Jim Sinclair: 1980 Was a Warmup, Gold to Range $400 a Day

from King World News:
Today legendary trader and investor Jim Sinclair told King World News that movements in gold will become so violent that gold will become untradable to individuals. Sinclair also said that gold will be the last great bubble as it goes into a geometric uptrend. Here is what Sinclair had to say about what we can expect to see going forward: “Liquidity, it’s as simple as that. All of this is the event that’s taken place many times in history. Many times in history there has been an inflation caused by volatility in currencies called currency induced cost push inflation.”
Jim Sinclair continues: Read More @ KingWorldNews.com

 

 

Currency Induced Cost Push Inflation...

In The News Today

February 23, 2012, at 10:20 am
by Jim Sinclair 

My Dear Friends,

Now is the first article in MSM on the subject I have been speaking to you about since 2001, Currency Induced Cost Push Inflation. However, crude is not the best of examples as there are exogenous events in its price structure that have great influence.

Gasoline Prices Are Not Rising, the Dollar Is Falling 2/22/2012 @ 1:12PM
Panic is in the air as gasoline prices move above $4.00 per gallon. Politicians and pundits are rounding up the usual suspects, looking for someone or something to blame for this latest outrage to middle class family budgets. In a rare display of bipartisanship, President Obama and Speaker of the House John Boehner are both wringing their hands over the prospect of seeing their newly extended Social Security tax cut gobbled up by rising gasoline costs.
Unfortunately, the talking heads that are trying to explain the reasons for high oil prices are missing one tiny detail. Oil prices aren’t high right now. In fact, they are unusually low. Gasoline prices would have to rise by another $0.65 to $0.75 per gallon from where they are now just to be “normal”. And, because gasoline prices are low right now, it is very likely that they are going to go up more—perhaps a lot more.
What the politicians, analysts, and pundits are missing is that prices are ratios. Gasoline prices reflect crude oil prices, so let’s use West Texas Intermediate (WTI) crude oil to illustrate this crucial point.
As this is written, West Texas Intermediate crude oil (WTI) is trading at $105.88/bbl. All this means is that the market value of a barrel of WTI is 105.88 times the market value of “the dollar”. It is also true that WTI is trading at €79.95/bbl, ¥8,439.69/barrel, and £67.13/bbl. In all of these cases, the market value of WTI is the same. What is different in each case is the value of the monetary unit (euros, yen, and British pounds, respectively) being used to calculate the ratio that expresses the price.
In terms of judging whether the price of WTI is high or low, here is the price that truly matters: 0.0602 ounces of gold per barrel (which can be written as Au0.0602/bbl). What this number means is that, right now, a barrel of WTI has the same market value as 0.0602 ounces of gold.
During the 493 months since January 1, 1971, the price of WTI has averaged Au0.0732/bbl. It has been higher than that during 225 of those months and lower than that during 268 of those months. Plotted as a graph, the line representing the price of a barrel of oil in terms of gold has crossed the horizontal line representing the long-term average price (Au0.0732/bbl) 29 times.
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Jim Sinclair’s Commentary

How do you do this with a straight face?

RBS to Dole Out £400 million In Bonuses Despite Full Year Loss Forecast February 23, 2012 4:02 AM GMT
(Reuters) – State-owned Royal Bank of Scotland is expected to pay out up to 400 million pounds in bonuses to its corporate banking staff as it gets ready to unveil a full-year loss forecast at up to 1.2 billion pounds on Thursday.
The move is expected to increase anger that the bank is still paying large salaries while thousands, including more than 30,000 layoffs at the bank in the last three years, lose their jobs in a weakening global economy.
RBS, 82 percent owned by the government after it was rescued during the 2008 financial crisis, is also in the firing line over high awards to staff as British taxpayers sit on a 21 billion pounds paper loss on the 45 billion pounds pumped into the bank.
The bank is likely to at least halve the bonus pool for its investment bankers from the 950 million pounds awarded for 2010, people familiar with the matter have said.
Sky News said on Wednesday the bonus pool will be between 390-400 million pounds.
The chairman and chief executive of RBS waived their bonuses this month after politicians from all of Britain’s major parties called on them to refuse the awards.
RBS’s investment banking income has been hit hard by the euro zone debt crisis and it plans to substantially shrink the business after the government said it should focus more on retail banking. It will cut another 3,500 investment banking jobs.
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Jim Sinclair’s Commentary

