Jim Sinclair’s Commentary

The score for this Friday is 4 broken banks so far at 8 PM this evening.

Bank Closing Information – November 6, 2009
These links contain useful information for the customers and vendors of these closed banks.

Gateway Bank of St. Louis, St. Louis, MO
Prosperan Bank, Oakdale, MN
Home Federal Savings Bank, Detroit, MI
United Security Bank, Sparta, GA

http://www.fdic.gov/

Jim Sinclair’s Commentary

You can’t play both sides.

Turkey’s final decision will not be in the interest of the EU.

Sudan leader’s planned visit sparks Turkey-EU row
Fri Nov 6, 2009 8:48am EST

ANKARA (Reuters) – Turkey’s President Abdullah Gul accused the European Union on Friday of "interfering" after the bloc asked Ankara to reconsider a decision to invite indicted Sudanese President Omar Hassan al-Bashir to an Islamic summit.

The exchange underscores the risk for EU candidate Turkey that Bashir’s plans to attend Monday’s summit in Istanbul of the Organization of the Islamic Conference (OIC), in defiance of an warrant from the International Criminal Court (ICC), could escalate into a diplomatic crisis with Brussels.

Muslim Turkey has not ratified the 2002 Rome Statute that established the ICC, but it is under pressure to do so to bring it closer to EU standards.

Turkey, which has deepened commercial and energy ties with Sudan, has announced it has no plans to arrest Bashir, who was indicted by the ICC in March for crimes against humanity and war crimes in Sudan’s Darfur region.

In a diplomatic note seen by Reuters, Brussels asked Turkey to reconsider its invitation to Bashir to attend the OIC summit.

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Jim Sinclair’s Commentary

Huffington does not think much of the new legislation on OTC derivatives, nor does anyone that really understands these weapons of mass financial destruction.

New Bill Would Keep Public In The Dark About Threats To Financial System
First Posted: 11- 6-09 01:45 PM | Updated: 11- 6-09 05:02 PM

Members of Congress and the general public may not be told of "potential emerging threats to the stability of the financial system," thanks to a Thursday vote by a House panel shepherding the bill that’s supposed to end "too big to fail."

An amendment offered by Rep. Gregory Meeks (D-N.Y.) and unanimously approved by a voice vote in the House Financial Services Committee specifically deletes a provision in the Financial Stability Improvement Act of 2009.

The two draft versions of the bill originally called for the proposed overseer of threats to the entire financial system to prepare an annual report to Congress describing, among other things, "significant financial market developments and potential emerging threats to the stability of the financial system."

But on Thursday, Meeks’ amendment deleted that language and instead compels the council to describe:

"Significant financial and regulatory developments, including insurance and accounting regulations and standards, and assesses the impact of those developments on the stability of the financial system."

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Jim Sinclair’s Commentary

Who knows, maybe this unmitigated gall, as Dr. Bob calls it, will cure our Wall Street problem. Let’s hope so.

Jim Sinclair’s Commentary

Actually it is not so subtle.

Central banks lead subtle shift away from dollar
Tue Nov 3, 2009 4:31pm EST
By Steven C. Johnson – Analysis

NEW YORK (Reuters) – Central banks with trillions of dollars in reserves that are already stepping up euro and yen purchases will likely continue doing so in coming years, driven by worries over the stability of the greenback.

A record U.S. budget gap and the rise of dynamic developing economies like China suggest the dollar, down over 20 percent since 2002 on a trade-weighted basis, has further to fall.

Of course, the dollar comprises some two-thirds of global reserves and will remain dominant in most holdings, as attempts to dump it would destroy the value of central bank portfolios.

But with the speed of reserve accumulation increasing after a crisis-induced lull late last year, policy makers can choose to park more new cash in euros and yen without having to sell existing dollar assets.

"I think 2009 will be remembered as a watershed moment for currencies," said Neil Mellor, strategist at BNY Mellon, which has some $20 trillion in assets under custody. "I don’t think there will be an imminent move, but it is quite clear there’s a plan to shift reserves to a more balanced portfolio."

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Jim Sinclair’s Commentary

This move by the Saudis was as much to break a building bear price manipulation as it is a move away from the US dollar.

Venezuela Reviews Oil Pricing Change
By DAN MOLINSKI and BRIAN BASKIN

PORLAMAR, Venezuela — Venezuela’s oil minister applauded Saudi Arabia’s decision to move away from West Texas Intermediate crude benchmark pricing for oil sold in the U.S., and said his country may do something similar.

"We support (Saudi Arabia) in its decision … a very important decision," Rafael Ramirez said on the sidelines of an oil conference.

Argus Media said last week that Saudi Aramco, the state-owned oil company, would in January switch to using its Argus Sour Crude Index as a pricing benchmark for oil sold in the U.S., instead of West Texas Intermediate. The abandonment of WTI, the longtime standard, for Argus’s five-month-old index by the world’s biggest oil exporter instantly sparked speculation that other major producers would follow.

Asked whether Venezuela may adopt the Argus pricing as well, Mr. Ramirez said, "I don’t have information right now, but let’s just say we are actively reviewing it."

Venezuela was the third-biggest exporter of oil to the U.S. in August, sending one million barrels a day, according to the U.S. Energy Information Administration. Saudi Arabia was fifth, sending 745,000 barrels a day. Combined, the two countries supplied about 9% of U.S. oil demand that month.

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Dear Readers,

Calls are overwhelming me today. Sometimes four at a time are coming in as people call all my numbers.

My cell phones are dancing across my desk with vibrate on high.

Everything you need to know is here. Please understand if I am driven nuts I cannot be that good to you.

Respectfully,
Jim

Jim Sinclair’s Commentary

Here is your by subscription handle on data reality.

- Annual Payroll Loss Rivals End of World War II Production Shutdown
- Unemployment Jumps to 10.2% (22.1% SGS)
- Systemic Liquidity Problems Still Intensifying
- Fed Continues to Explode Monetary Base

No. 256: Updated General Outlook, Employment/Unemployment, Money Supply"
http://www.shadowstats.com

Jim Sinclair’s Commentary

Keep this headline at hand as Market Watch will need it as gold trades at $1224, $1650 and on to Alf’s numbers.

Gold taps new record as U.S. joblessness hits 10%
Nov. 6, 2009, 11:36 a.m. EST
By Nick Godt, MarketWatch

NEW YORK (MarketWatch) — Gold futures barreled to a new record high above $1,100 an ounce on Friday, as news that the U.S. unemployment rate topped 10.2% in October boosted expectations the Federal Reserve will keep interest rates near zero well into next year, pressuring the dollar.

Gold for December delivery, the most active futures contract, rose as high as $1,100.50 an ounce on the New York Mercantile Exchange. It gained up to $1,101.90 an ounce in electronic trade. It recently gained $5.20, or 0.5%, to $1,094.50 an ounce.

Industrial metals, such as copper, however, moved lower. Copper, sometimes called "the metal with a Phd in economics," fell 1 cent, or 0.4%, to $2.94 a pound.

"With unemployment at 10%, the implications for Fed policy is that they have their hands tied and cannot defend the dollar," said Joe Foster, manager of the Van Eck International Investors Gold Fund.

"We’re going to see lots of new records going forward," he said. "By year end, it wouldn’t surprise me to [see gold] test $1,200 and then $1,300 by early next year before we see some consolidation."

The U.S. economy shed 190,000 jobs last month, lifting the unemployment rate above the 10% mark for the first time in 26 years, the Labor Department said. The report also revised statistics for September and August.

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Jim Sinclair’s Commentary

Even though people remain blissfully ignorant, the Iran/Turkey/Pakistan/Israel situation has the potential of changing the form of geopolitics for your lifetime.

Iran tested advanced nuclear warhead design – secret report
Exclusive: Watchdog fears Tehran has key component to put bombs in missiles
guardian.co.uk, Thursday 5 November 2009 20.45 GMT

The UN’s nuclear watchdog has asked Iran to explain evidence suggesting that Iranian scientists have experimented with an advanced nuclear warhead design, the Guardian has learned.

