Jim Sinclair

[Rasta]

King World News: Jim Sinclair - 1980 Was a Warmup, Gold to Range $400 a Day

mp3 audio interview [15:35]

[Rasta]

You got to love this fella. He is in just for the kicks, has nothing to loose, he already cashed out in the previous gold boom. Read the last lines for what I mean


My Dear Friends,

There are various points that I feel are critically important to define so that going forward we can better understand the implications of developments.

1. Definition of ‘Notional Value: The total value of a leveraged position’s assets. This term is commonly used in the options, futures, derivative and currency markets because a very small amount of invested money can control a large position (and have a large consequence for the trader). (From Investopedia.com…)

2. Keep in mind the notional value of the total amount of OTC derivatives outstanding reported by the BIS was reduced by 50% about two years ago when the BIS changed their computer basis for valuation by considering all derivatives as going to closure as value to maturity. The actual total value of all outstanding OTC derivatives that was then carried for two reporting periods on the books of the BIS is one quadrillion, one hundred and forty four trillion US dollars notional value. This is fact. The $700 trillion US dollars that is quoted now has not changed since it was manufactured by a change in the method of accounting for notional value by reducing the number by approximately 50%.

3. The size of notional value of derivatives outstanding granted by US banking entities is reported to the US Controller of the Currency. US Banks that have non-US financial entities on their books as non consolidated subsidiaries do not report to the US Controller of the Currency.

Now for the most important concept to understand:

When does notional value become real value? That is, under what circumstance would a credit default swap require financing to 100% of its insurance undertaking? The answer is in default. You can equate this for understanding purposes to the soybean trader with a faulty memory who holds a long contract into settlement day and does close it or roll it over into a future month. All the soybeans that contract represents will either be delivered or for the short must be delivered to the contract owner according to the storage arrangements of the contract. No ifs, ands, or buts. This example is given simply for the purpose of understanding.

Should the International Swaps and Derivative Association credit event committee deem a credit event to be a credit default as an involuntary occurrence, then the notional value of the credit default swap granted by the American bank to a speculator or holder of the defaulted bonds then that instrument has guaranteed that bond’s full value as defined in the CDS. This is how notional value becomes full value. It was this same committee at the International Swaps and Derivative Association that ruled in favor of Paulson’s short of securitized debt instrument OTC derivatives. Those derivatives resulted in his multi-billion dollar profit even though exactly how you would be short such an instrument seems to be to be very creative.

This is another reason why the can must be kicked down the road, not only at the February or March payments due by Greece, but to infinity. This is why QE is going to infinity. Once you have kicked the first can down the road you cannot stop. Your hope is that business conditions become ebullient and by earnings, the balance sheets that are truly a disaster are rebuilt. This is not the case now nor will it become the case. The can is going to get kicked forward again and again until in 2015 when it simply becomes too big a number to imagine. QE is the only way to create unlimited liquidity in less than one second without the help of anybody or anything. There is no other tool in the tool bag of the US Federal Reserve, the global lender of last resort, other than QE that can provide such liquidity in such a way. Operation Twist is a silly little thing in comparison.

Since there is no strong economic recovery out there and the can must be kicked as there is no other choice, liquidity has but one direction to go and that is higher. Because liquidity can only go higher, gold cannot do anything but go higher on balance because of the fact that liquidity must go higher. The equities market is a better buy on a break than short sale on a point of temporary overvaluation. Because the desire for a strong economic recovery depends both on lenders ability and willingness to lend, there is no significant business recovery on the horizon.

The only way out is the historic way out. That is the instillation of a new monetary system based on commodity money, gold. This need will remain intact to its strongest period in mid 2015 when the need will be critical. Gold is headed into the system and not away from it. Gold will be the last man standing in terms of asset categories when the piper must be paid, more than likely in June of 2015.

This is why I am so confident in what I am doing in TRX and some others are doing in other companies such as McEwen in MUX. Acquiring mineable gold in the ground and moving towards production is the correct direction to go. Mining money is the final goal. The leverage exists in upgrading gold in category and nature held. A discovery is just that. A total windfall is this without the use of margin. This was my plan in 2001 when interviewed by Forbes. It is set in cement in that article which you can easily research. The book I wrote in the 1990s, "Boom" outlined the country selection and business plan. I have made that plan and worked it without any deviation. I will succeed without the use of margin in what I think will be my maximus opus and last great business before I return to purely trading markets, my love, and exchanging notes with my dear friend, Harry Schultz.

Respectfully,
Jim

[Spruitje]

"Den Jim" is de laatste tijd héél actief, ik denk dat hij mieren in z'n broek heeft.

[Indiana Jones]

"Den Jim" is de laatste tijd héél actief, ik denk dat hij mieren in z'n broek heeft.

I doubt that. I think he feels something is coming more rapidly than he expected before. Could be a Greek default, because more and more German politicians are fed up with the current Greek moneylaundering policy.

