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Jim Sinclair thread (News & Views)

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http://jsmineset.com/2010/02/07/the-bi-pol...woods-meetings/

Dear CIGAs,

 

1. Bretton Woods was folded.

2. The floating exchange rate system is about to be folded.

3. By default or design we are going to a one-world currency and a one-world central bank of central banks.

4. For Portugal, Ireland, Italy, Greece or Spain to break off from the euro would be an expansion of the floating exchange rate system under present conditions.

5. There are presently 3 major currencies. That is the US dollar, the euro and gold.

6. The SDR was an attempt to form a single reserve currency that never took flight.

7. The SDR is an accounting unit made up of an index of currencies much like the USDX.

 

There is no immunity now from the size of funds seeking to speculate or manipulate markets. This type of money is attacking the debt of the weaker euro states by intention or coincidence. Their success in the Iceland situation was only the first chapter of a multi chapter play.

 

Central bankers fear that this type of action, most certainly if it is as successful as it was on Iceland, succeeding against the weaker euro states could easily attack the present functional reserve currencies, the US dollar and the euro.

He also mentioned $1,650 again, but not the date (Jan 14 2011). ;)

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The floating exchange rate system is about to be folded.

 

I believe the present floating exchange rate system is known as the Washington Consensus, which eventuated when the US went of gold in 71. I agree with Sinclair that this system is looking increasingly unstable, but disagree that this marks dooms for the dollar.

 

In this system capital has to sit somewhere. It can only fly out of one currency to another currency. What is most likely to happen is capital will fly to the central currency of the dollar asi t sits at the centre of the global economy. The Chinese Yuan effectively is supporting it also in their "peg". Sure, we know all the fundamentals against the dollar, but in the short/ medium term this market dynamic looks likely to over-ride them.

 

Of course it is equally disastrous for the US to have a chronically strong dollar as it is to have a chronically weak one. The US could well end up being crucified on a strong dollar which would ruin their economy. The obvious way out of a mess, that could well lead to the collapse of international trade, is a new Bretton Woods. In a new Bretton Woods the global economy would be rebooted on a new currency system. This system would fix/ stabilize/ existing currencies to the new currency, and in doing so revalue and rebalance those currencies against each-other. This would provide the substantial break needed between the Yuan and the dollar. By re-balancing and fixing currencies, intenational capital flows will remain open, and global trade restored.

 

Sinclair's target of $1,650 by Januaury next year looks unlikely... perhaps the following year, or when the new Bretton Woods is instituted.

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Sinclair's target of $1,650 by Januaury next year looks unlikely... perhaps the following year, or when the new Bretton Woods is instituted.

It may still happen.

Quite a lot of volatility can happen, and probably WILL happen, as the year progresses

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It may still happen.

Quite a lot of volatility can happen, and probably WILL happen, as the year progresses

On a deflationary downdraft we could see higher gold prices in pounds, Aussie and Kiwi dollars, and Euros.... but this may only represent the depreciation [capital flight] of these currencies relative to both gold and the dollar. The price of gold in the dollar could remain relatively stable this year... if the dollar continues to strengthen.

 

But as you say, anything can happen... maybe in the second half of the year may involve a return of risk... but I still find it hard to see 1650 in US dollars by January 2011. People are too bearish on the dollar.

 

Disclaimer: I am overweight in bullion. :lol:

 

Edited

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On a deflationary downdraft we could see higher gold prices in pounds, Aussie and Kiwi dollars, and Euros.... but this may only represent the depreciation [capital flight] of these currencies relative to both gold and the dollar. The price of gold in the dollar could remain relatively stable this year... if the dollar continues to strengthen.

 

But as you say, anything can happen... maybe in the second half of the year may involve a return of risk... but I still find it hard to see 1650 in US dollars by January 2010. People are too bearish on the dollar.

