Monday, October 22, 2012

Debate Post-Mortem: Obama's Bin Laden, Romney's Bad-Guys, And Mali, Manipulators & Moar Centrifuges

Was it just us - or was that a bit of a snoozer? Some fascinating 'off-topic' debates that dragged us from Mali to Massachusetts 1st grade math scores, and from Bayonets to Obamacare. Some reasonable amount of agreement between the two on foreign policy punctuated by flip-flopper and weakling name-calling. Ironically, given our boxing-match meme - the counterpunches were incessant though Romney seemed to play defense more and Obama appeared to more urgently change the discussion (with little impact). Lots of braggadocio on naming multi-syllabic foreign towns and leaders. Obama won the drinking-game challenge by a long-way 53:34. Obama also won the 'time-spoken' challenge (by the narrowest margin of the 3 debates) 41:42 to 41:07. Obama's odds of an election win levitated modestly from the beginning (from around 59.5% to 61.5%). Of course, Wal-Mart got very, very quiet when the cheap China import bashing started, but luckily it too was based on generic 10 second attention span talking points, and led nowhere, so the Waltons can get back to doing what they do best. So far an Obama clean-sweep on our scientific study, which of course was highly irrelevant: all the truly important foreign issues (EU, China economic ascendancy, Japanese decline) were ignored. Why? The "Mr. Chairman will get to work" of course, showing once again who is truly in charge.

Romney-Obama III: 'The Brawl In Boca' Live Webcast

This evening's main event (well aside from the baseball and the football), taking place in beautiful Boca Raton, Florida will be fought over six rounds focused on the 'never-a-dull-moment' topic of Foreign Policy. After last week's STFU stare on the Benghanzi bungle, we expect the incumbent from the blue corner to come out swinging (on his experience). The challenger from the red corner, will likely keep his distance early on as general items such as 'America's role in the world' are discussed but once his jab has been measured, and the debate switches to 'The changing face of the Middle East', we would expect the haymakers to start to be thrown. Let's get ready to deeeeebbbaaaatttteeeee! And may the first person to point out where the Straits of Hormuz are on a map, win!

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Decision 2012: Bears-Lions, Giants-Cardinals; Or Romney-Obama

The nation is facing an extremely difficult decision; the outcomes of which could well be career-defining for the protagonists. We are of course talking about the dilemma that the nation faces in choosing Monday Night Football, NLCS Game 7, or the third Presidential Debate. In order to help focus public opinion, we offer the debate drinking game, live-stream scoring, and suggest readers invest in Picture-in-Picture (or have their edible iPad on their lap as the sports get under way this evening). For those who prefer to 'hedge': Obama is 67% likely to win the debate, Detroit are just favored to beat Chicago, and the Giants are favored (on momentum) to beat Arizona - so it seems like the debate is the most one-sided affair (though we suspect will be more contentious).

German courts demand gold audit/Looks like another German gold swap/Huge importation of gold into China/gold and silver rebound

Good evening Ladies and Gentlemen: The price of gold rose as expected up $2.30 to finish the comex session at $1725.10.  Silver also had a stellar day rising 19 cents to $32.23. On Friday, the gold/silver equity shares were advancing despite the drubbing of the physical metal.  This is a sure sign that gold and silver will rise in price the following session. In other news today, the Spanish

BBBeauty Is Certainly In The Eye Of The BBBeholder

A mere nine years ago, California's governator uttered his now infamous words that his opponent's income tax loophole was wide enough to drive his Hummer through. Now in 2012, Bloomberg's Chart of the Day has found another glaringly wide 'loophole' in common financial wisdom. As Sebastian Boyd and Ye Xie note, Ireland and Kazakhstan both belong to the same BBB-rated S&P cohort and yet have debt/GDP loads of 106% and 11% respectively. While debt/GDP is not the sole arbiter of credit quality (ask the Americans) it seems the market is more than willing to effectively differentiate based on this as is clear from CDS levels; but the growing pile up of sovereign nations in this edge-of-the-cliff rating bucket suggests two things to us: 1) "The entire rating system is flawed" as Bloomberg notes; and 2) The self-destroying (or reflexive) nature of a non-investment grade rating shift is now seemingly totally politically motivated (as opposed to quantitatively defined) - perhaps nowhere better signaled than an unwillingness to downgrade Spain yet willingness to downgrade its regions. For your risk comprehending pleasure, we present - the BBBs!

