Should U.S. say it's selling gold before world learns it's long gone?

 

My Gold Cabin

 

FOMC Minutes: "Appropriate To Provide Additional Monetary Policy Accommodation"

 

Shorts Refuse To Capitulate: End Of September NYSE Short Interest Near Record Highs

 

US Long-Only Funds Selling Surges To Level Last Seen In Days Following Lehman Collapse

 

In The News Today

Posted: Oct 12 2010     By: Jim Sinclair      Post Edited: October 12, 2010 at 2:24 pm
Filed under: In The News

Dear CIGAs,
You have to love the Money Bunnies on Financial TV. This morning with most of the world markets lower the reason given was concerns about China.
The strange thing was the only market that was up was China.



Jim Sinclair’s Commentary
Now there is a gentleman. Jochen changed the price by $50.

‘Gold is the best asset class to be in’
After a 10-year bull run, conventional wisdom says it’s too late to join the party. Is it different this time? By Richard Evans
Published: 5:36PM BST 10 Sep 2010
The trouble with chasing performance is that you often join the party too late. Yet gold continues to defy the odds and if the great and the good of the investment world are to be believed, the gold price has further to go.
Last week, the analyst rated the most accurate forecaster of the gold price said the precious metal would keep rising.
Jochen Hitzfeld, an analyst at UniCredit, the Italian bank, has been rated by Bloomberg, the news agency, as the most accurate gold forecaster over the past three quarters. He reckons the gold price is heading for $1,600 an ounce.
His forecast is the latest in a long line of optimistic predictions. Other gold bulls include George Soros, famous for making £1bn by betting against the Bank of England, and John Paulson, the hedge fund manager who made $20bn by calling the credit crisis correctly.
These expectations that the price of gold will continue to rise come despite the metal already enjoying a decade-long bull market, rising from $253 in 1999 to its current level of about $1,260, a whisker below its all-time high of $1,265 reached in June.
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Jim Sinclair’s Commentary
The G20 totally flopped on this subject. There is no way the kids are going to play nice.
This time the loss in confidence will not only be in the dollar but in all western world currencies.

World Faces New Wave of Currency Wars
An American bill imposing punitive tarifs on countries that undervalue their currencies is set to unleash a new trade war between the US and China. But in fact the whole global currency system is in a state of jeopardy. As confidence in the dollar drops, private investors are putting their faith in gold. By SPIEGEL Staff.
At first glance, the new bill sounds perfectly innocuous. "H. R. 2378 — Currency Reform for Fair Trade Act" was on the agenda of the US House of Representatives late last Wednesday afternoon. Fair trade — who could object to that?
But as the representatives started debating, it didn’t sound harmless anymore. In fact, it sounded like war.
"International trade is a high-stakes, cutthroat business. And every time we simply talk, the other side acts. And every time they act, an American loses a job," said Xavier Becerra, a Democratic congressman from California.
Timothy Murphy, a Republican from Pennsylvania, went one step further: "We are about to lose our position as a global leader when next year China overtakes us as the biggest manufacturer in the world. The trouble is that China has never really accepted the basic rules of fair trade."
Democrat Linda Sanchez from California argued: "Opponents say that this bill will start a trade war. I say, we are already in a trade war. And China is using cannons and we’re standing here shooting (air gun) pellets."
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Jim Sinclair’s Commentary
Those kids, they will never play nice.