 

Disclaimer: I am overweight in bullion. :lol:

 

You might want to edit your last post regarding 2010. :blink:

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You might want to edit your last post regarding 2010. :blink:

Opps... still getting used to 2010. I was thinking about 2010 the other day. A new decade, starting with 0... for the mass of investors this could mark for them the start for a long term bear market in stocks. Of course, others saw this start earlier, where the recovery was interpreted as a bounce.

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http://jsmineset.com/2010/02/09/unpreceden...ancial-history/

Unprecedented Challenges In Financial History

Posted: Feb 09 2010 By: Jim Sinclair Post Edited: February 9, 2010 at 12:26 am

 

Filed under: General Editorial

 

My Dear Extended Family,

 

I doubt there has ever been a time in financial history when there has been challenges of this magnitude.

 

This is not business as usual in any form.

 

When have financial meetings been so top secret?

When has the military cordon off financial meetings?

When have F-18s, F-22s and French Rafales provided air support (as the Swiss did for the Davos seminar) for two central bank meetings in the last few weeks as the USA and Australia did?

 

Don’t accept terrorism as an excuse for everything that remains unexplained. There are so many lies and so much misinformation out there that the task of figuring out what is real is a daunting task.

 

I implore you to go for safety in everything you do. How can you go wrong hunkering down?

 

Do not speculate.

 

You cannot out trade these people nor can you read their intentions by charts. Both are impossibilities.

 

Do not deal on borrowed money. Secure you and yours. Take delivery of your precious metals and share certificates.

We are in unchartered seas of international financial turmoil. The mega rich have no loyalty to anyone or anything.

 

I know some of them, made one of them from scratch, and I assure you would put their mothers in a microwave for the right price. This is a financial world war taking place behind top secret meetings that are deciding our fate while not even knowing they are out of control.

 

I can’t change this but I can do my best to protect you.

 

Respectfully,

Jim

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I wanted to add: I agree with Sinclair. I feel that there is large-scale complacency around. The reason is that the system did not collapse in 2008, due to excessive money creation, and the complacency is so huge that people who were in charge back then, like ex-U.S. Secretary of the Treasury Hank Paulson can now come out and announce in all public that the world almost ended back then. The question is: what has improved since then? What has been fixed? I think not much, if at all. The hedgies are out there, still waiting to make their kill. Greece was a start, but it's possibly too small to be interesting.

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...I feel that there is large-scale complacency around.

...The question is: what has improved since then? What has been fixed? I think not much, if at all. The hedgies are out there, still waiting to make their kill. Greece was a start, but it's possibly too small to be interesting.

Agreed.

Rates are lower, and that has brought back confidence.

But the current ultra-low rate regime is unsustainable, and that's what people are missing.

Debts are building, and wasteful investments are being made.

 

A problem caused by waste and debt is not solved by more waste and debts.

This is the "alcoholic's solution" and it may seem right for a while, but will not work long term.

 

See my argument on this in the Y-shaped downturn

 

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http://jsmineset.com/2010/02/18/fed-raises...er-point-to-75/

The final Pillar in the gold bull market is a bear market in US Treasuries.

 

The increase in the discount rate to 0.75% is driven by market realities and a desire to be able to sell US Treasuries as foreign demand falls off.

 

The bull market in gold moved from $400 to $887.50 in the 1970s as interest rates rose from 3% to 14 7.8% on Ten Year money.

 

Once again the knee jerk reaction is to sell gold and buy the dollar. Be assured this must happen.

 

Because the final Pillar is falling while Gold is over $1000, you can look at Armstrong’s $5000 prediction as a realistic possibility.

 

Stay the course.

 

Respectfully,

Jim

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The RISE IN THE DISCOUNT RATE TODAY

 

isnt going to hurt the dollar one bit.

 

Jim's wrong again...on his timing.

