Monday, January 31, 2011

Latest from Harvey Organ

Huge gold standing for delivery; problems in Egypt intensifies

And this just in...Pay Attention Class...and check back often...

Monday January 31st, Updated 10:00 pm EST

Okay so lets dive into it. The Silver front month delivery saw its OI (open Interest) today, and it came in at 152. 152! February is NOT a delivery month! I will have more on this tomorrow as the options data comes in and I can patch things a little more clearer. This means we are somewhere around 1.3 million ounces to deliver for February and should continue to rise!

I need to point out that premiums in Asia are starting to increase in the physical markets. This is a clear indication of what is to come in the delivery month of March for Silver. This is exciting news. Get excited. Seriously, even if you dont have a fu$%ing clue what I'm talking about, get excited. Just be aware, that the 'price' in fiat may still be manipulated by the Blythe's out there, but they cannot manipulate the physical supply and demand for those shiny little maples, and crisp little eagles. Hence, from the numbers, they cant shake the tree, and the lower the prices go, the more people line up to buy. Houston, they have a problem.

Oh and China's central banker urged an increase in PHYSICAL gold and silver holdings today. Oh, and Egypt is burning.

I should have more info tomorrow night as it filters through. Overall a good day. Let them bash the price down some more, who cares, when the world figures out there is no supply, or very little, price discovery will be, you know it, EPIC.

Jim Sinclair’s Commentary
What was dismissed today as not really much of a problem by the media, Egypt,
is a problem of a most serious nature.

Dispatch: Regime Change in Egypt and a Radicalizing Region January 31, 2011 | 2059 GMT
Analyst Kamran Bokhari explores the potential behavior of a post-Mubarak Egypt and the fears that a radical Cairo could align with Iran and Islamist movements in the region.
The instability in Egypt comes at a time when the region is already in the throws of shifts. But contrary to popular fears, the region is not necessarily headed toward an Iranian led radicalization. Instead a new and still emerging complex situation is something that the United States and the region and the rest of the world will have to deal with.
Egypt is in a situation of flux, and it is really too early to say what will be the outcome of all the unrest and instability. There are all sorts of options. One option, one likelihood, is that the current regime rejiggers itself, reinvents itself, sends Mubarak a continuation of the old order. Another option is that there are elections and some form of coalition government emerges, and that’s where it gets tricky because the Muslim brotherhood, the country’s largest and oldest Islamist movement, is the single largest organized political force. In any such scenario the brotherhood is expected to play a large part and that raises a whole lot of fears in the region around the world of what will be the outlook, the policy outlook of Cairo in that situation.
So it’s not really clear as to where we are going right now but the big question is what happens to the region. We have an assertive Iran given the rise of a Shiite government in Iraq. Turkey is rising. There are all sorts of concerns about whether Turkey is headed toward alignment with the Islamic world as opposed to the West. And in the midst of all of this when you have Egypt also flaring up, it’s only natural for people to say what is happening here, are we looking at a scenario of Islamic radicalization of the region.
The reality is that there are too many complexities for that to happen. A: Iranian rise is still very much in play. It is not consolidated; it’s not necessarily going to happen. There the entire US-Iranian struggle that’s taking place. And number two: Turkey is a rising power and Turkey checks the power of Iran. And if you throw Egypt into that mix, it is not necessarily that Egypt will align with Iran or Egypt will lead a new radical wave. There is the huge difference between a Shiite Iran and Sunni Egypt and all of this assumes that Egypt will at some point become a radical regime, a radical state. And by that we mean that a state is at least not aligned with U.S. foreign policy in the region, and not necessarily at peace with Israel.

Jim Sinclair’s Commentary
Houston, we really do have a problem.

Clinton convenes mass meeting of US ambassadors
WASHINGTON (AP) — Secretary of State Hillary Rodham Clinton is convening an unprecedented mass meeting of U.S. ambassadors.
The top envoys from nearly all of America’s 260 embassies, consulates and other posts in more than 180 countries will be gathering at the State Department beginning on Monday. Officials say it’s the first such global conference.
The gathering comes at a time of crisis in Egypt that could reshape dynamics in the Middle East, fallout from leaked diplomatic documents and congressional calls for sweeping cuts in foreign aid.
Although the meeting has been called to discuss U.S. foreign policy priorities for 2011, officials say Clinton plans to meet personally with ambassadors from front-line states to hear about developments on the ground. Officials also expect that specific concerns about the WikiLeaks revelations will be raised.

Jim Sinclair’s Commentary
Houston, the world has another problem.

Albania braces for fresh protests January 29, 2011 12:00AM
THE mood of revolt has spread beyond the Arab world to the Balkans.
The Albanian opposition gearing up for another anti-government protest today and the police warning of a high risk of violence.
The opposition Socialist Party said the rally was aimed at honouring the three victims of violent clashes in last week’s anti-government demonstration. Protesters have been calling on the government to resign, claiming corruption and electoral fraud.
"I want to assure you it will be peaceful and quiet, there will be flowers and candles," Socialist leader Edi Rama said yesterday.
"Everything will be normal, not provoking anyone and not being provoked by anyone."
Police said the demonstration was a danger to national security, and warned that they could not guarantee the rally’s safety.
Mr Rama, who is Tirana’s Mayor, said he regretted the police statement.

Jim Sinclair’s Commentary
Houston, we have a third problem!

After Riots, Algeria Considers a Reshuffle By BENOƮT FAUCON
* JANUARY 28, 2011

Algeria’s President Abdelaziz Bouteflika is considering high-level cabinet changes in hope of showing a reformist bent after the country was shaken by riots, people familiar with the matter said.
There is no clear timing for the changes, but one scenario under consideration would include the promotion of Energy Minister Youcef Yousfi to be the new prime minister, replacing current Prime Minister Ahmed Ouyahia, they said. Such a move could be part of a broader reshuffle aimed at replacing officials with ties to political parties with technical experts whose reputations remain intact after the protests.
Mr. Yousfi, who became energy minister last year after a corruption probe shook Algeria’s oil industry, has had a long career in the hydrocarbons sector as well as in diplomacy.
Mr. Ouyahia is the secretary general of the National Rally for Democracy, a member of the ruling coalition.
A presidential spokeswoman said she had no information about any potential cabinet reshuffle. Spokesmen for the energy minister and the prime minister’s office couldn’t be reached.