IMF fails to strike deal over currency frictions
The International Monetary Fund on Saturday night failed to reach agreement on tackling mounting global "frictions" over exchange rate policies despite US calls to deal with the issue more forcefully. Philip Aldrick in Washington DC
Published: 11:21PM BST 09 Oct 2010
The IMF policy committee, which has been struggling to agree a consensus on easing currency tensions among key economies including China and the US, said the organisation should instead keep the issue under watch.
Pressure has been piling on China to speed up the pace of economic reform by dropping its policy of using a weak currency and reserve accumulation to boost exports. Finance ministers at the 187-strong lending agency have accused China of imperilling the global recovery by fostering the imbalances that are preventing deficit countries like the US and UK from returning to economic health.
IMF officials argue that if China let its currency appreciate, Chinese imports would become more expensive, potentially sparking demand for US goods. The US is facing crippling levels of unemployment despite returning to growth, which has raised fears of a "jobless recovery" that could trigger political and social unrest.
European Central Bank president Jean-Claude Trichet last night pointedly reminded China of its commitment last June to "engage in exchange rate flexibility", adding: "There is no need for [emerging economies] to continue to accumulate immense amount of reserve assets."
Earlier, US Treasury Secretary Timothy Geithner told the committee that the IMF had to speak more forcefully about how countries manage their currencies. He called on the IMF to "increase the candour of its surveillance" and said that "meaningful reform of IMF surveillance is a core challenge of the institution".
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Jim Sinclair’s Commentary
Coincidence? I doubt it. Correct? I am sure of it.

Gold May Climb to Record $1,650 an Ounce on Fed Easing, Goldman Forecasts – Bloomberg By Wendy Pugh – Oct 11, 2010 9:22 PM PT Tue Oct 12 04:22:43 GMT 2010
Gold may rally more than 20 percent from this month’s record to a high of $1,650 an ounce in 12 months as the Federal Reserve takes action to stimulate the U.S. economy, according to Goldman Sachs Group Inc.
Bullion may gain to $1,400 an ounce in three months and $1,525 an ounce in six months, analysts David Greely and Damien Courvalin wrote in a note dated yesterday. Gold for immediate delivery reached an all-time high of $1,364.77 on Oct. 7.
The Fed is considering whether to add to its purchases of Treasury bonds to spur the economic recovery, an action known as quantitative easing. The central bank may next month announce purchases of about $500 billion, Goldman Sachs said in a separate e-mailed note.
“With U.S. real interest rates pushing lower off the slowdown in the pace of the U.S. economic recovery and the growing prospect of another round of quantitative easing, we expect gold prices to continue to climb,” New York-based Greely and Courvalin wrote.
Spot bullion fell 0.3 percent to $1,349.90 an ounce at 2:50 p.m. Melbourne time, declining for the first time in three days. Gold for December delivery on the Comex in New York dropped 0.3 percent to $1,350.80. The bank in August forecast that gold may rally to $1,300 an ounce in six months.
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Jim Sinclair’s Commentary
It looks like the buck is being passed.

Citigroup Stops Using Foreclosure Law Firm Facing Florida Probe By Dakin Campbell and Donal Griffin – Oct 12, 2010 5:34 AM MT
Citigroup Inc. said it stopped steering foreclosure work to a Florida law firm whose court filings to support home seizures are under investigation by the state’s attorney general.
The bank, which is proceeding with seizures as some rivals stop to recheck documents, had used the Law Offices of David J. Stern PA. Florida Attorney General Bill McCollum said Aug. 10 it is examining whether Stern and two other firms filed “improper documentation” with the state’s courts to speed proceedings.
“Pending the outcome of the AG’s investigation, Citi is not referring new matters to this firm,” the New York-based bank said in an e-mailed statement. Citigroup services loans for government-sponsored entities, such as Fannie Mae and Freddie Mac. Stern “was approved by the GSEs during the time in which it was retained by Citi,” the bank said.
Lawmakers, attorneys general and consumer groups have pressed mortgage firms to follow Bank of America Corp., the biggest U.S. lender, which last week suspended all foreclosures to check whether faulty documents were used to confiscate homes. JPMorgan Chase & Co. and Ally Financial Inc.’s GMAC Mortgage unit froze seizures or evictions in Florida and 22 other states. Citigroup said last week it doesn’t plan to join them.
McCollum’s office “hasn’t made any charges or allegations of fault,” said Jeffrey Tew, an outside attorney for Plantation, Florida-based Stern, who declined to discuss its work for Citigroup. “I believe they’re a client. I can’t go into any details.”
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Jim Sinclair’s Commentary
It should read “entire Western World financial entities face new and critical threat from lousy collateral on Securitized Mortgage Debt. Pension fund is in a frenzy.”