(But right on his long term thinking, I suspect)

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Eric King of King World News today got a most incisive 12-minute interview out of Jim Sinclair, proprietor of JSMineSet.com, and America’s "Mister Gold," in which Sinclair remarked, among other things:

 

– Physical demand for gold has overwhelmed paper gold selling five times in the last two weeks and the cash market will run the gold market

– Gold is now the leading currency.

– While the bankruptcy of Greece is convulsing the financial markets, the bankruptcy of California is four times worse.

– All states and nations will be bailed out by central banks with "qualitative easing to infinity."

– The continuing pessimism about gold’s prospects is a guarantee of higher prices.

– The decline of currencies may produce a "Weimar effect" on equities, pushing them up.

– Confidence in government currencies can evaporate overnight.

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Dear Extended Family,

 

The solution is the problem. To quote Bill Carleton’s album, Squeeze the People, "Main Street is in the hands of a Roulette Wheel." He is so correct.

 

The name of the "Roulette Wheel" is Credit Default Swaps. It does not matter what the G-7 or the G-20 does. It does not matter what the IMF, ECB and Fed under a beard do. Mrs. Merkel’s foolish political strategy fits right into the equation.

 

CDS are going to take down every major currency, making trillions for the players. It will in time turn on the USA as it is already operating against the financially weaker Illinois and New York debt.

 

The dollar, as it gains ground due to the mirror image of the euro, becomes weaker and weaker due to overvaluation with no fundamental legs. The dollar’s time will come.

 

The OTC derivative credit default swap is about to clean the clock of the world. Der Spiegel is right but the debt is there. It will not go away but only grow bigger. The situation is in the cross hairs of the richest people on the planet hell bent on getting richer. That is the message of the Dow dropping 1000 points regardless of how it happened.

 

Nothing the G-7 or G-20 does will stop the predetermined avalanche in the world of fiat currency. Armstrong is right in that when it comes time for the great coming apart it will be akin to the Big Bang.

 

You are either ready now, or there will be no chance of readiness. Right now ready means gold and gold equivalents. The last currencies to be attacked will be the Cando and the Swiss Franc.

 

It is all over. The fat lady has sung.

 

Respectfully,

 

Jim

 

 

 

The Mother of All Bubbles

 

Huge National Debts Could Push Euro Zone into Bankruptcy

 

Greece is only the beginning. The world’s leading economies have long lived beyond their means, and the financial crisis caused government debt to swell dramatically. Now the bill is coming due, but not all countries will be able to pay it.

 

By SPIEGEL staff.

 

Savvas Robolis is one of Greece’s most distinguished economics professors. He advises cabinet ministers and union bosses. He is also a successful author and a frequent guest on the country’s highest-rated talk shows. But for several days now, it has been clear to Robolis, 64, the elder statesman of Greece’s left-wing academia, that he no longer has any influence.

 

His opposite number, Poul Thomsen, the Danish chief negotiator for the International Monetary Fund (IMF), is currently something of a chief debt inspector in the virtually bankrupt Mediterranean country. He recently took three-quarters of an hour to meet with Robolis and Giannis Panagopoulos, the president of the powerful trade union confederation GSEE. At 9 a.m. on Tuesday of last week, the men met behind closed doors in a conference room in the basement of the Grande Bretagne, a luxury hotel in Athens. The mood, says Robolis, was "icy."

 

Robolis told the IMF negotiator that radical wage cuts would be toxic for Greece’s already comatose economy. He said that the Greeks, given their weak competitive position, primarily needed innovation and investment, and that a one-sided fixation on cleaning up the national budget would destroy the last vestiges of economic strength in Greece. The IMF, according to Robolis, could not make the same mistake as it did in Argentina in the early 1990s. "Don’t put Greece on ice!" the professor warned.

 

But the tall Dane was not very impressed. He has negotiated aid packages with Iceland, Ukraine and Romania in the past, and when he and his 20-member delegation landed in Athens on April 18, they had come to impose a rigorous austerity program on the Greeks, not to devise long-term growth programs.