Jim Sinclair’s Commentary
Houston, things are getting pretty bad this weekend!

Jordanians protest government policies Fri Jan 28, 2011 2:57PM
Thousands of Jordanians have marched against the government’s political and economic policies, demanding the prime minister’s resignation.
The demonstrations, which were held following the Friday prayers in the capital Amman and other major cities, were organized by the country’s main political opposition group, the Islamist Muslim Brotherhood. It was the third consecutive Friday of protests in Jordan.
The demonstrators denounced Prime Minister Samir Rifai’s economic policies, saying reforms introduced by him, which led to cuts in subsidies for basic commodities, have caused the soaring food and fuel prices, unemployment and poverty.
"Rifai go away, prices are on fire and so are the Jordanians,” protesters chanted.
Protesters have also demanded that the prime minister be democratically elected rather than appointed by the King.
Today’s protests came while the prime minister and the country’s ruler King Abdullah II have promised to make reforms.


Jim Sinclair’s Commentary
This is disgusting!

Get Ready For More Outrageous Compensation Date: 03.22.09 Posted by: Equedia Weekly Newsletter
This past week, outrage was sparked over the controversial executive compensation from AIG, which recently received billions in taxpayer dollars. President Barack Obama on Monday blasted AIG and pledged to try and prevent it from giving its executives 165 million dollars in bonuses.
Eight top executives of Nortel Networks got approval from the courts for up to $7.3-million (U.S.) in bonus payments under a retention plan – despite the layoffs of 1,100 Canadian workers last year who were denied their severances after the telecommunications giant filed for bankruptcy protection in January.
The list of outrageous compensation to executives of failing companies stretches for miles and will continue to stretch because they argue that these big bonuses are required in order to keep good people in the company.
I say that’s bull. But it won’t change. It will just get worse.

Florida Judge Declares Entire Healthcare Law Void

After a month and a half ago, a Virginia Judge found a key provision of the healthcare law unconstitutional, today Judge Roger Vinson from the federal district court in Florida has found the entire healthcare law void. "I must reluctantly conclude that Congress exceeded the bounds of its authority in passing the Act with the individual mandate," Vinson writes. "Because the individual mandate is unconstitutional and not severable, the entire Act must be declared void." 

  • Florida judge rules that health care law is unconstitutional and says
    the entire act must be declared void.

Inflationary Holocaust Survival Guide

Treasury Sees $194 Billion Drop In Borrowing Needs Due To SFP Program Roll Off, Over Half A Trillion In Financing Needs For Jan-Mar Quarter

Here Comes The Greek Brady Plan Together With 35% Bond Haircuts...And A Caption Contest

Just in case you were expecting a full recovery on those Greek bonds stashed away under the mattress (ahem ASSGEN) here comes Euro Intelligence to spoil your day (and maybe, just maybe, wreak some havoc with your CDS). In a nuthsell: we are about to see a Brady plan with 35% haircuts. If true, we may be seeing some pretty interesting unintended consequences in the near to very near-term future.

Tracing The Path Of Egypt’s Disruption Sending Contagion To The Stronger Countries Of Europe

Monday - Mubarak's Mood May Move Morning Markets

Crude Oil Spikes Like An Egyptian 

Bank Excess Reserves Projected To Climb By $700 Billion In Five Months As Fed Liquidity Management Becomes Unfeasible


Interactive Global Inflation Heat Map

No, there is no "dis" prefix missing. Sorry. Today's "heat" map, which in places like a burning Cairo has a very peculiar double entendre, comes courtesy of the WSJ. 

Cairo rails closed, military doing more to restrict car traffic ahead of call for million-strong march - BBC

Syria next? Opposition groups there using Facebook to urge protest Saturday - CNN

Egyptian military statement cites 'legitimacy' of protesters' demands - Reuters

Food giant Nestle closing Egypt operations for now, Coca-Cola doing same in Cairo -

Breaking News. 

Egyptian military says on government TV that it 'will not use force' against public - BBC


Egypt Rapidly Running Out Of Food


Gold Bar Premiums At 17-Year High In Hong Kong

posted by Admin at Jim Rogers Blog - 5 hours ago
*“If the world economy gets better, commodities are going to make a fortune. If the world economy does not get better, commodities are the place to be because they are going to print more money, and that’s...

Rice Is Next


The March Brent Crude contract has just surpassed $100 for the first time since October 2008. Surely nobody is worried about monetary policy and Middle East contagion. After all, this is just throwing darts at the next disinflationary target. 

"Flip That Bond" Continues: Primary Dealers Offload 26% Of Just Acquired 3 Year Auction Back To Fed


Dallas Fed Misses Consensus, Comes At 10.9 On Expectations Of 15.0, Prior 12.8, More Input Cost Warnings


Chicago PMI Prints At Multi-Decade High At 68.8 On Expectations Of 64.5, "Steel Prices Are Going Crazy"


Guest Post: American Eulogy


Savings Rate Drop To 5.3%, Lowest In 10 Months


The Economist FTW - Part 2

Part 1 of the Economist FTW cover series came a week in advance of the first Greek bankruptcy (not to mention flash crash). Here comes Part 2...

Maersk Suspends Egypt Activities 



Sunday, January 30, 2011

China Central Bank Advisor Urges Increase In Official Gold And Silver Reserves

And so the long anticipated incursion by the PBOC, whose holdings of gold are behind even those of GLD, begins. Bloomberg has just reported, that "China central bank adviser Xia Bin said the country should increase its gold and silver reserves, the Economic Information Daily reported today, citing an interview with Xia." But how can this be: after all China has trillions in USD-denominated reserves, and any indication that it believes these are based on a currency that may actually be impaired will be an act of Mutual Assured Destruction. Well, yes and no. China is merely taking the next defection step in what is already failed Nash equilibrium. The first? The Fed's gross monetization of all US debt. The observant ones will realize that Chinese holdings in November were lower than they were in June of 2009! Who has picked up the slack? Why the Federal Reserve of course. Simply said, the Fed is explicitly making China's creditor status increasingly less relevant. Zero Hedge has long been wondering how much longer China will take this direct defection in what previously had been a stable equilibrium balance in which China provides the US vendor financing, while the US imports China's crap. As the Criminal Reserve is increasingly taking away the leverage that China used to enjoy as Creditor numero uno, it is only a matter of time before China fires back. And it may have just done that.

