Head Of Zimbabwe Central Bank Explains QE3

Gideon Gono, the governor of the Reserve Bank of Zimbabwe who destroyed the Zim dollar by creating hyperinflation, weighs in on the parallels between QE3 and the policy he followed last decade, in the RBZ’s mid-term 2012 monetary policy statement. Even though Ben Bernanke and Mario Draghi and all other central bankers will try to convince you that what they are doing are really different to what Gideon Gono did, you should really be taking Gideon Gono more seriously, who is basically admitting that the money printing strategy does not work to ‘stimulate’ growth. All it can stimulate are high- and hyperinflation risks.

The Fiscal Cliff… and Fools

by Bill Holter, MilesFranklin.com:
We have all heard about the “coming” fiscal cliff. It is said that Jan. 1 of next year that Bush’s tax cuts will expire, tax rates will go up and whack the economy over the head and force us back into recession. This, is not the fiscal cliff. We have already gone OVER the fiscal cliff. Actually, we went over this cliff probably back in 2006 or ’07, let me explain.
It was back in 2006 (maybe even FAR FAR earlier) that mathematically the “end” was in sight. Governments all over the world from cities, states and sovereigns had by this point packed in and promised so much to their citizens that mathematically they could never be paid. These “budgets” assumed blue skies til the year 2112 or thereabouts. “Recessions” were a thing of the past and thought to have been abolished forever. Growth “forever” was plugged into computers with all sorts of unrealistic assumptions (remember back in 1999 it was forecast that by now, 2012, the federal debt would be paid down?). It was all wishful thinking, faulty logic and if I may say, a bad joke.
I found myself screaming at the TV the other day when a “fiscally conservative” candidate was saying that “it’s not fair to spend all this money now and have our kids burdened to pay it back”.
Read more @ MilesFranklin.com

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Why A Balanced Budget Is Impossible In America

If the US government cut all government services except Social Security, Medicare, Medicaid, and interest payments, federal spending would still outpace revenues. As we noted here, these four mandatory items dominate costs. All the arguing over sequestration and the fiscal cliff are moot since as Professor Antony Davis notes in this brief clip, there are no specific cust that will enable government to balance the budget; in fact "nothing less than a complete redesign will solve the problem." That redesign begins with determing the proper role of government.

The Curious Case Of Debate-Day Stock Market Surges

In addition to the mysterious volley of recent economic data points that have blown even the most optimistic expectations out of the water, it is perhaps notable that not only is the economy in agreement with the status quo in the month before the election, but so is the market, and as can be seen below, on presidential (and vice) debate days, the market has posted some truly six sigma returns. For the month of October, the S&P 500 futures have risen a cumulative 20 points on the days of the debate; and fallen a cumulative 4.75pts on the non-debate days. Forget needing moar QE, we need moar debates! While we leave up to our readers to divine the implications of such outlier moves on debate days, our only suggestion for those who have missed their opportunity to buy the central bank policy vehicle, formerly known as the S&P 500, with both hands and feet, is to wait until the next presidential debate and go all in. After all, "it's only fair" that the market will soar hours ahead of the two teleprompter-less candidates debating highly irrelevant stuff.

Things Are Changing In Russia

Admin at Jim Rogers Blog - 3 hours ago

“I’m convinced things are changing in Russia for the first time.” - *in CNBC * Related: Market Vector Russia ETF Trust (RSX) *Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.*

The Future Of Gold, Oil, And The Dollar

The ability of reflationary policy to mute the worst risks of debt deflation has been a source of enormous frustration for stock market bears ever since the 2008 collapse. Yes, the initial moderate rally out of the S&P500’s black hole was perhaps not so surprising in 2009. Bombed-out stock markets can always manage some sort of rally. But the ability of the rally to continue through 2010, and then 2011, and now 2012 has been quite vexing and painful for bearish investors. Indeed, the entire post-2008 market phase has now produced an era of consistently poor performance for hedge funds. Recent data, for example, shows that an incredible 90% of hedge funds are underperforming the S&P500 through mid-September. Will the pain continue? If OECD policy makers do in fact lose stock markets as the main transmission mechanism for reflationary policy, then trouble of a very serious nature will make itself known in the biggest way imaginable since the 2008 crisis began.

Vikram Pandit Gives His First Post-Resignation Interview: Live BBG TV Webcast

Curious to learn just why Vik Pandit was given his marching orders with what appears to have been a one day's notice? Hear it from the horse's mouth direct courtesy of his first interview since quitting effectively several hours ago, with BBG TV's Erik Schatzker.

