Harvey Organ Thursday, March 10, 2011
Massive Raid on Silver and Gold..Minimal damage
Gold market will get ever more violent, Sinclair tells King World News
Approved, gold and silver money bill goes to Utah's governor
Lear Capital: China Hints at Purpose for Gold Accumulation
Submitted by Zero Hedge on 03/10/2011 19:10 -0500It's no secret that China's gold demand is soaring. They are buying mines, concentrates from which to extract gold and as much physical gold as they can secretly buy in world markets.
Reports also indicate, the people of China are being encouraged to buy some gold with every paycheck as the future of the world economy is uncertain at best. As world debt expands, currencies are debased and gold prices rise as a result.
Reports also indicate, the people of China are being encouraged to buy some gold with every paycheck as the future of the world economy is uncertain at best. As world debt expands, currencies are debased and gold prices rise as a result.
Guest Post: Chinese Gold Fever
Submitted by Tyler Durden on 03/10/2011 19:25 -0500Earlier Lear Capital presented their view on what the basis for Chinese gold accumulation may be. Next we present a comparable analysis by SmartMoney.eu which takes a deeper dive into the demand mechanics originating in China. To wit: "In some parts of Asia, inflation is rampant. Especially in India, food prices and other staples are going through the roof. The prices of some vegetables and spices has risen more than 100%... In China, the prime goal of the communist party is to maintain social stability and to avoid unrest. Targeting inflation is key. Therefore, many Asians are investing their hard-earned money into precious metals. The latest news from China corroborates this: in the first two months of 2011, the Chinese have imported 200 tonnes of gold, which is as much as in the entire year 2010! This is just individual investor demand, we are not even speaking about central bank demand, accounting for the entire Chinese mainland gold production! Chinese gold fever has caused gold demand to triple in the past 10 years, according to the World Gold Council. The Chinese are about to overtake the Indians as the world’s biggest gold consumers." For short-term market timers, as we predicted a week ago, continued pressure on risk assets, such as that today, will most certainly result in forced liquidation in precious metals such as gold and silver. This is absolutely guaranteed as margin calls pile in, and hedge funds, already levered to the hilt have no choice but to sell all outperforming assets, among which gold is at the top. Once liquidations are completed, the question will then be: does the Fed resume its inflationary path (and as a just completed analysis by Zero Hedge confirms, the shadow banking system is once again declining leaving few options for Bernanke). If that is the case, then the long-term fundamentals from a speculative standpoint revert. Add to that the discussed organic demand, and increasingly loud calls for $2,000 gold may materialize sooner rather than later
Jim Sinclair’s Commentary
Here is a deadly dichotomy of wealth. They wonder why their citizens are livid.
You will not see this in Oman.
Recession? What recession? So, it seems that this "global recession" has not impacted negatively on everyone. Check this out! It’s a Mercedes Benz owned by an Abu Dhabi oil billionaire (naturally).
Featuring the newly developed V10 quad turbo with 1,600 horsepower and 2800nm of torque 0-100km/h in less than 2secs, 1/4 mile in 6.89 secs running on biofuel.
That is NOT stainless steel, people, it is WHITE GOLD! I’m sure you’ll sleep better tonight, knowing that the exorbitant dollars you’re paying for gas these days are at least going to a good cause…
Shortly Zero Hedge will present our quarterly analysis of the liabilities held by the shadow banking system. It's quite a doozy, and cements our belief that whether immediately following or shortly after June 30 (a day, a week, a month), the Fed will have no choice but to proceed with further monetization of public debt issuance, as the private sector debt retrenchment continues at truly alarming levels, leaving just one source of debt money available - the US central bank itself. And with the Fed's desire to stimulate inflationary expectations, it will be forced to do what it is doing precisely as shown below. In the last fortnight period, the Adjusted Monetary Base increased by the second biggest amount in the past year, or $80 billion, following the previous increase of $142 billion as of February 23, or a $222 billion increase in a month. This is due to a surge in excess reserves following the winddown of the SFP program which in the past week increased by $82.6 billion (full Fed Balance sheet breakdown to follow). We continue to expect that Excess Reserves will hit $1.7 trillion by July, or over $300 billion higher from the current level of $1.380 trillion. In the meantime, observe what happens when the Fed goes hog wild with inflationary expectations. A few more days like today in the S&P, and expect Jon Hilsenrath to start the QE3 leaks. And never forget - to the Fed, the Economy and the Russell 2000 are equivalent.
