source: jsmineset.com

Jim,

Armstrong sees the Gold bull market lasting until roughly 2016 (17.2 years starting in 1999). Is it at this point that you see the USDX bottoming at .5200?

Is it at that point when you see the Federal Reserve Gold Certificate put in place? According to cyclical analysis it would come at the low point business wise of the 17.2 cycle.

How long do you think this world monetary system will take to be implemented?

I guess once again the US will lead the process.

Do you think China (or India) will take a major role in it?

Will it be done under the IMF umbrella?

After the Federal Reserve Gold Certificate is in place, do you believe that the world´s economy can enjoy some period of stability (with the exception of geopolitical considerations)?

Best regards,
CIGA Christopher

Christopher,

I see the USDX bottoming between .4600 and .5200, yes. I have learned not to argue with Armstrong on cycle timing. Gold should have a temporary high point between January 14th and June 25th, 2011.
Implementation is not a process, it is a surprise.

The US will not necessarily lead the process. By then the IMF will be the Western World Central Bank, if not in name, certainly in function.

China and India will play a major role by demand via back financial channels.

It will likely be done under the IMF umbrella as part of a Super Sovereign Currency.

After the Federal Reserve Gold Certificate is in place the world’s economy should be able to enjoy a period of stability for a considerable amount of time, but with a total rearrangement of positions of national economic powers moving towards Asia and do not forget Jakaya Kikwete and the common market of sub Sahara African countries of merit and leadership. They are there.

Regards,
Jim

As of September 25, gold has broken through two long-term formations and sits at the neckline of an inverse head & shoulders formation.

Given that gold closed the week at the neckline of such a long-term Head & Shoulders formation, after having shown such resilience over the past few weeks, it is time we prepare ourselves for a significant move, further into unknown territory. The chart above indicates that gold is acting like a coiled spring, ready for the slightest trigger, to send it into launch mode; bringing the price into the $1200-1300 USD range.

When I look at this chart, I am reminded of the 2002-2003 period, when gold was hovering around the $375 range in a large wedge formation. At the time everyone was thinking, “this must be it for gold, it’s already had such a run from $250, the bull run surely must be over by now.”

I remember seeing the wedges, similar to the current chart, though less volatile than the current price fluctuations. I remember seeing a good-sized wedge in the MACD which had broken to the upside. In fact, it was at this time that Jim Sinclair, the CEO of Tanzanian Royalty Exploration and the author of Jim Sinclair’s Mine Set had a contest for gold community members to draw the relevant trend lines on an Investors Business Daily gold chart that he provided. The prize for this contest was a one ounce gold coin.

Well, I took Jim up on his offer and drew formations similar to those on the attached chart. Including a MACD breakout precisely like the one on the current chart. I made the chart simple yet elegant and intuitive and fortunately for me; out of all of the hundreds of charts sent in to his fax, he chose mine as the winner. What a great feeling that was and what an appreciation I gained for the power that each of us has to understand what is going on in the economic world with elegant simplicity not endless complexity.

It was even more rewarding to see gold advance to $450 by late 2004 and then $700 by 2006. What you have to realize, when you are studying these charts, is the fact that the underlying forces which propel gold skyward have not changed. The governments and central banks of the world continue to employ their disastrously flawed Keynesian economic models which create welfare, warfare and ultimately massive inflation.

Politicians love having all of the “free” money, hot off the printing press, to buy votes, line the pockets of their associates and bail out their friends. That is why these leftist notions of a nanny state taking care of us from cradle to grave, often embraced by Republicans and Democrats alike, is not going to solve the problems it was intended to solve.

This is because everything has a cost, yes even the nanny state, corporate welfare and the like. As the price of the yellow metal rises the buying power of the savings of billions of individuals decreases; so they are in effect robbed in broad daylight by the Keynesian inflationary policies. Is it any wonder that the standard of living continues to decline all over the western world.

“We can’t solve problems by using the same kind of thinking we used when we created them.” –Einstein

One of these days, it may dawn upon people, en mass; that in general the government doesn’t solve problems, it only creates problems. So the only way to truly solve problems is by strictly limiting the role of government to that of a referee and letting the free market bring about the solutions we need.

Had the free market been allowed to act upon zombie banks years ago, when the problems first arose; these banks would have never become “too big to fail.” Had the free markets been allowed to act, unhindered, in the health care field, we would have more choices and less people unable to get the help they need.

Unfortunately, with the public school educated populace; the first place they turn whenever their is a problem is the government. So we have the Hegelian dialectic, “(problem) oh goodness, what a dreadful problem! — (reaction) what are they going to do about it? — (solution) the policies that were originally sought, but did not find the political support are now widely supported and then implemented without much opposition.”

It really saddens me to see my countrymen repeating this cycle over and over again, unaware and uncaring of the fact that it makes their lives much more difficult and constrained. I often wonder when it will become apparent to them that all of this nonsense isn’t working. Will it be when gold is at 3,000? 5,000? 10,000?

