We are in a storm of verbal intervention where the US dollar is concerned. Everything from statements that cannot be based on data such as the US dollar is "the mother of all carry trades," to the warnings to the East by Western Central banks not to apply currency controls as they are ineffective, to the Maginot Line drawn in the sand in the Euro at $1.50, are all structured to slow down the decline of the US dollar at a critical point in its descent.

On the other side of the coin the fundamentals for the dollar are not supportive.

All the moves towards currency diversification by central banks remain in place. Many central banks and Vietnam by increasing its importing of gold are following in the footsteps of India and China.

There is no question that there are governmental stops in the price of gold. If you read Armstrong’s conviction last evening, you know about the effects of imports and the ongoing long-term problems in the housing market and financial sectors that render no fundamental support for the dollar.

As the dollar makes it’s way below key levels already outlined to you and gold moves toward $1650 and beyond, there will be times like now where the advice of top callers seems rational, but is not.

I do not address my comments to those seeking a tip sheet or who are traders. I see that as contra-productive in the gold field now.

Understanding what is happening in complex currency trades, the impact of imports/export, and the financial industry that is now able to mark up toxic paper at will is not easy.

We have traveled together from $248 to the present level.

Those who have been here from the beginning will recall that when gold passed $529.40 it entered into a runaway and trading was suggested only for professionals.

I would like to reiterate that it is only going to get harder between here and $1650 and after on the way to Alf and Armstrong’s numbers. Swings can be hundreds of dollars from high to low in single days.

Look at this as insurance unavailable anywhere else.

Treat gold like the insurance policy it is with your gold and gold related item cost being the cost of the arrangement.

Ask yourself if you are succumbing to a top caller if you really want to be long dollars for any appreciable period of time.

Do not be run ragged by algorithm and hedge fund trading. Carry markets can be extremely violent.

Look at CIT and Middle America. Look at unemployment, and do not succumb to the new normal in a depraved economic world.

Have courage because you are going to need more than you already have called upon.

I am here for you to the absolute ability of one man communicating. Speculate if you must, but don’t call me when you hit the fan.

For those that understand the insurance character of gold, stand strong and stay the course.

Respectfully yours,
Jim

We are quickly running out of both Compendium sets, and once they are gone that is it! If you have been waiting for the right time to pick one up now is your chance! All Compendium orders placed by the end of the month will arrive in time for the holidays, so why not pick one up as a gift for someone you care about? You will continue to support the site here while giving one of the largest compilations of information and market insight available for purchase anywhere!

Dear Readers,

Hundreds of phone calls and thousands of emails from readers are overwhelming. We all work tirelessly to keep bringing you the most up to date news that affects the Gold market.

Almost every question we receive has been answered repeatedly here on JSMineset and can be found on the Compendium.

If you take value from this site, purchase a Compendium. You are getting a lot for your money and will keep us from becoming a paid subscription only site.

To those of you who have supported us, we thank you!

Regards,
Jim

**ANY COMPENDIUM PURCHASE WILL ALSO GET YOU THE LINK TO JIM’S 3 HOUR CIGA MEETING IN TORONTO FROM FEBRUARY 2009 – Email jsmineset@gmail.com if you have not received the link**

**PLEASE NOTE YOU DO NOT NEED A PAYPAL ACCOUNT TO PURCHASE ANY OF THE COMPENDIUM SETS. COMPENDIUMS SHOULD ARRIVE WITHIN 4-6 WEEKS DEPENDING ON YOUR LOCATION**

What you will receive with each set:

Compendium Version 1 ($50 USD): (VERY FEW LEFT!!!)

Compendium Version 1 includes all articles posted from the inception of JSMineset in 2002 to December 2005. It comes packaged as a searchable PDF database and includes several thousand articles on Gold and financial markets. As a bonus, a separate Technical Analysis video disc by Jim Sinclair is included in the package. This video is viewable on a computer only and is both PC and Mac compatible.

Compendium Version 2 ($80 USD):

Compendium Version 2 includes all articles posted from December 2005 to the end of October 2008. All articles are categorized and presented in HTML format and are PC and Mac compatible. Several thousand articles are again included in this archive disc which makes up literally thousands of pages of market commentary from Jim himself. Compendium Version 2 also includes an hour long DVD video commentary on financial markets by Jim Sinclair. This disc is playable in any DVD player and any computer that supports DVD playback.

Compendium Version 1 & 2 Package ($130 USD):

This package includes both compendium 1 & 2 which are shown above. As you have noticed by this point, JSMineset does not subsidize costs with garbage advertising nor do we ever promote products through our free eblast system. If you feel JSMineset has helped you over the years purchase Compendiums 1 and 2 and help keep us alive! For the price you pay the information you receive is unbeatable and you know it is going to a good cause.