Come they will, but the price is going to be a Doozie. Not paying this piper however would cost a great deal more.

The price will be paid.

To the indebted nations of Europe Updated: 2012-02-23 08:07
By Huang Xiangyang (China Daily)

Dear Sirs / Madams:

I know you are in trouble and want China to help. I have heard your repeated calls in the media for our leaders to bail you out by buying the debt of European governments. I want to assure you your entreaties have not been in vain.
Last week our premier pledged that China will "get more deeply involved" in resolving your debt crisis. Our central bank governor tried to buoy up market confidence in the euro by vowing to continue holding your sovereign debts. Such comments came even as the international rating agencies – Moody’s, Standard & Poor’s and Fitch Ratings – cut their ratings for your nations because of the weakening prospects for an overhaul in Europe.
We want you to know that we are your friend in your time of need.
In fact, the ever-expanding trade ties between China and the European Union have brought us closer together. China is now the EU’s top trade partner, and vice versa. So a collapse of the eurozone would also hurt China’s interests. The International Monetary Fund has warned that a deepening EU debt crisis could slash China’s economic growth in half this year. So we are both in the same boat.
But that does not mean you should take China’s help lightly.
More…

 

 

Greek Debt Deal Done—Yeah Right

February 23, 2012, at 10:17 am
by Greg Hunter 

By Greg Hunter’s USAWatchdog.com

Dear CIGAs,

I keep asking myself, when is a deal not a deal?  Every time I hear the words “Greek debt deal” or “Greek bailout” in the same sentence, I wonder if, this time, they really have a deal.  Yesterday, I was thinking that again when it was announced there was a new Greek debt deal.  The headline from Reuters read, “Europe seals new Greek bailout but doubts remain.”  My favorite paragraph in the story said, “An opinion poll taken just before the Brussels deal showed that support for the two mainstream parties backing the rescue had fallen to an all-time low while leftist, anti-bailout parties showed gains.  Anastasis Chrisopoulos, a 31-year-old Athens taxi driver, saw no reason to cheer the deal.  “So what?” he asked. “Things will only get worse. We have reached a point where we’re trying to figure out how to survive just the next day, let alone the next 10 days, the next month, the next year.”  (Click here for the complete Reuters story.)  There are elections in Greece in April.  What do you bet one of the “anti-bailout parties” wins?  There may be a deal today, but not in the not-so-distant future.
Another headline read, “Greece secures bailout to avoid debt default.”   Why should headlines be so misleading and give false hope?  Buried in the story was this nugget, “But despite those unprecedented efforts, it was clear that Greece, which kicked off Europe’s debt crisis two years ago, was at the very best starting on a long and painful road to recovery. At the worst, the new program would push the country even deeper into recession and see it default on its debts further down the line.”  (Click here for the complete story from MyWay.com.)   The headline should have read, “Greece secures bailout to avoid debt default for now.”
Let’s be frank here, Greece is going to default.  In the end, it will be the best choice–not for the bankers but for the people.  The bailout is really more debt put on the backs of the Greeks to help the bankers who made very bad loans.  You want to see what I call a true headline that tells the real story?  It comes from Graham Summers of Phoenix Capital.  It says, “Greece Is Not Lehman 2.0 as I’ll Show You, Its Far Far Worse.”   Now, that’s a headline you will not see on the mainstream media, but in this case, it’s probably a much better analysis of what is really going on.  Summers says, “In plain terms, Greece racked up too big of a tab and simply doesn’t have the means of paying it. End of story. The world needs to realize this. Because Greece will default and it will default in a big way.”  (Click here to read the complete post from Mr. Summers.  It’s sort of a sales pitch, too, but the report is valid.)
More…