World Leaders Urge Egyptian Reform

Israeli, Saudi and American Leaders Say Arabs Are Not Ready for Democracy 

Step Aside Egypt CDS.... Here Come The Saudi Contagion Vigilantes

By now everyone knows that over the past few days, Egypt CDS has taken a hard right angle and has doubled from 200 bps to well over 400 bps (making it just slightly riskier than Illinois). And tomorrow Egypt risk will add another 80 or so basis points. No surprise there. What may surprise some, however, is that just like Egypt, Saudi CDS has also gone vertical. And with momentum chasers finally realizing that there is a direction other than tighter, expect the contagion vigilantes to do some serious damage here. If history is any precedent, there is a long way to go.

Guest Post: The CIA On Egypt's Economy, Financial Deregulation And Protest



The Financial Crisis “Round Two” Survival Guide

Citigroup - The Last Recourse Against Runaway Inflation? A Commensurately Greater Jump In The Dollar

Citi's head of FX, Steven Englander, has some contrarian observations on the fate of the US dollar, which a more nuanced read may even indicate a slightly conspiratorial bent, namely that in order to cut the surging global inflation dead in its tracks (alas, too late for the regimes of Tunisia and Egypt), the dollar will have to surge even more. To wit: "If the world’s inflation problem is primarily derived from rising commodity and food prices, it is very likely that a stronger USD will help mitigate this inflation quickly and efficiently. There is a well established relationship between USD strength and weaker commodity prices." Of course, with the Printing Dutchman at the helm, what hope is there for a sustainable strong USD thesis: "The problem is that there does not appear to be a market driver for USD strength." Yet this could very well be the contrarian trade going forward as the G-20 looks aghast at events in Africa and realizes that the "last case" scenario just seems that much more credible. If this happens and there a concerted effort to reincarnate the dollar, look for the EURUSD to plunge, and all USDXXX pairs to surge in the following days, especially as the carry funding shorts realize that they will once again, just like in late 2008, be the sacrificial lambs at the altar of "Kicking the can down the road one last time"-dom. Quote Englander: "During a similar high commodity price episode in mid-2008, we saw some evidence of high reserves growth, which is unusual when the private sector is buying dollars. Moreover, then as now, market macro investor positions appeared to be long commodities. While it would be unusual for reserve managers to buy USD for inflation stabilization reasons, as a quick solution to a major problem it may be more effective than most."

As Egyptian Anger Swells, Will America (And Its Regional Interests) Be Targeted Next: "They Are Attacking Us With American Weapons"

Posted: Jan 30 2011     By: Jim Sinclair      Post Edited: January 30, 2011 at 12:23 am
Filed under: In The News


Jim Sinclair’s Commentary
Here is some more accelerant for the Egyptian fire.

Jordan’s opposition: Arabs will topple tyrants Jan 29, 1:10 PM (ET)

AMMAN, Jordan (AP) – The leader of Jordan’s powerful Muslim Brotherhood warned Saturday that unrest in Egypt will spread across the Mideast and Arabs will topple leaders allied with the United States.
Hammam Saeed’s comments were made at a protest outside the Egyptian Embassy in Amman, inspired by massive rallies in neighboring Egypt demanding the downfall of the country’s longtime president, Hosni Mubarak.
About 100 members of the fundamentalist group and activists from other leftist organizations and trade unions chanted "Mubarak, step down" and "the decision is made, the people’s revolt will remain."
Elsewhere, a separate group of 300 protesters gathered in front of the office of Jordanian Prime Minister Samir Rifai, demanding his ouster. "Rifai, it’s time for you to go," chanted the group.
Jordan’s protests have been relatively small in size, but they underline a rising tension with Jordan’s King Abdullah II, a key U.S. ally who has been making promises of reform in recent days in an apparent attempt to quell domestic discontent over economic degradation and lack of political freedoms.
But as a monarch with deep support from the Bedouin-dominated military, Jordan’s ruler is not seen as vulnerable as Mubarak or Tunisia’s deposed leader. Even the Brotherhood – a fiery critic of Jordan’s moderate government – has remained largely loyal to the king, who claims ancestry to Islam’s Prophet Muhammad.

Posted: Jan 30 2011     By: Jim Sinclair      Post Edited: January 30, 2011 at 12:47 pm
Filed under: Jim's Mailbox

Jim Sinclair’s Commentary
CIGA Pedro clearly outlines how the demise of the dollar is the demise of much more. Greenspan gave away more than anyone knows.
Gold is your only insurance policy against things we cannot control regardless of the wild fluctuation of the price. We must be our own central bank.

Inflation Inflation Everywhere and Not a Drop to Drink
At last, the doubters have nowhere to hide. The world is starkly revealed as an interconnected political economy force, and not as a disparate grouping of various nations, some authoritarian, some choosing democratically agreed upon policies, creating policy choice and thereby shaping of political outcome. Greece, Ireland, Tunisia, and now, the fulcrum of the Arab world, Egypt, stand as testimony. They are countries caught up in the machinations of a monetary policy to debase the world’s reserve currency.
All “he” wanted was some inflation, a little inflation to get America and the west out of the deflationary spiral caused by the failure of financial instruments (a.k.a. OTC Derivatives) and un-payable government debt – but he can’t get it. Everywhere it rages, but the place he wants it – home. So it erupts in global food prices and manifests itself in the attempts to bail out stone dead banks on the backs of the marginal economic player – post-destruction of the middle class. Most of the world has no savings to get through difficult times. Most of the world cannot “hedge” inflationary outcomes. Those outcomes appear quickly and change realities violently. The inflationary reality is their reality – the difference between starvation and survival. The result? Global upheaval, leading to where, we are not sure… but probably nowhere nice. Think American monetary policy was a uniquely sovereign, American affair? Think again. You are watching QE II live on television. American monetary policy and the global “race to debase” is that raging crowd you see on the television from Ireland to Greece and Egypt. It is that nascent force which Chinese leaders awake in terror, wondering what a billion plus people might do if faced with stark choices. If you can’t make the connection between the monetary policy and the political reality, you need to change the causal way you look at the world.
Nations hold dollars in reserve to meet the demands of running an economy. When debasement takes place, the marginal economic player gets hit first. This is what we see now. But there is another, geo-political aspect many are missing. The western attempts to control multiple political outcomes and a global geo-political/military order rests on the ability to finance and control that order. When the money gets degraded, the ability to finance that order goes with it. Degradation of currency inhibits foreign force projection, both militarily and politically. Nobody in Egypt believes America is capable of controlling political outcomes, as they did from Suez to Mubarak. That era has passed. It passed with the Shah of Iran, and the death of the widely despised (in Egypt) Anwar Sadat. The Mubarak intermezzo is over. In the Arab world, what happens in Egypt doesn’t stay in Egypt. The potential for “regime change” in Saudi Arabia is growing. Now we find that the financial necessity for Dollar debasement wasn’t as politically benign as people in Washington thought. Instability rages across a region that could usher in an era of global conflict.
People say, “be careful what you wish for” when you talk about the end of western hegemony, but while the political hegemony is dying by the hour, the monetary hegemony is currently intact and its results are evident. When those results swing full circle and return to the west, currency upheaval will be guaranteed. Global system breakdown, which made its debut in 2008 is now back for its main act. Money printing didn’t quite work out the way it was supposed to. This time, a rush to the security of Treasury instruments is unlikely to be the fallback position for global capital that now sees Fed monetary policy as a destructive boomerang cutting inflationary swathes across the planet… en route to its place of origin.
CIGA Pedro