The chart that answers all pent up QE2-related questions: whether one wants to know the summary purchase statistics during the life of QE2, the cumulative market reaction, the monetary aggregate response, or seeks an answer to more occult topics such as variance around the Submitted-Accepted ratio, or weighted age of purchases, it can all be found here.
Posted: Mar 10 2011 By: Jim Sinclair Post Edited: March 10, 2011 at 4:36 pm
Filed under: In The News
Jim Sinclair’s Commentary
Maybe the French are wrong.
Dispatch: French Support For Intervention in Libya March 10, 2011 | 2028 GMT
Editor’s Note: Transcripts are generated using speech-recognition technology. Therefore, STRATFOR cannot guarantee their complete accuracy.
The French government said on March 10 that it would recognize the Libyan National Transitional Council as the sole representative of the Libyan people. It will soon move its ambassador to Benghazi from Tripoli. This comes as French President Nicolas Sarkozy said he would call for airstrikes against Libyan forces at the March 11 EU Council meeting.
France has been one of the most vociferous supporters of a no-fly zone in Libya. However, the issue for French involvement is the capacity of Paris to enforce such a zone on its own. The French aircraft carrier Charles de Gaulle is the only aircraft carrier in the Mediterranean Sea at the moment. However, its (around) 35 aircraft alone would be insufficient to set up the initial zone. Therefore, the question is: To what extent can France enforce the zone on its own?
The logic for the call to an intervention is largely a domestic one for Paris. Initially, France took a lot of criticism for how it responded to the wave of protests in Tunisia and Egypt. France’s then-Foreign Minister, Michele Alliot-Marie, took a lot of criticism not only for vacationing in Tunisia by flying in a private jet of a businessman close to the regime, but also for offering the regime help from French security forces in repressing its protesters three days before the Tunisian president fled the country. Sarkozy ultimately had to replace Alliot-Marie with veteran Alain Juppe. The replacement was a considerable embarrassment for Sarkozy and for the French government. Therefore, one aspect of the logic for France’s support of a no-fly zone is the compensatory for the earlier lack of clarity on French policy toward change in the Middle East.
More…
Jim Sinclair’s Commentary
And the other half will be also. Is there any question whether QE will continue?
Bank of America says nearly half its mortgages are ‘bad’ Washington Business Journal
Date: Wednesday, March 9, 2011, 6:56am EST
Bank of America Corp. is segregating almost half its 13.9 million mortgages into a “bad” bank comprised of its riskiest and worst-performing “legacy” loans, Bloomberg News reported, citing Terry Laughlin, who is running the new unit.
“We are creating a classic good bank, bad bank structure,” Laughlin told investors at a meeting in New York Tuesday, according to Bloomberg. He was promoted last month to manage the costs of resolving disputes stemming from the company’s 2008 purchase of Countrywide Financial Corp. “We’re going to get after this, we’re going to do it the right way and we’re going to put it to bed in the next 36 months,” he said.
More…
Morning Thought
As the price of gold rises, the battle around round numbers such as $1400 get wilder and wilder. That is the summation of what you see going on now.
Trader views on gold have now come down to 30 seconds or less.
Adhering to the discipline of who gains financially from Middle East chaos, one must look towards Russia. The ammunition being carried by the mercenaries, calling themselves Freedom Rebels, is Soviet. That is not a smoking gun but it is quite interesting. The West, calling for punishment of Gaddafi regardless of whether he steps down, is a great incentive not to.
Jim Sinclair’s Commentary
Look, if Wall Street can do it, flaunt it and get away with it, why not a government agency?
Watchdog: TSA ‘cooked’ data on airport security
GAO: Cost of federal workers low
The Transportation Security Administration "cooked the books" to understate the costs of using federal workers rather than private contractors to screen airport passengers, a key TSA critic in Congress charged Wednesday.