The very existence of the technology, known as a "two-point implosion" device, is officially secret in both the US and Britain, but according to previously unpublished documentation in a dossier compiled by the International Atomic Energy Agency (IAEA), Iranian scientists may have tested high-explosive components of the design. The development was today described by nuclear experts as "breathtaking" and has added urgency to the effort to find a diplomatic solution to the Iranian nuclear crisis.

The sophisticated technology, once mastered, allows for the production of smaller and simpler warheads than older models. It reduces the diameter of a warhead and makes it easier to put a nuclear warhead on a missile.

Documentation referring to experiments testing a two-point detonation design are part of the evidence of nuclear weaponisation gathered by the IAEA and presented to Iran for its response.

The dossier, titled "Possible Military Dimensions of Iran’s Nuclear Program", is drawn in part from reports submitted to it by western intelligence agencies.

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Jim Sinclair’s Commentary

Yeah sure, now find the real one.

About that advanced nuclear warhead tech, no problem if you like to glow in the dark.

ElBaradei: Inspectors found nothing worrying in Iran
Thu, 05 Nov 2009 22:18:41 GMT

The International Atomic Energy Agency (IAEA) chief says that UN inspectors have found "nothing to be worried about" in Iran’s latest nuclear facility.

"The idea was to use it as a bunker under the mountain to protect things," Mohamed ElBaradei told the Thursday print of the New York Times, pointing to Iran’s Fordo nuclear facility, some 160 kilometers southwest of Tehran.

"It’s a hole in a mountain," the IAEA chief said.

Nuclear inspectors had visited the newly constructed nuclear facility in October.

The IAEA is expected to declare details of the inspection in its next report due in mid-November.

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Jim Sinclair’s Commentary

India is always preparing for war with Pakistan, but China as well?

India is preparing for possible war with China and Pakistan
October 31, 8:25 PM
Sahit Muja

Tensions have flared between both China and India militaries along their disputed 2,175 mile-long border, with both sides alleging more frequent troop incursions in recent weeks. China is upset when the Indian prime minister recently visit the disputed region. China considers an Indian-occupied piece of it’s own Tibetan Autonomous Region, has added flames to the fire.

China of course already deeply resents the fact that the top Tibetan leader, and several hundred thousand exiled Tibetans, are allowed to reside in India.

India’s Maoist rebels are now present in 20 states and have evolved into a potent and lethal insurgency. In the last four years, the Maoists have killed more than 900 Indian security officers. Indian leaders are now preparing to deploy nearly 70,000 paramilitary officers to hunt down the guerrillas.The Maoists, however, do not want to secede or be absorbed. Their goal is to topple the system.

India’s rapid economic growth has made it an emerging global power but also deepened stark inequalities in society. Maoists accuse the government of trying to push tribal groups off their land to gain access to raw materials and have sabotaged roads, bridges and even an energy pipeline.

India is preparing the military for possible war with China and Pakistan. India and Russia have agreed two military pacts, including a 10-year deal on weapons, aircraft, and maintenance contracts potentially worth at least $5 billion, Indian defense officials said. India plans to spend $30 billion over the next five years to buy modern weapons systems and attack planes.

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Jim Sinclair’s Commentary

Most, if not all tier one and tier two gold shares are up to their respective asses in short of product derivatives as it was used to finance new production.

If not on the company books the short of product derivatives are hidden in the development/production loan indenture. All are subject to a contract agreement that acts exactly like a margin call even if not named a margin call.

Meanwhile China, devoid of any derivatives, continues to suck up world minerals.

Where is North America’s head at? Probably the same place as where they are up to in short of product derivatives.

This is not limited to gold and silver entities but also exists in base metals.

U.S. is losing control of the world’s natural wealth to China
October 25, 11:31 AM

China has an insatiable appetite for the world’s natural resources to sustain an economic boom that powers ahead despite the global downturn.

The quest for raw materials is the central goal of the country’s foreign policy. And virtually every natural resource imaginable is found just over the border.

Russian far East have large reserves of natural gas, oil, diamonds and gold, while millions of square miles of birch and pine provide supplies of timber.

All this amounts to an astonishing combination. A densely packed country trying to keep its economy roaring ahead by laying its hands on natural resources, living alongside a largely empty region with huge mineral wealth and fewer inhabitants every year.

Russia and China might operate a tactical alliance, but there is already tension between them over the Far East. Moscow is wary of large numbers of Chinese settlers moving into this region, bringing timber and mining companies in their wake.

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Jim Sinclair’s Commentary

Iraq had no WMDs, but they do have a lot of oil.

You think the US has any intentions of leaving Iraq’s oil supplies defenceless? Do you really believe Iraq will ever be strong enough to protect a SUPERGIANT oil deposit against Iran?

Maybe discovering oil in your country is NOT good news. It certainly wasn’t for the Nigerian people. It will not be for Sudan’s outback.

ExxonMobil-led consortium nets ’supergiant’ Iraq oil field
Group wins bid to develop west Qurna as baghdad signs up slew of big contracts
Friday, November 06, 2009
Ahmed Rasheed and Muhanad Mohammed

BAGHDAD: An ExxonMobil-led consortium has beaten rival Russian, French and Chinese groups to bag initial rights to develop Iraq’s West Qurna field, the Oil Ministry said, adding momentum to Iraq’s bid to unlock its oil riches. With reserves of 8.7 billion barrels, West Qurna is among the prized Iraqi fields eyed by Western oil majors as they face flat or lower output at home and stiff competition from Chinese and Indian oil companies in bidding for oilfields elsewhere.

“The consortium led by ExxonMobil, which includes Shell, won the contract to develop West Qurna Phase One oilfield,” Oil Ministry spokesman Asim Jihad said.

The initial deal was signed in Baghdad on Thursday but needs Cabinet approval before it can be finalized.

The 20-year contract is part of a raft of deals Iraq is close to formalizing in a bid to catapult itself to the world’s third largest oil producer after decades of war and economic decline.

There is no guarantee that Iraq’s next government – to be elected in January ­– will honor the deals, but it injects optimism into prospects for Iraq’s battered oil sector and a second oil bid-round in December, after a lacklustre June auction.

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Jim Sinclair’s Commentary

The best comment this morning on the unemployment and discouraged workers report was that it is a "Rear View Mirror report, a lagging figure."

The US dollar is NOT a safe haven no matter what F-TV tells you.

Jim Sinclair’s Commentary

Curtain QE and drain liquidity? Who are they kidding.

Unemployment in U.S. Jumps to 10.2%, Payrolls Fall (Update2)
By Timothy R. Homan

Nov. 6 (Bloomberg) — The unemployment rate in the U.S. soared to a 26-year high of 10.2 percent in October and employers cut more jobs than forecast, underscoring why Federal Reserve policy makers say interest rates will remain near zero.

Payrolls fell by 190,000 workers last month, compared with a 175,000 drop anticipated by the median forecast of economists surveyed by Bloomberg News, figures from the Labor Department showed today in Washington. The jobless rate gained from 9.8 percent in September and exceeded 10 percent for the first time since 1983.

Stock futures slid and Treasury notes gained on concern the emerging economic recovery will cool as American consumers retrench. Fed policy makers this week said the economy will probably “remain weak for a time” and reiterated a pledge to keep borrowing costs low for an “extended period.”

“The rise in the unemployment rate is very ugly,” Ethan Harris, chief U.S. economist at Bank of America Merrill Lynch, said in an interview with Bloomberg Television in New York. “This is a big backward step to get this high of an unemployment number this early in the recovery.”

Futures on the Standard & Poor’s 500 Stock Index fell 0.8 percent to 1,054.70 at 8:55 a.m. in New York. Treasuries rose, pushing the yield on the 10-year note down to 3.47 percent from 3.53 percent yesterday.

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Jim Sinclair’s Commentary

Note how none of these cases find their way to court. Now ask yourself, why?

It is not kick backs.