US housing market faces new threat from foreclosure row
The US housing market faces a new threat from an escalating row over how banks have been repossessing homes. By Richard Blackden
Published: 9:45PM BST 11 Oct 2010
Bank of America last week halted foreclosures across the country amid allegations that homes are being seized based on data that has not been properly checked and moved too quickly through the process. JPMorgan Chase and Ally Financial have suspended foreclosures in 23 states to address similar allegations.
The suspensions have prompted calls from politicians for a national suspension until the foreclosure process has been fully investigated. That demand has prompted anger from those in the housing market, where sales of foreclosed homes currently account for about a quarter of all sales, according to RealtyTrac. The company, which tracks the housing market, said that banks seized 95,364 homes in August and issued foreclosure filings to 338,863 homeowners.
"It would be catatastrophic to impose a system-wide moratorium on all foreclosures and such actions could do damage to the housing market and the economy," Tim Ryan, president of the Securities Industry and Financial Markets Association said on Monday. Experts say that worries over the ownership of the property titles on foreclosed homes are unlikely to surface until the lender has found a new buyer for the property.
JPMorgan has begun to "systematically re-examine" thousands of filings for foreclosures, though said that the documents had been prepared by appropriate personnel. The Senate Banking Committee has said it will hold a hearing on the foreclosures after the mid-term elections.
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Jim’s Mailbox

Posted: Oct 12 2010     By: Jim Sinclair      Post Edited: October 12, 2010 at 12:43 pm
Filed under: Jim's Mailbox
Eric,
The major holders of the securitized mortgage debt OTC derivatives are just these pension funds.
What a mess.
Regards,
Jim

Unfunded Liabilities A Ticking Time Bomb CIGA Eric
The list is long – Chicago, New York, Boston, Detroit Los Angeles, etc. Unfunded pension liabilities are hardly a regional problem. It’s a nationwide epidemic that must be meet additional liquidity, quantitative easing part two (QE2), to prevent the FASB assisted, marked-to-model derivatives within the pension funds from imploding.
At $3.4 billion, the unfunded pension liability in Milwaukee is $14,853 per household. Without major changes, the system will not be able to make scheduled payments in less than twenty years.
Unfunded Liability Table:
Prior research by the Kellogg School of Management has found $3 trillion in unfunded legacy liabilities from state-sponsored pension plans. However, new research finds additional liabilities from municipalities that magnify the growing public pension crisis.
Source: maciverinstitute.com
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Hourly Action In Gold From Trader Dan

