino operator MGM Mirage by buying shares and half of an $8.5bn Las Vegas project. Dubai World last year sued MGM Mirage as credit dried up and CityCenter flirted with bankruptcy. The project has been plagued by construction problems.

BARNEYS
Istithmar World bought US luxury retail chain Barneys for $942m in 2007. Barneys hired restructuring advisory firm Perella Weinberg in August to help it mull options that would shore up its financial position.

More…

Jim Sinclair’s Commentary

Please do not listen to the "top callers" or those that would have you trade in your gold insurance. Neither are correct.

It can look good for the short term but the risk of not being there on the day and time of need is extremely high. This is why Alf refuses to give various potential reaction levels. None are tops and this time when gold is called upon it will rocket up and remain high.

Thirty financial groups on systemic risk list
By Patrick Jenkins and Paul J Davies in London
Published: November 29 2009 23:30 | Last updated: November 30 2009 08:17
Thirty global financial institutions make up a list that regulators are earmarking for cross-border supervision exercises, the Financial Times has learnt.

The list has been drawn up by regulators under the auspices of the Financial Stability Board, in an effort to pre-empt systemic risks from spreading around the world in any future financial crisis.

Insurers are considered systemically important for a variety of reasons: they might, for example, have a large lending arm, such as Aviva, or a complex financial engineering business, akin to that of Swiss Re.

Supervision spotlight
   Banks
   US
   Bank of America Merrill Lynch
   Citigroup
   Goldman Sachs
   JPMorgan Chase
   Morgan Stanley
   Canada
   Royal Bank of Canada
   UK groups
   Barclays
   HSBC

More…

Jim Sinclair’s Commentary

The most important thing to take into consideration is that the Central Bank of the UAE has reacted to this problem by using the blueprint of how the USA and Euroland reacted to the credit lock up. That is by adding liquidity without limit.

This is your guarantee of future problems with Western financial entities and those that imitated the USA. Also note the admission that the G20 got involved in this situation as we knew they had to.

The financial problems are not over. they have been contained by unprecedented injections of monetary liquidity and a barrage of unending MOPE.

Video Dispatch: Wake Up Call on Dubai’s Dream
November 30, 2009 | 2357 GMT

Abu Dhabi has come to the rescue of its neighbor, heading off banks caught in Dubai World’s multi-billion dollar deferral of debt payments. Colin Chapman says the default made big headlines over a holiday weekend, but has been contained. The future of the ‘magic kingdom’ has, however, taken a knock.

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