 

 

Companies With Mineable Ounces Soundest Investment For Coming Volatility

February 22, 2012, at 8:39 pm
by Jim Sinclair 

My Dear Friends,

Today was long and enlightening for me. I made multiple meetings in New York City with significant money managers.
During these meeting the price of gold rose above the $1764 level which I have repeatedly told you is as important as $524.90 was when gold broke out of its arithmetic up trend and entered its first power up trend. I wish to remind you $1764 is the point where gold moves out of its power up trend and enters into its geometric uptrend. I have also assured you the central banks and especially the US Fed via the BIS and Exchange Stabilization Fund seek not to depress gold, but only to prevent it from running so hard on the upside as to expose the true condition of Western world finance.
There has been significant interventions in the gold price at Angel $1764 with unexpected other central bank accumulation resulting in inexplicable strength in the $1710-$1720 area.
As the strong dollar policy is clearly a policy of softening a long term decline, the interventions in gold have been to modify a desire in the market itself to go ballistic on the upside.
If there was any startling realization today it was that among true geniuses and maturity in major money managers there is a grave lack of understanding concerning the forces at work in the financial can kick of the century now about to take place.
Only one person today knows that the war with Iran starts when Iran is frozen out of the Swift system. In terms of finance, that is a nuclear attack. It was just that threat alone that made Swiss banks destroy their tradition of privacy and send their loyal clients to a mass execution, assuming that they were cheating on taxes.
Not one person I spoke to today ever asked themselves who determines if credit event is a default and what that means to the mountain of credit default swaps that US banks have vended via their non US subsidiaries. By this method the count of these OTC derivatives by the US Controller of the Currency is way short of the true amount of debt insurance banks have sold.
Only one man understood what a commodity currency was and had studied where currency induced cost push inflation had produced severe price inflation during periods of awful economic conditions brought on by all types of debt failure.
I am speaking with leaders in finance who control immense sums of money. If these people do not understand the forces at work what makes you think politicians or their college professor appointees to central banks have a better understanding? The answer is simple – they do not!

Let me share with you the conclusion I took away from today’s luncheon.

1. What is going to happen is going to take place in March somewhere between the 14th and 20th in all probability.
2. What will determine the fate of markets is what action China does or does not take in providing funds to IMF bailout funds.
3. I believe China can and will extract significant trade and other benefits for their presence.
4. I believe China will want the same immunity that the IMF just took for themselves on sovereign debt in liquidation.
5. Greek gold will be held hostage to their debt.
6. That will accelerate the modest trend of repatriation of gold for the cellar of the New York Fed to nations like Germany that are certainly able to store their own wealth.
7. There will be an acceleration in the trend of utilization of other currencies than the dollar for contracting internationally regarding goods, service, oil and minerals.
8. I do not agree that we are at the doorstep now of major changes in the international monetary system. That comes in June of 2015.
9. I am certain that we are on the immediate threshold of the monster kick of the financial can down the road that is a dead end.
10. I believe China and the US Fed will assist in that great last can kick that backfires.
11. I am certain that I am in the right business and that business is the identification and accumulation of gold as gold is the ultimate survivor of what is about to happen.
12. I am certain the gold industry is mad as a Danbury hatter in selling their product the moment they produce it.
13. I am certain the gold and silver industry is in a transition back to the dividend producers they once were.
14. I am certain that the volatility in gold, silver and equities we have already seen is nothing compared to what is about to happen.
15. The last man standing among asset categories as the new monetary system is introduced sometime post June of 2015 will be gold and gold alone.
Therefore the soundest investment now is what I, and others (McEwen) are doing in building companies whose inventories of goods to be sold are mineable ounces of gold and other precious metals in the ground moving towards production.
The immense shorts in this industry group are whacked out noobies without a clue.
New mines need never pollute. Old mines can never be cleaned up. Open pit and surface enrichment is the type of gold that will be least effected by rising costs.
Respectfully,
Jim