Greetings Jim,
Gold closed slightly lower this week, reacting sharply off of the lower boundary of the uptrend from late 2008.
We are now 26 weeks into the intermediate-term cycle following the low on July 30. Ninety percent of all Intermediate-Term Cycle Lows (ITCL) form within 23 weeks of the previous low, so Cycle Analysis (CA) indicates that the latest ITCL is imminent and could occur at any time.
Additionally, the short-term cycle is currently within the window during which the next Short-Term Cycle Low (STCL) is likely to occur, and the setup for a confirmed STCL signal was generated on Friday as both of our CA price oscillators experienced bullish crossovers.
The trigger for confirming this STCL signal would be a daily close above $1,346. A confirmed STCL next week would significantly increase the likelihood of the ITCL occurring as well, and a synchronized short-term and intermediate-term low would forecast a move up to new all-time highs during the next 2 to 3 months.
Prometheus Market Insight

Presenting The US State Department Propaganda Filter

Confused by all the contradictions and outright lies that came out of Hillary Clinton's mouth when discussing Egypt earlier? Have no fear: here is a real-time propaganda filter that will make everything perfectly clear in words even the Egyptian Idol cognoscenti can appreciate. 

Libya Next?

The one country landlocked between Tunisia and Egypt has so far been oddly silent. Not so much any more. Al Jazeera reports that the Libyan government has imposed a state of emergency for "fear of demonstrations and rallies" comparable to those in Tunisia and Egypt. And ranked 17 in the world for oil production (and 9th in proven reserves), this is one that crude HFT algos may want to keep an eye on. 

Fed Bashing... British Accent Style



ElBaradei to Mubarak: 'Leave Today'

Egyptian opposition leader Mohamed ElBaradei is calling on President Hosni Mubarak to step down as he tells thousands of protesters 'change is coming.'

COT report..corrected for my commentary on Jan 29.2011
posted by Harvey Organ at Harvey Organ's - The Daily Gold & Silver Report - 13 hours ago
Good evening Ladies and Gentlemen:   I accidently this morning took the previous week's COT instead of what was released last night.   Here is the corrected version:   First the COT gold report:   ...

Arabic Broadcaster Al-Jazeera Is Banned in Egypt

Clinton to Egypt: Pursue Democracy


Mubarak Meets With Military as Protests, Looting Rock Egypt

Senator Rand Paul of Kentucky has proposed a list of budget cuts that will total $500 Billion dollars in savings.

a map of the dozens of riots in recent weeks across the globe that can be attributed to price hikes as well as a few price hikes in the US.

Budget deficit to hit $1.48 trillion.

Regulators Shut Down Small Banks in Oklahoma and Wisconsin   

World Markets Sink as Protests Escalate in Egypt   

Fitch Downgrades Egypt Outlook to Negative   

More Robust Spending Helps Economy Gain Steam   

The US Goes Back to the Gold Standard   

Weekly Chartology: Mind The Russell 2000 Gap

This week's key themes presented by Goldman's David Kostin: "The weak fiscal condition of federal, state and local governments, and corporate tax reform dominated our discussions this week with hedge fund and mutual fund portfolio managers. So far, 207 firms in the S&P 500 have reported 4Q results (55% of total cap). 45% of companies reporting have beat consensus earnings estimates by more than one standard deviation (above the historical average of 41%) and 9% have missed estimates (vs. average of 14%). The average EPS surprise has been nearly 10%, above the 4% historical average. Excluding Financials, there are fewer positive surprises (44%) and fewer negative surprises (6%)." For now Kostin is still sticking to his 1,500 forecast: "The S&P 500 rose 1.5% this week. Industrials was the best-performing sector (+3.0%) while Consumer Staples was the worst-performing sector (-0.5%). We expect the S&P 500 to rise to 1500 in 12 months (+15%)." We give this forecast three months max. After all, the path for QE3 must be paved with good intentions. And the kicker: "We expect a  combination of 8% sales growth and 30 bp of net margin expansion to 8.8% will combine to boost EPS by 14% to $96 per share." Ongoing margin expansion as most companies are prewarning about maring collapses... This is beyond painful.

Saturday, January 29, 2011

Step Aside The Bernank Here Comes Timothy Jeethner: The Bears Explain Banker Bailouts And The Screwing Of The American People

The same two bears who explained Quantitative Easing so that even the ADHD afflicted could understand Bernanke's indirect subsidies to the PDs, once again simply finance and in 6 minutes explain the core issues behind the bank bailouts. Concepts explained include the Too Bigger To Fail banks (the JP Morgan Chase Bear Stearns Washington Mutual and the Bank of America Countrywide Merrill Lynches), Goldman Sachs' HoldCo position over the US government, the "very real evil empire's" Goldman Sachs profiting on the AIG, the reason why the failed CIT's boss is the same person who bought a $70,000 desk, and why "when you constantly get the bailouts you don't care about the shame." Also explained are NY Fed boss, The Timothy Jeethner, The Change brought from The President Obama, why The Ben Bernank will not lend you money, and The Screwing Of The American People.