Japanese Government Demands BOJ Do QE 9 One Month After Failed QE 8

Almost exactly a month ago, the BOJ surprised most analysts with an unexpected increase in its asset purchase agreement by JPY10 trillion bringing the total to JPY80 trillion. There was one small problem though: the entire impact of the additional easing fizzled in under half a day, or 9 hours to be precise. This was, as Art Cashin summarized the following day, Japan's failed QE 8. It is now a month later, and with nothing changed in the global race to debase status quo, the time has come for the BOJ to attempt QE 9. Or that's the case at least according to the toothless Japanese government, which has formally demanded that Shirakawa do a nine-peat of what has been a flawed policy response for over 30 years now, this time with another JPY 20 trillion, or double the last month's intervention. Because according to Japanese Senkei, it is now Japan's turn to pull a Chuck Schumer and demand even mor-er eternity-er QE out of monetary authority of the endlessly deflating country. In reverting to the Moore's law of failed monetarism, we expect that a QE 9 out of Japan will have the same halflife as QE 8, if indeed the program size is double the last. At which point it will again fizzle.

And The Winner Of The First Lady Debate Is...

While our highly sophisticated scoring methodology - based on length-of-time speaking, words-spoken, and drinking-game-based buzzword bingo scores - has produced a result skewed to the Republican candidates, it seems the real world of intelligent voters sees things more tied with the last debate having been won by the incumbent. However, in order to settle the tie, Jimmy Kimmel decided to ask members of the voting public who they thought won the 'First Lady' Debate; the results will not surprise you - though clarification of stereotypes, biases, and why none of it matters (we refer readers to our earlier post on Deer Crossings for clarification) will be helpful we are sure...

Nuclear Update: Fukushima Unit 4 Is Sinking (Unevenly) ... Fracking Now Allowed within 500 FEET of Nuclear Plants
George Washington
10/22/2012 - 17:30
Brilliant ...


Don’t Try To Be A Spread Trader

My Dear Friends,

Teaching you via what the gold industry does as spread traders to rig the market for private gain now has a very serious purpose. That is not to make you spread traders. I teach you this so you know why I have had and still have the courage to ignore the manufactured reactions.
That recent 32,000 long contract sale that drove the market lower in minutes was not some major investor getting out because he/she feared the end of the gold market. That sale was the Hammer of Thor type selling of the long side of a spread opening up the short side at risk for gain. That 32,000 sale was the industry picking your pockets, knowing full well gold was going higher.
The commercial signals are tool of the commercial spread traders. That is why they have been right. You make them right by following them religiously. That is all this present reaction is about.
It is a total charade that in the 1970s I personally turned right on its ass. Someone will soon realize the illusion that the manipulator makes and then flip them on their rear end by a reverse spread tactic. Someday soon 32,000 gold contracts will come in selling like the Hammer of Thor. The reverse spread will be ready for them, having announced their plans in the COT. The manipulators, being smart as it gets, will join the bull side manipulating gold to at least $3500, but maybe $12,400. That is what happened in the 1970s and will happen now. I know because I did it and broke gold for the second time above $400. It never looked back until $887.50.
My spread was 22,000 contracts. There are people in the community that offer bearish opinions who are widely read who are sponsored by the gold industry spread traders. They buy subscriptions, and hire consultants.


The Dream X3 Team

My Dear Extended Family,

The team that thought this one up has to be called the Dream Dream Dream Team.
The Banksters own the government in the Western world. You might as well make a plan to line up every bankster and shoot them. The authors of this IMF study are more likely to end up as part of the firing squad without guns.
100% behind every loan will simply never happen if you want to see any loans.
Letting the government be in charge of anything economic is simply stupid. Dream on Dream Dream Dream Team. However, it shows a willingness to look at change, and that is only one thing, gold, as a standard but not gold "a" standard.