In Another Blow For "Green Industry" A123 Files For Bankruptcy After Collecting Hundreds Of Millions In Government Grants

That troubled battery-maker A123 has just filed for bankruptcy (and no, in this case bankruptcy is not equal with deleveraging) should not be news to anyone who has followed the US government subsidized trainwreck of a company (especially since as we updated yesterday it was known it would miss its bond payment today). Well actually we take that back. The bankruptcy may come as a surprise to the president. Recall that Obama called A123 Chief Executive Officer David Vieau and then-Michigan Governor Jennifer Granholm during a September 2010 event celebrating the opening of the plant in Livonia, Michigan, that the company received the U.S. grant to help build. Surprise and epic humiliation that is. "This is about the birth of an entire new industry in America -- an industry that’s going to be central to the next generation of cars," Obama said in the phone call, according to a transcript provided by the White House. "When folks lift up their hoods on the cars of the future, I want them to see engines and batteries that are stamped: Made in America." Needless to say if the car is a flaming Fisker Karma or Chevy Volt, the hoods may be too hot to lift but that's another story. Most importantly, it will come as a big loss to the firm's equity holders (who have already lost their entire investment so hardly a surprise) creditors, who will likely be wiped out almost entirely (listed below), but most importantly US taxpayers, who funded the firm not on one occasion as conventional wisdom will have it, but with four distinct Federal and State agency grants, as is highlighted in the first day motion affidavit by David Pyrstash in support of the Chapter 11 petition.

Will Obama Strike Libya In Delayed Pre-election War?

Speaking on conditions of anonymity, four administration officials have commented that they are actively seeking a target and readying strike forces and drones as retribution for the Sept 11 attack on the US Consulate in Benghazi. As AP reports, if the administration does find a target, officials say it still has to weigh whether the short-term payoff of exacting retribution on al-Qaida is worth the risk that such strikes could elevate the group's profile in the region, alienate governments the U.S. needs to fight the group in the future and do little to slow the growing terror threat in North Africa. The efforts show the tension of the White House's need to demonstrate it is responding forcefully to al-Qaida, balanced against its long-term plans to develop relationships and trust with local governments and build a permanent U.S. counterterrorist network in the region. The verbal rhetoric is escalating from Biden's last year comment that "if you do harm to America, we will track you to the gates of hell if need be." to "If America hits us, I promise you that we will multiply the Sept. 11 attack by 10," said Oumar Ould Hamaha, a spokesman for the Islamists in northern Mali. U.S. officials say covert action is more likely.

In The News Today

October 16, 2012, at 10:01 am
by Jim Sinclair

My Dear Friends,

Please note that every economic indicator that uses interviews or public opinion to development are booming into election time.
Amazing coincidence?
Regards,
Jim



Jim Sinclair’s Commentary

This says it all. We select a president by who can BS better. We are lost!






Jim Sinclair’s Commentary

This is not what supports a lower gold trend, making the manipulator’s action more difficult.
This is short term noise in the gold market without any meaning whatsoever.






Jim Sinclair’s Commentary

It is like old times. Every opportunity for Russia to make things more complex and difficult for the US will be taken full advantage of as Russia builds its military.

Press Statements Following Maliki-Putin Talks By John Lee.
Presidents Maliki and Putin have issued the following statement after their meeting in Moskow:
PRESIDENT OF RUSSIA VLADIMIR PUTIN: Mr Prime Minister, ladies and gentlemen,
Our meeting with the Prime Minister of Iraq, Mr Nouri al-Maliki, was substantive and constructive.
Some significant changes have have been taking place in Iraq since Mr Maliki’s last visit to Moscow in April 2009 – changes for the better. Iraq’s leadership is doing much for complete national reconciliation and accord, socioeconomic problems resolution and restoring country’s positions in the region and on the international arena.
We sincerely wish our Iraqi friends success in rebuilding and strengthening their state and see the augmentation of our bilateral trade and economic relations and the deepening of our political dialogue as Russia’s input into the advancement of Iraq toward re-establishing its peaceful living.
More…




Jim Sinclair’s Commentary

There is no "if" here, only "when."

