Jim Sinclair’s Commentary
Sure, and it could be tomorrow or a month from now.
Euroland makes a fool of themselves almost daily. The Fed is hiding, hoping it will all go away, but it will not.
That is what the gold trend is telling you.
Deutsche Bank on Europe: ‘It’s Not Inconceivable That We Could Be In Full Crisis Mode By The End Of This Week’
Joe Weisenthal | Nov. 7, 2011, 9:30 PM
Such is the severity of the situation in Italy.
Here’s Deutsche Bank’s Colin Tan talking about the same thing that everyone else is talking about:
Its not inconceivable that we could be in full crisis mode by the end of this week. The situation with Italy feels increasingly like one that has little chance of materially improving until some extreme pressure is put on someone to act. It may not come to a head this week but the signs are not good that we can avoid an extreme situation emerging soon.
The big problem: Berlusconi doesn’t seem like he’s in an urgent mood to make reforms, the ECB isn’t doing much, and China and Brazil have dropped out of the picture.
Hence we could get a big bustup:
For us there is no obvious near-term solution other than a stress event which prompts action.
Maybe the EU authorities will use the experience learnt from the Greece situation last week
that a hard-line response is the only way to force countries to act in the way they want. It is a
big risk but at the moment the weaker countries seem to still want the Euro enough that the
ECB and Germans could play hard ball and get what they want if they are prepared to take the
risk. Indeed ECB Governing Council member Yves Mersch fired a warning over the weekend
saying that the ECB often discusses the possibility of ending the purchase of Italian
government bonds and could if it concludes Italy is not adopting promised reforms. Such talk
will not encourage private capital into Italy meaning that the ECB may need to intervene more
to have the required impact.
China called to say thank you!
CIGA JB Slear.
China’s gold imports jump sixfold By Leslie Hook in Beijing and Robert Cookson in Hong Kong
November 7, 2011 6:39 pm
Chinese gold imports from Hong Kong, a proxy for the country’s overall overseas buying, leapt to a record high in September, when monthly purchases matched almost half that for the whole of 2010.
The buying spree follows a sharp drop in the price of the precious metal. After hitting a nominal all-time high of $1,920.30 a troy ounce in September, gold fell to a three-month low of $1,534 an ounce later in the month. Chinese investors snapped up the metal as prices fell.
Analysts expect the September import surge to continue until the end of the year as Chinese gold buyers snap up gold in advance of Chinese New Year, China’s key gold-buying period.
“In September we saw some bargain hunters come back into the market on the price dip,” said Janet Kong, managing director of research for CICC, the Chinese investment bank.
China is the world’s second largest gold consumer and demand has grown rapidly over the past year as Chinese investors buy gold to hedge against inflation and consumers buy more gold jewellery. Beijing does not publicly disclose its gold imports, but analysts consider the Hong Kong import figures a good directional proxy for the country’s total gold overseas buying.
A simple review of the cause of the bankruptcy of Western finance is offered by CIGA Giancarlo.
It is just that simple once the camouflaged legalize and math is removed. The worst of these is called Legacy Assets. The reason for good car sales is that if you are homeless you can buy yourself a Cadillac Escalade and live in it. Subprime loans are alive and well in the auto industry. Helga, having retired with a huge severance payment from the business of wine and spirits, is now the West’s largest new car dealer.
Helga is the proprietor of a bar. She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar. To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later. Helga keeps track of the drinks consumed on a ledger (thereby granting the customers’ loans).
Word gets around about Helga’s "drink now, pay later" marketing strategy and, as a result, increasing numbers of customers flood into Helga’s bar. Soon she has the largest sales volume for any bar in town.
By providing her customers freedom from immediate payment demands, Helga gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages.
Consequently, Helga’s gross sales volume increases massively.
A young and dynamic vice-president at the local bank recognizes that these customer debts constitute valuable future assets and increases Helga’s borrowing limit.
He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral!!!
At the bank’s corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into DRINKBONDS.
These "securities" then are bundled and traded on international securities markets.
Naive investors don’t really understand that the securities being sold to them as "AA" "Secured Bonds" really are debts of unemployed alcoholics. Nevertheless, the bond prices continuously climb!!!, and the securities soon become the hottest-selling items for some of the nation’s leading brokerage houses.
One day, even though the bond prices still are climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Helga’s bar. He so informs Helga. Helga then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts.
Since Helga cannot fulfil her loan obligations she is forced into bankruptcy. The bar closes and Helga’s 11 employees lose their jobs.
Overnight, DRINKBOND prices drop by 90%. The collapsed bond asset value destroys the bank’s liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.
The suppliers of Helga’s bar had granted her generous payment extensions
and had invested their firms’ pension funds in the BOND securities. They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds.
Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers. Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multibillion dollar no-strings attached cash infusion from the government.
The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Helga’s bar.
Now do you understand?
Ladies and gentleman,
A big rally for the mining stocks is on the way.
CIGA Las Sequeira