My Updated Economic Predictions

I always look at the 5 years of recession/depression part and that the true evaluation will be after the fact. We may never see news that looks like the 1930's, but the effect will probably be greater. At least in the 1930's people still knew had to grow a garden.

Also, you forgot to mention that the American citizen is running on fumes and buying grocries and gas on credit. What happens when the credit runs out?

When the people have to choose between gas, food and mortgage, the mortgage will be the first to go, then gas.

I think the numbers are very easy to understand. 70% of our economy is retail. This means the majority of people employed are in the retail industry. The retail industry has been sustained by credit.

So what is the balance of the jobs? What chunk was of this were housing and housing support (lending, title, insurance, etc.)

No one is sure how it will all play out. Just as easy as the media can brainwash, the internet can fight back.

Just a matter of if and when the masses put down their latte, turn off the tube and realized they have been HOOD WINKED/DUPED/LIED TO & TOTALLY F*CKED OVER.

Its important we all stay together and keep getting the word out for Liberty and become active in local politics.

Everyone should go to www.jsmineset.com
and read every posting Jim Sinclair posted today and then take action - here is a snippet
Dear Jim,

I think we mentioned a while ago that the Federal-Reserve hired 300 new bank work out specialists examiners a few months ago because they expected a wave of new small-bank failures over the next few years.

Monty
www.GuildInvestment.com

--------------------------------------------------------------------------------

Jim Sinclair's Commentary:

Ask yourself a question: Would you prefer to be a depositor in a risky bank or hold gold in your possession? It would be wise to make a decision soon as you don't have the pleasure of mulling it over much longer. Indy Mac went totally up in smoke in order to avoid the mountain of litigation heading for it - and just in time I might say. All those with significant deposits are like buzzards circling the holding company.Today, Bloomberg has another expert telling us how safe regional banks are when in fact they are now a huge risk.

Printed from The Economic Times
IndyMac Bancorp files for Chapter 7 bankruptcy
2 Aug, 2008, 0023 hrs IST, REUTERS

NEW YORK: IndyMac Bancorp Inc, once one of the largest US mortgage lenders, has filed for bankruptcy protection, less than three weeks after being seized by federal regulators following a bank run by depositors.

The Pasadena, California-based company filed for Chapter 7 protection on Thursday with the US bankruptcy court in Los Angeles, indicating it plans to liquidate. IndyMac expects the court to appoint a bankruptcy trustee promptly.

The filing was widely expected. It does not include IndyMac Federal Bank FSB, which is run by the Federal Deposit Insurance Corp and is the successor to IndyMac's former banking unit.

Most deposits at IndyMac Federal are insured up to $100,000. The FDIC is trying to sell IndyMac's assets.

IndyMac Bancorp, the holding company, has between $50 million and $100 million of assets, between $100 million and $500 million of liabilities, and fewer than 50 creditors, according to the bankruptcy filing.

Chief Executive Michael Perry, the company's sole remaining employee, in a court filing said he didn't have information normally required to file for bankruptcy protection because the FDIC has sole possession of IndyMac's books and records.

Perry has no involvement in IndyMac Federal's operations.

The collapse of IndyMac was the largest US banking failure since the 1980s savings-and-loan crisis. Regulators said IndyMac ended March with about $32 billion of assets and about $19 billion of deposits, most of which were insured.

IndyMac was the fifth of seven US banking failures this year. FDIC Chairman Sheila Bair said last week she does not expect another failure of IndyMac's size or larger.

More...

Dear Jim:

I took a step back .. now I get it. My face was too close to the charts!

Regards,
CIGA Alex

Posted On: Monday, August 04, 2008, 11:16:00 AM EST

Important Lessons From the Market

Author: Jim Sinclair

Dear CIGAs:

Using the markets as our blackboard, Friday and today provide us with a few important lessons. Indeed, I feel these lessons are worth posting in a place where they can be seen and reviewed easily. Here they are:

1. Gold is a currency - about that there is no question.
2. Any prospect of stagflation is anti-dollar. As such, the Formula is totally correct. Click here to review the Formula.
3. Geopolitics and energy are major gold/dollar drivers and these are set to deteriorate from 2008 to 2010. Then Pakistan goes fundamentalist with far reaching consequences.

I will give you one more: I see gold entering a fight midway between $1,100 & $1,200, then through $1,200 for a temporary kick in the rear.

