John Williams Talks To BNN About The "Great Hyperinflationary Collapse"

 

Morgan rigs bond, gold markets for a desperate Fed

 

Goldman Implicated In CDS Price Manipulation Scandal

 

Guest Post: Euro Until The Endsieg

 

Austerity, Inflation Or Default: SocGen's Guide To 2011

Eric Sprott's Double Barreled Silver Issue

Despite central banks and jewellers, gold has remonetized itself

 

Eight years after repudiating Embry, Royal Bank loves gold

Gold and Silver Rise/bonds rise fractionally.

In the News

Posted: Dec 09 2010     By: Jim Sinclair      Post Edited: December 9, 2010 at 9:28 pm
Filed under: In The News
Jim Sinclair’s Commentary
Now exactly how will financial TV give the hook to Chairman Paul when Bernanke testifies?
Maybe they will just drop the proceedings from being televised due to low ratings.

Posted at 4:34 PM ET, 12/ 9/2010
Ron Paul to chair monetary policy subcommittee overseeing Fed
By Felicia Sonmez
Texas Republican Rep. Ron Paul is poised to chair the House Domestic Monetary Policy Subcommittee, putting the gavel of the panel overseeing the Federal Reserve into the hands of one of the central bank’s most outspoken critics.
Rep. Spencer Bachus (R-Ala.), the incoming chairman of the House Financial Services Committee, announced Thursday that Paul will head the subcommittee when Republicans assume the majority in the 112th Congress.
"This is the leadership team that crafted the first comprehensive financial reform bill to put an end to the bailouts, wind down the taxpayer funding of Fannie Mae and Freddie Mac, and enforce a strong audit of the Federal Reserve," Bachus said in a statement, adding that the committee’s "first priority is to end the taxpayer funded bailout of Fannie and Freddie."
More…



Jim Sinclair’s Commentary
Medium range sounds somewhat like the Cuban Missile Crisis during the Kennedy Administration. The source is reasonable, so we should consider the meaning of such a development.

Iran Placing Medium-Range Missiles in Venezuela; Can Reach the U.S.
by Anna Mahjar-Barducci
December 8, 2010 at 5:00 am
Iran is planning to place medium-range missiles on Venezuelan soil, based on western information sources[1], according to an article in the German daily, Die Welt, of November 25, 2010. According to the article, an agreement between the two countries was signed during the last visit o Venezuelan President Hugo Chavez to Tehran on October19, 2010. The previously undisclosed contract provides for the establishment of a jointly operated military base in Venezuela, and the joint development of ground-to-ground missiles.
At a moment when NATO members found an agreement, in the recent Lisbon summit (19-20 November 2010), to develop a Missile Defence capability to protect NATO’s populations and territories in Europe against ballistic missile attacks from the East (namely, Iran), Iran’s counter-move consists in establishing a strategic base in the South American continent – in the United States’s soft underbelly.
More…

