Jim Sinclair's Christmas Message: Keep your Gold Insurance & Be Happy

This is from the Jim Sinclair section. I thought I'd copy into here for your edification. Hold tight. We've got a long way to go before the top in gold. Its going to be one wild ride. Merry Christmas everyone & Happy Birthday Jesus!


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December 25, 2009 06:18 PM

My Dear Extended Family,

For the Grace of God there go we.
Give thanks for what we have.
God helps those that help themselves.

Take a moment of silence for those suffering this Christmas, for there are many. It was all unnecessary. This could have been a normal, tolerable and actually good for the system 4 year recession of modest proportions.

Their pain, even if they do not know it, came from others becoming trillionaires on Federal funds. Their sworn enemy, although they do not know it, is OTC derivatives.

Since no intervention has been aimed at the cause, no solution to the problem is possible. Do not give up your insurance, no matter how hard F-TV tries to convince you to.

When you are deluged with the MOPE about Greece, Spain and Ireland, think about California and the 40 other states right behind it. The Formula of 2006 will not be denied.

Stay the course. Do not join the suffering many.

Respectfully yours,
Jim

Dear Jim,

With the advice you have given, anyone who followed it has to be blessed this season…

One has to be thankful if they have a roof over their head, food to eat and two and four legged family and friends close by. So many do not even have that.

“The recession has hit California doubly hard. It was one of the states with the biggest bubble in house prices so there has been the inevitable bust. One in every 180 homes received a foreclosure notice in November.

The construction industry is at a standstill and unemployment is well over the 10 per cent national average at 12.5 per cent.

The other problem facing the state is its Government finances. Years of fudging the budget numbers have left California in a fiscal hole that no amount of creative accounting can obscure.”

More…

It looks like California is really hit by the Formula. The author has not heard about Detroit’s 45% unemployment… California used to be the state of opportunity.

CIGA BT

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December 25, 2009 06:34 PM

Jim Sinclair’s Commentary

You may recall that I told you that “QE to infinity” is where we are going. Well those that disagree will have a hard time explaining this.

Forget about “until 2012.” There will be no end if funds are required.

Treasury removes cap for Fannie and Freddie aid
By J.W. ELPHINSTONE, AP Real Estate Writer*–*Thu*Dec*24, 5:36 pm*ET

NEW YORK – The government has handed its ATM card to beleaguered mortgage giants Fannie Mae and Freddie Mac.

The Treasury Department said Thursday it removed the $400 billion financial cap on the money it will provide to keep the companies afloat. Already, taxpayers have shelled out $111 billion to the pair, and a senior Treasury official said losses are not expected to exceed the government’s estimate this summer of $170 billion over 10 years.

Treasury Department officials said it will now use a flexible formula to ensure the two agencies can stand behind the billions of dollars in mortgage-backed securities they sell to investors. Under the formula, financial support would increase according to how much each firm loses in a quarter. The cap in place at the end of 2012 would apply thereafter.

By making the change before year-end, Treasury sidestepped the need for an OK from a bailout-weary Congress.

While most analysts say the companies are unlikely to use the full $400 billion, Treasury officials said they decided to lift the caps to eliminate any uncertainty among investors about the government’s commitments. But the timing of the announcement on a traditionally slow news day raised eyebrows.

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Jim Sinclair’s Commentary

Buying treasuries and agencies by the Fed is the ultimate example of QE to infinity.

Cap removal on agency debt is QE to Infinity.

QE to infinity guaranties gold at a minimum of $1650. Gold is going to and through $1224 then on to $1274-1278, after which it will set its sights on $1650.

I believe that Alf’s and Martin’s price objectives will be accomplished. The date upon which these prices occur will give us the best heads up on gold price intentions.

When this market finally lights up, it will set your hair on fire.

Who Is Buying All These US Treasuries (And Can They Keep It Up in 2010)?
24 DECEMBER 2009

“Almost no one but the Fed is buying Agency Debt.” ( Treasury Friday announced the removal of any cap on buying US Agency debt, Fannie and Freddie)

“Our concern now is that this is all starting to resemble one giant Ponzi scheme. We all know that the Fed has been active in the market for T-bills. As you can see from Table A,*under the auspices of Quantitative Easing, they bought almost 50% of the new Treasury issues in Q2 and almost 30% in Q3.

“The Fed is printing dollars to buy Treasuries as a means of faking the Treasury’s ability to attract outside capital. If our research proves anything, it’s that the regular buyers of US debt are no longer buying, and it amazes us that the US can successfully issue a record number Treasuries in this environment without the slightest hiccup in the market.”

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Jim Sinclair’s Commentary

I asked some knowledgeable people on this subject, who were the jerks that are the clients?

The answer shocked me – PENSION FUNDS.

Banks bet against clients and won.
SEC and Finra are reportedly investigating whether Wall Street investment banks deliberately sold risky securities (CDOs) to clients, and then bet on the securities failing. Probes are still in early stages, but in some cases the securities appear to have been deliberately stuffed with particularly risky mortgages in order to perform poorly if the housing market tanked. Goldman Sachs (GS), one of the firms fingered, has already responded to the*NY Times*report,*saying, “The buyers of synthetic mortgage CDOs were large, sophisticated investors. These investors had significant in-house research staff to analyze portfolios and structures and to suggest modifications. They did not rely upon the issuing banks in making their investment decisions.”

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Jim Sinclair’s Commentary

The guarantee is not better than the guarantor was my comment in 2006.

It is again today!

