My Dear Extended Family,
Click here to listen to the interview…
Tonight’s interview with Erik King of www.KingWorldNews.com is the summation of the last three special emails and the introduction of the ISDA to you.
I feel it is the most important offering that I have made in the past 9 years of our relationship. The future is not going to be easy, but with foreknowledge we can all survive and even prosper. This message is extremely important so if you have a moment please consider listening to the interview and then reviewing the last three emails.
Respectfully,
Jim
By Greg Hunter’s USAWatchdog.com
Dear CIGAs,
It is official. State and federal governments have condoned forgery, perjury and fraud in what’s been called the “robo-signing” foreclosure debacle. Last week, the five biggest banks in America signed on to a $26 billion deal that, basically, lets them off with a slap on the wrist for fraudulently foreclosing on homes in the last few years. I am not going to go on and on about how unfair and unjust this deal was or how the rule of law has been thrown down the stairs. I am going to focus on the fallout of this morally corrupt deal.
There is $700 billion in negative home equity with nearly half (11 million) of all houses underwater. Meaning, more is owed on the mortgage than the home is worth. This settlement may help a few folks, but it is a drop in an ocean of debt. Now that the deal is done, look for the pace of foreclosures to pick up speed and home values to take another cliff dive. If you thought the negative equity problem was at the bottom–forget it. The plunge in real estate prices is far from over, and it’s not going to turn positive anytime soon. Consider the latest Case-Shiller report where year-over-year declines in home values averaged 3.7% nationwide. This is despite 30-year mortgage rates at or below 4% and a big slowdown in foreclosures because federal and state governments were negotiating a deal for the past 16 months.
Banks are desperate for cash, and they are going to unlock all they can as fast as they can. After all, people can’t live in a house forever without paying. The banks are not going to enter a new age of morality when they just got a “get out of jail free” card from prosecutors. Rolling Stone’s Matt Taibbi wrote last week, “The only acceptable foreclosure deal had to bring about a complete end to robosigning and the other similar corrupt practices that grew up around it (like for instance gutter service, the practice of process servers simply signing affidavits saying they delivered summonses, instead of really doing it). But this deal not only doesn’t end robosigning, it officially makes getting caught for it inexpensive.”
(Click here for the complete Taibbi post.)
More…
Jim Sinclair’s Commentary
Rush hour in downtown Arusha, Tanzania.
Jim Sinclair’s Commentary
Is an auction really an auction if it is kept secret from other potential buyers?
Fed’s Secret Sale Of AIG Assets To Goldman Criticized As ‘Un-American’ Bonnie Kavoussi
The Federal Reserve gave just five banks the chance to bid on $6.2 billion in taxpayer-owned AIG assets before selling them to Goldman Sachs on Wednesday.
The Fed allowed Goldman Sachs, Barclays, Credit Suisse, the Royal Bank of Scotland, and Morgan Stanley to participate in the auction, according to a New York Fed statement. Reports of the auction leaked just days before the Federal Reserve announced the sale.
Some investors told Bloomberg News that the Fed’s decision to keep the auction secret was unfair to both investors and taxpayers. They said that if the bank had allowed the free market to set the price for the assets, the sale would have earned taxpayers more money.
"The exclusivity by which the process has shut out smaller dealers is a little un-American…. It seems odd that if you want to get the best possible price that it wouldn’t be open to anyone who wants to put in the most competitive bid," David Castillo, head of sales and trading at Further Lane Securities, told Bloomberg News.
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Jim Sinclair’s Commentary
In buying power it is going to be much deeper.
The Federal Reserve’s Explicit Goal: Devalue The Dollar 33% 2/06/2012 @ 3:36PM
The Federal Reserve Open Market Committee (FOMC) has made it official: After its latest two day meeting, it announced its goal to devalue the dollar by 33% over the next 20 years. The debauch of the dollar will be even greater if the Fed exceeds its goal of a 2 percent per year increase in the price level.