IMF’s epic plan to conjure away debt and dethrone bankers
So there is a magic wand after all. A revolutionary paper by the International Monetary Fund claims that one could eliminate the net public debt of the US at a stroke, and by implication do the same for Britain, Germany, Italy, or Japan.
By Ambrose Evans-Pritchard
2:31PM BST 21 Oct 2012

One could slash private debt by 100pc of GDP, boost growth, stabilize prices, and dethrone bankers all at the same time. It could be done cleanly and painlessly, by legislative command, far more quickly than anybody imagined.
The conjuring trick is to replace our system of private bank-created money — roughly 97pc of the money supply — with state-created money. We return to the historical norm, before Charles II placed control of the money supply in private hands with the English Free Coinage Act of 1666.
Specifically, it means an assault on "fractional reserve banking". If lenders are forced to put up 100pc reserve backing for deposits, they lose the exorbitant privilege of creating money out of thin air.
The nation regains sovereign control over the money supply. There are no more banks runs, and fewer boom-bust credit cycles. Accounting legerdemain will do the rest. That at least is the argument.
Some readers may already have seen the IMF study, by Jaromir Benes and Michael Kumhof, which came out in August and has begun to acquire a cult following around the world.


Notes From Underground: Tomorrow, the BOC Will Shine Some Light on Its Plans to Deal With Private Sector Debt Growth

Jim Sinclair’s Commentary

This is why I like the Canadian dollar long term.
The golden solution would require Euroland to hock their gold at these prices, something I do not think they would like to do.

Notes From Underground: Tomorrow, the BOC Will Shine Some Light on Its Plans to Deal With Private Sector Debt Growth
Dear CIGAs,
The Bank of Canada has been the most responsible actor on the global financial scene for the last six years. The Canadian banking system for the most part avoided the credit splurge that led to a collapse bubble and came though the Great Recession relatively unscathed. The Canadian federal government has a debt-to-GDP level of 34% and a very comfortable trade situation. There is, however, a problem of private debt growing too fast as the BOC has maintained very low interest rates to combat the fear of global recession. BOC Governor Mark Carney is a very astute global economic observer and also serves as the Chairman of the Financial Stability Board, which is the macro-prudential advisor of global banking. Mr. Carney would like to curb the borrowing of Canadian citizens but raising rates is a difficult proposition because of the current strength of the Canadian dollar.
Six months ago Carney discussed raising rates to stem credit growth  and has used the “may become appropriate” language in the BOC statement as a warning to the markets about a potential rate increase. The consensus forecast is for the BOC to remain on hold as economists are citing an October 15 speech by Carney that was determined to be very dovish and in fact sent the Canadian dollar lower most of last week. If the “forward-looking language ” remains in the statement look for an immediate rally in the LOONIE because of last week’s anticipation of a dovish statement. Again, the BOC is caught in a trap of not being able to raise rates because of a very strong currency and thus having to find an alternative policy to slow the growth of credit. The Canadian 2/10 curve is relatively flat at 78 basis points, which may also be a reason for the BOC to remain cautious about raising rates so as not to invert the curve. A tough situation for policy makers in a country where they have done so many things correctly when it comes to finances.
***In the Oct. 18 WSJ there was an article by Stephen Fidler, “A Golden Solution for Europe’s Sovereign Debt Crisis.” Fidler writes that the 17 central banks in the currency union are sitting on more than 10,000 metric tons of gold. The article forwards an idea long promoted by NOTES FROM UNDERGROUND, which is to issue GOLD-BACKED BONDS in an effort to raise the needed capital to help ease the financial strains of sovereign risk. This would put to use a dormant asset or if you prefer a “barbarous relic” and turn it into useful liquidity. Fidler raises some caveats to being able to do this but he is naive in believing that laws have ever stopped the EU authorities from proceeding in whatever manner they deem expedient.
I would add to his proposal that the bonds should be backed by a mere 20% of GOLD, giving the countries issuing them a new derivative with acceptable leverage. In a world demanding GOLD as an asset it is time for those with a gold hoard to put up a real asset for borrowing purposes. The WSJ article doesn’t even mention the gold being held by the IMF. It is time to put an asset that no banker wants and utilize it. Just ask Gordon Browne about his use of Britain’s gold. If Chancellor Browne had issued gold-backed bonds instead of selling off 60% of Britain’s precious metal, the exchequer would be healthier. The gold hoard would still exist and the bonds would have been retired.
***A Bloomberg article reveals that the official auditor of Germany is requesting that the Bundesbank verify its gold holdings outside of Germany. It seems that the German central bank has held gold at several foreign banks but there has never been an official audit. The Bundesbank owns 3,396 metric tons of gold which is held at vaults in Frankfurt, New York, Paris and London. Somebody is beginning to wake up and wants to assure that the assets in question are there without question. Put the gold to use and stop acting like it was grandma’s silver tea set in the attic.