Silver shortage, bond market manipulation figure in metals wrap at KWN


Silver futures trading has nothing to do with metal's real price, Sprott says


Kitco News reports on GATA's lawsuit seeking Fed's gold records


FOFOA: Who is draining GLD? Probably giants who want metal

Analysis: Egypt shows how easily Internet can be silenced.

Saudi Stock Exchange Plummets 6% 


Posted: Jan 29 2011     By: Jim Sinclair      Post Edited: January 29, 2011 at 6:29 pm
Filed under: In The News

Dear CIGAs,
On Friday we found out the supply on the Comex and hammering of gold was primarily the product of an undisciplined hedge fund trader who got caught in an outrageously large spread while heavily under-financed. We also learned the problems in Egypt have become a lot more serious than many anticipated.
Gold had two drivers Friday. Those drivers were the clear fact that the supply in gold was an aberration that drew the chart and yes, Egypt, but that was not fully appreciated.
Egypt is Iran and the Shah revisited. That is extremely serious.

The Egyptian Unrest: A Special Report January 29, 2011 | 2207 GMT
Egyptian President Hosni Mubarak remains the lifeblood of the demonstrators, who still number in the tens of thousands in downtown Cairo and in other major cities, albeit on a lesser scale. After being overwhelmed in the Jan. 28 Day of Rage protests, Egypt’s internal security forces — with the anti-riot paramilitaries of the Central Security Forces (CSF) at the forefront — were glaringly absent from the streets Jan. 29. They were replaced with rows of tanks and armored personnel carriers carrying regular army soldiers. Unlike their CSF counterparts, the demonstrators demanding Mubarak’s exit from the political scene largely welcomed the soldiers. Despite Mubarak’s refusal to step down Jan. 28, the public’s positive perception of the military, seen as the only real gateway to a post-Mubarak Egypt, remained. It is unclear how long this perception will hold, especially as Egyptians are growing frustrated with the rising level of insecurity in the country and the army’s limits in patrolling the streets.
There is more to these demonstrations than meets the eye. The media will focus on the concept of reformers staging a revolution in the name of democracy and human rights. These may well have brought numerous demonstrators into the streets, but revolutions, including this one, are made up of many more actors than the liberal voices on Facebook and Twitter.
After three decades of Mubarak rule, a window of opportunity has opened for various political forces — from the moderate to the extreme — that preferred to keep the spotlight on the liberal face of the demonstrations while they maneuver from behind. As the Iranian Revolution of 1979 taught, the ideology and composition of protesters can wind up having very little to do with the political forces that end up in power. Egypt’s Muslim Brotherhood (MB) understands well the concerns the United States, Israel and others share over a political vacuum in Cairo being filled by Islamists. The MB so far is proceeding cautiously, taking care to help sustain the demonstrations by relying on the MB’s well-established social services to provide food and aid to the protesters. It simultaneously is calling for elections that would politically enable the MB. With Egypt in a state of crisis and the armed forces stepping in to manage that crisis, however, elections are nowhere near assured. What is now in question is what groups like the Muslim Brotherhood and others are considering should they fear that their historic opportunity could be slipping.
One thing that has become clear in the past several hours is a trend that STRATFOR has been following for some time in Egypt, namely, the military’s growing clout in the political affairs of the state. Former air force chief and outgoing civil aviation minister Ahmed Shafiq, who worked under Mubarak’s command in the air force (the most privileged military branch in Egypt), has been appointed prime minister and tasked with forming the new government. Outgoing Intelligence Chief Omar Suleiman, who has long stood by Mubarak, is now vice president, a spot that has been vacant for the past 30 years. Meanwhile, Defense Minister Field Marshal Mohammed Hussein Tantawi (who oversees the Republican Guard) and Egypt’s chief of staff of the armed forces, Lt. Gen. Sami Annan — who returned to Cairo Jan. 29 after a week of intense discussions with senior U.S. officials — are likely managing the political process behind the scenes. More political shuffles are expected, and the military appears willing for now to give Mubarak the time to arrange his political exit. Until Mubarak finally does leave, the unrest in the streets is unlikely to subside, raising the question of just how much more delay from Mubarak the armed forces will tolerate.
The important thing to remember is that the Egyptian military, since the founding of the modern republic in 1952, has been the guarantor of regime stability. Over the past several decades, the military has allowed former military commanders to form civilian institutions to take the lead in matters of political governance but never has relinquished its rights to the state.
Now that the political structure of the state is crumbling, the army must directly shoulder the responsibility of security and contain the unrest on the streets. This will not be easy, especially given the historical animosity between the military and the police in Egypt. For now, the demonstrators view the military as an ally, and therefore (whether consciously or not) are facilitating a de facto military takeover of the state. But one misfire in the demonstrations, and a bloodbath in the streets could quickly foil the military’s plans and give way to a scenario that groups like the MB quickly could exploit. Here again, we question the military’s tolerance for Mubarak as long as he is the source fueling the demonstrations.

Jim Sinclair’s Commentary
The unrest continues.

Mubarak appoints ally as vice-president By Heba Saleh in Cairo and agencies
Published: January 29 2011 19:08 | Last updated: January 29 2011 19:08

Hosni Mubarak has appointed the head of military intelligence, Omar Suleiman, as vice-president, in a move analysts said signalled the beginning of the end of his 30-year reign, following five days of unprecedented street protests across Egypt.
“I think this is effectively the end of power of Hosni Mubarak,” said Mustapha Kamel al-Sayed, a political scientist. “If and when he serves out his term in November, real power will be in the hands of Mr Suleiman.”
Mr Mubarak has ruled without a vice-president since coming to power in 1981.
Mr Mubarak also appointed Ahmed Shafiq, a former commander of the air force, as prime minister, a day after he appeared on television to say he would dismiss the government and replace it with one that would carry out reforms.
It also been announced that Ahmed Ezz, a steel tycoon, close confidante of the president’s son and senior official of the ruling National Democratic party, had resigned.

Jim Sinclair’s Commentary

CIGA Edward correctly observes the absolute gaul of the demon banksters attempting to rewrite history.
Bravo Sarkozy!

Davos diss: JP Morgan head Jamie Dimon gets public smackdown from French President Nicolas Sarkozy BY Corky Siemaszko
Thursday, January 27th 2011, 12:36 PM

JP Morgan boss Jamie Dimon got a humiliating public slap down from the French president Thursday after he whined that bankers were bashed unfairly for the Great Recession.
Nicolas Sarkozy told the Manhattan moneyman that bankers made moves that "defied common sense" and harmed millions of people around the world.
"Don’t be accusatory of us," Sarkozy snapped at Dimon at the World Economic Forum in Davos, Switzerland.
"The world has paid with tens of millions of unemployed, who were in no way to blame and who paid for everything."
Dimon drew the ire of the French president – and some of the other participants in the forum – by calling the persistent criticism of bankers "unproductive and unfair."