Federal auditors found the agency erred in its cost comparisons, and a skeptical lawmaker said TSA did so to stop the use of private contractors to do screening — an option Congress wrote into the 2001 law that created the agency.
Sixteen airports throughout the country use private screeners under the Security Partnership Program (SPP), but TSA has barred other airports from joining the program.
In a letter to Congress released Wednesday, the Government Accountability Office (GAO) said TSA’s new estimates show that private screeners are just 3 percent more expensive than federal workers – not 17 percent, as the agency previously had stated.
Auditors said that earlier TSA estimates had not accounted for the costs of workers compensation, liability insurance, retirement benefits and administrative overhead involved in using federal employees.
"TSA cooked the books to try to eliminate the federal-private screening program," said Rep. John L. Mica, Florida Republican and chairman of the House Transportation and Infrastructure Committee. "GAO found that TSA ignored critical data relating to costs."
More…
Jim Sinclair’s Commentary
Yes, controlled and supported by that power that stands to gain the most from the chaos.
What a mess the West is making of this. Those States in the West that object to the current thinking know what it is all about.
Will Libya Again Become the Arsenal of Terrorism? March 10, 2011
By Scott Stewart
During the 1970s and 1980s, Libya served as the arsenal of terrorism. While this role may have received the most publicity when large shipments of weapons were intercepted that Libya was trying to send to the Provisional Irish Republican Army, Libyan involvement in arming terrorist groups was far more widespread. Traces conducted on the weapons used in terrorist attacks by groups such as the Abu Nidal Organization frequently showed that the weapons had come from Libya. In fact, there were specific lot numbers of Soviet-manufactured F1 hand grenades that became widely known in the counterterrorism community as signature items tied to Libyan support of terrorist groups.
As we have discussed, the conflict in Libya could provide jihadists in Libya more room to operate than they have enjoyed for many years. This operational freedom for the jihadists might have an impact not only in Libya but also in the broader region, and one significant way this impact could manifest itself is in the supply of arms. The looting of the arms depots in Libya is reminiscent of the looting in Iraq following the U.S. invasion in 2003. There are also reports that foreign governments are discussing providing arms to the Libyan rebels in the eastern part of the country. While it is far from clear if any of those discussions are serious or whether any potential patron would ever follow through, past operations to arm rebels have had long-lasting repercussions in places like Afghanistan and Central America.
In light of these developments, a tactical discussion of the various classes of weapons contained in Libyan supply depots and how they could be utilized by insurgents and terrorists is in order.
More…
Jim Sinclair’s Commentary
This is reminiscent of the 1979-1980 US government bond market.
PIMCO Total Return dumps U.S. government-related debt By Jennifer Ablan
NEW YORK | Wed Mar 9, 2011 6:12pm EST
(Reuters) – The world’s largest bond fund has gone ultra bearish on the United States, dumping all of its U.S. government-related debt holdings.
The move by Bill Gross’s $236.9 billion PIMCO Total Return fund completed last month comes in the wake of a vicious Treasury market sell-off and just days after he questioned who will buy Treasuries once the Federal Reserve halts its latest round of bond purchases in June.
Gross, who also helps oversee a $1.1 trillion investment portfolio as PIMCO’s co-chief investment officer, has repeatedly warned against U.S. deficit spending and its inflationary impact, which undermine the value of government debt and push up yields as investors demand more compensation for risk.
Over the last five months, worries over the ballooning U.S. budget gap estimated at $1.645 trillion for 2011, political stalemate in Washington over how to narrow it and inflationary fears have all contributed to a steep sell-off in Treasuries. The benchmark 10-year note has seen its yield, which moves inversely to price, rise more than one percentage point since early October to 3.46 percent by Wednesday’s close.
Gross expects further carnage. Just last week, he told Reuters Insider that a 4.0 percent yield for 10-year notes is a "rational expectation" if the Fed "disappears as the buyer of last resort."
More…
Jim Sinclair’s Commentary
The boys may have built up their short position in the euro. Here comes the destroyers.