If Greece defaults, Goldman Sachs; JP Morgan c.s. are going to be in trouble .... BIG trouble !

[Indiana Jones]

Dollar Alternative Anyone?


Gold Market Of The 70s Was A Dress Rehearsal
February 28, 2012, at 7:23 pm
by Jim Sinclair



My Dear Extended Family,

Please keep focused on the fact that the gold market of the 70s was simply a dress rehearsal. What is taking place right now is the real thing.

The supposed "Curse of 13" is behind you in the break from $1900 to close to $1500.

The reaction was stopped because the need and use for QE to infinity is real and present in time. There is no other tool in the lender of last resort to the entire Western World’s toolbox other than QE which can be applied to create the degree of liquidity required to prevent a global implosion. No other tool can create infinite liquidity in a flash. There is no speculating on what might happen in the future. It has happened now.

Few are looking at dollar utilization falling in international contracting and settlement. That is a key element of 2012. The US dollar has enjoyed demand from settlement and contracting which it is now losing daily. Gold is gaining utilization as a competitive currency.

Enormous utilization was the blessing the dollar had when it was the reserve currency of choice. Utilization and settlement is falling fast as the dollar now is the reserve currency by default.

Very few have ever tried to quantify this serendipitous demand for the dollar. Allow me to assure you dollar utilization for these purposes is huge and extremely important to dollar valuation.

2012 is the year the dollar falls as a result of a significant drop in dollar contract and settlement utilization. Imagine the demand for gold as the dollar closes below the antiquated measure of .7200 on the redundant USDX. When this occurs you will be looking back at $2111 from higher levels.

Please keep in mind that this is not a dress rehearsal but rather the real thing. There is no practical means to handle the problems at hand. We are at the dead end of the road the can has been kicked down.

Volatility in gold is going to go wild so just keep your head down and hold your insurance close to your chest. The cheapest thing gold is the gold share with the most ounces versus its price.

Silver is a game, but one hell of a game. Another try by silver at $50 looks imminent.

Regards,
Jim

http://www.jsmineset.com/2012/02/28/gol ... rehearsal/

[Rasta]

King World News: Sinclair: Today was a Cover-Up By the Fed & Mainstream Media

Audio interview: mp3 [11:30]


Today legendary trader and investor Jim Sinclair told King World News that today’s action was a cover-up by the Federal Reserve and the mainstream media. Sinclair also laid out for KWN readers globally the exact sequence of the cover-up and how it was orchestrated. Here is what Sinclair had to say about the shocking events that took place today: “The power behind the equity markets right now is liquidity and everybody knows it. It’s not improving earnings and it’s clearly not a broad globally improving economy, but rather improving liquidity.”

Jim Sinclair continues:

“If, in fact, what Bernanke attempted to tell the investment world today, that QE may not be necessary because of a modest improvement in the statistics of unemployment, if that was truly to be believed, then the stock market should have been off 800 points while gold was gold was down $100. Because the same thing moving the stock market is what’s moving the metals and that is pure liquidity.

When asked about Jean-Marie Eveillard’s comments earlier today on KWN that central banks were desperate and intervening in the gold market, Sinclair responded, “Let’s go by the intervention that started out in the morning....

“First you intervene via the mouth. Now, what happened over in Europe? The ECB made $712.4 billion in low interest loans to the member banks. This is the second round of massive credit infusions that has been credited with the easing of the eurozone debt crisis.

So that is quantitative easing and we know the money that’s been coming into the ECB has been coming in from two places. It’s been coming in from the IMF and from swaps done by the US Federal Reserve.

(This money flows, in order, through these entities) Federal Reserve (to the) IMF, IMF (to the) ECB, ECB (to the) member banks. (This is) pure QE on a global scale.

Now at the same time this headline is being run, an interview with the Federal Reserve Chairman, Bernanke, states that ‘Due to the modest improvement in housing, it is possible that our reliance on QE may not be as necessary.’ Immediately that takes gold off $30, but that $30 was intervention if I’ve ever seen it.

The next step (in the intervention) because we are back at recovery highs (during live trading), your algorithms are all looking for a reason to sell. (Action) tips off the algorithms and down it (gold) goes. It is an absolute contradiction in terms that the equity market could turn in a ho-hum day of minus 50 and gold be down close to $100 today.

How many listeners have even seen the $712.4 billion of low interest loans that went from the ECB to the member banks today? It’s there, but you are going to have to look real hard to find it.

Today does qualify as one of the biggest injections of liquidity into the system in the history of the system. Today was a cover-up by the US Federal Reserve and by the mainstream media of one of the largest injections of liquidity into the system that has ever occurred.”

[Rasta]

For anyone interested, TNX/TRX annual meeting can be viewed life (video) here and is scheduled to start 16:00 CET (12 minutes after this posting). Usually this webcast is provided afterwards for review too.