I can’t say for sure when decisive action will be taken; but if history is any indicator, inevitably there will come a point at which the pull of the massively centralized state on people’s lives distorts the culture of these people to such an extent that they decide they’ve had enough of it. This would be the point where they realize that it costs so much more to live in a massive welfare state than the benefits that are derived from it and the productive individuals either demand real change, or they pull up anchor and head for some place which will suit their needs.

by Jim Sinclair | Jim Sinclair’s Mine Set

Things are now “Out of Control.”

This international financial crisis is now out of control as the world asks if the USA has two presidents, one president or no president at all.

It would appear that Paulson is in financial control with Bernanke as his second.

I warned you by personal email long before the statement was proven totally correct that “This is it.” That was followed by “This is it, and it is now.” Many people laughed it off.

This is it, and it is now.
Now it is out of control.
Now we enter the Collapse of Confidence period.
Then we begin the Weimar Experience.

It has all hit the fan, and still the absolute majority have no clue. The OTC derivative dealers broke the system into millions of pieces of glass. This broken glass cannot be put back together.
It is heart rending to see a picture of GM autoworkers holding a prayer meeting for their retirement funds. The retirement money was never funded. It is a lost hope. This is another responsibility the government has undertaken that is going to go wild.

Those of you still in freeze frame are headed for lines around your bank. Your bank will likely be acquired by another bank that also is in deep trouble.

The US dollar, like a leaderless company, will lose its respect and therefore value.

In order of importance the following MUST be done unless you want to be one of the suffering masses that will be all too visible this winter:

1. You must have your assets held anywhere they are in true custodial-ship accounts. That type of account at a bank or broker states clearly that the assets held there are not on the balance sheet of the host financial entity. Those assets are clearly segregated in your name. This must be reviewed by counsel to be sure you have what you think you have. Don’t cheap out. All you have is depending on the validity of true custodial-ship accounts.

You cannot know all the banks are broke, however I feel ALL banks are broke because finance is an intertwined system that if visible would look like a spider’s web. Problems on the top will materialize all along the web. Therefore the singular most important step you must take is the establishment of a true custodial-ship account.

Do not assume you have this type of account unless a competent attorney reviews the account papers.

2. I am extremely concerned about those of you who persist in holding certificates for gold rather than holding the actual metal either delivered to you or held for you in a true custodial-ship type account. The scams out there in gold are plentiful. The only way to avoid these scams absolutely is to have your gold in your own possession.

Every other means of holding gold is steps away from perfection. Some will be ok, but many will not.

3. Why would anyone fail to either take paper certificates or order their financial agent to make direct registration book entry at the transfer agent? In most cases you only have until year-end to accomplish this strategy.

4. Withdraw from ETFs.

5. If you carelessly keep large assets with your broker you are as mad as a hatter. The FDIC DOES NOT have the money to guarantee all they are undertaking. Withdraw excess money constantly from any net broker. If you are so stubborn that you think you can trade to insure yourself when your funds are not making money while still getting your money that counts you are nuts. Admit to yourself you are nothing more than a gambling addict in a downward spiral.

6. Leave no gold or coins with any coin dealer.

7. If you can withdraw from your corporate retirement plan do it.

8. Withdraw from credit unions.

9. Withdraw from all money market instruments.

10. This is it.

11. It is now.

12. It is out of control NOW.

The next two months are going to be shocking, but nothing compared to what you will have to experience in 2009.

Respectfully yours,
Jim

I want to take a moment to relate some information that has come to my attention recently, which has the potential to affect everyone on this planet; but particularly those in the united States of America, since they will first be affected by this.

Over the course of the last couple of decades, the financial managers have been allowed to regulate themselves. There was an implicit mandate to create a boom in the housing market in order to bolster the economy.

In order to create this housing boom, a variety of “exotic” financial instruments were employed, which enable them to leverage their assets, and give more loans than they would have generally been able to give. Most of the troubled financial institutions of today were using “off-balance sheet” entities to hold these financial instruments, many of which were very risky.

Well, it looks as if the widely abused loop-hole that allowed them to keep things off of their balance sheet back-fired in an awesome way. Now the new financial accounting standard regulations FAS 140 are forcing them to move these entities back onto their balance sheet and realize any gains or losses.
Read the rest of this entry »

Jim Sinclair’s Commentary:

Have you acted to protect yourself? This type of event has only one way to go, from California to Maine.

WaMu, now there is a kettle afraid of the pot. Can you wait 8 weeks to eat?

WaMu wary of IndyMac cashier’s checks

More strange doings tonight surrounding the failure and federal takeover of IndyMac: some rival banks are refusing to honor cashier’s checks written by IndyMac — even though those checks are backed by the federal government.

John Bovenzi, the FDIC official now running IndyMac, tells the Los Angeles Times today he is “deeply troubled by reports that there are financial institutions that are refusing to honor or are placing excessive holds on IndyMac Federal checks.”

On latimes.com tonight: “Sheryl MacPhee, 46, said she liquidated a certificate of deposit at IndyMac’s San Marino branch Tuesday morning after a two-hour wait. She then took the cashier’s check to a Washington Mutual branch in South Pasadena to deposit.