JPMorgan Ends SEC Alabama Swap Probe for $722 Million (Update2)
By Martin Z. Braun and William Selway

Nov. 4 (Bloomberg) — JPMorgan Chase & Co. agreed to a $722 million settlement with the U.S. Securities and Exchange Commission to end a probe into sales of derivatives that helped push Alabama’s most populous county to the brink of bankruptcy.

JPMorgan will give Jefferson County, Alabama, $50 million, pay a $25 million penalty and cancel $647 million in fees the county faced to unwind the transactions, according to an SEC news release. In addition, the agency charged two former JPMorgan employees for their roles in an “unlawful payment scheme” that allowed them to win bond and interest-rate swap business with the county.

The settlement comes a week after Larry Langford, the former president of the Jefferson County Commission and Birmingham mayor, was convicted for accepting $235,000 in designer clothes, Rolex watches and cash from an Alabama banker who JPMorgan paid almost $3 million to help arrange the swaps associated with a refinancing of the county’s sewer debt.

“It’s a good day for us,” said Jefferson County Commission President Bettye Fine Collins. “Finally, we’re seeing some movement. We have been victimized by our creditors.”

More…

Jim Sinclair’s Commentary

Daddy, please increase my allowance for my bad report card!

Fannie’s Draws From Emergency Treasury Fund Reach $60 Billion
By Dawn Kopecki

Nov. 6 (Bloomberg) — Fannie Mae, the mortgage buyer seized by regulators, plans to tap emergency U.S. capital for a fourth time this year, bringing its draws of taxpayer money to $60 billion as the company sees no immediate end to its losses.

Fannie Mae will seek $15 billion in Treasury Department financing after posting an $18.9 billion third-quarter net loss, according to a Securities and Exchange Commission filing late yesterday. The Washington-based company, which posted $101.6 billion in losses over the previous eight quarters, has already tapped $44.9 billion from the $200 billion emergency lifeline.

“They’re going to need that $200 billion in capital, if not more, when this thing’s all said and done,” said Paul Miller, an analyst at FBR Capital Markets in Arlington, Virginia.

The Treasury Department is also holding up an agreement Fannie Mae reached in the third quarter to sell about $2.6 billion in low-income housing tax credits, the company said. The company may have to write down the value of the credits and take a charge if it can’t find a use for the credits.

Losses will continue and the company remains “dependent on the continued support of Treasury to continue operating,” Fannie Mae said in the filing. The company said any profit it does make would be eaten up by $6.1 billion in annual dividend payments owed on the Treasury borrowings, a cost that exceeded its annual net income for five of the past seven years.

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U.S. Jobless Rate Hit 10.2% in October, Highest in 26 Years, as Employers Cut Payrolls by 190,000
By JAVIER C. HERNANDEZ
Published: November 6, 2009

For Americans who wake up each morning thinking about their job hunt, Friday’s unemployment report offered little reassurance that their search would soon pay off, even as the broader economy showed signs of strengthening.

The United States economy shed 190,000 jobs in October, and the unemployment rate reached a 26-year high of 10.2 percent, up from 9.8 percent in September, the Department of Labor said Friday in its monthly economic appraisal.

While the pace of job losses has slowed significantly since the peak of the recession last winter, the unemployment rate, which measures the number of people actively seeking work, continues to climb, and economists do not foresee relief until well into next year.

“There’s no doubt that the slashing and burning of jobs has abated quite a lot,” said Allen L. Sinai, the founder of Decision Economics, a research firm. “The economy is recovering, but it is a very soft recovery.”

The biggest losses came in the construction, manufacturing and retailing sectors. Health care companies added 29,000 jobs to their payrolls, and the number of temporary workers grew by 34,000 — a significant gain that could indicate employers are beginning to expand their businesses again.

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More and more countries are getting frustrated with the U.S.

U.S. international influence is losing ground very, very quickly.

After Pakistan, Israel, Japan, China, now we have the Arab league. And at a certain point Europe (disagreement on financial regulation and executive bonuses).

The reasons for this frustration are various: economical, financial, geopolitical.

Unless President Obama change radically the way he handles foreign policy (which I doubt) in the next few weeks, I believe we could see a rapid rise in protectionism at all levels, which is the last thing we want to see in such crisis.

Best regards,
CIGA Christopher

Obama Push for Mideast Peace Dealt Setback, Arabs Say (Update1)
By Indira A.R. Lakshmanan and Bill Varner

Nov. 5 (Bloomberg) — The Obama administration’s effort to end the Middle East conflict has suffered a setback, the Arab League said at the United Nations after Secretary of State Hillary Clinton assured Egyptian leaders of the U.S. commitment.

“He is a good man and his intentions are good, but we are back to square one,” Arab League Ambassador Yahya Mahmassani said of President Barack Obama’s bid during his first year in office to make headway toward Israeli-Palestinian peace talks and a state for Palestinians. “His words have not led to actions so far.”

Clinton returned from five days of crisscrossing the region yesterday, after adding a stop in Cairo to try to ease Arab anger over her statements Oct. 31 in Jerusalem. She came under fire for hailing as “unprecedented” Israeli Prime Minister Benjamin Netanyahu’s proposal to restrict, rather than halt, settlement construction in the West Bank.

The outcry from Arab governments overshadowed Clinton’s Mideast tour and came as Arabs pressed at the UN for prosecution of Israeli officials for alleged war crimes during the December- January offensive in the Gaza Strip. Israel has said it won’t resume peace talks while facing possible war-crimes charges.

For three days starting at a meeting of Arab leaders in Morocco Nov. 2, Clinton insisted that U.S. policy on Israeli settlements hasn’t changed.

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Jim,

Same old same old…

Birth/Death Model

Birth/death model continues on its pace of estimate nontraditional job creation in the face of massive traditional job loss.  For instance, during the period of 2008.01-2008.10 birth/death creation and traditional job lost were 802 and -1800 thousand, respectively.  From 2009.01-2009.10 birth/death creation was 793 thousand jobs.  This number is comparable to the 2008.01-2008.10 period.  Traditional job losses during 2009.01-2009.10 was -4226.  This number is substantially higher than 2008.01-2008.10 and raises questions as to the consistency of the birth/death model.

Average Weekly Insurance Claim (AWIC)

As expected, backing away from recent highs.  I expect this series to roughly trace the illustrated pattern.

Job creation histogram (JCH)

Job destruction continues to outpace labor force decline.  In other words, the real unemployment is rising and much higher than reported.

CIGA Eric

Click charts to enlarge in PDF format

Jim,

They just got $800 billion.

CIGA BJS

Dear BJS,

Wars are not free, especially two, not counting black opts.

Regards,
Jim

Pentagon Expected to Request More War Funding
By ELISABETH BUMILLER
Published: November 4, 2009

WASHINGTON — The nation’s top military officer said Wednesday that he expected the Pentagon to ask Congress in the next few months for emergency financing to support the wars in Iraq and Afghanistan, even though President Obama has pledged to end the Bush administration practice of paying for the conflicts with so-called supplemental funds that are outside the normal Defense Department budget.

The financing would be on top of the $130 billion that Congress authorized for the wars just last month.

The military officer, Adm. Mike Mullen, the chairman of the Joint Chiefs of Staff, did not say how much additional money would be needed, but one figure in circulation within the Pentagon and among outside defense budget analysts is $50 billion.

More…

By now the government’s data release of this morning’s unemployment number is already baked into the market cake. The crummy news served to reinforce the notion, that helicopter Ben and company will continue their mission of protecting us all from global warming by filling the air with so many scraps of paper (aka – dollars) that they will serve to blot out the sun and keep us much cooler. No wonder it is so dad gum cold this year. In plain speak – Quantitative easing is alive and well and shows no signs whatsoever of being endangered any time soon.

The news sent gold careening upward breaking through the $1,100 barrier and making yet another all time high in nominal terms. Pre-weekend selling emerged as profit takers met up with gold perma bears to back gold off the session high but dip buyers continued to come in and push it back off the lows. Again, this is occurring with the Dollar actually gaining against the Euro and selling emerging in crude oil, the grains, natural gas and sugar and livestock. I mention this point because the hedge fund algorithms that have taken over the commodity markets would generally be selling gold under such circumstances. Yet gold is higher in spite of these factors. That is most remarkable. Not only that, this time the mining shares are actually higher even with the stock market struggling to hold on to its meager gains today.