If Gold Breaches $1,800 a Big Rally Coming: Chart Published: Tuesday, 16 Oct 2012 | 1:04 AM ET
By: Daryl Guppy
Technical analysts are often accused of drawing meaningless lines on charts on the grounds that the market knows nothing about these lines. The gold chart shows how useful these lines can be in determining the limits and behavior of future price activity. The long term up trending trading channel continues to define the price activity in gold.
The projection of support and resistance lines helps to define where future price action may pause, develop a retreat, or develop a trend continuation. his allows traders and investors to prepare appropriate trading responses.
Gold has significant resistance features that cap any rapid change in the trend.



There are three resistance barriers that limit the potential rise in the gold price. The first resistance barrier is the value of trend line A, which is now acting as a resistance level. The current value is near $1,790 an ounce. This is the lower edge of a long term uptrend channel so there is a high probability this will act as a strong resistance feature.
The gold price has clustered near this level and been unable to develop a decisive breakout. This does not mean a new downtrend but it shows weakness in the up move.
The second resistance barrier is the value of the resistance level near $1,800. The combination of trend line A and resistance near $1,800 adds more drag to the momentum and reduces the probability of a faster price rise.
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Jim Sinclair’s Commentary

This is an understatement. Evil, vile, putrid, worthless, without redeeming human qualities is more like it.






Jim Sinclair’s Commentary

Change? You have to be kidding.





Jim Sinclair’s Commentary

There is something disconcerting about this when you realize the FASB has allowed all financial institutions to value their worthless paper as fully valued to issue price or more.

Citigroup CEO Pandit and president resign in major shake-up; Michael Corbat is new CEO By Associated Press, Updated: Tuesday, October 16, 9:49 AM
Vikram Pandit abruptly stepped down as CEO of Citigroup on Tuesday, surprising Wall Street, after steering the bank through the 2008 financial crisis and the choppy years that followed.
Pandit’s replacement, effective immediately, is Michael Corbat, the current CEO of Citigroup’s Europe, Middle East and Africa division, the bank said. Corbat has worked at Citi and its
Pandit will also relinquish his seat on Citi’s board of directors. And a second top executive also resigned as part of the shake-up: President and Chief Operating Officer John Havens, who also served as CEO of Citi’s Institutional Client Group.
The news shocked Wall Street, a day after the bank reported strong third-quarter earnings. Pandit is credited with slimming the bank by selling businesses, removing it from government ownership after a bailout in 2008 and righting its balance sheet after billions in losses on bad mortgage investments made before he took the helm.
Today, Citi is the country’s third-largest bank, with $1.9 trillion in assets, according to the Federal Reserve. It trails only JPMorgan Chase, with $2.3 trillion, and Bank of America, with $2.1 trillion.
More…



Jim Sinclair’s Commentary

If the balance sheet of the USA was to re-price gold by multiplying the gold claimed to be owned by the USA to meet the dollar amount of total of the USA’s international indebtedness alone, the price would be in the range of $12,4000.

China And The Recipe For $12,000 Gold Addison Wiggin, Contributor
10/16/2012 @ 9:07AM
Gold has steadily advanced over the last 60 days from $1,600 to this morning’s $1,742. The IAU and GLD have been off to the races.  Which is making some people a little nervous. For instance: “Can you comment,” a reader asks, “on what you think might happen to the price of gold if Romney gets elected?”  I’ll tackle that question today in the course of examining some longer-term trends that will prove immune to whatever happens [checking the calendar] 25 days from now [thank God].
One of the most respected gold fund managers sees gold reaching for a new high inside the next 12 months. In his latest shareholder letter, Tocqueville Gold Fund chieftain John Hathaway bases that forecast on continued negative real interest rates: That is, as long as central banks push interest rates below the rate of inflation, gold performs well.
“Some suggest,” Hathaway writes by way of answering the reader’s question, “that a Republican victory in November would be a game changer for gold. It could bring about the dismissal of Bernanke, the taming of fiscal deficits, the painless elimination of excess liquidity from bloated central bank balance sheets and the restoration of robust economic growth.” [Pausing while your editor guffaws…]
“All of this,” Mr. Hathaway goes on, “would need to occur within the four years allotted to a new administration while voters patiently awaited the magic to take effect. While this rosy scenario is possible, we believe it would be a long shot.
“Therefore, we regard any possible pre-election weakness in gold and mining stocks based on such a possibility as a buying opportunity.”
More…