Moody’s cuts Spain rating, cites higher bank costs By Elisabeth O’Leary
MADRID | Thu Mar 10, 2011 7:08am EST
MADRID (Reuters) – Moody’s downgraded Spain’s sovereign debt rating by one notch on Thursday and warned of further cuts to come due to fears that bank restructuring will cost more than twice what the government expects.
"(Moody’s) believes there is a meaningful risk that the eventual cost of the recapitalization effort could considerably exceed the government’s current projections," the ratings agency said in a statement.
The cut in the rating — to Aa2 from Aa1 — drove the euro to session lows against the dollar and the premium investors charge for Spanish 10-year debt instead of German Bunds expanded to its widest point in two months at 232 basis points before narrowing again to 226.
The Bank of Spain will release its own report on banks’ capital needs after markets close on Thursday.
The government and central bank have forecast no more than 20 billion euros would be needed to recapitalise weak banks.
More…
Jim Sinclair’s Commentary
Here is a deadly dichotomy of wealth. They wonder why their citizens are livid.
You will not see this in Oman.
Recession? What recession? So, it seems that this "global recession" has not impacted negatively on everyone. Check this out! It’s a Mercedes Benz owned by an Abu Dhabi oil billionaire (naturally).
Featuring the newly developed V10 quad turbo with 1,600 horsepower and 2800nm of torque 0-100km/h in less than 2secs, 1/4 mile in 6.89 secs running on biofuel.
That is NOT stainless steel, people, it is WHITE GOLD! I’m sure you’ll sleep better tonight, knowing that the exorbitant dollars you’re paying for gas these days are at least going to a good cause…
Adjusted Monetary Base: Up, Up And Away
Submitted by Tyler Durden on 03/10/2011 19:41 -0500Shortly Zero Hedge will present our quarterly analysis of the liabilities held by the shadow banking system. It's quite a doozy, and cements our belief that whether immediately following or shortly after June 30 (a day, a week, a month), the Fed will have no choice but to proceed with further monetization of public debt issuance, as the private sector debt retrenchment continues at truly alarming levels, leaving just one source of debt money available - the US central bank itself. And with the Fed's desire to stimulate inflationary expectations, it will be forced to do what it is doing precisely as shown below. In the last fortnight period, the Adjusted Monetary Base increased by the second biggest amount in the past year, or $80 billion, following the previous increase of $142 billion as of February 23, or a $222 billion increase in a month. This is due to a surge in excess reserves following the winddown of the SFP program which in the past week increased by $82.6 billion (full Fed Balance sheet breakdown to follow). We continue to expect that Excess Reserves will hit $1.7 trillion by July, or over $300 billion higher from the current level of $1.380 trillion. In the meantime, observe what happens when the Fed goes hog wild with inflationary expectations. A few more days like today in the S&P, and expect Jon Hilsenrath to start the QE3 leaks. And never forget - to the Fed, the Economy and the Russell 2000 are equivalent.
Complete QE2 Cheat Sheet
Submitted by Tyler Durden on 03/10/2011 20:19 -0500The chart that answers all pent up QE2-related questions: whether one wants to know the summary purchase statistics during the life of QE2, the cumulative market reaction, the monetary aggregate response, or seeks an answer to more occult topics such as variance around the Submitted-Accepted ratio, or weighted age of purchases, it can all be found here.
Chinese Inflation Heats Up Again As PBoC Takes Another Step To Establish Yuan As Reserve Currency
Submitted by Tyler Durden on 03/10/2011 21:45 -0500That China's February inflation just came out at a consensus-beating 4.9% is no surprise. After all, the country miraculous slipped just below the consensus so the Department of Truth had to keep things somewhat symmetric. And yes, while this is the 5th consecutive month that Chinese inflation is higher than the official target of 4%, this is not the news of the evening: a press release just issued by the PBoC however is...
Former Goldman Sachs Analyst Charles Nenner Joins Marc Faber and Gerald Celente in Predicting Major WarFiled under: In The News
Jim Sinclair’s Commentary
Maybe the French are wrong.