Thomsen’s mandate is to save the euro zone. And any Greek resistance is futile.

 

Time to Foot the Bill

Robolis versus Thomsen. For the moment, this is the last skirmish between the old ideas and ideals of prosperity paid for on credit and a generous state, against the new realization that the time has come to foot the bill. The only question is: Who’s paying?

 

The euro zone is pinning its hopes on Thomsen and his team. His goal is to achieve what Europe’s politicians are not confident they can do on their own, namely to bring discipline to a country that, through manipulation and financial inefficiency, has plunged the European single currency into its worst-ever crisis.

If the emergency surgery isn’t successful, there will be much more at stake than the fate of the euro. Indeed, Europe could begin to erode politically as a result. The historic project of a united continent, promoted by an entire generation of politicians, could suffer irreparable damage, and European integration would suffer a serious setback — perhaps even permanently.

 

And the global financial world would be faced with a new Lehman Brothers, the American investment bank that collapsed in September 2008, taking the global economy to the brink of the abyss. It was only through massive government bailout packages that a collapse of the entire financial system was averted at the time.

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Friends,

 

You have nothing to fear, but Fear itself.

 

Unfortunately for many people, Big Fears are walking the land once again,

and there shadows are headed towards us.

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You are either ready now, or there will be no chance of readiness. Right now ready means gold and gold equivalents

Dear friends,

 

I suppose the above refers to silver and gold stocks. Can these really be called "equivalents"? Maybe gold will be in a class of its own in the future. All derivatives and representations could be suspect in a deflationary purge... until a restoration of a gold standard that is.

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Friends,

 

You have nothing to fear, but Fear itself.

 

Unfortunately for many people, Big Fears are walking the land once again,

and there shadows are headed towards us.

 

"Only Thing We Have to Fear Is Fear Itself" - FDR, 32nd US President and part-time gold confiscator.

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A nuclear solution to Europe’s debt problems is simply another way of saying "Quantitative Easing to Infinity."

 

All national debt will be bailed out. All states of the USA will be bailed out.

 

Paper currencies are headed to dust.

 

Regardless of the first knee jerk market reaction, gold is going to $1650 and beyond due to nuclear suggestions of adding more debt to entities failing because of debt. This is the EU Helicopter Drop coming up.

 

Credit default swaps are herein called the "Wolfpack." About that they are totally correct.

 

Now that they have challenged the "Wolfpack," whatever additional funds might be required will have to be provided or the "Wolfpack" will slaughter the EU.

 

~Jim Sinclair - http://jsmineset.com/

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As spotted on JSMineset:

 

http://uk.news.yahoo.com/4/20100517/tuk-li...ea-dba1618.html

Little liars grow up to be great leaders

...

"Parents should not be alarmed if their child tells a fib," said Dr Kang Lee, director of the Institute of Child Study at Toronto University who carried out the research. "Almost all children lie. Those who have better cognitive development lie better because they can cover up their tracks. They may make bankers in later life."

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As spotted on JSMineset.

 

http://www.bloomberg.com/apps/news?pid=206...id=a2eu6WpDGEEc

Gold a ‘Good Choice’ for Boosting Global Use of Yuan (Update2)

...

May 28 (Bloomberg) -- China’s trade in yuan-denominated gold investment products moves the currency closer toward global acceptance and the country should develop more of them, a central bank official said.

Pricing commodities in the currency “helps China’s goal to internationalize the yuan,” Wang Zhenying, deputy director- general of the Department of Financial Management at the Shanghai office of the People’s Bank of China, said today. “Gold is a good choice to have yuan trading.”

 

Gold consumption in China, the world’s biggest producer, may double within the next 10 years as supplies fail to keep pace with demand from investors and the jewelry industry, the World Gold Council said in March.

...