In The News Today

My Dear Extended Family,

Lan has written a long article that I ask you to please to read. The message it carries with points and exact figures screams that regardless of who is elected as president, the banker or the socialist, nothing can change.
As I have assured you for many years, QE to infinity is not a choice, but an absolute self-evident necessity without which the Western economic world will immediately collapse as governments go into bankruptcy, leading majors businesses that will follow quickly.
Nothing has changed. Nothing can be changed. Nothing will change no matter who is in the hot seat known as the Presidency of the USA.
Whomever is elected will be the Bag Man of a colossal monetary event. Any opinion to the contrary is juvenile nonsense uttered by political morons.
Please read all of this. Do not pass over a misunderstood word. Stop and define it. You will know you have passed over a misunderstood word by immediate fatigue while reading. Once you define the word you will feel as if you had a cold shower energy wise versus the previous fatigue. This is one of the greatest contributions the E.R. Hubbard made to society. It can turn a moron into a genius as long as the moron can read. Everyone I am writing to can understand all of this if you read these missives with a bookmark to a financial dictionary.
You have no excuse of saying you are not a good student. You have every right to be a lazy student. The system only exists because of the laziness of the population. If you wish to rise up, then do the work and pull yourself up first. You will not get pablum here. You will get the truth here, and the ability to fully understand it as truth, but you must do the work which is called clearing words.
Respectfully yours,