Dispatch: French Support For Intervention in Libya March 10, 2011 | 2028 GMT
Editor’s Note: Transcripts are generated using speech-recognition technology. Therefore, STRATFOR cannot guarantee their complete accuracy.
The French government said on March 10 that it would recognize the Libyan National Transitional Council as the sole representative of the Libyan people. It will soon move its ambassador to Benghazi from Tripoli. This comes as French President Nicolas Sarkozy said he would call for airstrikes against Libyan forces at the March 11 EU Council meeting.
France has been one of the most vociferous supporters of a no-fly zone in Libya. However, the issue for French involvement is the capacity of Paris to enforce such a zone on its own. The French aircraft carrier Charles de Gaulle is the only aircraft carrier in the Mediterranean Sea at the moment. However, its (around) 35 aircraft alone would be insufficient to set up the initial zone. Therefore, the question is: To what extent can France enforce the zone on its own?
The logic for the call to an intervention is largely a domestic one for Paris. Initially, France took a lot of criticism for how it responded to the wave of protests in Tunisia and Egypt. France’s then-Foreign Minister, Michele Alliot-Marie, took a lot of criticism not only for vacationing in Tunisia by flying in a private jet of a businessman close to the regime, but also for offering the regime help from French security forces in repressing its protesters three days before the Tunisian president fled the country. Sarkozy ultimately had to replace Alliot-Marie with veteran Alain Juppe. The replacement was a considerable embarrassment for Sarkozy and for the French government. Therefore, one aspect of the logic for France’s support of a no-fly zone is the compensatory for the earlier lack of clarity on French policy toward change in the Middle East.
More…
Jim Sinclair’s Commentary
And the other half will be also. Is there any question whether QE will continue?
Bank of America says nearly half its mortgages are ‘bad’ Washington Business Journal
Date: Wednesday, March 9, 2011, 6:56am EST
Bank of America Corp. is segregating almost half its 13.9 million mortgages into a “bad” bank comprised of its riskiest and worst-performing “legacy” loans, Bloomberg News reported, citing Terry Laughlin, who is running the new unit.
“We are creating a classic good bank, bad bank structure,” Laughlin told investors at a meeting in New York Tuesday, according to Bloomberg. He was promoted last month to manage the costs of resolving disputes stemming from the company’s 2008 purchase of Countrywide Financial Corp. “We’re going to get after this, we’re going to do it the right way and we’re going to put it to bed in the next 36 months,” he said.
More…
Morning Thought
As the price of gold rises, the battle around round numbers such as $1400 get wilder and wilder. That is the summation of what you see going on now.
Trader views on gold have now come down to 30 seconds or less.
Adhering to the discipline of who gains financially from Middle East chaos, one must look towards Russia. The ammunition being carried by the mercenaries, calling themselves Freedom Rebels, is Soviet. That is not a smoking gun but it is quite interesting. The West, calling for punishment of Gaddafi regardless of whether he steps down, is a great incentive not to.
Jim Sinclair’s Commentary
Look, if Wall Street can do it, flaunt it and get away with it, why not a government agency?
Watchdog: TSA ‘cooked’ data on airport security
GAO: Cost of federal workers low
The Transportation Security Administration "cooked the books" to understate the costs of using federal workers rather than private contractors to screen airport passengers, a key TSA critic in Congress charged Wednesday.
Federal auditors found the agency erred in its cost comparisons, and a skeptical lawmaker said TSA did so to stop the use of private contractors to do screening — an option Congress wrote into the 2001 law that created the agency.
Sixteen airports throughout the country use private screeners under the Security Partnership Program (SPP), but TSA has barred other airports from joining the program.
In a letter to Congress released Wednesday, the Government Accountability Office (GAO) said TSA’s new estimates show that private screeners are just 3 percent more expensive than federal workers – not 17 percent, as the agency previously had stated.
Auditors said that earlier TSA estimates had not accounted for the costs of workers compensation, liability insurance, retirement benefits and administrative overhead involved in using federal employees.
"TSA cooked the books to try to eliminate the federal-private screening program," said Rep. John L. Mica, Florida Republican and chairman of the House Transportation and Infrastructure Committee. "GAO found that TSA ignored critical data relating to costs."