As a point of interest, many of you follow John William’s wonderful work over at Shadowstats which cuts through the BS that the ministry of propaganda publishes on a regular basis and serves up to the generally gullible sheep. You have thus long known that the official statistics regarding the unemployment rate are not at all credible. I do find it interesting however that even at the government’s own official web site (http://www.bls.gov/news.release/empsit.t12.htm), the more realistic U6 numbers are actually horrendous (Seasonally adjusted at 17.5% compared to the headline number of 10.2%). If even these numbers are fudged, and we know that they are, one can only imagine how bad the true rate of unemployment is in this nation.

That is why chatter about the Fed withdrawing liquidity from the system is so imbecilic. The only reason some Fed governors even broached that subject a while back was a quixotic attempt to prevent a complete rout in the US Dollar by carry traders. Today’s data makes their public ponderings seem even more futile than ever notwithstanding all the publicity and hoopla surrounding their little ol’ dry run attempt to fine tune their actual mechanism with which to do so.

Technically gold is very strong on the weekly charts with all of the major moving averages trending solidly higher. It is a bit overbought on the daily chart and is showing some signs of selling but that is not to be unexpected after its performance this past week. The news from India this week brought about an entire new dynamic in the market and has many now looking for further Central Bank purchases to provide a strong floor of support on any bouts of price weakness.

We will more than likely see a repeat of last week’s data in this week’s Commitment of Traders data with swap dealers and commercials adding to shorts while managed money and CTA’s added to longs. The specs are in the driver’s seat right now and have not shown any signs yet that they are tiring.

Gold in terms of both the Euro and British Pound continues to perform exceptionally well. Yen priced gold is holding up fairly well but has been somewhat held back by the run into the Yen during periods of equity weakness and risk aversion.

Click chart to enlarge in PDF format

Gold traded above $1100 this morning.

The US dollar is not a safe haven regardless of what F-TV tells you.

Gold is headed to $1224, $1650 and then on to Alf’s numbers. Shorts still attempting to hold down juniors will fail. Majors with huge short of gold derivative losses have endangered their balance sheets, and will take action to repair them which dilutes assets and represents a loss.

I will write up and review the gold share field this weekend.

Regards,
Jim

From Jim’s Mailbox, November 5, 2009:

Dear Jim,

How do the majors seem to survive covering short of gold derivatives without going broke?

Why did they wait so long?

CIGA Arlen

Dear Arlen,

Have you not seen that each of the majors experiencing this do two things:

1. They sell everything they have that is not in full production.

2. They float major bond deals to fill the hole caused by the losses taken.

As to why they wait so long, it is my opinion they would not even now have covered except for a hidden margin call feature of the short of gold OTC derivative. A clause in the arrangement focuses on the bond rating and balance sheet condition of the hedger. The loss on the hedge is calculated against the company’s assets and liabilities. If the balance sheet is challenged to the limit it triggers an obligation to pay up or close the commitment. Many of the reductions and closing of hedge books has not been as much a decision as it is a contract requirement.

Regards, 
Jim

Martin Armstrong has written a new article titled "Is America On The Verge Of Another Bank War? Should We End The Fed Or Goldman Sachs?"

The subject is something we have spoken about here. The Fed is under political pressure not to SAY or DO anything that would be perceived by the Administration or Wall Street as a derailment of the procedures seen as necessary to economic recovery.

The needs of politics and Wall Street are always in present time and not forward looking.

Armstrong points out the history of such events, but in my opinion there has never been a challenge to a central bank as serious as what is now in place.

Armstrong’s article can be accessed here…

Jim Sinclair’s Commentary

And on it goes. Once you open Pandora’s box of ‘Too Big To Fail," and government underwriting of private losses, how do you stop?

You can’t without the fallout being worse than anyone can estimate.

The Third Seal may well have been broken by Wall Street.

Fannie Seeks $15 Billion in U.S. Aid After Ninth Straight Loss
By Dawn Kopecki

Nov. 5 (Bloomberg) — Fannie Mae, operating under a federal conservatorship, said it will seek $15 billion in aid from the U.S. Treasury as its ninth straight quarterly loss once again drove the mortgage-finance company’s net worth below zero.

A third-quarter net loss of $18.9 billion, or $3.47 a share, pushed the company to request its fourth draw on a $200 billion lifeline from the government, Washington-based Fannie Mae said in a filing today with the Securities and Exchange Commission.

Fannie Mae, which posted $101.6 billion in losses over the previous eight quarters, has already taken $44.9 billion in federal aid since April. Its shares, which peaked at $87.81 in December 2000, closed at $1.12 today in New York Stock Exchange composite trading.

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Jim Sinclair’s Commentary

Not the best way to deal with your banker.

US slaps duties on Beijing steel pipe imports
By Sarah O’Connor in Washington
Published: November 6 2009 00:17 | Last updated: November 6 2009 00:17

The US hit China with another big trade action on Thursday as it slapped ­preliminary anti-dumping duties on $2.6bn worth of Chinese pipe imports.

The commerce department’s decision to impose duties of up to 99 per cent on imports of some steel pipes is the latest in a string of trade spats between over tyres, cars and chickens. It comes less than a fortnight before President Barack Obama’s first visit to China.

The ruling will affect more imports by value than Mr Obama’s recent move to impose duties on Chinese tyres, which sparked an international row in which Beijing accused the US of “rampant protectionism”.

The decision was a victory for steel companies, including US Steel Corporation, that petitioned for the duties in April. The United Steelworkers union said the decision was “an overdue message for thousands of American laid-off workers that trade laws are being enforced”. It says nearly half the domestic industry’s workers have been laid off.

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Jim Sinclair’s Commentary

Turkey today.

Turkey: Sudanese president welcome to visit, shouldn’t fear arrest
By ASSOCIATED PRESS

A Turkish Foreign Ministry official said Sudan’s indicted president is free to attend a meeting of Islamic nations in Turkey despite an international arrest warrant against him.

Sudanese President Omar al-Bashir, wanted by the International Criminal Court for war crimes and crimes against humanity, is expected to arrive in Istanbul this weekend to attend a meeting of the Organization of Islamic Conference.

The official said Thursday that Turkey is not a party to the International Criminal Court and has no obligation or intention to arrest Bashir. She spoke on condition of anonymity because she was not authorized to speak to media.

Iranian President Mahmoud Ahmadinejad and Afghan President Hamid Karzai are also expected to attend the meeting next Monday.

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Jim Sinclair’s Commentary

The march to gold has begun.

When the COT takes on governments it loses.

Buy whatever China is buying has been a formula for success over the past few years. India was simply quicker on the draw this round and front ran the Chinese while they were waiting for a bargain.

Gold will go to $1224, $1650 and then on to Alf’s numbers.

Sri Lanka c.bank buying gold to diversify reserves
11.05.09, 04:55 AM EST

NEW DELHI, Nov 5 (Reuters) – Sri Lanka’s central bank has been buying gold for the past five or six months as it diversifies its reserves amid volatile markets, the bank’s governor said in an interview on Thursday.

‘We have been fairly strong accumulators of gold reserves over the past few months,’ Sri Lanka Central Bank Governor Ajith Nivard Cabraal told Reuters in a telephone interview from the southern Indian city of Chennai.

‘We haven’t stopped yet,’ he added, declining to quantify how much gold the central bank had bought or how much of the more than $4.8 billion of the country’s reserves were in gold.

‘Many countries are today diversifying. They are also looking at intrinsic value of their reserves, so gold would be a natural candidate for that kind of reserve accumulation,’ he said.

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Jim Sinclair’s Commentary

You think it might be a little late to figure this out?

Apparently the Formula did not get much respect.