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds

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Farmland goes for a premium as commodity prices tick up

Eric De Groot at Eric De Groot - 1 hour ago

Commodities were king in 2011. The sharp break into 2012 has not only emboldened the top callers but also turned the crowd from greed to fear. Fear within secular up trends often coincide with excellent entry or reentry points. Watch for a technical trigger. Chart: CRB Spot And Year-over-Year (YOY) Change Headline: Farmland goes for a premium as commodity prices tick up In the last five... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] more »

 

 

$1800 in Play for Gold

Trader Dan at Trader Dan's Market Views - 1 hour ago

I am posting a pair of gold charts today to note the clear resistance levels on the chart and to comment accordingly. The first is the daily chart showing the resistance zone that was broken this morning after being tested in yesterday's session. The key to that test was the ability of the gold market to SUSTAIN GAINS ABOVE the $1750 level. That was the level all momentum traders were watching to determine whether or not they were going to move in. When it appeared likely that gold was going to hold above that level yesterday, in came the hedge fund algorithms and up went the metal ... more » 

 

 

Mike Krieger Presents "The Playbook"

We need to look to Europe now to see what TPTB have in store for us. This is the consummate problem, reaction, solution game being played for all the marbles. First, you get the problem “spiking interest rates for the peripheral countries.” Then the “reaction,” financial panic and fear. Finally the “solution.” The placement of unelected technocrats as the leaders of Greece and Italy with ties to all the power structure’s institution such as the Trilateral Commission, the Bilderberg group and of course Goldman Sachs. It is like a coup that takes the shadow government from the shadows and puts them in your face. The reason that this is so key is because we are next. They don’t want to roll up everything at once. If they can get Europe safely consolidated then they will move here. That is when interest rates in the U.S. will spike (problem), and we get panic (reaction) and then the solution (bankster technocratic committees in charge and the IMF to the rescue, ie loss of sovereignty). This is the plan and I see it as clear as day.

Curious What Just Took Down Gold?

Gold just slid by almost $10 in the span of a few minutes. Curious why? Here is what took it down.

 

... And Nothing Else Matters

While the headline-chasers will allocate cause to effect for every twitch and ditch in asset prices, JPMorgan's Michael Cembalest appears to agree with us that nothing else matters but central bank balance sheet expansion. As we discussed earlier in the week, major central banks have injected nearly $7tn into world markets since 2007 and while the obscene rise in gas prices should somewhat self-limit the print-fest, it appears not before another bubble has burst as central bankers feel safe on this path given their microscopic focus on their own inflation-measures. Whether it be asset-reflation, boosting bank capital, pulling forward consumer demand, or government-reacharound financing, Cembalest sums up: super-easy monetary policy supports markets right now, prompting his question: "Who knew that unlimited money printing would be such a clean and simple solution to the world’s problems? I would love to read a book called “Reliable Central Bank Exit Strategies”, but I don’t think it has been written yet. Enjoy the ride."
We have only one question: "If a 20% rise in global stocks required a $2 trillion expansion in aggregate assets, which also took EUR-Brent to all-time record highs and WTI to over $107 $108, where will the next 20% come from, and how will the economy fare with $150 WTI?"
  

 

"A Great Disturbance In The Bourse"

"I felt a great disturbance in the Bourse, as if 216 hedge funds suddenly cried out in terror and were suddenly silenced. I fear something terrible has happened."