An increase in the price level of 2% in any one year is barely noticeable. Under a gold standard, such an increase was uncommon, but not unknown. The difference is that when the dollar was as good as gold, the years of modest inflation would be followed, in time, by declining prices. As a consequence, over longer periods of time, the price level was unchanged. A dollar 20 years hence was still worth a dollar.
But, an increase of 2% a year over a period of 20 years will lead to a 50% increase in the price level. It will take 150 (2032) dollars to purchase the same basket of goods 100 (2012) dollars can buy today. What will be called the “dollar” in 2032 will be worth one-third less (100/150) than what we call a dollar today.
The Fed’s zero interest rate policy accentuates the negative consequences of this steady erosion in the dollar’s buying power by imposing a negative return on short-term bonds and bank deposits. In effect, the Fed has announced a course of action that will steal — there is no better word for it — nearly 10 percent of the value of American’s hard earned savings over the next 4 years.
Why target an annual 2 percent decline in the dollar’s value instead of price stability? Here is the Fed’s answer:
More…
Jim Sinclair’s Commentary
Slowly, but surely good money forces out bad.
Panel endorses gold, silver commerce The Salt Lake Tribune
Updated Feb 13, 2012 11:18PM
A resolution urging the use of gold and silver in commerce won the approval of a House committee Monday, a move the sponsor says would help Utah stave off inflation and weather impending economic crises.
Rep. Brad Galvez, R-West Haven, sponsored legislation last year to recognize gold and silver as legal tender in the state, but doing business with the metals remains impractical.
Galvez’s resolution would encouragee the adoption of a legal and commercial system to make gold and silver more functional as currency.
The resolution, which was approved by an 8-3 vote by the House Public Utilities and Technology Committee, is nonbinding.
But Galvez is also sponsoring HB157, aimed at making it easier for Utahns to pay taxes in gold and silver and stating that Utah laws and rules could not create impediments to using gold and silver in private transactions or favor paper dollars over the metals.
More…
Jim Sinclair’s Commentary
Remember the super committee and the promises to cut the deficit?
Jim Sinclair’s Commentary
It is not a question of if – there is no other possibility.
The last four special emails I sent you, from the identity and
purpose of the ISDA to today’s message of the greatest fear of the gold
advocate being without basis, are the most important items I have ever
sent to you in the past 9 years.
Fed’s Williams Says U.S. Monetary Policy Throttle Should Be Kept Wide Open By Aki Ito and Caroline Salas Gage – Feb 14, 2012 1:00 AM MT
Federal Reserve Bank of San Francisco President John Williams said the U.S. central bank should keep trying to boost growth because it’s missing its goals for employment and price stability, while stopping short of calling for more asset purchases for now.
“I’m sticking with my story that economic growth won’t be that strong,” Williams told reporters yesterday after delivering a speech in Claremont, California. “Going forward, it’s about weighing the costs and benefits of doing more,” he said, adding that he’s looking “at the broad picture for what the outlook on the economy is” instead of a specific threshold that would signal that more easing was unnecessary.
Williams, a voting member on the policy-setting Federal Open Market Committee this year, said that inflation is likely to be about 1.5 percent this year and next, below the central bank’s goal of 2 percent. He also said the current 8.3 percent unemployment rate is “very far from maximum employment,” and that joblessness “will remain well over 7 percent for several more years.”
The FOMC said last month borrowing costs will remain low at least through late 2014, pushing back an earlier date of mid-2013, to help the two-year recovery gain traction. It also voted to maintain its maturity-extension program, announced in September to replace $400 billion of short-term debt in the Fed’s portfolio with longer-term Treasuries in an effort to further lower borrowing costs.
More…
Jim Sinclair’s Commentary
More movement towards Russia and China.