Allstate Sells Municipals as Governments Run Deficits (Update3)
By Jamie McGee and William Selway

Nov. 5 (Bloomberg) — Allstate Corp., the largest publicly traded U.S. home and auto insurer, is paring its municipal-bond holdings because state and local governments are “not in great shape,” Chief Executive Officer Thomas Wilson said.

“We’ve just recently begun to reduce our exposure to municipals because we are uncomfortable with some of the fiscal practices of some of the government entities,” Wilson said yesterday in an interview after the Northbrook, Illinois-based company reported a third-quarter profit. “If you look at their balance sheets or income statements and put it in financial terms, they are not in great shape.”

Allstate cut its municipal holdings 8.3 percent to $22.1 billion in the third quarter as tax-exempt yields plunged to a 42-year low and governments struggled to maintain budgets amid the recession. State tax collections declined by 16.6 percent in the three months through June from the year-earlier period, the largest quarterly decline since at least 1963, the Nelson A. Rockefeller Institute of Government said in a report last month.

Officials “haven’t adjusted their spending, so they are running deficits,” Wilson said. “When we look at the risk- return profile we don’t think we are being paid enough to take that risk today.”

Within its municipal portfolio, Allstate is reducing holdings of health-care debt and zero-coupon bonds, Chief Investment Officer Judith Greffin said today in a conference call with analysts and investors.

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Jim Sinclair’s Commentary

Simply put, India front ran China.

India Shows Hedge-Fund Savvy With Huge Gold Buy: William Pesek
Commentary by William Pesek

Nov. 5 (Bloomberg) — Barack Obama and Timothy Geithner must be as annoyed as they are bewildered.

Didn’t India get the memo? Developing nations are supposed to keep their excess cash in Treasuries, the U.S. president and his Treasury secretary are no doubt thinking. Gold? That relic of the past that doesn’t pay interest or dividends and can’t be eaten? A fool’s game best left to the dinosaurs out there.

India is going its own way with a $6.7 billion gold purchase. The transaction turned heads in markets. It should do the same in capitals from Beijing to Washington.

India’s 200 metric-ton deal wasn’t huge considering how much gold central banks hold. It’s the symbolism that matters as the U.S. struggles to keep the dollar’s slide orderly and panic- free. Consider India the vanguard of central banks more aggressively diversifying reserves away from U.S. assets.

As markets brace for that inevitability, here are four things we can conclude from India’s gold rush.

One, the dollar’s plight just got worse. Mounting U.S. debt is bumping up against a dismal employment picture, a toxic mix that may get the attention of credit-rating companies. This U.S. recovery looks to be a uniquely jobless one, complicating things for a president already grappling with two unpopular wars.

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Jim Sinclair’s Commentary

Non sustainable and without any practical method of exit. This is quite dollar negative.

It is what the final pillar is of the Gold Bull market.

U.S. to Sell $81 Billion in Long-Term Debt Next Week (Update2)
By Rebecca Christie

Nov. 4 (Bloomberg) — The U.S. Treasury Department said it plans to sell a record $81 billion in its quarterly auctions of long-term debt next week and will replace the inflation- protected 20-year bond with a reintroduced 30-year security.

The Treasury will auction $40 billion in three-year notes on Nov. 9, $25 billion in 10-year notes Nov. 10 and $16 billion in 30-year bonds Nov. 12. The amounts were in line with the median forecast of $80 billion in a Bloomberg News survey of nine analysts.

The U.S. is headed for a second straight year of budget deficits exceeding $1 trillion, and the country’s legal limit on debt may be reached next month. Treasury debt-management director Karthik Ramanathan told bond market participants this week to expect another year of government debt sales of $1.5 trillion to $2 trillion, minutes of the meeting showed today.

“Treasury debt managers will continue to remain aggressive in managing financing needs while minimizing potential market implications,” the Treasury said in a statement in Washington.

More….

How do the majors seem to survive covering short of gold derivatives without going broke?

Why did they wait so long?

CIGA Arlen

Dear Arlen,

Have you not seen that each of the majors experiencing this do two things:

1. They sell everything they have that is not in full production.

2. They float major bond deals to fill the hole caused by the losses taken.

As to why they wait so long, it is my opinion they would not even now have covered except for a hidden margin call feature of the short of gold OTC derivative. A clause in the arrangement focuses on the bond rating and balance sheet condition of the hedger. The loss on the hedge is calculated against the company’s assets and liabilities. If the balance sheet is challenged to the limit it triggers an obligation to pay up or close the commitment. Many of the reductions and closing of hedge books has not been as much a decision as it is a contract requirement.

Regards,
Jim

GDP Analysis:

PCE

Unbelievably, PCE/GDP continues to expand despite the evolving financial crisis.  What this suggests is that the stimulus/bailouts have done little to shift the U.S. away from a consumption-centric economy.  As long as excessive consumption relative to investment exists, the U.S. structural deficits will worsen in the future.

GDPI

Consumption up and investment down equals greater structural deficits.

NETEX

A nation that consumes more foreign than domestic goods and settles those transactions with paper will always see NETEX (exports-imports)/GDP expand during a recession/depression.

PCEI & FED

An illustration of Keynesian economics.  Your tax dollars at work. http://en.wikipedia.org/wiki/Keynesian

SAV

The trend towards savings has only just begun.

Regards,
CIGA Eric

Click charts to enlarge in PDF format

Today’s major event was FOMC’s unanimous decision to keep "Interest rates exceptionally low" for an "extended period of time."

This means that US dollar will remain the carry trade currency of choice as we transit to new ground with a major reserve currency as a carry trade currency. There are no rules or experience with this phenomenon.

Professor Roubini says $2000 gold is nonsense. I agree. It is probably going to a minimum of Alf’s lowest estimate of $3000.

Professor Roubini might consider the old saying of "Never say never."

I can’t tell you how many emails have I received telling me that gold would NEVER trade over $1000. One caller told me gold would never trade over $1000 in his lifetime, so I enquired how old he was. He hung up.

Gold: It’s All About the Dollar and (Yes Dr. Roubini), Inflation
November 04, 2009
Dian L. Chu

Gold prices surged to a new high Tuesday on news that India’s central bank bought $6.7 billion worth of gold from the International Monetary Fund (IMF). December gold jumped as high as $1,087, before settling at $1,084.90 an ounce on the NYMEX breaking the previous record of $1,072 an ounce on Oct. 14. Prices are now up 22.7% for the year heading for a ninth straight annual increase. (Fig. 1, click to enlarge)

Unusual Correlation

Historically, gold moves in an opposite direction to stocks because of bullion’s traditional role as a safe haven in times of crises. But gold has recently climbed in tandem with rising equities. For example, the Dow Jones Industrial Average, a bet on the economic recovery, is up about 15% this year. (Fig. 2,click to enlarge)

This unusual correlation is driven mostly by excess liquidity, return of risk appetite, and a weakening U.S. dollar. The creation of the U.S. national marketable debt to a record $7.01 trillion to revive growth, along with the Federal Reserve’s maintaining the benchmark interest rate near zero since December 2008, and the prospect of heavy government borrowing to fund deficits, threatens to weaken the dollar and fuel inflation and increased economic volatility later.

Economic uncertainty, inflation worries and the weakening U.S. dollar helped push gold to a new high this year. Weakness in the dollar benefits gold, which is often used as an alternative asset hedge to a depreciating dollar. The Dollar index (DXY) has declined about 10% this year. (Fig. 2) Right now, the general trend is still for further dollar weakness on the back of the Fed’s easy monetary approach, which will be supportive for the whole commodities complex.

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Jim Sinclair’s Commentary

Big deal?

Fed Sees No Need to Raise Rates Soon
By EDMUND L. ANDREWS
Published: November 4, 2009

WASHINGTON — The Federal Reserve signaled on Wednesday that it isn’t close to raising interest rates, saying the economy remains weak even though the recession appears to be over.

The central bank said it would keep its benchmark interest rate at virtually zero, repeating its long-standing mantra that economic conditions were likely to warrant “exceptionally low” rates for “an extended period.”

