Breakfast with Jamie [Dimon]
Posted: Dec 29 2010 By: Jim Sinclair Post Edited: December 29, 2010 at 4:04 pm
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In The News
Home Prices Drop Most in Largest Cities By AP / JANNA HERRON Tuesday, Dec. 28, 2010
(NEW YORK) — Home prices are dropping in the nation’s largest cities and are expected to fall through next year, as fewer people purchase homes and millions of foreclosures come on to the market.
The Standard & Poor’s/Case-Shiller 20-city home price index released Tuesday fell 1.3 percent in October from September.
All cities recorded monthly price declines. The last time that happened was in Feb. 2009.
Atlanta recorded the largest decline. Prices there fell 2.9 percent from a month earlier. Home prices in Washington dropped 0.2 percent in October, the second monthly decline after five straight increases.
Home prices in Dallas, Portland, Ore., Charlotte, N.C., Tampa, Fla. and Denver have fallen for four straight months.
The 20-city index has risen 4.4 percent from their April 2009 bottom. But it remains 29.6 percent below its July 2006 peak.
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Jim Sinclair’s Commentary
It was the blizzard’s fault as we know it was snowing from California to Maine.
Christmas Week Retail Sales Fall 4.1% By Theresa McCabe 12/29/10 – 01:13 PM EST
NEW YORK (TheStreet) — Retail sales were down 4.1% during Christmas week as Dec. 26 fell on a Sunday and wasn’t included in the week’s sales.
Research firm ShopperTrak said that about $1 billion in sales that could have taken place on Dec. 26 and 27 were postponed due to the winter storm that caused many roads and airports in New York to shut down and created travel chaos throughout the Northeast.
The firm said that U.S. foot traffic on the day after Christmas was down 11.2% from last year because of the storm.
Data also showed that Dec. 23 was the season’s second biggest shopping day, coming in after Nov. 26, or Black Friday.
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Jim Sinclair’s Commentary
It is simply massive fraud.
Sign of the Times – Foreclosure Report Rips Rubber-Stamp Notary Wednesday, December 29, 2010 12:53 PM
Source: The New York Post)trackingBy KAJA WHITEHOUSE
The face of New Jersey’s robo-signing scandal may be a Pennsylvania notary public who signed thousands of foreclosure documents in the Garden State even though he wasn’t licensed there.
Thomas Strain, who now heads the bankruptcy team at GMAC Mortgage Corp., has emerged as a key player in New Jersey’s foreclosure mess through a damning report that swayed the state’s top judge to crack down on rogue foreclosure filings by the nation’s largest mortgage lenders, including GMAC.
Earlier this month, New Jersey’s chief justice, Stuart Rabner, announced severe measures to halt abusive foreclosure practices in the state, including rubber-stamping documents without verifying their authenticity, known as robo-signing.
Among the measures, Rabner is requiring the nation’s six largest mortgage lenders, including Ally Financial’s GMAC, Citigroup, OneWest Bank and Wells Fargo, to prove their procedures are up to par at a hearing set for Jan. 19 – or risk having their foreclosure activities suspended in the state.
In announcing the measures, Rabner pointed to a report compiled by Legal Services of New Jersey, a non-profit in Edison, NJ, which mentions Strain in no less than four cases involving instances of robo-signing when Strain worked for Mount Laurel, NJ-based Full Spectrum Services prior to joining GMAC in 2009. The report also repeatedly mentions Strain’s former boss, Frank Hallinan, a lawyer with mortgage law firm Phelan, Hallinan and Schmeig.
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Jim Sinclair’s Commentary
Let’s cut the crap. There is no way that the mountain of old derivatives making up now more than 90% of the OTC derivative population can be cleared.
There are no standards so therefore there can be no margin facility. Without that they cannot be cleared except a cartoon.
If the new CDS OTC derivatives are cleared it will without any doubt bust the clearing agent by early 2012. That is the reason for the pull out. Don’t listen to the MOPE.
Derivatives Clearing Group Decides Against Registration BY BEN PROTESS
The world’s largest clearinghouse for credit-default swaps, ICE Trust, has had second thoughts about registering with regulators, citing concerns over new rules devised to bring transparency to the $600 trillion derivatives market.