India to step up ties with Tehran; unfazed by US sanctions 14 Feb, 2012, 04.31PM IST, IANS
NEW DELHI: Unfazed by US sanctions and Israel linking Tehran to the attack on an Israeli embassy car here, India is set to ramp up its energy and business ties with Iran, with a commerce ministry team heading to Tehran to explore fresh business opportunities.
The team is expected to go to Tehran later this month to discuss steps to expand India’s trade with Iran, part of a larger strategy to pay for Iranian oil, said highly-placed sources.
Despite the US and European Union sanctions on Iran, India recently sealed a payment mechanism under which Indian companies will pay for 45 percent of their crude oil imports from Iran in rupees.
Not just oil, India is also stepping up the refurbishing of the Chabahar Port in Iran and a strategic railway link that will offer it direct access to Afghanistan and the energy-rich Central Asia.
In recent years, India has taken care to insulate its multi-faceted ties with Iran from the West’s collision with Tehran over its nuclear programme. The West accuses Iran of developing nuclear bombs.
More…
Jim Sinclair’s Commentary
Arab spring welcomed with glee by Financial TV is a disaster for Western interests.
Egypt Cabinet minister says US funded nonprofits to create chaos Published February 14, 2012
Stoking tensions with Washington, an Egyptian Cabinet minister has accused the United States of directly funding nonprofit groups to create chaos in the country following last year’s ouster of longtime leader and U.S. ally Hosni Mubarak, according to comments published in state-owned newspapers on Tuesday.
International Cooperation Minister Faiza Aboul Naga made the remarks in a testimony she gave in October to judges investigating allegations the groups used foreign funds to foment unrest.
Aboul Naga, a leftover from the Mubarak regime who has served in three interim governments formed since his ouster, has been leading the crackdown on the foreign groups. Authorities last week referred a total of 43 employees of nonprofit groups, including at least 16 Americans, to trial before a criminal court.
The Americans include Sam LaHood, son of U.S. Transportation Secretary ray LaHood. All 43 are banned from travel. No date has been set for their trial.
The crisis has soured relations between Egypt and the United States, which has threatened to cut off aid to Egypt — a total of $1.5 billion a year in military and economic assistance — if the issue was not resolved. The release of Aboul Naga’s testimony four months after she gave it suggests that Egypt may not be willing, at least for now, to ease tensions with the U.S.
More…
Jim,
In this interview to a Swiss newspaper Le Temps, the president of the biggest French bank, Société Générale, confirms openly that the bank will remain universal and will reinforce its activities in the investment banking (aka derivative) business.
"– assure son «attachement au modèle de banque universelle», c’est-à-dire d’un établissement présent sur toutes les activités. Et compte même s’appuyer «sur deux franchises mondiales», dans le domaine «des dérivés sur actions et des ressources naturelles»."
The title of the article is revealing : "L’ombre d’une américanisation de la finance," which translates to "The shadow of an Americanization of finance" (in Europe).
Such words coming from the President of the biggest French bank make me believe that the only outcome of all this is a complete meltdown of the Western world financial system before governments take the decision of restructuring the international monetary system.
Best regards,
CIGA Christopher
Click here to read the article…
Jim,
ECM lending facilities at rates well below the market is 1.2 Trillion Euros (1.58 Trillion USD).
“There is no stigma whatsoever on these facilities,” ECB President Mario Draghi said in Frankfurt on Feb. 9. “The use of these proceeds is a business decision. Our primary interest is in lending to the real economy.”
Mario Draghi knows very well that an infinite percentage of this money will reach the real economy if any at all. This money which is a free lunch will be used by banks to increase their profit and executive bonuses through more speculation on the markets (aka more derivatives).
So many lies…
QE is at full speed and it will kill the middle class of the Western world though hyperinflation.
I hope the Banksters pay for all this one day.
Regards,
CIGA Christopher
Jim,
As we like to say here, it is QE-E or QE everywhere. Here is Japan with another in their long line of QE’s.