Market Commentary From Monty Guild

Posted: Dec 09 2010     By: Monty Guild      Post Edited: December 9, 2010 at 9:30 pm
Filed under: Guild Investment
U.S. Tax Cuts Extended – This Is Bullish For Stocks, And It Means More QE From The U.S. And Europe
After the news broke of an agreement between U.S. lawmakers to extend the Bush tax breaks, some people concluded that the fiscal stimulus could reduce the pressure on the Fed from needing to do more QE.  We disagree.  We believe the tax breaks will mean even more QE…and the bond market seems to agree with us.  This weeks’ poorly bid U.S. Treasury auctions says that while investors agree that tax breaks are good for encouraging economic growth, they also drive government deficits higher.  Bond offerings from the U.S. Treasury are going to go up, and the Fed had better buy the Treasury’s bonds, because it is apparent investors don’t want them.  QE is here to stay.
Ripping Off The Band-Aid In Iceland
Our good friend, Larry Jeddeloh of The Institutional Strategist recently brought to light the differences in the way Iceland dealt with its financial crisis and the way the rest of the Western World has chosen to deal with theirs.  In 2006, Iceland’s central bankers miscalculated and thought everything was ’stable’.  Larry points out that highly educated, capable central bankers may believe they have things under control, yet they can still make mistakes.  In his Market Intelligence Report, Larry goes on to discuss Iceland’s response to their financial crisis; they took some bitter medicine, let banks fail, let depositors lose money, and let their currency fall.
In the large Western democracies, there is no political will to make the hard decisions needed to fix their ailing financial system, and policymakers appear to be opting for the Japanese method of prolonging the agony.  Larry writes,
“bailout fever…has a firm grip on the U.S. and is spreading quickly in Europe, evidence is emerging that our monetary policy chiefs are…wrong…again.  Take Iceland.  The country let its banks fail, it didn’t use taxpayer money to bail them out, and the country and its currency have paid a heavy price.  However, Iceland’s budget deficit just a couple years past the crash will be 6.3% this year, and 0% next year.  Contrast this with Ireland, which will have a 32% deficit, as estimated by the EC.  How long will this debt burden the economy?  How long will banks be frozen up, leading to stagnation?  If Japan is any guide, it could be decades.”
U.S. State Finances Are Going To Have To Be Addressed
We have discussed the risks to the so-called ‘conservative’ municipal bond market in recent months.  Nothing has been done to address the fiscal crisis in many states, counties, and municipalities across the U.S. who owe trillions of dollars to bondholders…and are seeing their tax receipts shrink rapidly.  This is another reason we believe that QE is going to continue for a long time.
Much has been written and reported about the European debt crisis, but if you look at the chart below, the capital markets are starting to anticipate defaults among some over-levered U.S. states.

The Federal Reserve’s work is far from being done.  To combat deflationary psychology, QE is the best policy response that the Fed has come up with.  Municipal bondholders must be hoping for a continued expansion of the Federal Reserve’s balance sheet (printing money), so that it can include many of these states’ loans.
What does this mean for investors?
Continued QE by developed countries’ central banks means that stocks (especially in countries and industries that can grow faster than the rate of inflation) and investments in commodity related assets will continue to be attractive.
Our Recommendations
Investors should continue to hold gold for long-term investment.  We have been bullish on gold since June 25, 2002 when it was selling at about $325 per ounce.  In our opinion, it will move to $1,500 and then higher.  Traders should sell spikes and buy dips.  Gold closed today at $1,382.60 an ounce, an increase of 325% in almost 8 ½ years.
Investors should continue to hold oil-related investments.  We have been bullish on oil since February 11, 2009, at which time oil was trading at $35.94 per barrel.  After the recent pullback, oil is trading at $88.52 per barrel, which is up about 146%.
Currencies:  For long-term investment, we do not like the U.S. dollar, Japanese yen, British pound, or the euro.  As we mentioned in our September 14th letter, we like the Singapore, Thai, Canadian, Swiss, Brazilian, Chinese, and Australian currencies.  We would use the current pull-backs in these currencies as an opportunity to establish long-term positions.  Since September 14, 2010, these currencies have appreciated or depreciated versus the U.S. dollar by the following percentage: Singapore dollar +1.6%, Thai baht +7.4%, Canadian dollar +1.6%, Swiss franc +2.1%, Brazilian Real +1.2%, Chinese Yuan +1.3%, and Australian dollar +4.7%.
Investors should continue to hold shares of growing companies in India, China, Singapore, Malaysia, Thailand, Indonesia, Colombia, Chile, and Peru.  We have been recommending these markets in these commentaries since September 14, 2010, and we would use any pullbacks as an opportunity to add or initiate positions for long-term investors.  Stocks in these countries have appreciated in U.S. dollar terms by the following percentages since September 14, 2010:

Country	Stock Index Appreciation/Depreciation in USD
Singapore	6.6%
Malaysia	2.0%
India	5.9%
China	7.7%
Indonesia	15.9%
Thailand	11.5%
Colombia	5.4%
Chile	7.2%
Peru	31.5%