[Adamus]

http://www.24hgold.com/english/news-gol ... Jesse&mk=1

[Indiana Jones]

The Two Economic Clutch Type Events Of This Period
March 2, 2012, at 12:20 pm
by Jim Sinclair

My Dear Extended Family,

The history of this period will focus attention on two economic clutch type events. These events will have mandated the need for the construction of a new monetary system utilizing a virtual reserve currency traded only by central banks. This reserve currency will be related to gold via a global Western world M3.

An economic clutch type event is one that by its occurrence allows the world to shift gears and change into a new economic velocity and direction.


-The first economic clutch event took place when the decision was made that the US Federal Reserve and US Treasury would not support a rescue of the prestigious investment firm of Lehman Brothers. By doing this, they threw that institution and all of its transactions in which it was the deficit other party into default via bankruptcy.

Before then the entire OTC derivative debacle had a simple but extremely controversial solution. The tactic would have been similar to the means of nullifying the effect of the historic failure of the Savings and Loan Institutions during the last great housing recession.
This at hand solution was to net the entire global derivative problem into a singular institutions named the Derivative Bank. At that time all OTC derivatives which were established would be returned to the instance of establishment when obligations netted almost zero.

It was the institution of Lehman as a bankruptcy that removed the ability to net out to near zero from the daisy chain of global derivatives. To bring the daisy chain of OTC derivatives to net the winner would have to place their paper winnings into the pool and the paper losers would have placed their paper losses back into the pool.
This would have reduced the entire loss to only part of the earnings on the banking institution from 1991 (the birth of the derivative use globally) rather than the more than now 20 trillion dollars worth of liquidity required to fund the winners who have benefited mightily from that windfall we financed.

The forced flushing of Lehman Brothers is therefore the economic clutch event that brought quantitative easing to provide the rescue funds to finance the winnings of the global Western world financial system. The downshift was from 5th gear to 1st gear that nearly blew up the world economic engine.


-We now have had the 2nd Western world economic clutch event that will shift the gears directly from the plodding along in 1st gear economically into reverse gear, therein blowing the transmission and engine simultaneously. This event is the ISDA blessing of the credit event which reduced the value of Greek debt to its holders by 70% without triggering a default. They have now made it virtuous to walk away from the once lest risk loans, loans to Western governments. Such a walk away is now deemed a credit event, not the dirty D word, default.

A pattern of action has been set in place now which takes QE, the gift from Lehman’s economic clutch event, to QE to infinity, the direct result of the Greek economic clutch event that was declared via the International Swaps and Derivative Association. These Gods of Mammon declared 70% of the Greek sovereign debt to be valueless without guilt, sin or consequences.

Replacing the lost value from the sovereign credit event (non-default) in this paper selectively to the banking system makes unlimited creation of liquidity an act of virtue and blessedness.

To assume that other nations facing the same problems will not wish the same treatment is madness. To assume the private sector facing the same problems will not demand the same treatment is madness. Therefore QE to infinity is now deemed an act of virtue and blessedness.

A 70% haircut in the value of the Greek sovereign debt does not constitute a credit event defined as a credit default according to the most powerful financial entity on the planet, the ISDA. This group is more financially influential than governments today. This decision by the revered members of the Association’s Determinations Committee has acted to prevent the notional value of all the credit default swaps, an OTC derivative, from becoming real value as would occur if the CDSs were called upon to function.

The ISDA has, according to MSM, taken offense to being described as secretive in its proceedings. The ISDA said minutes of the meeting of the committee would not be publicly distributed as the decision was unanimous.

What has occurred in what is now described as “the successful handling of the Greek problem” by the ECB is in fact a total disaster for mankind in its introduction of QE to Infinity as the blessed settlement to a problem that now is more severe than it was prior to the Lehman event.
That problem is that the mountain of OTC derivative has not been attended to, but rather has grown to include the size of all Western world sovereign debt as it is all western sovereign debt that is now threatened by an event of default on a national level. That will simply occur regardless of whatever the ISDA says. Much of it will not be paid, period.

This enfranchised QE to infinity sets a floor via Chinese gold acquisitions to any reaction in price. Alf Field’s price objective of gold at $4500 is by this 2nd economic clutch event now in the crosshairs of the gold price.

Gold prices staying high have now been guaranteed. Further to that, those intelligently managed gold producers internationally will shift to dividend payers of note, transforming the gold industry into the utility type equity of the future. Opinions expressed to the opposite are simple exercises in economic ignorance.

Gold’s price reactions, when they do occur, will be violent and very short lived. This is fact.

Respectfully,
James Sinclair

[Rasta]

The CIGA meeting 2012 (held after the annual shareholder meeting, March 1st last week). As the 2011 version was a Compendium "must watch", this one I expect to be too:

http://standrewsclubav.ca/webcast/clien ... neset.html

It appears to be broken right now, give the techies a day to fix it.