For practical purposes, analysts said, that means policymakers are still at least six months away from tightening monetary policy.

It was unclear whether Fed policymakers even discussed changing their language on interest rates, which would mark a first step toward a shift in policy. Some officials have worried that even discussing a change in language, which would be disclosed when minutes of the meeting are published two weeks from now, would send the premature signal that higher rates were imminent.

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Jim Sinclair’s Commentary

This is a last resort in the system for privacy. It is in danger because of what happened in London.

1. Have nothing in your box that you cannot explain.
2. Have paper records of the acquisition of everything in your box.
3. Have nothing in your box that would embarrass you if it was on the front page of the New York Times.
4. Consider a safe room in your house for your private items.
5. I had a friend whose name was Yeknod. He always advised 2 feet of concrete.

How Safe Is Your Safe-Deposit Box?
By ELISABETH LEAMY

A woman says the state took her property and sold it for a fraction of its cost.

The 50 U.S. states are holding more than $32 billion worth of unclaimed property that they’re supposed to safeguard for their citizens. But a "Good Morning America" investigation found some states aggressively seize property that isn’t really unclaimed and then use the money — your money — to balance their budgets.

Unclaimed property consists of things like forgotten apartment security deposits, uncashed dividend checks and safe-deposit boxes abandoned when an elderly relative dies.

Banks and other businesses are required to turn that property over to the state for safekeeping. The problem is that the states return less than a quarter of unclaimed property to the rightful owners.

Not-So-Safe-Deposit Boxes

San Francisco resident Carla Ruff’s safe-deposit box was drilled, seized, and turned over to the state of California, marked "owner unknown."

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Jim Sinclair’s Commentary

John Embry knows his field.

Click here to read the latest from John Embry…

Jim Sinclair’s Commentary

Face East is the battle cry of world economics.

Japanese FM calls off US visit
Wed, 04 Nov 2009 09:27:45 GMT

Japan’s foreign minister has cancelled a trip to the US meant to improve bilateral ties as relations between the two countries are strained by a row over a US base in Japan.

The planned meeting between Japanese Foreign Minister Katsuya Okada and US Secretary of State Hillary Clinton would have come just days before US President Barack Obama’s visit to Tokyo next week.

"The visit this time was cancelled as the Japanese side could not coordinate the timing amid various scheduling demands such as parliamentary sessions," Hirofumi Hirano, the chief cabinet secretary, told reporters on Wednesday.

"I don’t think it will affect relations between Japan and the United States," he added.

Analysts say the victory of the Democratic Party of Japan (DPJ) in August is the sign of a significant change in relations between the two countries.

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Jim Sinclair’s Commentary

Today in the Iran / Pakistan / Turkey / Israel story.

Israeli military attacks and takes over Iranian ship
Wednesday November 04, 2009 09:35
author by Saed Bannoura – IMEMC News

An Iranian ship was attacked in international waters in the Mediterranean Sea by the Israeli navy early on Wednesday morning, while apparently on its way to Lebanon.

According to Israeli media sources, no Cabinet meeting was held in advance of the decision to attack the ship, and a small number of Cabinet officials may have given the go-ahead for the attack.

Israeli officials told the Associated Press that the ship contained weapons including anti-tank missiles, but no official information has been released on the contents of the ship or the reason for its illegal seizure by the Israeli military. Col. Avital Leibovich with the Israeli military confirmed to reporters that the ship had been seized, but gave no details.

The Israeli Defense Minister Ehud Barak told Israeli newspaper Ha’aretz, "This is another success in the endless struggle against attempts to smuggle weapons and military equipment whose goal is to strengthen terrorist elements who threaten the security of Israel."

More…

Jim Sinclair’s Commentary

Outrageous. This never needed to happen.

OTC derivatives turned a normal economic correction into a total disaster.

The pain and suffering caused by these super rich paper shuffling demons beats "Vlad the Impaler."

They are proud of themselves. I hope they do not breed.

U.S. Home Vacancies Rise to 18.8 Million on Defaults (Update1)
By Kathleen M. Howley

Oct. 29 (Bloomberg) — About 18.8 million homes stood empty in the U.S. during the third quarter as banks seized properties from delinquent borrowers and new home sales fell in September.

The number of vacant properties, including foreclosures, residences for sale and vacation homes, rose from 18.4 million a year earlier and 18.7 million in the second quarter, the U.S. Census Bureau said in a report today. The record high was in the first quarter, when 18.95 million homes were vacant. The homeownership rate, meaning households that own their own residence, stood at 67.6 percent.

The worst U.S. housing crash since the Great Depression has led to a record number of foreclosures and shaved almost a third off property values. The S&P/Case-Shiller Index of 20 cities in August was 29 percent below its 2006 high, after rising for four consecutive months.

“We are bumping along the bottom of the housing market,” said James Lockhart, vice chairman of WL Ross & Co. and the former director of the Federal Housing Finance Agency. “There is the potential for another swing down.”

Sales of new U.S. homes fell 3.6 percent in September to an annual pace of 402,000, the Commerce Department said yesterday. That was lower than the 440,000 median forecast of 75 economists surveyed by Bloomberg News.

More…

Jim Sinclair’s Commentary

Look who is famous – our own CIGA JB Slear!

HUGE gold story developing… investors are draining gold vaults
Friday, October 30, 2009

From Market Skeptics:

In order to secure gold at the lowest possible price, US investors are turning to the complex, lengthy process of taking delivery of gold futures contracts. By buying gold contracts in deliverable months and wait for them to expire, sophisticated investors are emptying COMEX warehouses. The incredible hassle of trying to pry gold out of COMEX warehouses appeals to investors because no other place in the US offers a price equal to the COMEX exchange. Nothing even comes close.

Guiding investors through the delivery process are gold and silver brokers like JB Slear who specialize in helping high net worth clients take delivery of gold and silver futures contracts. These advisors are necessary because, as investors are discovering, that there is trouble at COMEX warehouses…

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Jim Sinclair’s Commentary

Turkey today.

Israeli envoy in Turkey pelted with eggs
By JPOST.COM STAFF

Israeli ambassador in Turkey Gabi Levy was pelted with eggs on Wednesday by Turkish university students, according to various reports.

Turkish daily Hurriyet reported that during Levy’s visit to the Black Sea Technical University, a group of students congregated around him, shouting slogans such as "Israel’s child killers are not wanted in our universities," calling Israel a "fascist" country and hurling eggs at Levy’s car until security personnel intervened.

Several students were arrested, and the ambassador was forced to cut short his visit to the institution.

The ambassador was slated to speak at the university during a tour of historic Turkish city of Trabzon.

"The people of Israel have a great interest in the [Black Sea] region," Levy was quoted as saying, referring in his speech to the influx of Israeli tourism in the area.

Also during Levy’s Black Sea visit, the mayor of coastal city Rize, Halil Bakirci, criticized Israel’s "policy of occupation" and said that Turkey’s stance on Israel would "not change as long as it continues," according to a report in Turkish publication Turkiye.

More…

Here is an interview with Nomi. What an eye opener. Thank god we learned about gold long ago from you who understood it all long before these people had the guts to warns us. Way too late now Nomi, but thanks for the tally.

CIGA BJS

Click here to view the interview…

Jim,

Rogers contradicts Roubini. Rogers believes commodities and gold prices are in a bull market and are not bubbles.

However, Rogers sees a bubble in the U.S. bond market.

Regards,
CIGA Christopher

Rogers Says Roubini Is Wrong on Bubbles as Gold, Stocks Rally
By Brian Swint and Mark Barton

Nov. 4 (Bloomberg) — Jim Rogers, the investor who predicted the start of the commodities rally in 1999, said that Nouriel Roubini is wrong about the threat of bubbles in gold and emerging-market stocks.

Many commodities are still down from record highs and equity markets aren’t on the brink of collapse, Rogers, chairman of Singapore-based Rogers Holdings, said in an interview on Bloomberg Television today. The price of gold will double to at least $2,000 an ounce in the next decade, he said.

