gold and silver withstand another raid/gold and silver open interest continues to rise

gold and silver withstand another raid/gold and silver open interest continues to rise

2 Dead, 4 Injured In Chile As Gas Price Hike Protests Turn Deadly

 

In The News Today

Posted: Jan 12 2011     By: Jim Sinclair      Post Edited: January 12, 2011 at 7:12 pm
Filed under: In The News

"Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants – but debt is the money of slaves." –Norm Franz, Money and Wealth in the New Millenium

Jim Sinclair’s Commentary
Here is a short review on option trades.
1. If you believe it what you are doing, you should switch forward when 50% of the time left in the option has occurred.
2. Even if you are in the money on your option do not allow your position to remain open up to maturity unless your plan and finances allow you to take delivery.
3.If the underlying security or commodity is highly volatile, fade the market by legging the position. That means be wiling to sell your winner on the up and buy the next maturity option on the reactions. Do not do the opposite.
4. Always keep in mind that options are not investments, but speculations which require strategy.
5. Have a strategy.

Jim Sinclair’s Commentary
Forbes has got it right. Gold is not going to take a 1980 flop. Gold is going to $1650 and above.
In time a virtual world currency as an average of many currencies tied to gold via a large measure of world M3 will occur. It will not be convertible, however it will be accepted as an alarm set in a monetary concept.
That has been lacking since currencies went to float in the marketplace against each other.
Gold will trade as a pendulum around the price of gold at the inception of this monetary plan. The dollar will remain in reserves of many countries primarily because they are simply stuck.

There Is No Getting Around Gold
Money has lacked a golden anchor for 40 years. It has proved a stupendous failure. Jeffrey Bell and Rich Danker, 01.10.11, 12:00 PM EST
Earlier this week Thomas Hoenig, president of the Kansas City Federal Reserve, went out of his way to call the gold standard a "very legitimate monetary system." In November, World Bank President Robert Zoellick and Indiana Republican Congressman Mike Pence both called for a serious look at using gold as the centerpiece of international monetary reform.
The fact that a Fed leader, the highest-ranking American official in international economics, and a potential presidential candidate are talking up the gold standard indicates that floating money is running out of political cover, and that the obstacles to gold replacing it are narrowing.
The first confirmation of this was the reaction of certain economic elites who, instead of responding with a straightforward defense of the status quo, lobbed ad hominem attacks on those who dared to mention gold. "I think [Zoellick] is living in the past," Edwin Truman of the Peterson Institute for International Economics told the Financial Times. Gold is "minor and really irrelevant," echoed Peterson Institute Director Fred Bergsten in the same article.
The most common practical objection to the international gold standard is political: that the slight deflationary bias it gives off would not be tolerated by people today. Yet this conclusion overlooks the serial price crashes that the economy has endured since gold was demonetized in 1971.
At different times and most recently all at once, the values of homes, stocks and other investment assets have collapsed and traumatized the lives of ordinary Americans. Think upheaval over monetary policy was a thing of the 19th century? In 1982 a mob of tractor-driving farmers blockaded the Fed headquarters in Washington in protest over high interest rates, leading Chairman Paul Volcker to hold public forums around the country to try and explain his prolonged and painful effort to squeeze inflation out of the economy.
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Jim Sinclair’s Commentary
The unfunded state pension liabilities are $5.2 trillion, twice what they estimate.
States in the present business cannot tax their way out of their deficit and future liabilities. The sovereignty of state will come into question.
Bloomberg estimated 100 to 150 municipalities will go broke. That is very low.
The putts that scream about Europe should take a closer look at this.

Jim Sinclair’s Commentary
The Portuguese bonds auction was successful? I will give you three guesses who bought the auction. I bet you only need one guess.
The ECB and the Fed are partners in QE2.



Jim Sinclair’s Commentary
Yeah sure. Here comes the state bailouts. This is disinformation.