Monty Guild
BOJ Unexpectedly Adds Stimulus as It Sets 1% Target for Inflation: Economy By Toru Fujioka and Keiko Ujikane – Feb 14, 2012 3:03 AM MT
Japan’s central bank unexpectedly added 10 trillion yen ($128 billion) to an asset-purchase program and set an inflation goal after an economic slide fuelled criticism it has been slower to act than counterparts.
An asset fund increased to 30 trillion yen, with a credit lending program staying at 35 trillion yen, the Bank of Japan said in Tokyo today. The BOJ also said that it will target 1 percent inflation “for the time being.”
More…
Standard of Livings Are Declining Across Most of the Western World
CIGA Eric
Chart Notes:
Gold-adjusted retail sales, or constant currency sales, continues to contract year-over-years (YOY) since 2000. 2005 and 2007 saw brief periods of constant currency YOY gains, but they didn’t last long.
Constant currency retail sales hasn’t been able surpass a -10% contraction since 2008. This contraction rates sits like an anvil over spending.
Ever wonder why that trip to brick and mortar and/or online store produces that feeling of a loosing battle? The persistent decline in constant currency retail sales confirms our gut response that standard of livings are declining across most of the Western World.
Gold-Adjusted Retail Sales (RSGLDR) and YOY Change
Headline: Retail Sales in U.S. Trail Forecasts as Auto Purchases Drop
Feb. 14 (Bloomberg) — Sales at U.S. retailers rose less than forecast in January, reflecting an unexpected drop in purchases of automobiles.
The 0.4 percent gain reported by the Commerce Department today in Washington was half the 0.8 percent rise median forecast of economists surveyed by Bloomberg News. Sales excluding cars climbed 0.7 percent, more than projected and the biggest gain since March.
Chains like Target Corp. and Limited Brands Inc. topped analysts’ sales forecasts last month, when many companies offered incentives to bring back shoppers after holiday sales stagnated. Further gains in employment are needed to bolster wages and underpin confidence, ensuring that demand can be sustained.
“Consumers are being very picky at this point,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. “We saw aggressive retailer discounting and sharp price cuts in the new year. It bodes poorly for retailers’ margins.”
The median forecast of 75 economists surveyed by Bloomberg projected sales excluding cars would rise 0.5 percent. Estimates ranged from little change to a 1.8 percent gain.
Prices of goods imported into the U.S. rose 0.3 percent in January, reflecting higher costs for automobiles and petroleum, a report from Labor Department also showed today. It was the second increase in the past six months, indicating little pressure in prices from overseas.
Source: businessweek.com
More…
Buy Gold Stock Weakness, Says The Market
CIGA Eric
Ephrem,
The market’s message after a massive, multi-decade breakout is buy weakness. Unfortunately, human behavior is hardwired for selling rather than buying fear. This means gold shares train, fueled by rising gold prices, will shed a lot of passengers along the way.
S&P Gold (Formerly Precious Metals Mining)*
The gold shares mania phase, characterized by rising dividends and higher highs despite gold reaching its equilibrium price, could easily extend into 2020-2025.
Eric
Eric,
Its funny that you mention gold stocks climbing the wall of worry… Im noticing that the premium stocks with sound resources and good cash flows are taking turns inching up to their old time highs.. e.g., endeavour, fortuna, silver wheaton, anv etc.
Im just wondering when this "breakout" does happen will we be witnessing a massive run similar to the tech stock run i.e., 1996-1999? during their final mania phase. If so, should we be seeing a top sometime around 2015ish?
thanks
Ephrem
More…
Dear Extended Family,
The Gold Aficionado’s greatest fear is totally without basis. The price of gold will not fall significantly from its points of true standard valuation and the introduction of a new currency system.
Gold is heading back towards a monetary system and not away from it. The producing gold company of the future is the new utility as it dividends a majority of its profits to its shareholders.