Respectfully,

Jim

Posted On: Sunday, August 03, 2008, 6:29:00 PM EST

Bank Withdrawals 2008 Style

Posted On: Sunday, August 03, 2008, 3:18:00 AM EST

Weekly Action In Gold Stocks From Trader Dan

Author: Dan Norcini

Click here for this week's action in the XAU, Royal Gold, El Dorado Gold, Golden Star Resources, Coeur D'Alene, IAMGold, ECU Silver and Seabridge Gold with commentary from Trader Dan Norcini

Posted On: Sunday, August 03, 2008, 3:12:00 AM EST

In The News Today

Author: Jim Sinclair

Dear CIGAs,

For a short period of time you witnessed geopolitics impact the markets for crude and gold. The COT sold into it. When Pakistan goes up in smoke the same market action will happen, COT will sell into it, and the ballistic up-move in gold will be on. This will occur over $1200.

US not convinced with Pak's war on terror
NDTV.com - New Delhi,India
The worst thing that can happen to Pakistan is an attack on the United States that is traced back to its tribal areas, it said. "The new prime minister, ...

Taliban claims responsibility for bomb attack in Pakistan
Xinhua – China
2 (Xinhua) -- Pakistan's local Taliban on Saturday claimed responsibility for the bomb attack in northwestern Pakistan's Swat valley, in which at least ...

Bomb at bridge kills 9 in Pakistan's Swat Valley
The Associated Press –
PESHAWAR, Pakistan (AP) — A bomb exploded at a bridge on Saturday, killing at least nine security forces in a valley where Pakistani troops are battling ...

Tough talk to Pakistan of little use
Sydney Morning Herald - Sydney,New South Wales,Australia
the US President demanded, referring to Pakistan's all-powerful Directorate of Inter-Service Intelligence by its acronym ISI. It was a question that might ...

UPDATE 1-Pakistan denies spies behind Indian embassy attack
Reuters India - Mumbai,India
By Zeeshan Haider ISLAMABAD, Aug 1 (Reuters) - Pakistan angrily rejected a New York Times report on Friday that said US intelligence agencies have concluded ...

Pakistan Rejects Reports Spy Service Planned Kabul Bombing
Voice of America – USA
By VOA News Pakistan has rejected US media reports that members of country's intelligence agency helped plan the deadly bombing of the Indian Embassy in ...

Militants kidnap 2 police in northwestern Pakistan
The Associated Press –
KHAR, Pakistan (AP) — Police say militants have overpowered a security post in northwestern Pakistan and kidnapped two officers. Local police chief Fazal ...

India-Pakistan clashes bring fear to Kashmir villages
Reuters India - Mumbai,India
Hundreds of people were killed on both sides of the Kashmir frontier before the 2003 truce as India and Pakistan's armies engaged in daily lethal artillery ...

Posted On: Sunday, August 03, 2008, 3:09:00 AM EST

Jim's Mailbox

Author: Jim Sinclair

Jim Sinclair’s Commentary

Greg, always the gentleman, expresses his view delicately. I would have been a tad harder on this guy.

I don’t understand Gartman’s latest calls
By Greg Hunter

I was watching CNBC around 2:30P this past Friday and up popped a segment with Erin Burnett interviewing Dennis Gartman. Gartman is an economist and founder of the Gartman letter. He’s a smart guy and has been in the financial game since the 70’s. Maybe this is why I was so perplexed about his latest calls. He basically said commodities are finished and their bull run is over. This included gold which he said had come down from over a thousand dollars an ounce to the low 900’s where it is now. He also said wheat, corn and soybeans are all well off their highs and that these price declines signaled a “top”. He also said he was “long Harley-Davidson and short Toyota.”…“long financials and short the market”. Gartman admitted his call for the financials, when he got in, was like “catching a falling knife,” but his short position in the markets still made the trade a good one. Ok, I get that but shorting Toyota?! Yes, the company just announced sales off 18 percent but the company is a leader in hybrid technology. Toyota will be on at least its second generation hybrid by the time GM comes out with the Chevy Volt in 2010. Gartman told Burnett his call about Harley-Davidson was a play on expensive gasoline. I looked up what the entry level Harley costs, and a base model Sportser goes for around $7K. According to the Harley dealer I called in Queens, NY, you can expect to get around 40 miles per gallon. An entry level Toyota is a Yaris. A 5 passenger base model goes for about $12K and you do not have to wear a helmet. The Yaris is rated at 29 city and 36 highway. Can you see husbands across America telling the wife, “honey I know how we are going to fight those high gas prices. I am going to buy the family a Harley.” I don’t know about you guys, but in my house the answer from my wife would be, “not no, but hell no.” Don’t get me wrong, Harley-Davidson is a great company with a great product, but so is Toyota.