Roubini, the New York University professor who warned in 2006 about the coming financial crisis, said on Oct. 27 that investors are borrowing dollars to buy assets and creating “huge” asset bubbles. Rogers said that he’s not buying stocks now, though he may buy more gold.

“What bubble?” Rogers said, when asked if he agreed with Roubini’s view. “It’s clear Mr. Roubini hasn’t done his homework, yet again.”

Roubini told a conference in South Africa last month that investors were doing “the mother of all carry trades” by buying assets with borrowed dollars. He said emerging-market equities are showing a bubble, that gains in some developing- nation currencies are becoming “excessive” and that the rally in oil is “not justified by the fundamentals.”

More…

Dear Jim,

From this morning’s quarterly refunding announcement:

"Despite the recent decision to reduce the size of the program, Treasury retains the flexibility to increase the SFP in the future. Such a decision will be made in coordination with the Federal Reserve."

More…

That is to say, it looks as though the Fed, despite its much-vaunted independence, is at least temporarily replacing most of this sterilized funding with QE in order to let the Treasury avoid the debt ceiling for a while longer.

Regards,
CIGA John

Final Thoughts For The Day:

1. The general thinking is that today was massive short covering. Some point at the silly short of gold OTC derivative hedgers. My feeling is that when COT takes on governments, COT loses. India front ran China. The IMF will not have the "Gold For Sale" sign up much longer.
2. Tomorrow the Fed will leave rates unchanged again.
3. Therefore the hair splitters will be reading the Fed statement for some key to the future.
4. My feeling is that if the Fed pays homage to the Hawks in wording the Administration will go wild.
5. Gold is set up for $1224 and $1650 without any regard to the if or not there are the same two words in a Fed statement.
6. All the way to Alf’s numbers there will be challenges so to the fellows – man up, the ladies are perfect anyway.
7. Ignore the challenges from here to $1650 as from $248 to here. This entire process is gold ascending and the dollar descending, technical BS aside.
8. Before I listen to Professor Pundit on the dollar carry trade, I would have to see Libor green for a change.
9. There isn’t a chance in hell that the Fed will do anything different tomorrow from today in practice.

Jim Sinclair’s Commentary

Do you really think the Fed can change course without major political ramifications? The economic problems are quite far from solved and in some areas are worse.

Even changing two words in the Fed statement is fraught with political risk.

Bernanke tonight will make a choice upon which the future of the Fed hangs. What was created in 1913 can be dissolved, in practice, in 2009.

Republican Wins Race for Virginia Governor
Tue, November 03, 2009 — 8:07 PM ET
By IAN URBINA

RICHMOND, Va. — Robert F. McDonnell, a Republican and a former state attorney general, won a decisive victory in Virginia’s governor’s race Tuesday, a stark reversal of fortune for Democrats who have held control in Richmond for the past eight years.

Mr. McDonnell defeated the Democratic candidate, R. Creigh Deeds, an 18-year state senator from rural Bath County in western Virginia. With 99 percent of the precincts reporting, Mr. McDonnell had 59 percent of the vote, and Mr. Deeds 41 percent.

Republicans cited the victory as a repudiation of the Obama administration and the national Democratic Party’s agenda, especially that of departing Gov. Tim Kaine, the chairman of the Democratic National Committee.

Nonetheless, exit polls conducted by Edison Research on Tuesday showed that support for Mr. Obama had diminished only slightly in the state since his victory here in 2008. The polls suggested that many of Mr. Obama’s voters stayed home on Tuesday, allowing Mr. McDonnell to win on strong support among white men and independents and among voters who say they are very worried about the direction of the nation’s economy.

More…

Jim Sinclair’s Commentary

Turkey makes their position clear.

Covered with olive leaves, the PM says it the way Turkey is now.

Turkey PM: If you don’t want Iran to have nukes, give yours up
Last update – 20:10 31/10/2009

Turkish Prime Minister Tayyip Erdogan said on Saturday that countries opposed to Iran’s atomic program should give up their own nuclear weapons, and attacked as "arrogant" the sanctions imposed on Ankara’s neighbor.

He also said he wanted the Middle East, and then the whole world, to rid itself of nuclear weapons.

During a trip to Iran this week, Erdogan said he backed Tehran’s "right to peaceful nuclear energy" and called its approach in nuclear talks with Western powers "positive."

The trip added to Western concern that NATO’s only Muslim member may be shifting its foreign-policy focus towards the Islamic world and turning its back on Western allies.

Iran says the sole aim of its nuclear program is to generate electricity, but Western powers suspect it of secretly planning to produce nuclear weapons and are trying to persuade it to stop enriching uranium.

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Jim Sinclair’s Commentary

Turkey follows the money with the Russian/Iranian energy complex.

Russia and Turkey to build oil refinery in Mediterranean
Monday, 02 Nov 2009

Todays Zaman Cited Mr Sergei Shmatko energy minister of Russia as saying that Russia and Turkey will build an oil refinery in the Mediterranean to maximize profits from a joint pipeline project.

Mr Shmatko said that “We want to build a major refinery and jointly sell oil products from the Mediterranean coast.”

The comment follows a deal between Italy, Russia and Turkey last week under which Russia agreed to participate in building a pipeline from the Turkish Black Sea port of Samsun to Ceyhan in the Mediterranean.

Russia and Kazakhstan said that they would supply crude for the new link which is designed to reduce tanker traffic through Turkey’s narrow and busy Black Sea straights.

Italy’s Eni and Turkey’s Çalık hold 50% each in the 550 kilometers pipeline which will have a maximum capacity of 1.5 million barrels per day.

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Jim Sinclair’s Commentary

Trader Dan has been recognized by the Wall Street Journal.

We are proud to call your attention to the Hog Man. Trader Dan’s opinion, long sought by all CIGA’s with myself first in line, is now carried on the Wall Street Journal Commodities page.

We are keeping this quiet here in memory of my 720 pound porker, Bertha. She was leash trained, but after she got to 450 pounds, it was hard to tell who was taking whom on a walk.

Today’s Comments On Gold:

1. Is there any question left out there about gold going to $1650?
2. Do you really believe the shorts can sit on the gold shares as financing windows open up and gold starts its march past my estimates and on to Alf’s numbers?
3. Closing your derivative book now is not good news. It is a public admission that you are an ass.
4. On the countdown – not too shabby so far.
5. To the hoard of whiners from $248 up, next time I reserve the right to yell at you.

Jim Sinclair’s Commentary

What a bunch of cheapskates.

The US sends them billions and all they offer is $5 million. Is that $267,153 each?

Pakistan offers $5 mn for information on Taliban leaders
By IANS
November 2nd, 2009

ISLAMABAD – The Pakistan government Monday offered a reward of $5 million for information on the country’s Taliban chief Hakimullah Mehsud and 18 of his associates.

The reward is for information on Tehreek-e-Taliban leader Hakimullah Mehsud and his associates who have vowed deadly attacks across the country in retaliation over US drone strikes.

The rewards were offered in a government advertisement on the front page of The News daily and flashed on Pakistani television channels overnight.

“Anyone who captures these people dead or alive or provides concrete information, the government will award them a cash reward,” The Nation quoted the advertisement as saying.

“The banned Tehreek-e-Taliban (TTP) terrorists are daily involved in deadly activities and because of their activities innocent Muslims are going to the valley of death,” it added.

More…

Jim Sinclair’s Commentary

A little harsh, don’t you think?

Jim Sinclair’s Commentary

Egon von Greyerz gets the award today for the most intriguing headline.

India buys gold while Great Britain buys banks. Now that is consistency in stupidity

INDIA BUYS GOLD – UK BUYS BANKS
November 3rd, 2009 by Egon von Greyerz, GoldSwitzerland

India, like China, understands the virtues of gold. This is why they have snapped up 200 tons of gold from the IMF at around $1,045 per ounce or $6.7 billion. The UK does not understand gold, that is why Gordon Brown sold  most of the nation’s gold in 1999 at virtually the low of $250.

