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Thoughts for Today:
1. Do you know what the practice of Federal Reserve repos are all about? The Fed wants to repo the toxic paper they absorbed from all over. The stuff cannot be valued because each item of the securitized vehicle has independent criteria. The OTC derivative nature of the entire pile of crap the Fed owns is impossible to assign value to and therefore impossible to quantify the losses on. The Federal Reserve would rather take in cash, put out garbage and guarantee the garbage to improve their balance sheet.
When will people learn? You cannot fool the big money, you can only fool the fools.
2. Foreclosures have made up no less than 1/3 of housing sales in 2009. Now Alt A and commercials are rolling over hard.
3. F-TV is offering a new book that blames the problems of the financial industry on Main Street. It offers a nonsensical thesis that Wall Street is the victim and Main Street is the criminal. That would fit in well with the banksters doing the work of god
4. I have received back the first run on a book that I and another wrote concerning what we feel is the consummate argument for gold. This book shows you a very powerful means of supporting gold without having to spend anything, risk anything, yet accomplish much. I will post more word on this when I know the timing of the first print run.
Jim Sinclair’s Commentary
Remember the yearend dollar party as we headed into the New Year?
Gold Extends Biggest Advance in Two Months as Dollar Declines
By Nicholas Larkin and Kim Kyoungwha
Jan. 5 (Bloomberg) — Gold rose in New York, extending its biggest gain in two months, as a weaker dollar boosted the metal?s appeal as an alternative investment. Platinum and palladium reached the highest prices in at least 16 months.
The U.S. Dollar Index, a six-currency gauge of the greenback?s value, fell as much as 0.6 percent today to a two- week low. The Reuters/Jefferies CRB Index of raw materials rose, extending yesterday?s 2.1 percent climb. Bullion futures yesterday gained 2 percent, the most since Nov. 3, and added 24 percent in 2009 as investors hedged against a declining dollar.
?The weaker dollar and broad commodity gains should continue to push gold higher in coming sessions,? James Moore, an analyst at London-based TheBullionDesk.com, said in a report. ?The market should continue to be underpinned by investment and physical dip-buying.?
Bullion futures for February delivery climbed as much as $11.30, or 1 percent, to $1,129.60 an ounce on the New York Mercantile Exchange?s Comex unit, the highest price since Dec. 17. The metal was at $1,122.90 at 8:34 a.m. local time. Gold for immediate delivery in London advanced 0.1 percent to $1,122.80.
The metal increased to $1,125.25 an ounce in the morning ?fixing? in London, used by some mining companies to sell production, from $1,121.50 at yesterday?s afternoon fixing.
Jim Sinclair’s Commentary
Another Government says STUFF IT on OTC derivative losses.
Icelandic president angers Britain, Dutch over bank bill
REYKJAVIK (AFP) – Iceland’s president on Tuesday refused to sign an unpopular bill to compensate Britain and the Netherlands over the failure of Icesave bank, triggering anger in London and The Hague.
President Olafur Ragnar Grimsson said in a televised speech that he would put the bill to a referendum instead.
"I have decided, according to Article 26 of the Constitution, to refer this new Act to the people," he said. "The involvement of the whole nation in the final decision is therefore the prerequisite for a successful solution, reconciliation and recovery."
In a swift response Britain insisted that the compensation deal must go through, while The Netherlands said it was "unacceptable".
Fitch Ratings immediately downgraded Iceland’s long-term debt rating from BBB- to BB+, citing a "renewed wave of domestic political, economic and financial uncertainty".
The agency said the president’s decision "represents a significant setback to Iceland’s efforts to restore normal financial relations with the rest of the world".
Jim Sinclair’s Commentary
One of the books I wrote was "The Strategic Metals War."
It is obvious who has won.
Concern as China clamps down on rare earth exports
Neodymium is one of 17 metals crucial to green technology. There’s only one snag – China produces 97% of the world’s supply. And they’re not selling
By Cahal Milmo
Saturday, 2 January 2010
Britain and other Western countries risk running out of supplies of certain highly sought-after rare metals that are vital to a host of green technologies, amid growing evidence that China, which has a monopoly on global production, is set to choke off exports of valuable compounds.