“Although the gold market only accounts for about 1/400- 1/500 of China’s financial markets, the meaning of it is going to be significant,” Wang said. “A currency’s international status depends on its being accepted in trade and settlement and having certain financial products priced in that currency.”

...

Full internationalization of the yuan will take 15 to 20 years, Dai Xianglong, chairman of China’s National Council for Social Security Fund, said last month. This doesn’t mean the currency will displace the dollar, which will remain dominant in the global currency system, he said.

 

“We have more than 30 trillion yuan worth of savings in deposits and the lack of investment products have contributed to Chinese investors going into mungbeans and garlic lately,” the central bank’s Wang said. “We can develop more gold products to attract investor demand.”

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Dear Comrades In Golden Arms,

 

1. The euro is stronger this morning on debt sales by weaker euro countries and the German high court permitting bailouts. As I see it this was the use of emergency funds via beards that is as effective QE as if they were bought directly by the ECB and the Fed.

 

2. The criminal litigation against major international investment companies in the southern district of New York must be extremely scary for them. The Manko and Edelman cases should be reviewed not only for legal precedent set, but also for legal points made by the prosecutor.

 

3. Nothing has changed except for the acceleration of QE across all Western nations.

 

Respectfully,

Jim

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BP the next Lehman?

 

http://jsmineset.com/2010/06/22/jims-mailbox-470/

Dear Jim,

 

The BP crisis in the Gulf of Mexico has rightfully been analysed from the ecological perspective. People’s lives and livelihoods are in grave danger. But that focus has equally masked something very serious from a financial perspective, in my opinion, that could lead to an acceleration of the crisis brought about by the Lehman implosion.

 

People are seriously underestimating how much liquidity in the global financial world is dependent on a solvent BP. BP extends credit – through trading and finance. They extend the amounts, quality and duration of credit a bank could only dream of. The Gold community should think about the financial muscle behind a company with 100+ years of proven oil and gas reserves. Think about that in comparison with what a bank, with few tangible assets, (truly, not allegedly) possesses (no wonder they all started trading for a living!). Then think about what happens if BP goes under. This is no bank. With proven reserves and wells in the ground, equity in fields all over the planet, in terms of credit quality and credit provision – nothing can match an oil major. God only knows how many assets around the planet are dependent on credit and finance extended from BP. It is likely to dwarf any banking entity in multiples.

 

And at the heart of it all are those dreadful OTC derivatives again! Banks try and lean on major oil companies because they have exactly the kind of credit-worthiness that they themselves lack. In fact, major oil companies, conversely, spend large amounts of time both denying Banks credit and trying to get Bank risk off of their books in their trading operations. Oil companies have always mistrusted bank creditworthiness and have largely considered the banking industry a bad financial joke. Banks plead with oil companies to let them trade beyond one year in duration. Banks even used to do losing trades with oil companies simply to get them on their trading register… a foot in the door so that they could subsequently beg for an extension in credit size and duration. For the banks, all trading was based on what the early derivatives giant, Bankers Trust, named their trading system: RAROC – or, Risk Adjusted Return on Credit. Trading is a function of credit bequeathed, mixed with the risk of the (trading) position. As trading and credit are intertwined, we might do well to remember what might happen to global liquidity and markets if BP suffers what many believe to be its deserved fate of bankruptcy. The Intercontinental Exchange (ICE) has already been and will be further undermined by BP’s distress. They are one of the only “hard asset” entities backing up this so-called exchange.

 

If BP does go bust (regardless of whether it is deserved), and even if it is just badly wounded and the US entity is allowed to fail, the long-term OTC derivatives in the oil, refined products and natural gas markets that get nullified could be catastrophic. These will kick-back into the banking system. BP is the primary player on the long-end of the energy curve. How exposed are Goldman sub J. Aron, Morgan Stanley and JPM? Probably hugely. Now credit has been cut to BP. Counter-parties will not accept their name beyond one year in duration. This is unheard of. A giant is on the ropes. If he falls, the very earth may shake as he hits the ground.