As far as the commodity boom being over… that is the call that is most puzzling to me. Last I checked, the President just signed a bill that not only bails out GSE’s Fannie and Freddie but gives Hank Paulson an open check book to do it. Add that to the billions handed out every day to the banks and brokerages at the so called “lending” facilities at the Federal Reserve and that spells lots and lots of money creation. John Williams of Shadowstats.com contends money supply growth is at a rate of at least 16 percent a year. (Keep in mind that stat does not include the Fannie and Freddie bailouts.) That means in less than 5 years we will have twice as many dollars floating around as we do now. Nobel prize willing economist Milton Friedman said,” always and everywhere inflation is a monetary phenomenon.” In other words, if you print a lot of money then you will have a lot of inflation. With all the money printing going on, I do not see how gold or any other commodity has put in a “top.”

Jim,

Is it your experience that the average price of gold to oil is 10 to 1?

It seems that Soros is long in gold since July. See the paragraph from Forbes:

"Soros finally shorted oil at $137 a barrel and put on a long position in gold; he expects to see gold hold its ground even if oil continues to decline. In fact, the gold bug clique believes in a consistent 10-to-1 ratio for gold and oil. It holds that either gold will rise to 10 times a barrel of oil ($1,350 an ounce) or oil will fall to $96 a barrel--one-tenth the present market price of gold. Croesus was told Tuesday that statistics spanning many decades support, on average, this 10-to-1 ratio"

Best regards,
CIGA Christopher

The Croesus Chronicles
Gold And Oil For Soros; Illiquidity At Merrill
07.17.08, 8:53 AM ET
Robert Lenzner

Wealth destruction took a day off Wednesday as illiquidity surfaced as a top issue at a major investment bank.

The market rallied in the wake of a lower oil price, Federal Reserve Chairman Ben Bernanke promised that Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ) were solvent, and new rules began to lean against avaricious short-sellers of bank shares.

Undoubtedly, this spike in bank shares was due in large part to hedge funds, which began covering some of the massive short positions they've built up over the past 18 months. For example, billionaire George Soros--Croesus was told--has covered much of his shorts in financial stocks. Why chance another public policy move by regulators to shut off this automatic feeding trough?

Soros finally shorted oil at $137 a barrel and put on a long position in gold; he expects to see gold hold its ground even if oil continues to decline. In fact, the gold bug clique believes in a consistent 10-to-1 ratio for gold and oil. It holds that either gold will rise to 10 times a barrel of oil ($1,350 an ounce) or oil will fall to $96 a barrel--one-tenth the present market price of gold. Croesus was told Tuesday that statistics spanning many decades support, on average, this 10-to-1 ratio.

More…

Dear Christopher,

Crude at $125 times 10 = $1250. That is a given.

Ratios are interesting, however with this FUBAR broken financial condition, I doubt ratios mean anything at all.

All the best,
Jim

Posted On: Friday, August 01, 2008, 10:46:00 PM EST

Market Commentary From Monty Guild

Author: Monty Guild

Dear CIGAs,

SOME VERY IMPORTANT POINTS ABOUT INFLATION

We expect that we will soon be seeing inflation data show that inflation in China and other parts of Asia is moderating. All that this means is that the rate of inflation, which was for example 11% for the last 12 months, may be falling to 6 % for the next 12 months. Inflation is a rate of change calculation. When you have a high rate of change in year One and it goes to a lower rate of change in year Two, then the data says inflation is lower.

However, prices are not lower. If for example, prices for food or gasoline rose 11% last year and an additional 6% this year, it is of no solace that inflation is only 6% now...if the compounded price increase is up by 17% in a little over a year. That is why monetary authorities worldwide always strive for not more than 1 or 2% inflation. Inflation is a huge tax on those who are on fixed income. It creates massive social problems and is pernicious in the extreme.

The so called 'decline' in inflation will be a big headline over and over for months to come. The fact is that rate of inflation is moderating. However, longer term, we believe that the decline is temporary because the amount of money created to bailout the banking system worldwide will be uncountable. The upcoming PR spin may convince some of the uninformed that inflation will now moderate for a long time.

Even with a moderation in the rate of inflation, inflationary raises in prices penalize a large part of the society. In the 70's, we went through years of incorrect belief that inflation had moderated...which in the final analysis turned out to be incorrect. Incorrect as it was, it still periodically scared commodity speculators, and the prices of commodities, gold, and foreign currencies went down.

In the end, gold, commodities, and foreign currencies had huge price rises as the truth about the insidious nature of inflation became plain to people. Moderating inflation does not mean lower prices. To get a better read on how the inflation's burden is being felt, we suggest asking a business owner...and sample some consumers. They will be able to give you better data points than the media...or the government.