“MacPhee said a WaMu manager told her that under a new corporate policy, the bank was not accepting IndyMac checks. If a customer insisted on depositing the check, it could be eight weeks or more before the full amount would be accessible, she said she was told.”

More: “WaMu spokeswoman Olivia Riley declined to discuss details of the bank’s check policies. ‘We have a check hold policy that takes into consideration a variety of factors,’ she said. ‘WaMu is accepting checks from IndyMac customers; however, depending on the specifics, funds will be subject to an extended hold period.’ Wells Fargo said it too was placing extended holds on many IndyMac checks as a precaution.

“Officials at the Office of Thrift Supervision, WaMu’s chief regulator, are investigating the complaints about the checks, OTS spokesman William Ruberry said.”

The situation was already out of control to begin with. Now it is SEVERELY spiraling out of control. Whenever the counter-parties of these transactions fails to pay, it means the FED has to print up more money to bail them out. If they aren’t bailed out, then the whole charade crumbles to the ground, taking the rest of us with it as the economy swirls down the toilet bowl.

This is a situation that has no reasonable solution except, imo, to scale down these derivative positions. They are going to have to be made illegal, but the people that have them already have to be grandfathered in so that the system doesn’t collapse.

Total Notional Value Of Derivatives Outstanding Surpasses One Quadrillion

Jim Sinclair | JSMineSet.com

Dear CIGAs,

The notional value of all outstanding derivatives now totals approximately $1.144 QUADRILLION.

This appears to be Bank of International Settlement Spin to announce the largest gain in derivatives outstanding since they started to report. As of the last report it appeared that both listed and OTC derivatives was under $600 trillion. Now listed credit derivatives alone stood at $548 Trillion. The OTC derivatives are shown as $596 billion notional value, as of December 2007. One can only imagine what number they are at now.

Well we hit a QUADRILLION. We have more than $1000 trillion dollars in all derivatives outstanding. That is simply NUTS because notional value becomes real value when either counterparty to the OTC derivative goes bankrupt. $548 trillion plus $596 trillion means $1.144 quadrillion. Read the rest of this entry »

The bear market in the U.S. Dollar is obviously accelerating with each passing day, prices are moving up across the board as the freshly created money increasingly pours into the market for hard assets such as commodities.

Indeed, at the extreme end of possibilities, most of today’s prognosticators believe in one of two potential outcomes:

1. The dollar collapses into complete oblivion, the United States dis-integrates, anarchy takes hold and society as we know it ceases, bringing about a dark age of chaos and upheaval.
2. Everything stays about the same, the markets recover in the near future, the economy begins recovery by 2009, and people continue to go further and further into debt; all remains well in the Goldilocks economy, where consequences never befall those who are irresponsible.

My research into these matters indicates that neither of these scenarios are likely, though it wouldn’t hurt to be prepared, at all times, for the first scenario, in case the system does end up coming apart.

During the course of my studies I have come across a brilliant solution, which, after another 30% slide in the dollar, the U.S. Dollar resumes its role as the reserve currency for the planet Earth, but with a modernized and revitalized Gold Certificate Ratio to regulate it, instead of edict-driven interest rate fluctuations. Read the rest of this entry »

Dan Norcini | Jim Sinclair’s Mine Set

The US Treasury Department today released its monthly International Capital Flows data for the month of March 2008. Among the main highlights was a significant NET OUTFLOW of foreign capital of some $48.2 billion compared to a revised INFLOW of $48.9 billion in February. That is nearly a $100 billion swing in one month’s time and illustrates how severe the distress in the US financial system was which forced the hand of the Fed to bail out Bear Stearns at the expense of polluting their balance sheet. Wouldn’t you have loved to have been a fly on the wall in those hidden offices where the various machinations took place as the monetary authorities and their pals in the investment banks plotted and schemed to come up with a way to avert the consequences of their reckless greed and idiocy when it comes to the derivative daisy chain mess they concocted?

That net outflow occurred when short term securities were included in the numbers. When those were stripped out, the data showed a large NET INFLOW of $80.42 billion.

Using the short term measurement, the flows were insufficient to fund the trade deficit for that same month which was at $58.2 billion. That is a shortfall of $106.4 billion. Employing only the long term dated securities, flows were more than sufficient to fund the gap. Read the rest of this entry »

Jim Sinclair | JSMineSet.com

Now the credit derivative implosion problem has worked its way into the commercial paper market which since last week has declined by $90 billion. The word is that the commercial paper market for all purposes is closed down, yet Professor Bernanke sleeps on. No one can say with a straight face that a shut down commercial paper market will fail to shut down the US Economy. It will.

The Dow was down 300 points until rumors of a secret meeting being held at the Fed made their rounds. When that one ran out of steam the next rumor was a major injection of cash was going to be made into Bear Stearns. That has to give you an idea what people think about Bear Stearns’s financial condition and therefore most other major investment banking firms with prime names. Read the rest of this entry »