All prices are in US dollars and include shipping and handling.

Thank you all for your continued support!

Dan Duval
JSMineset Editor

1. I would recommend that you review the paper by Martin Armstrong titled "How All Systems Can Collapse Overnight."

The US dollar has declined slowly and in an orderly manner. Loss of confidence internationally is building. All of sudden the orderly decline, like all bear markets, will become completely disorderly.

Gold will be up $75 and then gain another $75 in the US hours as shorts are taken out on a stretcher.

2. There is a floor in gold at $1045 where India purchased from the IMF. China is in to "saving face." and therefore more likely to buy the remaining IMF gold at $1044 than to step up in price.

Others knowing that would more than likely front run China again.

3. Now the community is back into top calling. Before you subscribe to this please review the market action of gold on its second move above $400 in 1979.

Be careful as gold is going to $1224-$1278, $1650 and then on to Alf numbers.

Ask yourself if you are a speculator or an insurance holder?

Yra Harris shares his genius with us. I consider his summation all you need to know to be right up to the minute of what is real out there. All else is prattle, blather, and simple nonsense.

It is all here.

Dear CIGAS,

Not only can Geithner speak Mandarin and Japanese, but he can also evidently moonwalk as well as Michael Jackson.

It seemed on Thursday that Geithner was trumpeting the insertion of the phrase “market oriented exchange rates that reflect underlying economic fundamentals.”

Unfortunately for the Treasury Secretary, the Chinese had not let this desired phrase to be signed onto. Hu Jintao the Chinese president would not allow it to be entered into the final memorandum.

This was yet another slap at Geithner which will force him to do more back stepping than the late Michael Jackson. Not only did the US fail to get a discussion about currency floatation, but the USA was widely criticized for inflating asset bubbles with their low interest rate policies. The US was then hammered on the lack of a free trade policy. Even Mexico jumped on the US for its incipient protectionism.

This was not a successful meeting for the US and we can only hope that Obama comes off better on his trips to China and South Korea.

President Obama’s speech in Japan was met with general acceptance and deemed to be constructive for US – Japanese relations.

The Korea/US free trade agreement still hangs in the balance as Congressional Democrats prevent its passage. This is causing more embarrassment for the President on his Asian tour.

Geithner and company have to do less posturing and more negotiating if the US is to be seen as a leader on global economic issues.

Up to this moment this presidential trip has not gone well, and we believe it will bode ill for the dollar.

Until the Fed starts removing the stimulus, the US will continually be viewed as a serial bubble blower.

There was a story on Bloomberg today suggesting that the Treasury was going to push for TARP to be extended, so we have even more evidence of the administration’s dedication to continual use of the liquidity pump.

There is simply no desire to reign in liquidity and when Obama arrives home he has promised a full-blown White House conference on job creation.

We see continued dollar weakness and further curve steepening.

More importantly is that U.S. leadership is seen as deteriorating as they fail to take the lead on free trade.

The equity markets will like the continued effects of the global carry trade still maintaining its robustness.

We commented in Friday’s piece about some of the reversal action we saw on Thursday and noted how the gold and Aussie dollar reversed off highs and wanted to see if the reversal action was sustained. Friday we received our answer and it was unequivocally a one day event as the Aussie especially rallied on Friday, going out on its high. Gold also turned and rallied most of the day, also going out on its high.

We cannot stress enough that economic models are inherently flawed as a trading indicator because they fail to take into account the market ramifications of political missteps. That is why we continue to iterate that 2+2=5 is also a beautiful thing and why we give greater credence to the analysis directed by political economy.

The impact of the global recession is met by domestic policies and as long as this holds true all the G20 meetings and APEC take a back seat to the needs of the political nation-state.

Congress will do what it needs to do to ensure its re-election. China will do what it needs to do to make work for the millions displaced from its rural economy. This thought process will continue to drive our trading views, of course relying on the technicals to spot breakouts both up and down as the soundest technique of risk management.

We also look to what we have referred to as negative divergence, which is when markets react contrary to the fundamentals of the market.

We saw this by the close of Friday when the long end of the debt markets rallied even with the dollar weak and the carry trade back in full force.

This catches our attention, as we know the underlying fundamentals of the DEBT markets are terrible as the continuing abundant supply weighs heavily.

We will be attentive to checking resistance levels to see where the strength ought to ebb but with retail sales and the empire state report out today we hope to get a good test of resistance.