More…
Jim Sinclair’s Commentary
Yes, controlled and supported by that power that stands to gain the most from the chaos.
What a mess the West is making of this. Those States in the West that object to the current thinking know what it is all about.
Will Libya Again Become the Arsenal of Terrorism? March 10, 2011
By Scott Stewart
During the 1970s and 1980s, Libya served as the arsenal of terrorism. While this role may have received the most publicity when large shipments of weapons were intercepted that Libya was trying to send to the Provisional Irish Republican Army, Libyan involvement in arming terrorist groups was far more widespread. Traces conducted on the weapons used in terrorist attacks by groups such as the Abu Nidal Organization frequently showed that the weapons had come from Libya. In fact, there were specific lot numbers of Soviet-manufactured F1 hand grenades that became widely known in the counterterrorism community as signature items tied to Libyan support of terrorist groups.
As we have discussed, the conflict in Libya could provide jihadists in Libya more room to operate than they have enjoyed for many years. This operational freedom for the jihadists might have an impact not only in Libya but also in the broader region, and one significant way this impact could manifest itself is in the supply of arms. The looting of the arms depots in Libya is reminiscent of the looting in Iraq following the U.S. invasion in 2003. There are also reports that foreign governments are discussing providing arms to the Libyan rebels in the eastern part of the country. While it is far from clear if any of those discussions are serious or whether any potential patron would ever follow through, past operations to arm rebels have had long-lasting repercussions in places like Afghanistan and Central America.
In light of these developments, a tactical discussion of the various classes of weapons contained in Libyan supply depots and how they could be utilized by insurgents and terrorists is in order.
More…
Jim Sinclair’s Commentary
This is reminiscent of the 1979-1980 US government bond market.
PIMCO Total Return dumps U.S. government-related debt By Jennifer Ablan
NEW YORK | Wed Mar 9, 2011 6:12pm EST
(Reuters) – The world’s largest bond fund has gone ultra bearish on the United States, dumping all of its U.S. government-related debt holdings.
The move by Bill Gross’s $236.9 billion PIMCO Total Return fund completed last month comes in the wake of a vicious Treasury market sell-off and just days after he questioned who will buy Treasuries once the Federal Reserve halts its latest round of bond purchases in June.
Gross, who also helps oversee a $1.1 trillion investment portfolio as PIMCO’s co-chief investment officer, has repeatedly warned against U.S. deficit spending and its inflationary impact, which undermine the value of government debt and push up yields as investors demand more compensation for risk.
Over the last five months, worries over the ballooning U.S. budget gap estimated at $1.645 trillion for 2011, political stalemate in Washington over how to narrow it and inflationary fears have all contributed to a steep sell-off in Treasuries. The benchmark 10-year note has seen its yield, which moves inversely to price, rise more than one percentage point since early October to 3.46 percent by Wednesday’s close.
Gross expects further carnage. Just last week, he told Reuters Insider that a 4.0 percent yield for 10-year notes is a "rational expectation" if the Fed "disappears as the buyer of last resort."
More…
Jim Sinclair’s Commentary
The boys may have built up their short position in the euro. Here comes the destroyers.
Moody’s cuts Spain rating, cites higher bank costs By Elisabeth O’Leary
MADRID | Thu Mar 10, 2011 7:08am EST
MADRID (Reuters) – Moody’s downgraded Spain’s sovereign debt rating by one notch on Thursday and warned of further cuts to come due to fears that bank restructuring will cost more than twice what the government expects.
"(Moody’s) believes there is a meaningful risk that the eventual cost of the recapitalization effort could considerably exceed the government’s current projections," the ratings agency said in a statement.
The cut in the rating — to Aa2 from Aa1 — drove the euro to session lows against the dollar and the premium investors charge for Spanish 10-year debt instead of German Bunds expanded to its widest point in two months at 232 basis points before narrowing again to 226.
The Bank of Spain will release its own report on banks’ capital needs after markets close on Thursday.
The government and central bank have forecast no more than 20 billion euros would be needed to recapitalise weak banks.
More…
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