HOW THE BIG U.S. HOUSING BAILOUT HAS THE POTENTIAL TO UNHINGE THE WORLD FINANCIAL MARKETS, AND SEND THE U.S. DOLLAR DOWN...AND GOLD UP

Lawrence B Lindsey is the former assistant to the president for economic policy and a respected economist with both an academic and consulting background. Mr. Lindsey wrote a big article for today's Wall Street Journal. A link to the article is below, but I would like to quote from the last two paragraphs of that article. He is speaking about the convoluted 700 page bill that will bail out Fannie Mae and Freddie Mac.

"The legislation also creates long-term uncertainty with regard to the extent and form of government assistance. In effect, Treasury Secretary Paulson now has an open-ended mandate to bail out the nation's troubled housing finance market, the largest single capital market in the world.

If any other country announced that its finance minister could print unlimited debt to do something similar, financial markets around the world would dump both the country's debt and the country's currency. It may well be different because this is the United States of America. But certainly, to take such a risky and unprecedented step, a better crafted and considered piece of legislation should have been created."

TO QUOTE MR. LINDSEY "IF ANY OTHER COUNTRY HAD ANNOUNCED THAT ITS FINANCE MINISTER COULD PRINT UNLIMITED DEBT TO DO SOMETHING SIMILAR, FINANCIAL MARKETS AROUND THE WORLD WOULD DUMP BOTH THE COUNTRY'S DEBT AND THE COUNTRY'S CURRENCY."

For those who have not believed up until now that the U.S. would flood the world market with currency, this is how the U.S. will create the inflation that will send gold up and the dollar down. Clearly, you cannot bail out the single largest capital market on earth by printing money without creating:
1) A much lower value for the U.S. dollar.
2) A much higher price for gold.

You can see the entire article here:

http://online.wsj.com/article/SB121754567926302543.html?mod=...

Thanks for listening.
Monty Guild and Tony Danaher
www.GuildInvestment.com

Posted On: Friday, August 01, 2008, 10:32:00 PM EST

Spin Versus Economic Law

Author: Jim Sinclair

Dear Friends,

On and on it goes.

You can spin it every day 24 hours a day, but economic law will not allow the end of the day to be altered. The FT will look at the weakness that has set the stage for such events and the local US media will praise the FDIC’s instant action.

I really don't want to see you in one of those lines because financial TV tells you that all is well and to buy the dollar and lots of shares of those really cheap financials.

International and US media will report this event in diametrically opposed perspectives.

Note that this was first published at 6:56 EDT after all major equity and debt markets closed, leaving an entire weekend to package the spin.

The only problem is all banks that fail following this. The pictures of lines of worried depositors published in the Financial Times is going to mute the publishing of skewed data on any other factors such as inflation and crude, making them all side shows. The system is broken and cannot be put back together again by the application of more of the monetary explosion that created all the bubbles that got us here.

Let’s not forget to thank the manufacturers and distributors of all those OTC derivatives that have killed the financial system and all of us to some degree.

Protect or perish, it is up to you.

Respectfully yours,
Jim

Florida bank closed by FDIC
First Priority Bank becomes the eighth bank failure of the year. Branches will reopen as Sun Trust Bank.
By Ben Rooney, CNNMoney.com staff writer
Last Updated: August 1, 2008: 7:33 PM EDT

NEW YORK (CNNMoney.com) -- Federal regulators in Florida closed First Priority Bank Friday, marking the eighth bank failure of the year.

The Federal Deposit Insurance Corporation, which was named the receiver of the failed bank, entered into an agreement with Atlanta-based SunTrust Bank (STI, Fortune 500) to assume the insured deposits of First Priority.

All six branches of the Bradenton, Fla.-based bank will reopen on Monday as branches of SunTrust. First Priority depositors will automatically become depositors of SunTrust, the FDIC said.

First Priority had assets of $259 million and total deposits of $227 million, according to the FDIC. That includes $13 million in uninsured deposits held in approximately 840 accounts that potentially exceeded the federal insurance limits.

Account holders with more than the $100,000 insured limit will essentially "become a creditor" of the failed bank, said FDIC spokesman Andrew Gray.

Those accounts will be credited as the FDIC sells more of the failed bank's assets, Gray said.