Quantitative Easing 0-1-2-3∞ & The Federal Reserve’s Love Affair with its Banks and Mortgage Bonds: Levitating The Black Hole
“A black hole is a region of spacetime where gravity prevents anything, including light, from escaping… Around a black hole there is a mathematically defined surface called an event horizon that marks the point of no return.”—Wikipedia
To much frenzied media coverage, the Federal Reserve Bank announced a third round of quantitative easing “QE 3∞“on September 13, 2012. The Federal Reserve will essentially print unlimited quantities of dollars to purchase agency mortgage bonds and maintain nominal interest rates targeted at 0% (“ZIRP”) to keep borrowing costs reasonable for its member banks, among others.
“QE 3∞” in 2012 is the unlimited version of “QE 1” in 2009 following the banking and financial system crisis in September 2008. What does this mean?
QE is simply the printing of dollars in paper or digital form by the quasi-private Federal Reserve Bank, as the Federal Reserve does not have this money. In QE 1, the Federal Reserve Bank printed $1.25 trillion to purchase agency mortgage-backed securities (MBSs). Agency MBSs are mortgage bonds (akin to a mutual fund filled with mortgages, peoples’ homes) issued and guaranteed or held by the quasi-private Fannie Mae and Freddie Mac.
On a practical level this means the Federal Reserve Bank printed $1.25 trillion with a computer stroke and became the owner or recipient of homeowners’ mortgage payments.  The Federal Reserve will do this on an unlimited basis in QE 3 going forward, as it states ‘to foster maximum employment and price stability’.
What is it about the Federal Reserve Bank’s love affair with mortgage bonds that the media and the Federal Reserve will not speak of?  
I.  QE0: Insolvency of the Largest Banks in the Federal Reserve System
Let’s pause for a moment. The most significant QE was not even called QE. It was the suspension of the Financial Accounting Standards Board’s (FASB) mark-to-market accounting rule 157 in April 2009. The rule required banks to value assets on their balance sheets at current market price or fair value, but since 2009, became what the banks hope it is worth or what they paid for it.
Doing so helps insolvent banks avoid the appearance of insolvency by not having to write-down the amount of losses on assets, such as mortgage bonds, assuming there is a willing buyer (There isn’t really). Private sector financing for the housing market through demand for private label MBSs, which are mortgage bonds backed by mostly subprime mortgages reincarnated as prime issued and sold by the largest banks, collapsed since fall 2008.
Let’s give this FASB suspension of mark-to-market accounting event a name, QE0 , to mark the point of no return in April 2009 about six months after the banking and financial collapse in September 2008.
Following the collapse, lawmakers in the U.S. House of Representatives lined up to threaten FASB in a series of hearings to suspend mark-to-market accounting, as Representative Michael E. Capuano (D-Mass.) warned FASB’s chairman in March 2009: “Do not make us tell you what you have to do.” (Transcript of the U.S. House of Representatives Mark-to-Market Hearing, March 12, 2009). The American Bankers Association, Citigroup, and the Bank of New York Mellon Corp., the world’s largest custodian of financial assets, also pressured for the rule change.
[On a side note:  MIT finance professor-CBO chief economist revised my memo to say that assets may already fully reflect market values. After I was fired I learned that MIT professor called by the U.S. President to CBO in 2009 has a CBO economist sit on FASB. This CBO economist and CBO Director Elmendorf are part of the Hamilton Project at the Brookings Institution. Robert Rubin is the project’s founder and Dr. Lawrence Summers, once chief advisor to the U.S. President, sits on its Advisory Council to promote economic growth and health care. Former Federal Reserve Bank Chairman Alan Greenspan, Robert Rubin, and Lawrence Summers were instrumental in the proliferation of derivatives in the late 1990s. ]
Let’s look at a few simple charts. What does QE0 FASB look like for the largest banks?
Voodoo Assets and Liabilities Chart 1:


From Voodoo Chart 1, was there a banking and financial crisis in 2008 that froze global markets? From the crisis in fall 2008 to 2009, there is no change between assets and liabilities! No change, for what has been considered the worst banking and financial crisis in a century (a few?).
Bank assets net of liabilities or net worth look incredible during a time when home prices dropped 25% to 65% (e.g. Arizona, Nevada, California, Florida) nationwide, the labor force participation rate set back 30 years coupled with an unprecedented rise in foreclosures, whose mortgages back $7 trillion or so mortgage bonds of the largest banks and Fannie Mae and Freddie Mac that failed in fall 2008. (The LFPR is another basic, standard measure of the employment picture that is less prone to voodoo adjustments. The LFPR is the number of people in the workforce between 16-65 years old divided by the total 16-65 year old population count. It excludes the military and the institutionalized population, i.e. people in prison.)
Let’s take this further for a bird’s eye proxy view of how voodoo the numbers may be. The Federal Reserve Bank data shows the residual “equity” or net worth of banks after all liabilities are paid to be a positive $1.5 trillion in its latest release as shown in the chart. Suppose we compare the banks’ numbers to the market or public consensus of the banks’ equity value. This would be the market capitalization, a measure heavily dependent on the market price of the bank stock that is almost always higher than the equity value. The largest handful of banks hold about three-quarters of the nation’s banking assets, but let’s expand that to the10 largest banks.
The Federal Reserve Bank reports a positive $1.5 trillion in residual banks equity or positive net worth – the largest banks account for most of this – but the market consensus (market capitalization) indicates that figure to be about $800 billion or roughly 50% lower. This percentage falls in the ballpark of asset overvaluation or understatement of liabilities found among banks that have been allowed to fail.
The ‘market consensus’ market capitalization figure is assisted by a levitated stock market (ex. 401k(s)/retirement plans) that rose after the FASB mark-to-market rule was suspended and remains in place since April 2009. It is unclear if the system can withstand a return to reality-based accounting, as a few hundred billion dollars or trillion dollar difference will be rather modest compared what happens when over $1,000 trillion in notional derivatives are set off. This notional money does not exist until it becomes real when banks and financial institutions fail. (There is a small fraction of derivatives that is used to hedge or mitigate risk with real assets and capital behind them.) For reference, world GDP was about $70 trillion in 2011.
What does QE0 FASB look like for the Equities-Stock Market?  