Failure to secure alternative long-term sources of rare earth elements (REEs) would affect the manufacturing and development of low-carbon technology, which relies on the unique properties of the 17 metals to mass-produce eco-friendly innovations such as wind turbines and low-energy lightbulbs.
China, whose mines account for 97 per cent of global supplies, is trying to ensure that all raw REE materials are processed within its borders. During the past seven years it has reduced by 40 per cent the amount of rare earths available for export.
Industry sources have told The Independent that China could halt shipments of at least two metals as early as next year, and that by 2012 it is likely to be producing only enough REE ore to satisfy its own booming domestic demand, creating a potential crisis as Western countries rush to find alternative supplies, and companies open new mines in locations from South Africa to Greenland to satisfy international demand.
Amid claims that Beijing is using its rare earths monopoly as a tool of foreign policy, the British Department of Business, Industry and Skills said it was "monitoring" the supply of REEs to ensure China was observing international trade rules.
Jim Sinclair’s Commentary
MOPE spins the story but the imports are the real stuff.
India 2009 gold imports 300-350 T – trade body
Mon Jan 4, 2010 8:23am EST
NEW DELHI, Jan 4 (Reuters) – India imported 300-350 tonnes of gold in 2009, higher that the previous estimate of a little over 200 tonnes, the head of the Bombay Bullion Association said on Monday.
Suresh Hundia said the trade body had also revised its estimate of imports in 2008 to 439 tonnes from 420 tonnes.
"Figures of export houses had to be revised … Data for eight months had to be revised," he said.
Hundia said the estimate changed significantly because data from several large trading houses, which were allowed to import gold in early 2009, was not available earlier.
Jim Sinclair’s Commentary
Regardless of MOPE, be assured this is NOT a dress rehearsal.
The dollar rally is an illusion. Gold will trade at $1650 and higher.
U.S. Treasuries Post Worst Performance Among Sovereign Markets
By Daniel Kruger
Jan. 1 (Bloomberg) — Treasuries were the worst performing sovereign debt market in 2009 as the U.S. sold $2.1 trillion of notes and bonds to fund extraordinary efforts to bolster the economy and financial markets.
Investors in U.S. debt lost 3.5 percent on average through Dec. 30, according to Bank of America Merrill Lynch indexes, the biggest annual slide since at least 1978. The 10-year Treasury yield reached its highest level in six months yesterday before a Labor Department report next week forecast to show payrolls were unchanged in December after the U.S. economy lost jobs in every month since January 2008.
“The financial system has survived,” said Ray Remy, head of fixed income in New York at Daiwa Securities America Inc., one of 18 primary dealers that trade directly with the Federal Reserve. “Now the market has to deal with other issues like deficit spending, tremendous issuance, the weakness in the dollar. How significant is this recovery, and what happens when you take away some of the government stimulus.”
The yield on the benchmark 10-year note climbed to 3.84 percent from 2.21 percent at the end of 2008, according to BGCantor Market Data. The yield touched 3.91 percent yesterday, the highest level since June 11.
Two-year note yields rose to 1.14 percent from 0.76 percent.
Jim Sinclair’s Commentary
QE to infinity, guaranteed.
Fed may re-enter MBS market later in 2010 – Market News
Tue Jan 5, 2010 12:05pm EST
NEW YORK, Jan 5 (Reuters) – The Federal Reserve is discussing re-entering the mortgage-backed securities market later this year if its buying power is needed to hold down interest rates, Market News said on Tuesday in a story citing Fed officials.
The $5 trillion agency mortgage-backed securities market may weaken when last year’s biggest buyer, the Federal Reserve, ends its $1.25 trillion agency MBS purchasing program at the end of the first quarter of 2010.
Fed officials, however, "are prepared to contemplate changes if need be, depending on conditions in the economy, housing finance and in financial markets more broadly," Market News said in a story written by Steven Beckner.
"Among the options that has been discussed, say people in a position to know, is doing additional MBS purchases."
The Fed’s program has helped keep 30-year mortgage rates near record lows, attracting buyers to the housing market as it struggles to exit its worst slump in decades.