We know that the long end of the DEBT market is viewing deflation as a greater threat but at some point that will have to turn against itself as the Fed and Treasury begin to panic.

That is what gold and the dollar has been anticipating.

We look for the debt market to eventually paint a similar story, especially when its major creditors have so derisively received the U.S.

Yra

Please check out the following interview I did with Eric King of www.KingWorldNews.com.  He has been kind enough to host the interview on his website so all of you have the opportunity to listen to it.

Click here to listen to the interview…

Aussie unemployment numbers just came out and were much better than expected!

DEBT,DEBT,DEBT for that theme was alive and well in the world today.

Hirohisa Fujii the finance minister of Japan was raising concerns about the recent sell off in JGBs as the rates on ten year Japanese debt have risen 20 basis points over the last 2 weeks. There is growing concern that Japan will have trouble financing their growing national debt that is now over 200% of GDP. This is not a new story but one that has been kicked around for several years and seems to be gaining adherents in the world because of all the other government debt that has been floated since the global recession has deepened. We will pass this off as a concern of crowding out – as the low yields on JGBs cause them to be replaced by other sovereign debt.

Yesterday that great luminary of credit analysis, FITCH, raised a warning about British gilts being downgraded from AAA which caused the sterling to be sold off.

We will note that this that warning the gilts have been up for 2 days so something else must be bothering the pound, like resistance, so we send you to the charts to see if the sterling can hold support.

The Greek government has also come under attack for budgetary malfeasance but that is a problem for the European Union so its impact is diluted. But if these DEBT concerns rattle the Japanese and the BRITS, what about the U.S. budgetary morass? Anybody want to buy 30 year treasuries? And the talking heads proclaim that GOLD is devoid of reality.

We also remind those who are quick to criticize the Japanese that 95% of JGB’s are held domestically while the holdings of U.S. debt are global. We are back to good old John Connelly – it is our dollar but your problem but with Mr.Obama in Japan and China next week we will see for how long this tired old phrase holds.

There was an interesting story out on Tuesday that the Chinese Investment Corp [CIC] has agreed to purchase a 15% stake in the large U.S. energy company AES. The agreement also includes the buying 35% of the firm’s wind power unit for another $570 million for a total investment of 2.1 billion dollars. This may not be deemed a significant amount of money but its importance lies in the concept that the Chinese are testing the Americans to see if they will block this deal under the auspices of CIFIUS.

Remember the last few times the Chinese have attempted to buy into U.S. assets they were rebuffed under the guise of strategic value to the U.S. With Obama in China pressing for possible appreciation of the Renminbi? The trade off may well be allowing the Chinese to purchase high technologically valued assets in the U.S. If the CIFIUS committee were to block this deal, we won’t know for a while, look for great friction to develop between the U.S. and China

Also out of Asia, tonight the Taiwan central bank announced that they are banning foreigners from putting money in bank time deposits. This is a new type of effort to place constraints on capital flows like the Brazilian 2% tax announced last week. We must stay alert to more of these actions as emerging markets attempt to halt the rapid appreciation of their currencies. The impact on the Brazilian REAL has been negligible but we can look for continued efforts to do so. If this becomes contagious the equity markets will be the recipient of that pain.

From the realm of the absurd we have our man Timmy Geithner in Japan reiterating his strong dollar mantra. Do they ever tire of looking like idiots on the world stage? The last time Geithner was in China college students openly laughed at him in a Q and A session he was having and that was in June.

What exactly has the Secretary of Treasury done to put any bite in that statement? We want to report that the Rick Mishkin piece in the FT elicited a couple letters to the editors that followed upon our criticism. One was written by an economist we admire greatly, Andrew Smithers, who noted that of course you can discern a bubble. Smithers has done a great deal of work on valuing Wall Street by using Tobin’s Q theory so when he is critical you should take notice. There are no good bubble periods for they only create pain further out in time as we saw with the bursting of the Dot.com bubble. The Fed held rates far too low for too long and created the housing bubble. Enough said. And then his eminence Sir Alan followed Mishkin with a speech in which he discussed how the recent equity rally was smoothing the way for recovery. Oh the rehabilitation of Greenspan is a work in progress. Reminds one of Lin Piao.

Yra Harris

The currency intervention, both real and oral, is a waste of time as the euro will trade well above the $1.50 level. This is not because it is worth it but it is another inverse to the US dollar which is headed considerably lower.

The mistake that governments always makes in its assumed omnipotence is that intervention, certainly at a key number like $1.50, is that when the market realizes it is over moving momentum goes ballistic on the upside. That renders all the talk, skewed figures and wasted intervention money as not only useless but contra-productive.