Barron's Roundtable Wrapup 

Gold and Silver rally/Huge Problems in Egypt/Oil rises Harvey Organ


Interactive Map Of Egypt Riots

Curious to link a place with a protest you have seen on Al Jazeera (and only Al Jazeera: US "media companies" can send journos to Davos... and who can forget what Marc Faber thinks of all those who have gone to Davos... and spend $100K+ per person, but can't cover, at no cost, what is rapidly becoming the most important event of the decade) over the past two days? Here is your chance: the New York Times has put together an interactive map of Cairo highlighting the key protest areas, which also happen to be the key choke points in the geography of the Egyptian capital.


Tracking The Gold "Conspiracy" - GATA's Must Read Presentation To The Cheviot Asset Management Sound Money Conference


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Roubini Says US Risks "Train Wreck" From Bond Vigilante Wrath   

Financial Meltdown Was "Avoidable," Inquiry Concludes

Protests Spread To Saudi Arabia

While the biggest threat to the Middle East region is the possibility that the population of Saudi Arabia may try to imitate what has been happening in the region, thereby bringing total chaos to the established regional geopolitical and more importantly, energy, structure, the first protests in the Saudi Arabia city of Jeddah are already in the books. The clip below shows the peaceful demonstrations that have taken place recently, which as Fedupmontrealer explains are "taking place in front of the Municipality in protest of the severe lack of infrastructure, and corruption, that led the city to be inundated this week causing billions of dollars of damages for the second time in two years." That this is even occurring in a state where the average wealth is orders of magnitude greater than in Egypt is remarkable. On the other hand, we expect more news such as those from yeserday that Kuwait is paying its citizens $3,500 plus free food for a year to keep calm. Oddly, visions of money dropping helicopters, infinitely extendable unemployment insurance and tax breaks keep dancing in our head. Those who wish to follows the latest developments out of Jedda which appears could be the lightning rod for Saudi riots can do so by tracking #JeddahProtests on Twitter.

Violence Rules Egypt Despite Shakeup


Mohamed ElBaradei calls on President Mubarak to step down in an exclusive phone interview broadcast by Al Jazeera English


Police Fire on Protesters in Egypt, Killing at Least One


Profiling Omar Suleiman: "One Of The Most Powerful Spooks In The Middle East"


Egypt Spy Chief Omar Soliman Named Vice President


Guest Post: The Nature And Origin Of The State


FX Charts That Matter: The Screaming EURUSD Spot-2 Year Fwd Swap Spread Convergence Trade


Bet on gold nets Paulson $5 billion



Friday, January 28, 2011

Tech-Savvy Egyptians Get Message Out


Mubarak Speaks, Dissolves One Crony Government, New Crony Government To Be Named Tomorrow

The Egyptian president (?) is speaking liverecorded (unclear from where). Somewhere, the Bernank is rehearsing the very same speech. Long, meandering speech, whose conclusion is that government is at fault. The government will be sacked and be replaced with new government tomorrow. Long Riot futures.

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Watch Out For Hidden Inflation Costs As Packaging “Shrinks”

World moves closer to food price shock

Jim Grant: "The Fed Is Now In The Business Of Manipulating The Stock Market...Should Confess It Has Sinned Grievously"


Buy Silver Sell Spanish Equities


Guest Post: America Needs Community, Not Collectivism


The Great Debt Shift.
Here is a quote: "Two of the world's largest economies, the EU ($16 trillion) and the US ($14 trillion), have become the leading practitioners of private-to-public debt shifting. The US has assumed the debts of banks, insurers, mortgage holders, and even entire industrial sectors. The European Union has done the same for entire states. The resulting public debt levels are, predictably, placing strains on both the dollar and the euro. Worse still, the bailouts have created a spirit of apathy toward debt accumulation. Western governments have embarked on a debt binge for the ages. Already, the credit ratings of the United States and some of the EU's core countries, such as France and the UK, are being questioned. While this socialization of private debt has created deep citizen resentment, it remains to be seen whether political pressure is enough to hold back the tide..."

Posted: Jan 28 2011     By: Jim Sinclair      Post Edited: January 28, 2011 at 9:07 pm
Filed under: In The News

Jim Sinclair’s Commentary
Three so far this week.

Bank Closing Information – January 28, 2011 These links contain useful information for the customers and vendors of these closed banks.
FirstTier Bank, Louisville, CO
Evergreen State Bank, Stoughton, WI
The First State Bank, Camargo, OK

Jim Sinclair’s Commentary
Things in Egypt continue to crumble.

Mubarak Dismisses Egypt’s Government January 28, 2011 | 2241 GMT
Egyptian President Hosni Mubarak in an address broadcast on state television Jan. 28 said that he has dissolved the government and will form a new government Jan. 29. In other words, Mubarak is not stepping down.
Changing the political face of the government is unlikely to pacify Egyptian protesters. Mubarak is undoubtedly the primary target of the demonstrations. The crisis in Egypt is thus far from over. The military still appears to be the main power broker in the country, and Mubarak’s fate is likely in the hands of his generals. Mubarak’s appeal to stay and the hours-long delay in making this speech could be a negotiated step between the two sides, but the potential for more direct and overt military intervention remains extremely high. Chief of Staff of the Armed Forces Lt. Gen. Sami Annan is expected to return to Cairo by Jan. 29 and next steps by the military are likely to be discussed then.
The announcement was strategically made in the middle of the night in Egypt to give time for troops to take position. The military’s interaction with the demonstrators will need to be watched closely. So far, the military has been able to move into the cities and has been welcomed by the protesters without employing the more heavy-handed tactics of the internal security forces. What order they imposed came not from violence but from the perception that they would enable the demonstrators to bring down Mubarak.

Jim Sinclair’s Commentary
Apparently everyone reads Trader Dan.