More…

Posted On: Friday, August 01, 2008, 5:44:00 PM EST

Market Commentary From Monty Guild

Author: Monty Guild

Dear CIGAs,

SOME VERY IMPORTANT POINTS ABOUT INFLATION:

We will soon see inflation data that shows inflation in China and other parts of Asia is moderating. All that means is that the rate of inflation which was 11% for the last 12 months is falling to 6% for the next 12 months. Inflation is a rate of change calculation. When you have a high rate of change in year 1 and it goes to a lower rate of change in year 2 then the data says inflation is lower.
Prices however are not lower. If for example prices for food or gasoline rose 11% last year and an additional 6% this year, it is of no solace that inflation is only 6% if the price is up 17% in a little over a year.
That is why monetary authorities worldwide always strive for not more than 1 or 2% inflation. Inflation is a huge tax for those on fixed income. It creates massive social problems and is pernicious in the extreme.
The so-called decline in inflation will be a big headline over and over for months to come. Fact: the rate of inflation is moderating. I believe that the decline is temporary because the amount of money created to bail out the banking system worldwide will be uncountable. The PR spin may convince the uninformed that inflation will now moderate for a long time.
Even with a moderation in the rate of inflation, any inflation raises prices and penalizes a large part of the society .In the 70's we went through years of belief that inflation had moderated which in the final analysis turned out to be incorrect. Incorrect it was but it periodically scared commodities speculators and prices of gold and foreign currencies went down.
In the end, gold and foreign currencies had a huge price rise as the truth about the insidious nature of inflation became plain to people.
Respectfully yours,
Monty Guild
www.GuildInvestment.com

(Article courtesy of Trader Dan Norcini)

U.S. inflation pressures near six-year low

NEW YORK, Aug 1 (Reuters) - U.S. inflation pressures fell in July to a near six-year low, driven by disinflationary moves in measures of labor market conditions, loans, interest rates and commodity prices, a report said on Friday.

The Economic Cycle Research Institute's U.S. Future Inflation Gauge (USFIG), designed to anticipate cyclical swings in the rate of inflation, slipped to 112.4 in July from 114.9 in June, revised from 115.2.

The reading was the lowest since August 2002, when the index stood at 110.7 according to ECRI data.

"With the USFIG falling to a new 71-month low, underlying inflationary pressures are in a decisive cyclical downswing," said Lakshman Achuthan, managing director at ECRI, in an instant message interview.

The USFIG annualized growth rate, which smooths out monthly fluctuations, fell in July to minus 7.6 percent from minus 4.4 percent in June, revised down from negative 3.9 percent.

More…

Posted On: Friday, August 01, 2008, 3:25:00 PM EST

In The News Today

Author: Jim Sinclair

Jim Sinclair’s Commentary

Now here is a real plus for the dollar! Note the sarcasm.

Future Looks Bleak For Jobs
Melinda Peer, 08.01.08, 2:00 PM ET

Although companies didn't shed as many jobs as expected in July, losses are likely to accelerate as macroeconomic weakness creeps deeper into companies across sectors.

The U.S. economy got mostly bad news on Friday as the July unemployment rate jumped to 5.7%, with young people bearing the brunt of the losses. The level was higher than expected by economists, who were looking for 5.6% on average, although the number of jobs actually lost was not as severe as expected, coming it at 51,000 instead of the predicted 72,000.

Still, coming a day after a troubling weekly unemployment report, the figures cast a pall.

In an interview with Reuters on Friday, Mohamed El-Erian, the co-chief executive of Pacific Investment Management, said the credit crisis "morphed into a deepening economic weakness" that he expects will accelerate. "We now have three balance sheets all coming under pressure at the same time: housing, consumers and the financial sector," he said.

More…

Jim Sinclair’s Commentary

Getting your kids into a good college may become easier.

Is Your Student Loan Safe?
Students Scramble to Secure New Loans as Dozens of Lenders Drop Out
By ALICE GOMSTYN
ABC NEWS Business Unit
July 30, 2008

Forget back-to-school shopping: With just a few weeks to go before the start of the fall semester, many college students are doing some last-minute student-loan shopping as more and more cash-strapped lenders drop out of the student loan business.

More…

Jim Sinclair’s Commentary

Andrew certainly has major courage.

Laws don't apply to those big boys, do they?

Cuomo to Sue Citigroup Units Over Auction-Rate Securities
By CHAD BRAY
August 1, 2008 6:20 p.m.

NEW YORK -- New York State Attorney General Andrew Cuomo said Friday he intends to "imminently" take legal action against two Citigroup Inc. units over their marketing and sales of auction-rate securities.

In a letter Friday, Mr. Cuomo's office indicated it intended to sue Citigroup Global Markets Inc. and Smith Barney under the state's Martin Act for fraudulent marketing of the securities and for destruction of documents under subpoena.

Mr. Cuomo's office said a five-month probe found that Citigroup "repeatedly and persistently" made material misrepresentations and omissions in its underwriting, distribution and sale of auction rate securities. "Citigroup represented that auction-rate securities were safe, liquid, and cash-equivalent securities," wrote David A. Markowitz, chief of Mr. Cuomo's Investor Protection Unit. "These representations were false, and had a severe detrimental impact on tens of thousands of Citigroup customers."