In a floating system governments should know they cannot not enforce currency parity rates.

Parity rates are fixed currency highs and lows from the Bretton Woods days.

All talking heads on this subject were gleams in the eyes of their parents back then, not even in diapers, but do claim expertise.

I have to tell you the story of how I came to the name of those early CIGAs who earned a degree here at JSMineset. This group, known as Comets, received a gold pin to acknowledge their accomplishment.

I had a hobby of keeping fish. My favorite was my Arawanus which is considered in Asia to be the best of good fortune.

An Arawanus looks like a World War II landing craft as it swims with its large mouth open wide for opportunistic dining. The rather gross thing is that you have to buy Comets for The Arawanus to eat.

Well one day I bought the usual 20 Comets for the Arawanus’ dinner. These Comets actually organized and attacked the Arawanus all together at the same time. They ate all the fins off the Arawanus, making it a cucumber floating straight up and sentencing it to death.

I was so proud of the Comets that I grew them in my tank, transferring them to a 90,000 gallon outdoor pond where they live happily with their offspring today.

The message was that if we all work together as a team we can overcome any and all obstacles, even an Arawanus. If we let the shorts scatter us then all is lost.

It is up to us.

Back in the old days when charts were kept in caves and we wore animal skins going to Wall Street, aka my time, the type of a formation in gold is exactly like a step ladder known then to us as a Swiss Stair.

It was rare and had to have a perfect measure.

What it meant then was that the secret Swiss had inside information on something and were accumulating, as only they could, like a finely oiled machine. It only occurred is situations that were going to amazing heights.

It was a certain situation when it was a Swiss Stair at new highs. It was a certain situation when it was a Swiss Stair over a few months at the least.

I have seen stocks go from under $10 to over $200 as a result of properly constructed Swiss Stairs.

Gold never has inside news. Gold is what it is. Inside might be living with gold for half of a century to know what it means.

This now makes $1650 look much too conservative.

What have you been told about gold here by all of us that has not come to fruition?

Here is another tidbit. Goldman will make more money long on gold than any other entity.

I have spent this afternoon attempting to formulate an article on the junior gold shares with something new to tell you.

This has not proven easy.

It might be because I have given so much of myself to a project where I have had to fight my way past those who punish builders and reward destruction. Fight past those who would provide funding but destroy the project for a profit. It might be because some investors find it easy to blame management rather than try to understand what has really happened and what the opportunities are.

There are legitimate people, legitimate companies, and legitimate accomplishments that due to organized market operations have been swept under a rug.

Some stockholders blame the management or blame their brokers, but haven’t focused on the bullies that have brought this about.

What the bullies themselves have lost sight of is that many of these situation have real and significant value that is about to be recognized by new investors.

Those that have stayed with their selected issues have had plenty of time to come to know the company and its potential. They are committed or they would not be there.

Now that gold has significantly breached $1000 it is becoming an investment vehicle for an entire new class of investor.

These new investors are looking for and will recognize the value of the assets that are underlying the juniors and are unavailable in any other category of gold investment.

Concepts such as each 100,000 on ground ounces economically has the same value as 1,000,000 underground ounces when you consider the cost of mining. 1,000,000 surface mineable ounces can have a market value of one billion dollars less the cost of mining which is definitively the lowest in the best of circumstances.

Those juniors with mineable underground deposits not yet in development are free of the short of gold derivatives that are still a lead weight on the profitability of a producing entity – almost every producing entity.

When properly selected, the junior mining sector offers the best value in gold available.

Old fashioned financial means of growing a mineral prospect still can be undertaken by a junior, but a committed producer has the short of gold derivative with no way out.

These facts have been lost to manipulators mired in their assumed victory, and to stockholders.

Where the facts are not lost is among those seeking bargains that are free of short of gold derivatives existing only in the most depressed yet qualified juniors. It is these new and stronger investors that will turn the tide for the juniors as the legitimate financing window is now opening for the more qualified among the still walking but wounded junior gold situations.

27 years ago in an Alaskan sunset above the Arctic Circle in the Fall of 82, I witnessed a great bull moose in a nearby tundra pond. The picture was so profound and powerful that it has become the symbol of my life. To remind me, I have a bronze wind vane in the form of a bull moose over my office. When push comes to shove I lower my head and move straight ahead. As long as I draw a breath it is my code to plow forward regardless of any opposition. That is determination based in knowledge.

Respectfully yours,
Jim

Click here to view the JSMineset memo on the 6 categories of gold shares.