Instead the UK has today spent $51 billion on propping up bankrupt banks. Royal Bank of Scotland received another $41 billion today making it the costliest bailout worldwide with a total of $75 billion. Lloyds Bank received another $10 billion. The US is of course also spending printed money on rescuing bank creditors with 115 bank failures so far in 2009.

So who is likely to make the best return on their investment, India with their gold or the UK or US with their bankrupt banks. We certainly know who we will put our money on.

On 22 October we forecast in our report “Final Warning” that starting in November we are likely to see major changes in markets and in the economy. We have barely entered November and gold is already making a new all time high at $1,081. It is interesting that it is happening right after IMF has disposed of  half of the planned gold sales. The same event in the 1970’s was the catalyst for the acceleration of the gold price.

But this is just the beginning as we have been discussing in our reports. We would suggest that investors don’t follow the example of the UK and US and throw good money after bad but instead do like India and protect themselves by buying gold.

More…

Jim Sinclair’s Commentary

The shakeup should be the British people as RBS gets another huge hunk of cash.

Lloyds is next. Maybe the Queen as well. Certainly Prince Charles.

You know this is total madness, too big to fail. The new normal is a form of social fascism.

Gold is your only refuge. Go there!

RBS and Lloyds in major shake-up

Royal Bank of Scotland (RBS) and Lloyds Banking Group are to sell off branches in another major shake-up of the UK banking industry.

The sales have been demanded by the European Commission to safeguard competition concerns after the two were bailed out by the UK government.

RBS will sell 318 branches, while Lloyds will dispose of more than 600 branches over the next four years.

Lloyds also confirmed it would stay out of a government-run insurance scheme.

Lloyds, which is 43.5%-owned by the government, will instead raise £21bn, including a £13.5bn rights issue and a £7.5bn debt swap.

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Jim Sinclair’s Commentary

Sounds fair in the "New Abnormal."

CIT Bankruptcy: Taxpayers Stiffed on Company’s Bailout Billions While Execs Reap Bonuses
By Ward Harkavy

If people were pissed off about AIG’s temporary decline and permanent bonuses, CIT’s bankruptcy ought to enrage them.

The giant lender to businesses is heading for a quick in-and-out in bankruptcy court, and when it emerges, taxpayers will be the ones who have gotten the ol’ in-out: CIT won’t have to repay its $2.33 billion TARP bailout.

CIT’s been in deep trouble for way more than a year. Meanwhile, some of its execs have reaped special bonuses. Its H.R. director, Jim Duffy, has received a $450,000 cash bonus for what the company called his "exceptional performance." What did he do? "Mr. Duffy’s achievements in 2008 include the design and implementation of a process to reduce our total headcount by 22% … along with the successful deployment of talent and development programs targeted at retaining CIT’s key talent," according to CIT’s proxy filing last April. That message to taxpayers was approved by CEO Jeff Peek.

That was the same month that Peek’s wife, Liz Peek (a former journalist), wrote an anonymous, weepy tell-all for Portfolio about the sad plight of TARP wives. And that was the same month that Portfolio itself went out of business.

Liz Peek acknowledged in her sob story that even her husband had to take some of the blame for last year’s Wall Street tsunami, though she continued the canard that the Street’s execs didn’t see the tusanimi coming — as if it were a natural disaster instead of a manmade one.

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Jim Sinclair’s Commentary

Fire those white collars and get rid of the overhead. Unique idea!

J&J to Slash More Than 7,000 Jobs in Restructuring
By Shannon Pettypiece

Nov. 3 (Bloomberg) — Johnson & Johnson, the world’s biggest health-products company, will fire more than 7,000 workers as it tries to eliminate layers of management and invest in more profitable areas of its business.

The cuts will shrink J&J’s workforce by 6 percent to 7 percent and save as much as $1.7 billion by 2011, the New Brunswick, New Jersey-based business said today in a statement.

J&J has been trying to diversify its business into biotechnology medicines, consumer products and medical devices as it faces generic competition to its antipsychotic Risperdal and migraine drug Topamax. The company reported third-quarter revenue that was lower than analysts had expected, citing generic competition and slowing demand for consumer products.

“Today, we are announcing a series of actions and plans designed to ensure that our company remains well-positioned and appropriately structured for sustainable, long-term growth in the health care industry,” Johnson & Johnson Chief Executive Officer William C. Weldon said in the statement.

J&J fell 7 cents, or less than a percent, to $59.42 at 9:42 a.m. in New York Stock Exchange composite trading. It has lost 2.7 percent of its value in the past 12 months before today.

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Jim Sinclair’s Commentary

Welcome to the New Abnormal.

Let’s call it the ZOMBIE JAMBOREE

Eric Sprott: "Dead Government Walking"
Joe Weisenthal | Nov. 3, 2009, 12:48 PM

If you’re looking for something to cheer you up, don’t read the latest letter from ultra-bear Eric Sprott (via Market Folly). Basically he argues, a US default is coming sooner, rather than later, and that there’s just no hope of averting this.

The projected US deficit from 2009 to 2019 is now slated to be almost $9 trillion dollars.3  How on earth does anyone  expect them to raise this capital? As we stated in a previous article, in order to satisfy US capital requirements, all existing investors would have had to increase their US bond purchases by 200% in fiscal 2009. Foreigners, however, only increased their purchases by a mere 28% from September 2008 to July 2009 – far short of what the US government required.4 The US taxpayer can’t cover the difference either. According to recent estimates, tax revenue from all sources would have to increase by 61% in order to balance the 2010 fiscal budget. Given that State government income tax revenues were down  27.5% in the second quarter, the US government will be lucky just to maintain its currentlevel of tax revenue, let alone increase it.

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Jim Sinclair’s Commentary

Let’s hear a rousing round of applause for Darth Vader, the Dark Side, the Evil Empire, and all their little OTC derivative devils who did this.

Cleary they do not give a flying f***.

Bankruptcy Filings to Match Divorce Filings in 2009: 1.5 Million. 35.8 Million Americans on Food Stamps – 11 Percent of the Population. The 5 Indicators of the Misery Index.

It is a sobering fact that in 2009, there will be as many people filing for bankruptcy as those filing for a divorce.  We are on track to seeing an average of nearly 5,900 bankruptcy filings a day for 2009.  While some people use the stock market as their barometer of economic recovery, there are a few other “misery” indicators that show things are still bad for millions of Americans and counter the recovery talks.  If you want to track a broader recovery, I would recommend people examine the five indicators of the misery index.  Food stamps, bankruptcies, long-term unemployed, foreclosures, and credit card defaults are probably your best gauges to the real economic recovery.

The problem we currently face is even after the global economy was brought to its knees by the current Wall Street banking structure, things still haven’t changed at the core of their mission.  The same banks are back taking inordinate amounts of risk with the now explicit backing of the U.S. Taxpayer.  It is no surprise then that our U.S. dollar has been pummeled by the policies of the Federal Reserve and U.S. Treasury.

Let us examine each component of the misery index.

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Jim Sinclair’s Commentary

Remember the terrorist that hid the bomb in a body cavity that exploded all over the Prince’s robes?

The Prince suffered no injuries but got one hell of a dry cleaning bill.

Well this scanner will never find that bomb in its hiding place.

Child porn fears scupper airport ‘nude X-ray’ scans
By Jason Lewis
Last updated at 1:22 PM on 18th October 2009

Airport  security chiefs have been banned from subjecting children to a controversial new X-ray scanner that produces ‘naked’ pictures of passengers because of legal warnings the images may break child pornography laws.

The full-body scanner, which can spot weapons and explosives hidden under clothing, was launched with great fanfare at Manchester Airport last week.

But now – with the system due to begin operating at full capacity at Manchester’s Terminal 2 next week – security chiefs have been told no one under 18 can be subjected to the new checks.

Child protection experts have warned that the image produced by the Rapiscan machines may break the law which prevents the creation of an indecent image or pseudo-image of a child.

The legislation, the Protection of Children Act 1978, could potentially have led to security officers facing criminal charges for doing their job by examining the images.

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