Record Direct Takedown Leads To Huge Demand For 7 Year Bond Auction, Disproves "Rotation From Bonds Into Stocks "

While this week's two previous auctions were uneventful and very much unimpressive, today's 7 Year $29 billion issue continues to show that the bulk of the curve action continues to be at the belly. Unlike January's spotty 7 Year auction which saw a massive 56.64% in Primary Dealer take down, today's was the opposite, with the auction pricing a whopping 3 bps inside of the When Issued at 1.418%, with Dealers taking down just 38.89%, well below the TTM average 47.46%. This was the lowest Dealer take down since December 2010.  The Indirect Bid was well higher than in January when as we already noted previously foreign investors were dumping US paper, yet at 41.85% was just in line with the TTM average of 41.54%. The big outlier however was the Direct Bid take down which soared from 11.59% to a massive 19.27% take down - a low 44% hit rate on the Direct Bid. Why the huge shift in sentiment toward US paper? It hardly has anything to do with the yield rising from a meager 1.36% to a just barely higher 1.42%. And yet, there was a tangible change in Direct interest - is it merely PIMCO buying up more paper? Most likely - this is perfectly aligned with the fund's recent average effective duration so we would not be surprised if Bill Gross is now loading up on the belly. The result of the super strong auction is the entire treasury curve sliding in yield, as it indicates that the wholesale expectation of a shift away from Treasurys and pushing into stocks, is nowhere to be seen. And stepping back from the tree, the forest now stands at just under 101.5% debt/to US GDP. Many more auctions coming.

Are We Running Out Of Greater Fools?

The scale, speed, and time of the equity rally of the last five months or so echoes loudly the post-Jackson Hole rally in 2010 (from AUG10 to FEB11) and while the aggregate money pumpers of the world have done their best to keep the pedal to the metal (gold?), we worry that just as before we are running out of greater fools to buy assets at the margin in the hope that they will be first through the gates when the spigot gets turned off (or at minimum turned down). Sentiment is peaking, the number of bulls in the AAII survey is rolling over (just like in DEC10/JAN11), the number of bearish respondents is troughing (just like in DEC10) and the ratio of Bulls to Bears (having approached record highs) is now rolling over (just like in DEC10/JAN11).  With energy prices surging (as they did in Q4 2010/ Q1 2011) and expectations high for the next round of gross money-printing (forget supposedly better US fundamentals, QE3 is here any minute apparently and LTRO 2 will be enough to build a real Death Star), we fear once again that hope has exceeded its credibility and with financials showing some cracks in their armor (in credit for sure and now in stocks too), perhaps the less-than-greatest fools are leaving the building early.

Not Again - Following Abysmal 2011, Only 10% Of Hedge Funds Are Outperforming The S&P In 2012

Too bad not every hedge fund can be long Apple (even if as Goldman points out, they sure are trying - "One out of five hedge funds has AAPL among its ten largest long positions" - a truly stunning observation and one which means that if Apple, which is priced to absolute perfection, has even one hiccup, we would see an absolutely epic bloodbath in the market). Because if 2011 was a horrible year for hedge funds which closed the year well below, or -10%, their respective benchmark - the S&P (unch for the year), the last thing hedge fund LPs can afford is another year in which they pay 2 and 20 to generate a return lower than the S&P. Yet to their horror, this is precisely what is happening. According to Goldman's latest Hedge Fund Tracker, "The typical hedge fund generated a 2012 YTD return of 3% through February 10th compared with 7% gains for both the S&P 500 and the average large-cap core mutual fund." Yes, there are outliers, but far and wide this means that even more redemptions are about to hit the hedge funds space, where jittery investors will no longer show any restraint before sending in that redemption letter. It gets worse: "The 60-fund Dow Jones Credit Suisse Blue Chip Hedge Fund IndexSM has returned 3% YTD, in line with our sample average.... The distribution of YTD performance indicates that 50% of hedge funds have  generated returns between -2% and +2%." And the absolute kicker: "Only 10% have returned more than 7%, outperforming the S&P 500." Another way of saying that is that 90% of hedge funds are generating negative alpha! If that is not the signed, sealed and delivered notice of death of the hedge fund industry courtesy of not ubiquitous central planning, we don't know what is.