No More State Bailouts, States Have Means According To Bernake By John Etherington on January 11, 2011, 2:10 pm
In testimony on Friday before the Senate Budget Committee, Federal Reserve, Chairman Ben S. Bernanke, was asked specifically about providing assistance to state and local governments facing budget deficits and high borrowing costs. His short answer: It’s not going to happen. Concerns have been mounting recently of a potential crisis in the municipal bonds market because states are struggling to pay off debt thus raising costs for municipal borrowers.
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Jim Sinclair’s Commentary
I was laughed at when I assured you that Central Banks would become buyers in gold.

ECB-Gold reserves up by 21 mln euros in wk to Jan 7 FRANKFURT | Tue Jan 11, 2011 9:12am EST
FRANKFURT Jan 11 (Reuters) – Gold and gold receivables held by euro zone central banks rose by 21 million euros to 367.432 billion euros in the week ending Jan. 7, the European Central Bank said on Tuesday.
Net foreign exchange reserves in the Eurosystem of central banks rose by 0.2 billion euros to 180.3 billion euros, the ECB said in its regular weekly consolidated financial statement.
Gold holdings rose because of purchase by the central bank of Estonia to cover its contribution to the ECB’s foreign reserve assets, the ECB said.
The size of the Eurosystem of central banks’ balance sheet amounted to 1.966 trillion euros, the first time the weekly statement included Estonia’s central bank. Estonia joined the euro zone at the beginning of the year.
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Jim Sinclair’s Commentary
Gold’s role as a currency gains momentum.

India, Iran mull over gold-for-oil for now 8 Jan, 2011, 01.36AM IST, Dheeraj Tiwari & Rajeev Jayaswal,ET Bureau
NEW DELHI: India is determined to ensure steady crude oil supplies from Iran and is even considering settling payments with gold in the short term before the two countries agree on a mutually accepted currency and a bank to clear the transactions.
"We have written a letter to NIOC ( National Iranian Oil Company )) asking it to suggest a bank where US sanctions are not applicable," a government official involved in the matter said requesting anonymity.
Another official said India could settle crude oil import transaction using gold in the short term, while efforts to resolve the deadlock continue. An Indian delegation, including officials from ministries of external affairs, finance and petroleum, will visit Tehran next week to thrash out the payment issue, officials said.
India’s crude oil imports from Iran faced an impasse after the Reserve Bank of India declared that a regional clearinghouse that involved the Iranian central bank could no longer be used to settle oil and gas transactions between the two countries.
Oil industry officials are keenly awaiting a solution as India imports 80% of the 184 million tonne of crude oil it refines every year, and Iran accounts for 16% of these purchases, making it the second-biggest supplier, after Saudi Arabia.
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Jim Sinclair’s Commentary
When you have your own limitless overdrawn checkbook, as does the Fed, you cannot go broke.
The currency goes broke.
Can the Fed go Broke?
Click here to watch the video…

 

Jim Sinclair’s Commentary
Yeah sure things are getting better.

Wage Drop Has Been Worst In Decades
Wages for American workers have fallen dramatically since the financial crisis, in what will likely turn out to be the worst such plunge since the Great Depression, the Wall Street Journal reports.
When hard times hit, employers typically are reluctant to reduce wages. But this downturn has been different: More than half the workers who found new work by early 2010 after losing jobs between 2007 and 2009 said their pay had dropped, according to Labor Department data cited in the WSJ. A full 36 percent said the new job paid 20 percent less than their former one.
While headlines have focused on the national unemployment rate of 9.4 percent, the pain extends far beyond those 14.5 million who are deemed officially unemployed by government statistics. The only other instance of such severe wage reductions since the Depression was during the recession of the early 1980s, but the current slump is on track to be far worse, the WSJ notes.
Among people who are lucky enough to have work, living standards have been significantly downgraded. Almost a third of America’s working families are now considered low-income, earning less than twice the official poverty threshold, according to a recent report. The recession reversed a period of improvement.
This trend spells a grim future for the American worker, and for the American economy.
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Jim Sinclair’s Commentary
To clearly see the condition of US banks add this to the FASB’s sale of their souls that allowed banks to value their assets at any price they want you to see to.
Below is the earnings statement weakness. Add them together and a bull market in financials is nuts.
Price appreciation is due to QE2 and that only.