Jim’s Mailbox

October 16, 2012, at 11:38 am
by Jim Sinclair

Dear CIGAs,

CIGA Steve C says it for me.
Thank you Steve.
Jim

Dear CIGAs,

After the banking crisis, the Fed drastically dropped interest rates and then pumped money, which they created out of thin air, into the system. The government came up with other ideas which included the huge stimulus package, and a plan for minor mortgage relief, and the "cash for clunkers" program.
Some people bought new cars, and there seemed to be some success with these ideas. But all of those ideas were done with borrowed money. Consider this, if you were in a relationship and you suddenly lost your self employed income, your partner could buy some goods or services from you, using their credit card. But looking at the total balance sheet for your relationship, what has happened is the total balance sheet is looking worse than it did before.
During the banking crisis, the Fed and the government got their best brains together in many meetings. Basically, they did their best idea first, then their second best idea, then their third best idea and so on. All of the best ideas have been used already.
It doesn’t matter if you liked the parties they were in or not. The fact is they were intelligent people, who did things after participating in many brainstorming sessions.
All Romney can offer now is something like ideas number 7, 8, 9, 10 and so on. Weaker ideas that were thought of before but were discarded. Plus he hasn’t seen the actual books. If Obama gets in, he too will be trying ideas that were discarded previously.
Either of them will overspend drastically, which will mean a huge rise in the price of gold.
CIGA Steve C



Dear Jim,
Here is a very interesting Forbes article on Gold.
It is interesting that the gold coverage ratio is currently at an all-time low of 17%. The historical average for the gold coverage ratio,” Minerd writes, “is roughly 40%, meaning that the current price of gold would have to more than double to reach the average.
It gets better, history repeats itself, the gold coverage ratio has risen above 100% twice during 20th century,” most recently at gold’s 1980 peak. “Were this to happen today, the value of an ounce of gold would exceed $12,000.”
Regards,
CIGA Luis Ahlborn Sequeira
China And The Recipe For $12,000 Gold

Dear Luis,
Yes, that is the mathematical value of gold versus USA’s foreign debt.
Regards,
Jim



Dear CIGAs,

Last week I sent out an alert to all Private Road Members that Citibank was the NEW SILVER RIGGER on the block. Here was the analysis on how I figured it out (for Private Road Members)…
ALERT: Silver Short Hot Potato Being Passed Again!
http://www.roadtoroota.com/members/1019.cfm
Today comes the shocking news that the CEO and COO of Citibank have ABRUPTLY RESIGNED!
Shocker at Citigroup as CEO Vikram Pandit Abruptly Resigns
http://finance.yahoo.com/blogs/breakout/shocker-citigroup-ceo-vikram-pandit-abruptly-resigns-133826852.html
It will be impossible for JPM and Citigroup to unwind their silver rigging positions so be ready for the silver take off!
We are in the last moments of the MAJOR BATTLE for our freedom.
Buckle up for a WILD end of the year! Stay tuned on the Road to Roota for all the action
May the Road you choose be the Right Road.

Bix Weir
www.RoadtoRoota.com



Dear Mr. Sinclair,
We need to act decisively to break negative feedback loops and restore the global economy to a path of strong, sustainable and balanced growth. – IMF, 2012
So what’s stopping who?
Regards,
CIGA Deep.

CIGA Deep,

That is proof of MOPE’s eventual worthlessness. It only works when the economic wind is at your back. Once you go negative, MOPE flops. They really believe economics is all psychology.
Jim

C-Wave Rally In Gold Is Coming CIGA Eric
A big rally driven by a flight to safety/quality from the ever-expanding debt crisis is coming. Unfortunately, today’s short-term traders tend to care more about when than why. This bias drives more failure than success stories in this business.
The A-wave pauses (dips) represent price building cause in order to jump the creek with force. This process is also known as the accumulation of energy to the point of activation (activation energy) in chemistry or phase transition in thermodynamics.

Headline:  If Gold Breaches $1,800 a Big Rally Coming: Chart
Technical analysts are often accused of drawing meaningless lines on charts on the grounds that the market knows nothing about these lines. The gold chart shows how useful these lines can be in determining the limits and behavior of future price activity. The long term up trending trading channel continues to define the price activity in gold.
The projection of support and resistance lines helps to define where future price action may pause, develop a retreat, or develop a trend continuation. his allows traders and investors to prepare appropriate trading responses.
Gold has significant resistance features that cap any rapid change in the trend.
Source:  cnbc.com
More…

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