The fact that gold is money and not a commodity is the safety latch that opens on its own when all other forms of money close. Gresham’s Law is human nature seeking a standard when all other forms of exchange have mutated to casino chips with national flags on them. Increasing world liquidity multiplies itself in increasing volatility of all things traded until an epic moment when over the top volatility convinces even the most economically ignorant that only a standard that cannot be multiplied by an instant Bernanke helicopter unlimited electronic monetary liquidity system is honest money. It is the flight from the burning values in terms of purchasing power of the casino chips called fiat currency towards a standard that proves Professor Gresham’s Law. It is a study of history that repeatedly shows his thesis that good money, honest money, forces out bad money.
Between now and 2015 gold will meet and, like all markets, exceed its value as a standard of measure. However there will be no repeat of the 1980 to 2001 price adjustment. Of course gold will meet and exceed a number, but its return to that full valuation will be a modest percentage of the total value. Gold is headed to a pendulum point at the introduction of the new virtual Western World Reserve unit for trade settlement.
I see the new system utilizing a Western World M3, which all member governments will agree to as 100 on the Index of Standard Currency Equilibrium. As this measure rises and falls, governments will agree that the value of their Treasury gold will move in the same direction and percentage according to their GDP ranking.
What will of course happen is the Squids of the Western world, the investment banks, will invent derivatives to speculate on member’s gold value requirements, which will change the price of gold in the marketplace and therefore remove the necessity of doing anything from the central banks. Once again the airwaves of the financial world will hang on the weekly announcement of the M figures, but this time it will be for a Global Western M3 tallied by the historical lender of last resort, The US Federal Reserve Bank.
There will be many variations and tweaks to this concept, but once again a new Rentenmark will be invented as a virtual reserve currency unit tied to a standard (gold) with a shadow of control on Western global money supply. A function of control will be by exposure (M3), but not convertibility. Like the Rentenmark it will be a bit of a farce, but it will work due to the demand for a fix that sits in the shadow of gold but is not convertible. This new Rentenmark will not be tradable by general business but rather be the virtual Standard Reserve Currency Unit (SRCU) available only to the central banks of the Global Western Monetary Association. All the present fiat currencies, the casino chips with national flags on them called things like the dollar and euro, will still be around and serving a purpose valued against the virtual Standard Reserve Currency.
The survivor will be gold. Its volatility will subside as it trades around a pendulum point that will be the price of gold on the day of agreement to the setting of the Index of Standard Currency Equilibrium (ISCE).
Assuming Alf Fields has called the number at $4500, then gold would trade in a range around $4500, say by $500, as the derivatives created to speculate on the Global Western world M3 changes via gold’s value.
What would not remain is the purchasing power of each casino chip with a flag on it, fiat currency. That would have fallen victim to currency induced cost push inflation, which now permeates the Western world’s financial system yet to be properly defined.
In conclusion, gold will not fall significantly in value after finding its full valuation as a standard. It will mutate into a currency form the same way German real estate gave the Rentenmark its value when Germany did not own all that much real estate.
The producing gold companies will now return to what they were in the 1940s and 1950s, the utility sector of the equity market as the best and certain yielders.
This is why I do what I do every day. Rather than in the 70s when I carried 22,000 long Comex gold contracts, I am building an entity to carry as many ounces of mineable gold as I possibly can assemble to become a utility equity of the future via outright ownership and royalty. That is done through TRX on the NYSE and TNX on the senior Toronto Stock Exchange.
Regards,
Jim
Here we go Again...
We had strong downgrades all across Europe and a total jettisoning of risk
trades in Tuesday's session with the result that we had a sinking Euro and
a surging Dollar. Overnight we learn that now China promises to join the
money rain parade and pour its wealth into bailing out Europe to protect
its export markets.
What do we get as a result of this? A complete reversal of the risk
aversion trades with all the money that came pouring out of the markets
Tuesday now turning around and flooding right back in again.
Up goes gold and silver after both sold off on Tuesday and up goes the ... more »
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