In future posts, we will look at how these derivatives and other mechanisms are used to suspend free market forces; a finite factor is time. But there is more to the Federal Reserve’s love affair with mortgage bonds, because the crater left by insolvency has to be filled.
II. Who Has Been Hoarding U.S. Treasuries
The chart below shows a simple year to year change in the largest banks’ holdings of U.S. Treasuries and other securities. Since the banking and financial crisis in 2008, the largest banks added incrementally more U.S. Treasuries holdings to their balance sheets in four years than the past 20 years combined.  This serves the dual purpose of helping to capitalize the banks and as the few remaining buyers of U.S. Treasuries as the Federal Reserve “monetizes” or prints dollars to make up the rest. If the past four years is any indication, 2013 looks to be a bigger year as the few seeking safety in U.S. Treasuries may be found at the largest banks.
Voodoo Parking Lot Chart 2:


From a different perspective, if we look broadly to the currency composition of foreign central banks (IMF COFER), relative holdings of U.S. dollars and U.S. Treasuries to total foreign exchange reserves have dropped by over 60% from the height in 2000 of 56% to 34% in 2012.  The often-cited 62% of central bank foreign exchange holdings being in U.S. dollars overlooks nearly half of currency holdings that are unreported, the growth of which has been driven by emerging and developing economies – presumably led by China.
Emerging and developing economies have grown to account for about two-thirds of the world’s central bank holdings of foreign exchange reserves as their relative holdings of U.S. dollars have quietly gone in the opposite direction… and some portion quietly into accumulating gold. Increasingly, bi-lateral trade agreements among other nations exclude the use of the U.S. dollar as payment for international trade, once the domain of the U.S. dollar as the world reserve currency. Other countries see what is unfolding in this country but it is unclear if the American public sees it.
The Federal Reserve Bank is printing trillions of dollars (and euros through currency swaps) to levitate its member banks and the financial system in concert with the suspension of accounting rules after the systemic collapse of derivatives built around the housing market. Why mortgage bonds from Fannie Mae and Freddie Mac?
III. The Front End and Back End of Quantitative Easing – Fannie Mae, Freddie Mac, MERS, and the Federal Reserve’s Largest Member Banks
We return to the center of the banking and financial system collapse in 2008. On the front end, Fannie Mae and Freddie Mac guarantee the equivalent of one-third of U.S. GDP in mortgages, making them perhaps the largest financial institutions in the world. During the crisis in September 2008, Fannie Mae and Freddie Mac were taken under conservatorship by the U.S. Department of the Treasury, which stepped in to guarantee unlimited capital infusions to ensure the solvency of these agencies, lifting the $400 billion cap on December 24, 2009.
The unlimited part of the capital infusions by the U.S. Treasury comes to an end on December 31, 2012. Coincidentally on September 13, 2012 the Federal Reserve announced QE 3 that it will print essentially unlimited dollars to purchase Fannie Mae and Freddie Mac mortgage bonds for as long as it takes. There is a 2-3 months overlap, in case the idea was to ensure a smooth transfusion for the Federal Reserve to pick up where the U.S. Treasury leaves off.
Link to full article…

Jim Sinclair’s Commentary

News from GATA.