US Banks Reporting Phantom Income on $1.4 Trillion Delinquent Mortgages Robert Lenzner
The giant US banks have been bailed out again from huge potential writeoffs by loosey-goosey accounting accepted by the accounting profession and the regulators.
They are allowed to accrue interest on non-performing mortgages ” until the actual foreclosure takes place, which on average takes about 16 months.
All the phantom interest that is not actually collected is booked as income until the actual act of foreclosure. As a resullt, many bank financial statements actually look much better than they actually are. At foreclosure all the phantom income comes off gthe books of the banks.
This means that Bank of America, Citigroup, JP Morgan and Wells Fargo, among hundreds of other smaller institutions, can report interest due them, but not paid, on an estimated $1.4 trillion of face value mortgages on the 7 million homes that are in the process of being foreclosed.
Ultimately, these banks face a potential loss of $1 trillion on nonperforming loans, suggests Madeleine Schnapp, director of macro-economic research at Trim-Tabs, an economic consulting firm 24.5% owned by Goldman Sachs.
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Jim Sinclair’s Commentary
Very interesting as it speaks to the falling level of confidence in the US dollar.

At Least 10 States Have Introduced Gold Coins-As-Currency Bills Jillian Rayfield | January 5, 2011
Legislators in at least ten states have introduced bills in the past few years to allow state commerce to be conducted with gold and silver.
As we reported, Georgia state Rep. Bobby Franklin (R) recently reintroduced legislation to force his state to conduct all monetary transactions with U.S. gold or silver coins — including the payment of taxes.
The Georgia bill has a long way to go before become law — but it’s by no means the only state that’s considering a future in gold. Lawmakers in Montana, Missouri, Colorado, Idaho, Indiana, New Hampshire, South Carolina, Utah, and Washington have proposed legislation, mostly in 2009, to include gold and silver in its accepted currency forms.
Constitutionaltender.com, a site dedicated to tracking and promoting these bills, explains:
The United States Constitution declares, in Article I, Section 10, "No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts". But, in fact, EVERY state in the United States of America DOES make some other "Thing" besides gold and silver coin a "Tender in Payment of Debts" — some "Thing" called "Federal Reserve Notes." Thus the need for the "Constitutional Tender Act" — a bill template that can be introduced in every state legislature in the nation, returning each of them to adherence to the United States Constitution’s actual legal tender provisions.
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Jim Sinclair’s Commentary
QE to infinity

Merkel Says Germany Ready to Do `Whatever Needed’ to Protect Euro Region By Tony Czuczka and Patrick Donahue – Jan 12, 2011 8:03 AM PT
Chancellor Angela Merkel indicated that Germany is ready to revise the terms of Europe’s rescue fund for indebted states, underscoring her willingness to take whatever steps are necessary to blunt the sovereign debt crisis.
“We support whatever is needed to support the euro, also with respect to the rescue fund,” Merkel told a joint press briefing in Berlin today with Italian Prime Minister Silvio Berlusconi. “We’re saying what we’ve always said since the Greek crisis: We will stand by the euro.”
Merkel may back extra measures to support the single currency after bailouts for Greece and Ireland, budget cuts in Portugal and Spain and a deal to create a permanent crisis- resolution mechanism all failed to calm bond markets. She is due to discuss support for the euro in talks with International Monetary Fund Managing Director Dominique Strauss-Kahn today.
“They are learning and they are changing their position,” Carsten Brzeski, an economist at ING Groep NV in Brussels, said in an interview. “We’ve all learned that if one country takes the bailout package, it does not mean that the contagion and speculation stops.”
Merkel was responding to remarks made by European Union Economic and Monetary Affairs Commissioner Olli Rehn, in which he called for a “comprehensive” plan to contain the sovereign debt crisis. His proposals included an expansion of the “size and scope” of the EU’s 440 billion-euro ($574 billion) rescue fund, the European Financial Stability Facility.
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