What’s Next for Capitalism After the Current Version Implodes?

by Charles Hugh Smith, OfTwoMinds.com:
Has the centralized nation-state model of global capitalism finally reached its autumn?
Predicting the end of Capitalism has been a popular pastime since the term was coined. The reason why this particular parlor game is so fruitless is that Capitalism is not monolithic or static–and neither is socialism, the other great ideological umbrella that covers a variety of systems and iterations of State/collective ownership of assets.
If we take the long-term historical perspective of Giovanni Arrighi in The Long Twentieth Century: Money, Power and the Origins of Our Times, we find that modern global Capitalism has gone through four iterations, each of which saw the dissolution of the old order and the emergence of an even greater source of capital and power. Arrighi has built upon the epic structure created by Fernand Braudel in his three volume history of modern Capitalism, Civilization & Capitalism, 15th to 18th Century, a series I have often recommended here to anyone who seeks to understand the origins and nature of modern Capitalism:
Read More @ OfTwoMinds.com

Just What Is the REAL Exposure to Greece? Pt 1

by Graham Summers, GainsPainsCapital.com:
The financial world is awash with theories as to how significant the Second Greek Bailout is. I’m far less concerned with this (the Bailout accomplishes nothing of import and only puts off the coming Greek default by a short period). Instead, I think it much more important to ascertain the true exposure to Greek sovereign debt.
And what better place to start than the banking system of the one country that is playing hardball with Greece during this latest6 round of negotiations: Germany.
First off, the reports concerning German bank exposure to Greek debt are anything but reliable. For instance, according to the Bank of International Settlements German bank exposure to Greece is only $3.9 billion (though they state this is only on an immediate borrower basis).
Read More @ GainsPainsCapital.com

Indians LOVE Gold, But Like SILVER An Awful Lot Too – Silver Imports May Top 5,000 Tons in 2012

[Ed. Note: If you think 5,000 metric tons of PHYSICAL silver taken off the market every year doesn't have an impact, consider this: 1 metric tonne = 32,150.746 Troy ounces... X 5,000 tons... By my quick calculations, the Indians alone need around 160 MILLION troy ounces annually!]
by Debiprasad Nayak, WSJ.com:

MUMBAI — India’s silver imports may top 5,000 metric tons in 2012 due to strong investment demand, Prithviraj Kothari, the president of the Bombay Bullion Association, said Tuesday.
The country imported around 4,800 tons of silver last year, he said.
“Silver demand is expected to rise on firm industrial and investment demand,” he told reporters on the sidelines of a conference.
Though demand for silver may not pick up in the next few weeks as returns from debt instruments are better than that from silver, investment interest in the white metal is expected to grow as and when the country’s central bank starts lowering lending rates, Mr. Kothari said.
Read More…

WTF...Wasn’t Ron Paul in the Debate?!?!?!?

[Ed. Note: It's like a game of "Where is Waldo?", except Waldo always appears somewhere in the picture, unlike Ron Paul, who can be completely erased by the media. Poof! Gone, like a fart on a windy day.]
Winners And Losers From Final GOP Debate
by Amy Walter, ABC News:
MESA, Arizona – Maybe it was the fact that the candidates were forced to sit in an odd, uncomfortable configuration. Or, maybe it was that after twenty of these debates, these four candidates are just really tired of the routine. Or, maybe it was the Arizona sun that sapped the candidates of the energy and verve they have shown in previous debates.
Whatever it was, this final – maybe – GOP primary debate was not a particularly strong one for any candidate. It generated a lot of light, but very little heat. And, it did produce one sure loser: Rick Santorum.
Winners:
Mitt Romney
Read More @ News.Yahoo.com

Clarke and Dawe – Solvency in Our Time

 

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