ICE Trust, a division of the Intercontinental Exchange, the big derivatives exchange, applied to be a derivatives clearing organization with the Commodity Futures Trading Commission in November. Last week, the company quietly withdrew its application.
In a Thursday letter to the commission, which was released on Tuesday, a lawyer for ICE Trust said the company changed its mind because of “significant changes proposed to” regulations for clearing organizations.
The gesture may be symbolic. In July, ICE Trust will automatically be granted status as a clearinghouse, under the Dodd-Frank financial overhaul law.
A spokesman for ICE declined to comment.
ICE, which has cleared more than $14 trillion of credit-default swaps since it started in 2009, said it had applied with the commission to bring its operations into compliance more quickly and to attract new customers before the rules went into effect in July. But the clearinghouse decided to hold off, owing to uncertainty around the process.
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Jim Sinclair’s Commentary
The Green Hornet says oh my god!
Bailed-Out Banks Slip Toward Failure by Michael Rapoport
Monday, December 27, 2010
Number of Shaky Lenders Rises to 98 as Bad Loans Pile Up; Smaller Institutions Hit Hardest
Nearly 100 U.S. banks that got bailout funds from the federal government show signs they are in jeopardy of failing.
The total, based on an analysis of third-quarter financial results by The Wall Street Journal, is up from 86 in the second quarter, reflecting eroding capital levels, a pileup of bad loans and warnings from regulators. The 98 banks in shaky condition got more than $4.2 billion in infusions from the Treasury Department under the Troubled Asset Relief Program.
When TARP was created in the heat of the financial crisis, government officials said it would help only healthy banks. The depth of today’s problems for some of the institutions, however, suggests that a number of them were in parlous shape from the beginning.
Seven TARP recipients have already failed, resulting in more than $2.7 billion in lost TARP funds. Most of the troubled TARP recipients are small, plagued by wayward lending programs from which they might not recover. The median size of the 98 banks was $439 million in assets as of Sept. 30. The median TARP infusion for each was $10 million, federal filings show.
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Jim Sinclair’s Commentary
Surprise, surprise as Turkey flexes its new politically perceived muscles.
Preference for Gold Savings Among Turks Surges, Hurriyet Says By Benjamin Harvey – Dec 28, 2010 10:59 PM PT
Preference for holding gold as a form of savings in Turkey surged to the highest level since at least 1998, Hurriyet newspaper reported, citing a Mastercard survey in the country.
Gold was the most-preferred savings vehicle among Turks, at 22 percent, followed by savings of Turkish lira “stuffed under the pillow” in second at 21 percent and bank deposits in third at 15 percent, Hurriyet said, citing Mastercard’s survey in 11 Turkish provinces. Foreign-currency savings were preferred by around 8 percent of the population, while bond purchases and stocks each accounted for 6 percent, it said.
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Posted: Dec 29 2010 By: Jim Sinclair Post Edited: December 29, 2010 at 2:10 pm
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Jim's Mailbox
Jim Sinclair’s Commentary
Words of mature wisdom from good Sir Richard (Russell).
Dear Friends,
December 27, 2010 — I have posted below the year-end price of gold starting with the year 2000, the first up-year of one of the greatest and least appreciated bull markets in history. Take in this series, you may never see it like again.
2000 — $273.60
2001 — $279.00
2002 — $348.20
2003 — $416.10
2004 — $438.40
2005 — $518.90
2006 — $638.00
2007 — $838.00
2008 — $889.00
2009 — $1118.40
2010 — ?
I’ve been around a long time, and I’ve studied many primary bull markets. And now I want to venture a few of my observations.
In markets, I have never seen a series like the above end with a whimper or a fizzle. The end or the wind-up of such a series usually arrives with an upside "explosion," as those who have failed to participate in the series finally rush in to join in the apparent endless advance. This is the wild and wooly speculative phase of a great bull market. Big bull markets don’t end with a sigh, they end in exhaustion.
(1) Most great primary bull markets last longer and carry farther than the majority of investors (even the bulls) expect.
(2) A great primary bull market is an expression of something changing in a very fundamental and meaningful way. Following a great bull market, the world is never quite the same.
