PM Selloff Reason: CME To Raise Margin Requirements For Silver From $5,000 To $6,500

Submitted by Tyler Durden on 11/09/2010 15:23 -0500
And if that doesn't work, there is always confiscation.


Jim Sinclair’s Commentary
The last note of the day is that increased margin requirements on metals is a sign of a bull market and a professional tool for covering a short.

China Lowers US Credit Rating

Posted: Nov 09 2010     By: Jim Sinclair      Post Edited: November 9, 2010 at 3:44 pm
Filed under: General Editorial

Dear CIGAs,
This is the Chinese equivalent of the US rating agencies that have been hammering the world. In the present conditions it does have significant clout.
The fact that the US Fed exceeded the 500 billion level laid down a gauntlet. It is for economic and political reasons now that the Fed cannot back down from their position. In fact the austerity measure that others have taken threatens an immediate opening of a black hole sucking the euro zone down.
QE is not correct but QE to infinity will be the Western Worlds play. Only china will stand tall.
The market is questioning the Fed resolve on QE today because of today’s 10 year US Treasury auction participant results. It is just such a threat that calls for QE to infinity, but I would suspect that this is too refined for analysts interviewed to understand.
Gold is going to $1650 and beyond. Speculation that the Fed will back off on QE is misplaced and wrong.
They can’t.

China’s Dagong Lowers U.S. Credit Rating on Fed Monetary Policy November 09, 2010, 1:41 PM EST
By Joshua Fellman and Ye Xie
Nov. 10 (Bloomberg) — China’s Dagong Global Credit Rating Co. reduced its credit rating for the U.S. to A+ from AA, citing a deteriorating intent and ability to repay debt obligations after the Federal Reserve announced more monetary easing.
The credit outlook for the U.S. is “negative,” as the Fed’s plan to buy government debt will erode the value of the dollar and “entirely encroaches” on the interests of creditors, analysts at Dagong, one of China’s five official ratings companies, said in a statement. The U.S. is rated Aaa and AAA by Moody’s Investors Service and Standard Poor’s Corp., the highest credit ratings of the New York-based companies.
The downgrade came before a meeting of Group of 20 leaders this week in Seoul and as the U.S. steps up pressure for China to let the yuan strengthen to help reduce the U.S. trade deficit. China countered the criticism by saying U.S. economic policies threaten the stability of developing nations.
“The general market perception is that there’s a risk that the Chinese rating agency is playing a bit more political game than providing independent analysis,” said Ian Lyngen, a government bond strategist in Stamford, Connecticut, at CRT Capital Group LLC, in a telephone interview. “I don’t think it has the same ramification as a downgrade by mainstream rating agencies such as S&P and Moody’s. That said, the reasons that the credit rating of the U.S. may come under pressure are obvious to most people.”
More…



This Is Economic War CIGA Eric

NYSE Mid-Day Update
This is war:
China signaled its intention to drain excess cash from its financial system by unexpectedly raising the yield on bills at a central bank auction and announcing new rules to curb hot money inflows. Anecdotally, a ratings agency in China downgraded the U.S. to A+ from AA with a negative outlook because of QE2.
Jim
The bond auction results provide the casualty numbers.
Dealer participation rate fell to 34% today. Their participation rate has fallen to nearly 50% since 2009 (onset of the crisis). This is a huge deviation from the norm as purchase and resale is big business for primary dealers. Notice how indirect purchases have increased significantly since 2009. These are customers placing direct bids through a submitter. This can include Foreign and International Monetary Authorities placing bids through the Federal Reserve Bank of New York (big emphasis here).
As Jim said, it’s economic war.
10 Year Auction Results:
30 Year Auction Results tomorrow…
Source: treasurydirect.gov
More…

In The News Today

Posted: Nov 09 2010     By: Jim Sinclair      Post Edited: November 9, 2010 at 1:48 pm
Filed under: In The News

Jim Sinclair’s Commentary
What does this mean to a non interest bearing checking account? It might be very interesting for those that are holding funds for USA expenses. I will get back to you.
Certainly this is MOPE and meat for maintaining confidence in the financial system. It however will only end up costing the FDIC big time.

FDIC Approves Temporary Unlimited Deposit Insurance Coverage for Noninterest-Bearing Transaction Accounts
FOR IMMEDIATE RELEASE 
November 9, 2010
The Board of Directors of the Federal Deposit Insurance Corporation (FDIC) today approved a final rule to implement section 343 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Section 343 provides temporary unlimited coverage for noninterest-bearing transaction accounts. This separate coverage will become effective on December 31, 2010, and will end on December 31, 2012.
The final rule revises the FDIC’s deposit insurance regulations to include noninterest-bearing transaction accounts as a new temporary deposit insurance account category. All funds held in such accounts are fully insured, without limit, and this coverage is separate from, and in addition to, the coverage provided to depositors for other accounts at an insured depository institution.
Noninterest-bearing accounts, as defined in the Dodd-Frank Act, include only traditional, noninterest-bearing demand deposit (or checking) accounts that allow for an unlimited number of transfers and withdrawals at any time, whether held by a business, individual or other type of depositor.
The new temporary provision for unlimited coverage of deposit insurance for noninterest-bearing transaction accounts is similar to the FDIC’s Transaction Account Guarantee Program (TAGP) but differs significantly in the definition of "noninterest-bearing transaction account." The TAGP, which expires December 31, 2010, includes low-interest NOW (negotiable order of withdrawal) accounts and Interest on Lawyer Trust Accounts (IOLTAs). The final rule expressly states that NOW and IOLTA accounts are not covered under the Dodd-Frank Act definition of noninterest-bearing transaction accounts and do not qualify for temporary unlimited coverage.
More…

A Note From Harry Schultz

Posted: Nov 09 2010     By: Jim Sinclair      Post Edited: November 9, 2010 at 2:14 pm
Filed under: Harry Schultz

Jim Sinclair’s Commentary
The Dean of Gold and my dear friend of 45 years, Harry Schultz, utters these very important and milestone words.
Heed the Dean!