FLASH: German gold report reveals secret sales that likely were part of swaps Submitted by cpowell on 01:27PM ET Monday, October 22, 2012. Section: Daily Dispatches
3:51p CT Monday, October 22, 2012

Dear Friend of GATA and Gold:
With the Associated Press report appended here, the German gold audit story has just exploded into the English-language press with some important revelations:
– The gold vaulted by the German central bank, the Bundesbank, with the Bank of England "has fallen ‘below 500 tons’ due to recent sales and repatriations. …" So despite the lack of official announcement, Germany lately has been selling gold from London — perhaps as part of the secret "strategic activities" grudgingly acknowledged two years ago by the Bundesbank to GATA’s friend, the German financial journalist Lars Schall:
The lack of announcement of the sale of the German gold in London suggests that the sale was actually part of a gold swap with another central bank — like the New York Fed. That is, the powerful implication here is that German gold in London was sold at the behest of the United States and in exchange Germany took title to United States gold vaulted in the United States — or title to gold supposedly vaulted in the United States. This way the Bundesbank could continue to claim ownership of the same amount of gold without lying, at least not technically.
As for the Federal Reserve and the U.S. Treasury Department, when you rig every market you can’t worry so much about lying.
Of course such gold swaps were the target of GATA’s federal freedom-of-information lawsuit against the Federal Reserve in U.S. District Court for the District of Columbia, a lawsuit concluded somewhat successfully last year, having pried from the Fed an admission that it has secret gold swap arrangements with foreign banks:
– The Bundesbank is resisting accountability and has censored part of the auditors’ report in the name of protecting secrets of the central banks storing the German gold. But why should there be any secrets about it? Nobody’s asking for the combination numbers to the vaults, and the combination wouldn’t do anyone any good anyway, as the vaults are guarded. Do these secrets involve gold loans and leases and other legerdemain? That seems to be the case.
– The campaign to repatriate the German gold has gotten noticed in a big way.
– The Bundesbank has been officially reprimanded by another German government agency for negligence in its custodianship of the national gold.
– The Bundesbank won’t let German parliament members inspect the German gold vaulted abroad because the central bank vaulting facilities supposedly lack "visiting rooms." And yet one of those vaults, the Federal Reserve Bank of New York, offers the public tours that include "an exclusive visit to the gold vault" — provided, apparently, that you’re not an elected representative of the German people:
GATA has made further informational requests of the Federal Reserve, Treasury Department, and State Department involving their gold records:
Since those agencies have failed to respond, GATA now is entitled to bring more freedom-of-information lawsuits against them. But we can’t do that without sufficient financing.
The auditors’ report about the German gold demonstrates that the Western central bank gold price suppression scheme — part of a vast scheme of rigging all major markets — can be exposed and defeated by persistent clamor and demands for information. If you haven’t already considered helping us financially, please do so now:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Jim Sinclair’s Commentary

From a source I believe to be true. If so, here is another reason to vote for neither.


Jim Sinclair’s Commentary
When the people become so corrupted the operating phrase is here:

I agree to this Constitution with all its faults, if they are such: because I think a General Government necessary for us, and there is no Form of Government but what may be a Blessing to the People if well-administered; and I believe farther that this is likely to be well administered for a Course of Years and can only end in Despotism as other Forms have done before it, when the People shall become so corrupted as to need Despotic Government, being incapable of any other. –Benjamin Franklin

Jim Sinclair’s Commentary
Strong Uptrend
Smart Scan Chart Analysis confirms that a strong uptrend is in place and that the market remains positive longer term. Strong Uptrend with money management stops. A triangle indicates the presence of a very strong trend that is being driven by strong forces and insiders.
Based on a pre-defined weighted trend formula for chart analysis, EURUSD scored +100 on a scale from -100 (strong downtrend) to +100 (strong uptrend):

clip_image002 +10 Last Hour Close Above 5 Hour Moving Average
clip_image002[1] +15 New 3 Day High on Tuesday
clip_image002[2] +20 Last Price Above 20 Day Moving Average
clip_image002[3] +25 New 3 Week High, August 2nd
clip_image002[4] +30 New 3 Month High on September 7
+100 Total Score

My Dear Friends,

Could it be that there is a rising recognition that pre-election markets are both operated by friends of the family and this is what we are dealing with?
I think so.
That then means that the sheeplez are starting to wake up a little. Operative word here is "little."