Citigroup would become the third major Wall Street firm to face legal action over its sales of auction-rate securities in recent weeks.

More…

Jim Sinclair’s Commentary

I wouldn’t have minded if Mr. Holland said $1200 and $1650.

Gold price could hit $1 500/oz next year, says Holland
By: Matthew Hill
Published on 1st August 2008
Updated 4 hours ago

Gold could trade as high as $1 500/oz in 2009, the head of Africa’s second-biggest producer of the yellow metal said on Friday.

Gold Fields CEO Nick Holland said that the industry was operating slightly above break even at a gold price of $900/oz, not leaving room for profits.

“I don’t think the gold price has really performed anywhere near where it should have done, particularly given the rise in the commodity prices in other sectors, given the rise in the oil price, and particularly given the state of the economy in the US,” Holland said in a transcript of an interview posted on the company’s website.

“Certainly $800 I think is a very good floor price for gold. I don’t see it going below that. And secondly, the sky is the limit. You know, $1 000 by the end of the year and maybe $1 200 to $1 500 during 2009, I think, is very possible,” he added.

Meanwhile, presenting Gold Fields’ results for the year ended June 30, Holland said that he “wouldn’t be surprised” if gold were to trade at levels of around $1 000/oz to $1 200/oz, as the all-in costs of the industry had climbed to some $800/oz.

“I think gold has got substantial upside,” he stated, adding that he saw the metal trading at $1 000/oz by the end of the year.

More…

Jim Sinclair’s Commentary

I concur, especially with $1200 this year.

No surprise if gold rises above $1,000/oz
Allan Seccombe
Posted: Fri, 01 Aug 2008

[miningmx.com] -- THE gold price is unlikely to fall as far as $500/oz and could instead rise to between $1,000 and $1,200/oz, new Gold Fields CEO Nick Holland said on Friday.

“One of the things that gives me some comfort, so that I think the gold price is not going back to $500 like some people would have you believe, is that the all-in cost of production of the sector has risen significantly,” Holland said at a results presentation in Johannesburg.

The all-in cost for world number four producer Gold Fields, which Holland refers to as the notional cost expenditure (NCE) per ounce comprising operating cost plus all capital expenditure, was $869/oz in the June quarter against a received price of $895/oz.

Gold Fields intends bringing down to $725/oz in the 2009 financial year as it winds down its capital programme and increases gold production by bringing new projects on stream.

This compares to an industry average of around $780/oz for its peer group including Barrick, AngloGold Ashanti, Newmont Harmony Gold and Gold Corp.

More…

Jim Sinclair’s Commentary

This never needed to happen.

$946m headline loss for AngloGold
August 01, 2008 Edition 2

As a result of the reduction in the gold hedge book ($977 million) and uranium commodity contracts ($11m), an adjusted headline loss of $946m was recorded for the second quarter of 2008, AngloGold Ashanti said yesterday.

"Excluding the impact of these adjustments, adjusted headline earnings would have been $50m," it said.

More…

Jim Sinclair’s Commentary

The bulls were raging on Financial TV today. Now does this look to you like all is well?

Deutsche Bank Debt Rating Cut by S&P After Writedowns (Update4)
By Aaron Kirchfeld

Aug. 1 (Bloomberg) -- Deutsche Bank AG, Germany's largest bank, had its long-term credit rating lowered by Standard & Poor's after announcing higher-than-estimated second-quarter writedowns of 2.3 billion euros ($3.6 billion).

S&P cut the long-term counterparty credit rating one step to AA- from AA, and affirmed the bank's A-1+ short-term rating. The outlook on all the ratings is negative, S&P said, adding that the investment-banking industry is still under ``heavy pressure.''

``The downgrade reflects that we no longer consider Deutsche Bank's performance to be materially stronger than that of the leading peers in the currently difficult environment,'' said S&P analysts led by Bernd Ackermann in Frankfurt in a statement today.

Deutsche Bank reported yesterday that second-quarter profit declined 64 percent after markdowns on mortgage securities, loans and debt backed by bond insurers led to a loss at the securities unit. Chief Executive Officer Josef Ackermann said he ``remains cautious'' on the rest of the year.

More…

Jim Sinclair’s Commentary

You read some gold bear/dollar bull’s blog and come running to me in a panic? These “experts” are simply wrong. Read the following.