Dear CIGAs,
Yesterday, Nov 8, 2010, was a day I’ve awaited for 40years, since President Nixon shut down the last vestiges of the gold standard. Yesterday, at last, a respected member of the ruling classes called for a discussion to readopt a modified global gold standard as a lynchpin for the monetary system. Robert Zoellick, World Bank President and a former US Treasury official, says a new system is needed (as called for in HSL for 20 years), using 5 main currencies, with gold as the international reference point for future currency values. He wondrously said “Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today.” I couldn’t have put it better and in fact I have put it in those exact words, as has Jim Sinclair and a number of free market analysts.
RZ said “The development of a monetary system to succeed Bretton Wood II launched in 1971, will take time. But we need to begin.” Amen, Mr Z and thank you! Also, thanks to the Financial Times for making this the leading page one headline story, despite their traditional aversion to gold. Ethics won! This story broke in the early AM Nov 8th and halted a correction that began in the gold price, after which gold rose to a new high. The story freaked out ruling politicians around the world who despise gold because it acts as a governor on government spending. After Nixon closed the gold window, government spending and deficits rocketed, as the data charts prove, from that exact moment. Germany, the US Fed, and Trichet of ECB all patted Mr. Z on the head, but said it’s not practical.
What would you expect them to say dear reader? They will fight a gold-linked system, but in the end they will give in, because the system is dying, fast, as the gold price reflects. How good a new system will be, whether it will have only a symbolic link or a strong one, can’t be guessed today, nor how soon. The gold price will tell us. My prediction on Bloomberg TV in Paris a few years ago was that “Gold will force a system change when gold hits $1,650, but that it might need $2,000 to bring a change.” That may still come true, because, as you see in the press today, most political leaders tried to discount Mr Z’s brave, but wise recommendation.
I shall frame this FT front page and hang it on a wall. It was a watershed day.
Harry Schultz

Mark Fisher Slams Bernanke: "QE Is Going To End Bad...This Is Going To Be The Bubble Of All Bubbles"

Jim Sinclair’s Commentary
This is war.

NYSE Mid-Day Update
China signaled its intention to drain excess cash from its financial system by unexpectedly raising the yield on bills at a central bank auction and announcing new rules to curb hot money inflows. Anecdotally, a ratings agency in China downgraded the U.S. to A+ from AA with a negative outlook because of QE2.

Jim’s Mailbox

Posted: Nov 09 2010     By: Jim Sinclair      Post Edited: November 9, 2010 at 1:48 pm
Filed under: Jim's Mailbox

Dear Eric,
This is one part of the whys behind QE to infinity. You can be sure this is as true in the euro zone as it is in the USA.
The euro zone yelling and screaming will join QE to infinity before middle 2011.
Regards,
Jim

Nearly All State Unemployment Funds in Deficit CIGA Eric
Deficits such as these are not limited to California. Illinois, Wisconsin, Texas, New York, New Jersey, and/or nearly ever State in the Union have drained their unemployment insurance funds and must start paying the federal government interest on the borrowed money in 2011. The markets already know that there’s no way the States will not have the funds to service and repay the debt without massive cutbacks.
Listen; if you want to still your head in the sand on this one, it’s up to you. The States have a SERIOUS cash flow problem that will inevitably be "solved" by the Federal printing press.
Headline: California’s unemployment fund has $10.3 billion deficit
California businesses already pay some of the highest unemployment taxes in the country – and the tab is likely to increase.
The recession and the Legislature’s decision years ago to raise benefits have drained the state unemployment insurance fund, which now has a estimated $10.3 billion deficit.
Headline: Illinois to start paying interest on jobless benefits
The $2.2 billion Illinois has borrowed from the federal government to pay for unemployment benefits is about to get hit with a hefty fee.
As of Jan. 1, the federal government will start charging interest to the 32 states or territories that have borrowed money to bolster their unemployment insurance funds and still owe on their debt. Collectively, nearly $41 billion is owed, according to Department of Labor data.
Headline: Texas may sell $2 bln of debt for unemployment fund
Texas might refill its unemployment trust fund by selling $2 billion of debt later this year, a strategy that cut its borrowing costs in the last downturn, according to a state official.
Texas, like many states around the nation, has seen the recession drain its unemployment insurance fund, which pays benefits to jobless workers
Source: sacbee.com
Source: rrstar.com
Source: reuters.com
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Hourly Action In Gold From Trader Dan

Posted: Nov 09 2010     By: Dan Norcini      Post Edited: November 9, 2010 at 2:01 pm
Filed under: Trader Dan Norcini

Dear CIGAs,
Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini

HUI/Gold Ratio and HUI/S&P 500 Ratio Charts From Trader Dan

Posted: Nov 09 2010     By: Dan Norcini      Post Edited: November 9, 2010 at 2:04 pm
Filed under: Trader Dan Norcini

Dear CIGAs,
Click either chart to enlarge in PDF format with commentary from Trader Dan Norcini

US Long Bond Chart From Trader Dan

Posted: Nov 09 2010     By: Dan Norcini      Post Edited: November 9, 2010 at 2:08 pm
Filed under: Trader Dan Norcini
Dear CIGAs,
Click chart to enlarge today’s action in US Long Bonds in PDF format with commentary from Trader Dan Norcini