Posted: Oct 12 2010     By: Dan Norcini      Post Edited: October 12, 2010 at 2:22 pm
Filed under: Trader Dan Norcini
Dear CIGAs,
It appears that we have going on is Federal Reserve Officials heading for the microphones in an attempt to stop an outright blitzkrieg against the US Dollar. In three week’s time, the Dollar has dropped 6%  when measured against the basket of currencies comprising the USDX. I suspect that while nothing concrete may have emerged out of the past weekend’s pow-wow to smoke the peace pipe and create a resolution regarding the currency wars, the US got an earful from their counterparts who are not the least bit pleased to see the stunt that they are pulling in deliberately devaluing the greenback.
Thus we get the spectacle of seeing the very same people who brought us QE and have given every reason for market participants to fully expect another round of QE2, and I might add the green light to bond speculators to bid up the price of Treasuries, now suddenly shifting gears and acting as champions of frugal monetary policy and warning us about the dangers of excessively low interest rates!  News flash to Fed officials – we did not write the minutes to your last FOMC press release – you did.
The reason everyone and their mother is expecting low interest rates for the foreseeable future and more QE is because these same people now warning us about the same are the very ones who told us that is what we could expect! Personally I wonder how these people sleep at night. This is akin to parents filling the cereal bowls of their children with a near endless amount of Fruit Loops, pouring tablespoons of sugar upon them, and then warning those children about the dangers of juvenile diabetes so that they can then claim to have been responsible parents. What kind of idiots do these elitists think we are!
Regardless, the little staged drama act served to push out a few shorts in the Dollar with the result that several commodity markets experienced some light selling in today’s session including the precious metals. As mentioned yesterday, gold is probably waiting for a further downside move in the Dollar below 77 in the USDX before it takes out its previous all time high just above $1,360. You have to know that the rulers of Monetary La-La Land are more than displeased to see ol’ Yeller trading above $1,350. After all, the best doggone dog in the West is making a mockery out of all of them. Maybe by injecting a bit of doubt into the market about the extent of the next round of QE, they believe that they can make the trade in the Dollar a bit more two sided thereby slowing its descent and taking some of the wind out of the gold market. Problem is what has now been dubbed “Foreclosure Gate” makes all of this just a side show in a circus. The die is cast and the wound is fatal and no amount of talking heads can negate the seriousness of what is occurring and the fall out that is going to continue for a very long time.
Back to gold – technically it is pausing below its all time high unable or unwilling to charge higher for the immediate moment but thus far dips continue to be bought leaving the market in an apparent wait and see mode. Downside support remains first near $1,330 followed by $1,325 – $1,320 before more substantial support emerges near $1,315 – $1,312. Open interest remains high with a lot of speculative long side exposure but if those longs REFUSE to run, the shorts will not be able to push it lower for any duration. The key is the tenacity and conviction of the gold bulls. This is why the Fed officials are at the microphones – everything has become a game of intimidation as psychological warfare ramps up with Central Bankers of the West arrayed against those who are attempting to preserve their wealth from the depradations of their cancerous policies
A second close over $1,350 in gold would certainly set the market up for a retest of the recent peak high. Once that level gives way, then $1,380 comes into play.
It would certainly aid matters if the HUI were to get and stay above 520 with that level serving as a floor instead of a cap. It is always more advantageous to the bull cause when both the shares and the bullion are moving higher together in tandem.
Silver has experienced so many strong up days recently that support levels need to leave sufficient room for the increase in volatility and the size of the daily trading range. The charts indicate support in the market lies down closer to $22.50 – $22.35 or so. Much stronger support comes in near $22.00 – $21.85. Resistance is yesterday’s high just shy of $23.70 with psychological resistance above that near $24.
Corn continues moving higher still feeding off of last week’s surprise USDA numbers and that is serving to put a floor under the entire grain complex. It made a 25 month high in price as it looks more and more like a push to $6.00 is in the cards. Expect to see higher beef, pork and poultry prices next year as a result of all this.
Copper prices are showing good resilience and continue to hover just below $4.00. Lumber is limit bid today on news China was buying wood. It is remarkable how the least mention of China in combination with any commodity market generally drive its limit up. It was cotton yesterday and now it is lumber. The commodity markets have already made the transition to regarding China as the leading economy on the planet. Its demand overshadows anything that is taking place in the US domestically as we all know that lumber demand stinks here at home with the crippled home building industry caught up in the malaise affecting the entire real estate sector. Doesn’t matter – if China buys it, the market runs higher. At some point the rest of the markets will catch up to the reality of the tectonic shift in the economic dominance of the East over the fading West.
Crude oil is weaker today and Nat gas just made a new yearly low price. Thankfully,  those who use natural gas for heating this winter will be spared any price hikes. That gas shale play has turned out to be a big break for weary consumers who are getting slammed on the food front. American technological innovation in the energy industry is still the best in the world. If its there in the ground somewhere, our companies can figure out how to go and get it. As a side note, China’s huge energy company CNOOC, has purchased a sizeable interest in the South Texas oil and gas formation known as the Eagle Ford. Clearly they are eager to acquire the tech know how to extract these deposits. Folks down that way welcome the investment interest partly because we can introduce Chinese business owners to the joys of hunting South Texas white tail deer. You haven’t seen a monster buck until you’ve seen one of those beauts! A lot of Texas ranchers are going to be getting checks not only for mineral rights but for deer leases! If you’ve got a truck that you can load up with genuine cowboy hats and some rattlesnake boots and wallets, you will make a killing selling them the next few years to the new wave of tourists from the East and their business counterparts.
Bonds continue where they left off yesterday doing a whole lot of nothing. They too are sitting around watching for clues about the QE move by the Fed.
Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini



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