Jim Sinclair’s Commentary
What a lovely and transparent gift to the incumbent! I am referring to levels, not today’s direction.
Crude 89.93
-0.51 -0.56%
Gold 1726.84
+2.97 +0.17%
Euro 1.30560
+0.00238 +0.18%
US Dollar 79.572
+0.001 0.00%

Jim Sinclair’s Commentary

Good morning Euro. You are making it harder for the manipulators to hurt gold.

1.30690 +0.00368 (+0.28%)A
2012-10-22 11:43:38, 0 MIN DELAY


Jim Sinclair’s Commentary
Putin, seeing the economic weakness of the USA and Euroland, begins both economic and military measures that will keep the US from cutting its military budget and accumulating gold. This first test is very meaningful if you have eyes to see.

Putin flexes muscle in big test of Russia’s nuclear arsenal By Steve Gutterman
MOSCOW | Sat Oct 20, 2012 3:34pm EDT

(Reuters) – President Vladimir Putin took a leading role in the latest tests of Russia’s strategic nuclear arsenal, the most comprehensive since the 1991 Soviet collapse, the Kremlin said on Saturday.
The exercises, held mostly on Friday, featured prominently in news reports on state television which seemed aimed to show Russians and the world that Putin is the hands-on chief of a resurgent power.
Tests involving command systems and all three components of the nuclear "triad" – land and sea-launched long-range nuclear missiles and strategic bombers – were conducted "under the personal leadership of Vladimir Putin", the Kremlin said.
An RS-12M Topol Intercontinental Ballistic Missile was launched from the Plesetsk site in northern Russia, and a submarine test-launched another ICBM from the Sea of Okhotsk, the Defence Ministry said.
Long-range Tu-95 and Tu-160 bombers fired four guided missiles that hit their targets on a testing range in the northwestern Komi region, it said.
"Exercises of the strategic nuclear forces were conducted on such a scale for the first time in the modern history of Russia," the Kremlin statement said.


Massive Foreclosures after Election-Fabian Calvo

By Greg Hunter’s

Dear CIGAs,

Fabian Calvo buys and sells a $100 million worth of distressed mortgage debt and property a year.  He says, “We haven’t even scratched the surface of being at the bottom of the housing market.”  Calvo runs a company called and predicts, “. . . massive default and massive foreclosures after the election.”   Calvo is an outspoken critic of crony capitalism on his “Fabian4Liberty” YouTube channel that has nearly 2 million views!  Calvo says, “You have to flush out mal investment to get the economy working again and to rework the Constitutional Republic, you have to flush out the criminals who have hi-jacked it.”  Calvo contends, “There is systemic fraud and corruption” and sees firsthand how “. . . banks are profiting from short sales and foreclosures.”   Calvo thinks there is an even bigger financial meltdown on the not-so-distant horizon, and it “. . . will center around the repudiation of the dollar as the world’s reserve currency” and that food and fuel prices could “triple.”  In 2013, Calvo predicts, “The next President will inherit the economic calamity that is coming.”  Join Greg Hunter as he goes One-on-One with Fabian Calvo.



Jim’s Mailbox

As background regarding the Euro, my model picked up the move off the lows really well, but started vacillating at about the 130 area. It’s still too unstable/unreliable to be traded – (unlike DB).
Another point: AU should have been 1696 tonight & 1682 tomorrow; a close above 1732 re-stages the chart. I
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Notes On Governments Making Gold Illegal

I should not have used the word "they" if the government makes gold illegal.
Will they pay you full value or what is on the coin?
On the day of illegality, yes, compensation will be paid, market related. That is what occurred under Roosevelt. This is a key point that
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Notes From Underground: Rajoy’s Party Retains Power in Galicia

Jim Sinclair’s Commentary
Who won, where, and that means what?
To understand today’s fundamentals you need to be as much a citizen of your own country as a citizen of the world. Yra Harris is a world citizen.
Notes From Underground: Rajoy’s Party Retains Power in Galicia Yra Harris
In what was a very
Continue reading Notes From Underground: Rajoy’s Party Retains Power in Galicia

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