World Grows Jittery About American Debt By URI FRIEDMAN | January 28, 2011 11:22am
clip_image002The U.S. received two stern warnings Thursday that it needs to get its fiscal house in order, and quickly. Moody’s, the credit rating agency, cautioned that it may need to downgrade its AAA-rating of U.S. debt sooner than expected, while the International Monetary Fund argued that America must tackle its mounting debt and confront thorny issues like entitlements if it wants to maintain its credibility in global markets. Moody’s AAA rating is its top designation, but the agency pointed out that the U.S. has the highest ratio of government debt to government revenue of any AAA-rated country.
The rebukes came a day after a congressional projection placed this year’s federal budget deficit at a post-World War II record of $1.5 trillion. It also came on the same day that another credit-rating agency, Standard & Poor’s, downgraded Japan’s bond rating from AA to AA- out of concern that the country isn’t making a credible effort to control its spiraling debt. During his State of the Union address, President Obama proposed deficit-reduction measures like freezing domestic spending, but critics accused him of skirting the painful spending cuts or tax increases needed to truly rein in the national debt.
How seriously should we take the threats issued by Moody’s and the IMF?
Moody’s Warning Could Spook Foreign Investors, notes Bloomberg’s Christine Richard: "The threat of a lower rating may cause international investors to avoid U.S. assets. About 50 percent of the almost $9 trillion of U.S. marketable debt is owned by investors outside the nation."
If Japan Was Downgraded, U.S. Could Be Next, maintains Time’s Michael Schuman: "Anything you can say about Japan you can say about the U.S.–and more. Unlike Japan, the U.S. is not a creditor nation, nor does the populace save enough. Despite talk of a more conservative approach to spending, the U.S. has no credible plan for reining in its deficits and debt."
U.S. Debt Will Be Downgraded, argues Douglas McIntyre at 24/7 Wall St: "The US is doomed to suffer a downgrade in its debt before its begins the hard work on restructuring Social Security, Medicare and Medicaid. A downgrade may not even be enough of a shock to bring Americans to their senses. They have paid for their entitlements and they believe they deserve them."
Downgrade Unlikely But Potentially Disastrous, explains The Washington Post’s Howard Schneider. The U.S. still has the world’s largest economy and reserve currency, Schneider reminds us. Yet, "however unlikely, a downgrade in U.S. debt or loss of confidence in the government’s ability to repay its creditors could touch off a catastrophic series of events–from a shutdown of global trade finance and credit to the collapse of banks and governments that hold large amounts of U.S. debt and depend on the flow of money through and from the United States to stay afloat."

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Guest Post: The Big Squeeze, Part 2: Abused Fundamentals And Fake Markets: How They Play Out


Quant Wipeout In Process?

Europe Considering Extending Greek, Irish Bailout Loan Duration From 3 To 30 Years

Gold Flash Smash

Gold is the only asset that takes the escalator down and the express elevator up. Incidentally, the 3% surge in WTI was predicted by Zero Hedge yesterday on what is completely common-sensical assumptions. What kind of idiots are running this market if someone is surprised by what is happening today?

Suez Canal Closure Concerns Go Viral

Shockingly, the "pundits" have suddenly realized that courtesy of the upheaval in Suez, the canal with the same name may be closed, which would wreak havoc on shipping costs. Once again, Zero Hedge was just ahead of the curve: "Egyptian Stock Market Plunges Over 11% To Fresh Multi-Year Lows; Is A Suez Canal Transit Halt Imminent?" The just announced countrywide curfew will not make Suez Canal operability any easier. For those who are concerned about what a Suez closure means, we recreate what we wrote previously on the topic. And just in from Reuters, Energy Secretary Steven Chu has declined to say if he is worried Egypt protests may disrupt Mid-East oil, but believes that serious disruptions will have oil prices. By harm he means make them surge higher. 
Posted: Jan 28 2011     By: Jim Sinclair      Post Edited: January 28, 2011 at 1:33 pm
Filed under: In The News

Jim Sinclair’s Commentary
Egypt has shut down both internet and cell phone access amidst protests. The fact that the US also has the ability to do the same is frightening.
This possibility makes the ownership of direct satellite phones most inviting. I am re-installing my Motorola radio system that I have used in the past to keep lines of communication open to my office in the old non-tech world.

Egypt Withdraws From Internet After Protesters Take to Streets By Jonathan Browning – Jan 28, 2011 8:41 AM PT
Egypt, which has one of the most advanced telecommunications markets in the Middle East and Africa, “withdrew” from the Internet, after Egyptian authorities shut connections to the outside world.
Internet traffic volumes into and out of Egypt slumped at about 12:20 a.m. Egyptian time today, according to Internet security company Arbor Networks. Mobile-phone services run by local units of Vodafone Group Plc and France Telecom SA were also halted.
“Rather abruptly, in a coordinated fashion, all of the major Internet providers that have traffic in and out of Egypt basically withdrew from the Internet,” said Craig Labovitz, chief scientist at Arbor Networks.
Egyptian authorities shut the connections after anti- government demonstrators took to the streets inspired by an uprising that ousted Tunisian President Zine El Abidine Ben Ali on Jan. 14. Internet traffic volumes slumped at about 12:20 a.m Egyptian time today, Arbor Networks said. The Egyptian authorities couldn’t immediately be reached for comment.
Vodafone said it was ordered to suspend mobile-phone services in selected areas. “Under Egyptian legislation, the authorities have the right to issue such an order and we are obliged to comply with it,” Vodafone said in an e-mailed statement. “All mobile operators in Egypt have been instructed to suspend services in selected areas.”

Jim Sinclair’s Commentary
Of sorts, yes!

Russia Moving to Gold Standard? Written by Christian Gomez
Friday, 28 January 2011 11:24

With the value of the U.S. dollar exponentially declining since the establishment of the Federal Reserve Bank in 1913, it comes as no surprise that many world leaders and international economists have expressed their desire for a new world reserve currency. In light of the global financial crisis, Russia may be moving toward a sound economic solution — gold.
On Monday, January 24, the First Deputy Chairman Georgy Luntovsky of the Central Bank of Russia (CBR), announced plans to purchase over 100 metric tons of gold every year — increasing the bank’s gold reserves by 13 percent in 2011.
Last year alone, the CBR expanded its gold holdings by 23.9 percent to 790 tons. Why the sudden increase? “The current set of reserve currencies and the main reserve currency — the U.S. dollar — have failed to function as they should,” Russian President Dmitry Medvedev told a Shanghai Cooperation Organization summit on June 16, 2009, adding that he would like to see the Russian ruble become a global reserve currency.
Medvedev’s desire for the ruble to be a global reserve currency, or part of a new economic world order, may not be the only reason for the sudden gold increase. With the signing of the Customs Union treaty last month, the leaders of Russia, Belarus, and Kazakhstan agreed to establish a free-trade zone among themselves with a common currency. The Customs Union — set go into effect on January 1, 2012 — has been regarded as the economic restoration of the Soviet Union.
A new gold ruble could serve as the basis for a common currency between the three old Soviet republics, much as the former Soviet ruble once was.