Loan program may stir nuclear industry.
In the next few days, the Energy Department will announce the first of $18.5B in loan guarantees for building new nuclear reactors, and industry experts think the first guarantee will go to Southern Company (SO). General Electric (GE) and others have invested tens of millions of dollars in plans for reactors in the hope that a drive for cleaner energy will force environmental advocates to rethink their skepticism over nuclear power.

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Jim Sinclair’s Commentary

“The guarantee is no better than the guarantor.”
–Jim Sinclair, 2006

The Bankruptcy of the United States*
By Porter Stansberry*
From the November 23, 2009, S&A Digest*

It’s one of those numbers that’s so unbelievable you have to actually think about it for a while…

Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that’s not counting any additional deficit spending, which is estimated to be around $1.5 trillion.

Put the two numbers together. Then ask yourself, how in the world can the Treasury borrow $3.5 trillion in only one year? That’s an amount equal to nearly 30% of our entire GDP. And we’re the world’s biggest economy. Where will the money come from?

How did we end up with so much short-term debt? Like most entities that have far too much debt – whether subprime borrowers, GM, Fannie, or GE – the U.S. Treasury has tried to minimize its interest burden by borrowing for short durations and then “rolling over” the loans when they come due. As they say on Wall Street, “a rolling debt collects no moss.”

What they mean is, as long as you can extend the debt, you have no problem. Unfortunately, that leads folks to take on ever greater amounts of debt… at ever shorter durations… at ever lower interest rates. Sooner or later, the creditors wake up and ask themselves: What are the chances I will ever actually be repaid? And that’s when the trouble starts. Interest rates go up dramatically. Funding costs soar. The party is over. Bankruptcy is next.

When governments go bankrupt, it’s called a “default.” Currency speculators figured out how to accurately predict when a country would default. Two well-known economists – Alan Greenspan and Pablo Guidotti – published the secret formula in a 1999 academic paper. The formula is called the Greenspan-Guidotti rule.

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Jim Sinclair’s Commentary

This way we have the “treasury guarantee of the nuke power loans,” “the default of the US,” and the “debt clock” in that order.

U.S. National Debt Clock : Real Time

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Jim Sinclair’s Commentary

Back to the future.

U.S. Says Incident Aboard Plane Was Attempted Act of Terrorism

A man who attempted to light an explosive aboard a US airplane as it landed in Detroit on a flight from Amsterdam told investigators he was affiliated with Al-Qaeda, US media reported Friday.

CNN, citing a federal bulletin, said the man told investigators he had acquired the explosive in Yemen, along with instructions as to when it should be used.

President Barack Obama, who is vacationing with his family in Hawaii, was notified about the incident and held a conference call with his national security team, the White House said.

Sandra Berchtold, an FBI spokeswoman in Detroit, told AFP the incident was under investigation.

The incident unfolded around noon local time (1700 GMT) aboard Northwest Airlines Flight 253, which was carrying 278 passengers from Amsterdam.

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Jim Sinnclair’s Commentary

The only way I am wrong on my gold price predictions is that they are way too low.

Central banks keen to stock up on gold
European Central Bank cuts annual metal sale
Suresh P. Iyengar
Mumbai, Dec. 25

The European Central Bank (ECB) decision to downsize its annual gold sale in 2009 to 155 tonnes is expected to further boost yellow metal prices in 2010. The ECB has sold 400- 500 tonnes annually the last 10 years.

Of late, there is a tendency among central banks of many countries to hold a major portion of their reserves in gold. The emergence of new net buyers is expected to add strength to the bullish trend in the metal. China had acquired 450 tonnes, India 200 tonnes and Russia 120 tonnes from the International Monetary Fund this year.

The US government holds 8,133 tonnes of gold, the Euro Zone 10,800 tonnes and the IMF about 3,000 tonnes. Governments across the world own close to 30,000 tonnes.

Mr Ajay Mitra, Managing Director (India), World Gold Council (WGC), said that gold is more relevant as an asset going into 2010. Increasing signs of recovery have heightened inflation concerns suggesting a favourable environment for investment demand.

While the ECB has a high gold reserve, many emerging economies have very low stocks or no gold at all. “In aggregate, Asian countries hold only 2 per cent of their reserves in gold. Were the Asian central banks to increase their holdings by just one percentage point, they would need to buy about 1,000 tonnes. Official sector activity will be a key metric to watch in 2010,” said WGC.

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Jim Sinclair’s Commentary

Turkey is now a playing card in Iran’s High Stakes Poker as the newest Iran nuke deadline approaches.

Iran willing to swap nuclear material in Turkey
By NASSER KARIMI, Associated Press Writer
Fri*Dec*25, 12:41*pm*ET

TEHRAN, Iran (AP) – Iran would be willing to swap nuclear material with the West in Turkey, the foreign minister said in the country’s latest counteroffer to a U.N.-drafted deal aimed at thwarting Tehran’s ability to produce atomic weapons.

The U.N. proposal aims to ease concerns that Iran could build a nuclear weapon by reducing its stockpile of low-enriched uranium. Under the proposal, the uranium would be shipped to France and Russia in exchange for more highly enriched fuel rods that are not suitable for use in weapons.

Speaking on Iran’s state TV, Foreign Minister Manouchehr Mottaki suggested Turkey, which neighbors Iran and has good relations with the West, as a venue for exchanging nuclear material.

Iran “does not have a problem with Turkish soil” as the location for an exchange of enriched uranium for nuclear fuel, he said late Thursday.

In Turkey, Foreign Minister Ahmet Davutoglu welcomed the Iranian announcement and said his government is ready to do its best to help reach a diplomatic solution to the standoff over Iran’s nuclear program.

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