 

As we are beginning to see, the Western pension structure, financial trading and global credit are all inter-twined. BP is central to this, as a massive supplier of what many believe(d) to be AAA credit. So while we see banks roll over and die, and sovereign entities begin to falter… we now have a major oil company on the verge of going under. Another leg of the global economic “chair” is being viciously kicked out from under us. Ecological damage is not just an eco-event on its isolated own. It has been added to the list of man-made disasters jeopardizing the world economy. The price tag and resultant knock-on effects of a BP failure could easily be equal to that of a Lehman, if not more. It is surely, at the very least, Enron x10.

 

All the counter-party risk associated with the current BP situation means the term curve of the global oil trade has likely shut down. Here we have yet another credit-based event causing a lock-up in markets that will now impede trade and commerce. It looks like an exact replication of the 2008 credit market seizure could ensue all over again – and it could probably be a lot worse. The world is in a far more delicate state now.

 

Although never really discussed, the world is highly reliant on BPs provision of long-term credit to many core industries. Who makes good on all the outstanding paper that so many smaller oil, gas and electricity companies, airlines, shipping companies, local bus, railway and transportation networks that rely on BPs creditworthiness and performance for? It doesn’t take a genius to figure out how this could all unwind. If BP has to be bailed-out, like a bank, the system will have to print even more unimaginable amounts of money.

 

The market, intellectually lazy and slow to realization, as it often is, probably has not woken up to it yet – but the BP crisis could unleash damage similar to the banking crisis. A BP failure through bankruptcy could make Lehman look small in comparison, and shake the financial house of cards we live in even more severely. If the implicit danger of the possibilities imbedded in such an event doesn’t make an individual now turn towards Gold at full speed, it is likely that nothing will.

 

Respectfully yours,

CIGA Pedro

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http://jsmineset.com/2010/07/01/why-we-do-what-we-do/

Why We Do What We Do

 

Dear Extended Family,

 

There are times when you must ignore the hedgie madness in the marketplace and revert to why we are doing what we are doing.

 

The deflation being spoken of today is the catalyst for the coming hyperinflation. The fact is it has been so in all historic examples. The flooding of markets with debt has been brought on for different reasons, but the ways and means of hyperinflation has always been the same.

 

Therefore it is today’s financial market deflation talk that is the reason why you should own gold.

 

This continued downturn in business will find government in a panic, not in austerity when their constituency does the Greek dance of panic as the pain on Main Street becomes intolerable. It will.

 

Contemplate what each of the following means to you one at a time. Do not try to do them all at once. You do not want to do this as a routine memory exercise as much as a meditation on why you have bought the insurance you have.

 

- Gold is a currency with no liabilities attached.

- Gold is competition to paper currency.

- Gold is not a commodity.

- Gold is a barometer of fear.

- Gold is a barometer of confidence in Government.

- Gold is insurance.

- Insurance is not something to trade.

- Gold is money when money fails.

- Hyperinflation is a currency event, not an economic event.

- Hyperinflation is a currency event described as a loss of confidence in the currency.

- Gold in your hand eliminates counter-party risk.

- Gold is the high ground when the global tsunami hits.

- Gold removes financial agents between you and your assets.

 

Be strong in your conviction and do not be bothered by the return of the Prechterites and top callers.

 

Respectfully,

Jim

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Sinclair going Fekete:

 

Jim Sinclair’s Commentary

 

Chinese demand for gold is a physical demand which will reveal itself in the comparison of COMEX near delivery contract price and the cash market price.

 

As they close in on each other that says physical demand. If it ever goes to backwardation then Asia is in charge.

 

Backwardation, in this case, is a cash physical market bid above COMEX near delivery month. At that point the physical market is in charge of the futures market for gold, a unique currency.

 

Such a market development, when it occurs, is extremely bullish in the unique market for gold.

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