Jim Sinclair’s Commentary
I have told you that farming was the greatest opportunity in Tanzania.
Tanzania is recognized as the greatest opportunity in Africa. This article tends to underscore that.

DAVOS-Firms seek to up food output to counter more unrest Fri Jan 28, 2011 5:27pm GMT
By Emma Thomasson

DAVOS, Switzerland, Jan 28 (Reuters) – Some of the world’s top firms agreed on Friday to invest in agriculture projects in Tanzania and Vietnam, warning of more unrest in the developing world if food production does not keep pace with population growth.
Business leaders announced a plan at a news conference at the World Economic Forum (WEF) to increase food production by 20 percent, while cutting greenhouse gas emissions by 20 percent and reducing rural poverty by 20 percent in a decade.
"This is timely given the news of continued rises in crop prices," said Hugh Grant, chief executive of Monsanto (MON.N), the world’s biggest seeds company.
"The expectation is that by 2050 we will have to double the amount of food that our little planet produces.

Jim Sinclair’s Commentary
States will go broke.

Moody’s to Include Unfunded State Pension Liabilities, NYT Says By James Kraus – Jan 27, 2011 1:17 AM ET
Moody’s Investgors Service plans to include unfunded pension liabilities into its credit rating for U.S. states’ debt, the New York Times reported, citing Robert Kurtter, managing director for public finance at Moody’s.
States haven’t included those liabilities until now, prompting growing unease among investors in municipal bonds, the newspaper said.
The new system will be comparable to the way Moody’s now rates corporate and sovereign debt, the newspaper said. States with the highest total indebtedness include Connecticut, Hawaii, Illinois, Kentucky, Massachusetts, Mississippi, New Jersey and Rhode Island, as well as Puerto Rico, the Times reported.

Jim Sinclair’s Commentary
The ideas that a spread financed at $10,000,000 can control the total production of gold from South Africa shows you the madness of credit, debt and markets now.

Huge U.S. gold position liquidated by fund-WSJ LONDON | Fri Jan 28, 2011 5:44am EST
LONDON Jan 28 (Reuters) – Hedge fund SHK Asset Management liquidated a U.S. gold futures position this week valued at over $850 million, more than 10 percent of the main U.S. futures market, the Wall Street Journal reported on Friday.
As a result of the move, which was made on Monday, the number of gold contracts on CME Group Inc.’s Comex division plunged by more than 81,000, to about 500,000, in their biggest single fall ever, the WSJ reported. It said an average daily move is about 3,000 to 5,000 contracts.
Daniel Shak, who runs the $10 million fund, told the newspaper that the trade had been profitable for him for years, but it stopped working and the exchange kept raising his margin requirements, forcing him to put up more money.
Shak said that when the exchange raised it by 25 percent on Monday, he decided to cut his losses and end the trade, the newspaper said.

Jim Sinclair’s Commentary
This period is more degraded than that of Sodom and Gomorrah. Pompei was kindergarten compared to the sociopaths of Wall Street.
The problem is that the present day demons own the place. Who need enemies when you investment bankers.

Wall Street Rocket Scientists Revive CDOs in Derivatives Battle 2011-01-28 00:01:00.10 GMT
By Simon Clark and Elisa Martinuzzi

The U.K. is losing about 38 billion pounds ($61 billion) a year to fraud, with the finance industry bearing the largest loss in the private sector of 3.6 billion pounds, the government said.
The financial-services industry in the U.K., which saw a 14 percent increase in online-banking fraud, is losing 1 billion pounds a year to mortgage fraud and 2.1 billion to insurance scams, the National Fraud Authority, a unit of the U.K. Attorney General’s office, said in a statement yesterday.
The public sector is losing 21 billion pounds to fraud, and the private sector loses an estimated 12 billion pounds, according to the NFA. Fraud costs individuals another 4 billion pounds a year and charities 1.3 billion pounds, it said.
The estimate “shows that 55 percent of fraud — a massive 21 billion pounds — is committed against the public sector,” Francis Maude, a minister for the Cabinet Office, said in the statement. “Ripping off the taxpayer will not be tolerated.”
The Serious Fraud Office, which prosecutes complex fraud and white-collar crime in the U.K., said in a separate statement yesterday that it has achieved an 80 percent conviction rate in its cases since April last year, and has 103 open cases.

Jim Sinclair’s Commentary
CIGA Green Hornet submits this as an example of brain surgeons at work in Finance.

Fitch downgrades Egypt outlook to negative By TAREK EL-TABLAWY – Jan 28, 2011 10:36 AM ET
By The Associated Press

CAIRO (AP) — Fitch Rating on Friday revised down its outlook for Egypt, dropping it to "negative" as mass protests in the country turned violent, engulfing the capital and other cities in the most serious challenge to President Hosni Mubarak’s regime in years.
Fitch said it was holding steady Egypt’s other ratings, including its long-term foreign currency issuer default rating, which was held at the investment grade BB+.
"The Outlook revision reflects the recent upsurge in political protests and the uncertainty this adds to the political and economic outlook ahead of September’s elections," said Richard Fox, head of Fitch’s Middle East and Africa Sovereign Ratings. Egypt is slated to hold presidential elections in the fall.
The revision came after the Egyptian stock exchange’s benchmark EGX30 plummeted about 17 percent in two days, a drop fueled by investor panic over Tunisia-inspired protests that erupted Tuesday in the Arab world’s most populous nation. The demonstrations have focused on the economic disparity in the country, spiraling food prices and the grinding poverty that afflicts nearly 40 percent of Egypt’s 80 million people.
Analysts have downplayed the likelihood that President Hosni Mubarak’s regime would be ousted as a result of the protests. But the mass rallies in which tens of thousands have clashed with riot police have pushed to the surface latent concerns about Egypt and raised questions about the economic impact on the country.