…………………………………………………………..
His father, Congressman Howard Buffett, understood gold, but his son, Warren Buffett, does not understand gold.
Maybe this will help Warren. Why is gold the ultimate and timeless money?
Good money must have a number of unique characteristics.
(1) It must be durable, which is why we don’t use wheat or corn.
(2) It must be divisible, which is why we don’t use a Picasso painting or jade statues.
(3) It must be convenient, which is why we don’t use lead or copper or real estate.
(4) It must have value in itself, which is why we don’t use paper.
(5) It must be transportable, which means that large values must be contained in a small area (a gold coin weighing only one ounce can be worth far more than fifteen hundred dollars).
(6) It must have a long history of being accepted as a store of value. Gold was considered valuable as long as 5,000 years ago in the age of the Egyptians.
(7) It cannot "disappear" or be used up in manufacturing as is copper and even silver. Thus, the gold coin that you have in your hand may have been part of Cleopatra’s earrings centuries ago. Almost all the gold that has ever been discovered is still available in one form or another.
(8) It must not be the liability of any sovereign nation, nor should it require governmental law to make it money. For instance Gold requires capital, talent, risk, sweat and courage to recover or to accumulate.
Russell note — It’s possible that gem-quality diamonds can fit all the above characteristics but two. Diamonds are not divisible, nor do they have a long history of being stores of value.
Second note — The Washington-based IMF recently completed its promised sale of gold. It was rumored that the IMF would have to sell its gold on the open market. Not so. The fact is that central banks eagerly gobbled up the IMF’s gold. According to The Financial Times, the IMF sold its gold directly to the central banks of India — 300 tonnes, Sri Lanka — 10 tonnes, Bangladesh — another 10 tonnes, and Mauritius — two tonnes.
And why are these central banks trading paper for gold? After all, it’s the central banks that are creating the fiat paper. Why are they swapping their own beloved products for gold?
The latest anti-gold propaganda centers around the gold exchange traded funds. A full page article in Sunday’s New York Times implied that only with the advent of all the gold ETFs has gold boomed. The article implies that the ETFs (mainly GLD) allowed an ignorant public to buy gold, and that this is the reason for gold’s recent advances. The article did not explain why gold has risen yearly for almost a decade, even before gold ETFs were created. The Times article hinted that gold was in a bubble, and that it was a dangerous bubble. The article emphasized the 20-year gold bear market of 1980 to 1999.
……………………………………………………………………..
For the first time, more gold is being taken for investment than is used in jewelry. Asians have been gold buyers for years, while Americans have accumulated dollars and are just beginning to learn about gold. Meanwhile, the ignorant media continues to publish "beware" articles about gold. Soros announces that gold is the "biggest bubble" in the area of commodities, but the Soros largest holding is in gold. Sound as though Soros wants to knock the price of gold down so he can buy more on the cheap.
These billionaire investors; they have no consciences. Hmm. maybe that’s why they’re billionaires.
Until Tuesday,
Russell
Jim,
I had a few questions that I would like you to address if you can.
Several years ago you made the comment that the time would be coming when, if a person had the money, they could buy whatever they wanted for pennies on the dollar as people would be trying to sell whatever they had to pay off their debts. Is this still a likely future event or will hyper-inflation just cause the cost of things to sky-rocket and if you need something like a used car, etc. you should buy it now?
I have my portfolio divided between 2 different brokers. Is it still critical to take the stocks out in certificate form? I’m not so much worried about having a hold put on my account even for several months, I haven’t been trading my positions much anyway. I’ve tried to get into mining companies that are performing well and I’m just holding what I have. But I sure wouldn’t want to lose my positions. What is the likelihood that one day I could find out that my positions are gone if they’re held in my broker account?
If things got that severe in the financial markets would you consider it to be more likely to happen during the second run up from $2500 to $10000 gold that Armstrong is predicting?
Is having the stock held in my name by the clearing house sufficient or should I be holding the actual certificate?
Are you still holding to the position that if we don’t see $1650 gold by Jan. 14th that it will be $3000-5000 in June?
Thank you for your time,
CIGA Steve
CIGA Steve,
Own gold then buy toys if you must. That is the way to buying for a value of peanuts in time.