Stressed banks borrow record amount from Fed
Thu Jul 31, 2008 5:45pm EDT
By John Parry

NEW YORK (Reuters) - Banks borrowed a record amount of funds from the Federal Reserve in the latest week as the year old credit crisis took a persistent toll, while the commercial paper market continued to contract, signaling tough conditions for short term borrowers.

Banks' primary credit borrowings averaged $17.45 billion per day in the latest week, the second straight week this had hit a record and up from $16.38 billion the previous week, Fed data showed on Thursday.

"It shows there's a shortage of liquidity in the system," said Christopher Low, chief economist at FTN Financial in New York.

Secondary credit the Fed extended, which is usually taken out by banks in need of emergency cash, rose to $89 million in the latest week, from $34 million the week before. Although these numbers are still very small compared with primary credit, "What that tells you is that there's an increasing number of banks that the Fed is classifying as 'unsound' or inadequately capitalized," Low said.

Analysts may watch the trend of secondary credit closely, given the travails of U.S. regional and smaller banks and the likelihood that a continued decline in house prices and rise in foreclosures and bad loans will deepen the difficulties of the banking sector for many months or years.

More…

Jim Sinclair’s Commentary

The US economy is bottoming. The global credit problem is over and getting ready to recover? Definitely NOT!

Auto sales plunge again
Sharp fall in truck and SUV sales hurt automakers as consumers get squeezed by higher gas prices and weak economy.
By Chris Isidore, CNNMoney.com senior writer
Last Updated: August 1, 2008: 1:16 PM EDT

NEW YORK (CNNMoney.com) -- The nation's top automakers all reported sharp drops in July sales that were much worse than expected, as high gas prices and a weak economy continue to bite the already battered auto industry.

GM's car and light truck sales plummeted 26% in July, adding to more bad news for the troubled company. Earlier in the day, GM (GM, Fortune 500) reported a $15.5 billion loss in the second quarter.

Sales of light trucks, which include pickups, SUVs and so-called crossover vehicles, tumbled 35%, as buyers turned away from those models to more fuel efficient cars. But GM cars also suffered, falling 12% from year-earlier levels.

More…

S&P cuts Big Three carmaker ratings lower into junk
REUTERS
11:49 a.m. July 31, 2008

NEW YORK – Standard & Poor's Thursday cut ratings on all three major U.S. automakers deeper into junk status, citing expected losses due to higher gas prices and a weakening U.S. economy.

S&P cut its ratings for General Motors Corp, Ford Motor Co and Chrysler Automotive LLC to “B-minus,” or six levels below investment grade, from “B.” It also cut to ”B-minus” from “B” the finance arms of Ford, Chrysler and GMAC, which is 49 percent owned by GM.

For Ford, S&P cited mounting cash losses due to lower U.S. sales and a shift in demand from large pickup trucks and sport utility vehicles amid higher gas prices and the weak economy.

More…

Deutsche Bank Writedowns Exceed $11 Billion
Thursday, July 31, 2008 8:37 AM

FRANKFURT -- Deutsche Bank AG announced fresh writedowns on Thursday, taking its bill from the global financial crisis beyond $11 billion.

Germany's flagship financier had originally been seen as one of the few to emerge unscathed from the crisis, but as the problems on global markets continue Deutsche Bank is being sucked ever deeper into trouble.

The group's pretax profit collapsed in the second quarter to 642 million euros ($1 billion) — a fraction of the 2.7 billion euros it made a year earlier — as writedowns ate into its bottom line.

More…

Posted On: Friday, August 01, 2008, 1:47:00 PM EST

Hourly Action In Gold From Trader Dan

Author: Dan Norcini

Click chart to enlarge today’s 4 hour action in gold in PDF format as of 12:30 pm CDT with commentary from Trader Dan Norcini.

Posted On: Friday, August 01, 2008, 12:15:00 PM EST

Jim's Mailbox

Author: Jim Sinclair

Jim,

The facts are that (1) average weekly initial claims for state unemployment year-over-year growth rates, similar to 1980, 1989, and 2001 etc., continue to climb, (2) nonfarm payroll numbers, regardless of the short-term expectations game and birth/death model contribution, continue to erode, and (3) the net jobs created/(loss) less civilian labor force suggests that marginal job creation is not keeping up with civilian labor force expansion.

Click here to review the Formula.

The recent takedown in gold will not last long.

CIGA Eric

Click here for today’s employment charts from CIGA Eric

Dear Jim,

They are not offering a gold ETF in Dubai because the Arab, Indian and Pakistani residents of the region don't want gold. Clearly this will be a big market for gold ETF's just as it is a good market for physical gold and gold futures.