We believe long-term investors should continue to hold food-related shares such as grains, wheat, corn, soybeans, and farm suppliers.  Since we stated the grains bottomed on December 31, 2008, these have all appreciated substantially.  We see more price rises ahead.  Since December 31, 2008 the price of corn is up about 41.3%, wheat is up about 28.5%, and soybeans are up about 32.2%.
We believe U.S. stocks can rally further.  Our reason for becoming more bullish on U.S. stocks on September 9, 2010 is that over the longer-term, liquidity formation through QE will create demand for many assets, including U.S. stocks.  Since September 9^th, the S&P 500 is up about 11.2%.
Thanks for listening.
Monty Guild and Tony Danaher
www.GuildInvestment.com

In the News

Posted: Dec 09 2010     By: Jim Sinclair      Post Edited: December 9, 2010 at 7:11 pm
Filed under: In The News

Dear Jim 
The last pillar?
CIGA Marc.D

Dear Marc,
Yes sir. 
Jim

Global bond rout deepens on US fiscal worries 
Agreement in Washington on a fresh fiscal package has set off dramatic rise in yields of US Treasuries and bonds across the world, threatening to short-circuit any benefits of stimulus. The bond rout raises concerns that the US authorities may be losing control over events.
By Ambrose Evans-Pritchard 8:03PM GMT 08 Dec 2010
The yield on 10-year Treasuries – the benchmark price of money worldwide and the key driver of US mortgages rates – has rocketed to 3.3pc, up 35 basis points since President Barack Obama agreed on Monday to compromise with Senate Republicans on tax cuts.
The Treasury sell-off has ricocheted through the global system, triggering bond sell-offs in Asia, Europe and Latin America. Japan’s finance ministry braced as borrowing costs on seven-year debt jumped by a sixth in one trading session, while German Bunds punched through 3pc.
More…



Dear Jim,
And here they go boosting their foreign reserve holdings of gold to help shield their billions of dollars
CIGA LAS, Lisbon

GCC urged to boost gold reserves
Tom Arnold
Last Updated: Dec 9, 2010
GCC states should boost their foreign reserve holdings of gold to help shield their billions of dollars of assets from turbulence in global currency markets, say economists at the Dubai International Financial Centre Authority (DIFCA).
Diversifying more of their reserves from US dollars to the yellow metal would help to offer central banks in the region higher investment returns, said Dr Nasser Saidi, the chief economist of DIFCA, and Dr Fabio Scacciavillani, the director of macroeconomics and statistics at the authority.
“When you have a great deal of economic uncertainty, going into paper assets, whatever they may be – stocks, bonds, other types of equity – is not attractive,” said Dr Saidi. “That makes gold more attractive.”
Declines in the dollar during recent months have dented the value of GCC oil revenues, which are predominantly weighted in the greenback.
Gold prices rose to a record high before falling back this week as the dollar strengthened.
Longer term, gold could play a more important role in the global monetary system as the shift from developed world to emerging markets intensified, the two DIFCA economists said in a report published yesterday.
The dollar’s position as the leading reserve currency was likely to diminish as US dominance of the world economy dwindled
More…



Dear Jim,
The “fat lady” is singing sir.
Joe

Dear Joe,
You are right. Here’s a little advice:
Sell the rallies short using a French Curve short term.
Buy to cover using the same tool.
This could be an occupation for the next 10 years minimum.
Be professional and wait for the trade to come to you.
Regards,
Jim

30-Year Bond Gets Surprise Demand; Treasurys Rally
Published: Thursday, 9 Dec 2010 | 1:09 PM ET
By: Reuters and CNBC.com
Investors showed surprisingly heavy demand for 30-year bonds Thursday, despite fears that Treasury yields were ready to take off as the market tired of the barrage of supply.
The $13 billion sale drew a high yield of 4.41 percent, about 0.05 percentage points below expectations. The bid-to-cover ration, which measures how much is bid for each dollar auctioned, came in at 2.71, above the recent average of 2.66.
Treasury prices rallied after the results were released, sending the 30-year yield to 4.39 percent after a rally that marked the biggest since the fall of Lehman Brothers in September 2008.
The benchmark 10-year Treasury note spiked up 20/32 higher in price to yield 3.19 percent, down from 3.27 percent late Wednesday, while the 30-year bond was 29/32 higher after trading around even just prior to the auction.
Thursday’s auction is the last part of this week’s $66 billion in coupon-bearing supply.
More….