Gold is properly defined as insurance. Everything gold is a gradient of insurance. Is it not wise to keep insurance close at hand? Many gold companies no longer issue paper certificates however.
My deep respect for Alf and Armstrong move me to say they will be right at some time in the not too distant future. $10,000 is a bit of a reach.
That is called direct registration and is the second best route to take.
I stand by what I have said recognizing that I may have made a fool out of myself in public. The fact that I said $1650 many years ago is no excuse if I am wrong on January 14th 2011 and gold is at $1550.
There is no gray, for a responsible person, in what you say.
Jim
Jim,
“The world will soon wake up to the reality that everyone is broke and can collect nothing from the bankrupt, who are owed unlimited amounts by the insolvent, who are attempting to make late payments on a bank holiday in the wrong country, with an unacceptable currency, against defaulted collateral, of which nobody is sure who holds title.”
CIGA Everett
Dear Everett,
No fiat currency, by definition, holds that title.
Only gold is impervious to the madness of today’s financial world.
Regards,
Jim
What Price is High Enough? CIGA Eric
One observation to Jim’s responses to various questions included below,
What price is high enough? The answer to that will reflect the state of confidence within the current monetary system. Confidence will be heavily influence by the extent of nominal debt destruction through direct and indirect default into 2016.
The trend in total credit market debt as a percentage of national income will influence confidence within the old monetary system. The liquidation process, if permitted, will help restore confidence. Of course, this is only the officially recognized credit market debt. Accounting "flexibility" hides a much larger burden.
Total Credit Market Debt As A% GDP: 
It doesn’t take much insight to recognize that the liquidation phase has only just begun. The termination of the blow off phase represents the initial stages of the Great debt revaluation. The Great debt revaluation as defined by the upward revision in the price of gold began in 2000.
How long the world attempt to exude confidence while looking the other way?
The economic gain for each dollar of debt created has slumped well below the Great Depression lows. The law of diminishing returns has begun to handcuff policy options.
Annual Gross Domestic Product (GDP) per Annual Total Credit Market Debt (TCMD):
Annual Income Growth per Debt Creation 
It will be impossible to define the ultimate price target because mathematical equations cannot predict emotions.
The trend, however, remains up. A 5-handle looks extremely plausible. The final value, driven by emotions, will likely surprise even the bulls.
Gold, London P.M. Fixed: 
————-
I had a few questions that I would like you to address if you can.
Several years ago you made the comment that the time would be coming when, if a person had the money, they could buy whatever they wanted for pennies on the dollar as people would be trying to sell whatever they had to pay off their debts. Is this still a likely future event or will hyper-inflation just cause the cost of things to sky-rocket and if you need something like a used car, etc. you should buy it now?
Own gold then buy toys if you must. That is the way to buying for a value of peanuts in time.
I have my portfolio divided between 2 different brokers. Is it still critical to take the stocks out in certificate form? I’m not so much worried about having a hold put on my account even for several months, I haven’t been trading my positions much anyway. I’ve tried to get into mining companies that are performing well and I’m just holding what I have. But I sure wouldn’t want to lose my positions. What is the likelihood that one day I could find out that my positions are gone if they’re held in my broker account?
Gold is properly defined as insurance. Everything gold is a gradient of insurance. Is it not wise to keep insurance close at hand?
However many gold companies no longer issue paper certificates.
If things got that severe in the financial markets would you consider it to be more likely to happen during the second run up from $2500 to $10000 gold that Armstrong is predicting?
My deep respect for Alf and Armstrong move me to say they will be right at some time in the not too distant future. However $10,000 is a reach.
Is having the stock held in my name by the clearing house sufficient or should I be holding the actual certificate?
That is called direct registration and is the second best route to take.
Are you still holding to the position that if we don’t see $1650 gold by Jan. 14th that it will be $3000-5000 in June?
When you make a statement only a woos wiggles away. I stand by what I have said recognizing that I may have made a fool out of myself in public. The fact that I said $1650 many years ago is no excuse if I am wrong on January 14th 2011 and gold is at $1550.There is no gray, for a responsible person, in what you say.
Thank you for your time,
Steve
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