Respectfully yours,
Monty Guild
www.GuildInvestment.com

Gold ETF likely to enter Dubai in fourth quarter
Reuters
Published: August 01, 2008, 00:04

Hong Kong: The World Gold Council (WGC) is targeting a fourth-quarter launch of its Dubai-listed exchange traded fund (ETF), rounding out its suite of gold ETFs on major markets after a listing in Hong Kong yesterday.

James Burton, chief executive of the industry body, said that after the Dubai listing, which would be that exchange's first ever ETF, the WGC may take a pause. "After Dubai, I would say there are no gaps [in availability of gold ETFs in major markets]," he said in an interview in Hong Kong, where he was launching the SPDR Gold Trust.

"I had hoped or planned that we would have a consolidation year, where we just went and marketed, instead of this frantic listing that we've been doing. We've been doing it non-stop since mid-2002. There's some logic in giving it a rest for a year and then spend a bit of time marketing it."

The ETFs are backed by physical gold, which gives investors exposure to the gold price without needing to take delivery. That adds to demand for the precious metal, which has attracted safe-haven investments during the past year of turbulence on global financial markets.

More…

Dear Jim,

As Dan and the author of the below article very cogently point out, any other country would have its bonds and currency pummeled as a result of the behavior of the US government. It is my position that the US is not immune from the laws of economics and of markets.

History has repeatedly shown that such misbehavior by the dominant empire of the time can have a delayed reaction but the reaction will come in time. There is in my mind a virtual certainty that Mr. Lindsey’s prediction will come to pass.

We need only to be patient and in time the world markets will punish the US currency for the destructive and terrifying behavior or the government. A lower US dollar means higher gold prices and quite possibly terrible damage to the world financial structure as we know it.

Respectfully yours,
Monty Guild
www.GuildInvestment.com

Monty,

A former Bush administration official comments on the FNM and FRE bailout…

Note his last paragraph…

“If any other country announced that its finance minister could print unlimited debt to do something similar, financial markets around the world would dump both the country's debt and the country's currency. It may well be different because this is the United States of America. But certainly, to take such a risky and unprecedented step, a better crafted and considered piece of legislation should have been created.”

More…

Dan

Dear Jim,

Here is more on the Authoritarian "Free" Enterprise theme:

Russia: The Kremlin and the Next Round of the Metals Wars
Stratfor Today » July 29, 2008 | 2123 GMT

Summary

Russian Prime Minister Vladimir Putin publicly criticized metals giant Mechel, leading the company’s stock prices to plummet July 29. Putin’s statements have led to rumors that Mechel could go the way of Yukos — but more importantly, it shows a resumption of Russia’s metals wars and indicates that the Kremlin is stepping in.

Analysis

Russian metals giant Mechel’s stocks continued plunging July 29 after Russian Prime Minister Vladimir Putin publicly railed against the company for deceiving the Kremlin and swindling the Russian people. This has led to a flurry of rumors in Russia that Mechel could go the way of Yukos. While this is definitely possible, the developments surrounding Mechel also follow a trend that Stratfor has been watching: a resumption of Russia’s metals wars. Mechel’s situation is even more complicated than a competition between metals companies because the Kremlin has stepped into this particular fray — showing that it, too, has a bone to pick with Mechel and the metals industry as a whole.

The Russian government started hinting in 2007 that it could be interested in consolidating the country’s metals sector, just as it had consolidated other major industries such as energy and defense. The Kremlin has been setting up so-called national champions — like Gazprom, Rosneft and Rozboronexport — which are reminiscent of Soviet-era champions. These national champions have let the government shove many foreign firms out of Russia and use the champions as political weapons domestically and abroad. However, the metals and mining sector was one area the Kremlin was loath to touch.

More…

Posted On: Thursday, July 31, 2008, 10:58:00 PM EST

Back To The Gold Investment Basics

Author: Jim Sinclair

Dear CIGAs,

Here is a proposal:

I am getting emails with files on every bearish gold article from every corner of the cyberspace world.

You know that I do not wish to read other’s ideas, bullish or bearish. Answers come to me through silent contemplation of a question, not in the hopeless din of a multitude of so-called gold experts who in reality are unqualified loud dullards.

If you insist on sending me every negative posting you can find on the internet you must send me the credentials you have reviewed that qualifies the writer to opine.

Assuming the list of credentials is noteworthy; I will review it and comment either here on JSMineset or directly via email.

Now that we have that out of the way, let’s get down to the basics:

Protection of your hard earned assets is the first and foremost needful exercise.
Investment of those assets is the secondary consideration. What good is an investment if it is unprotected from financial agents.
Gold must not be approached as a speculative vehicle in which you want to make a killing. If you approach gold in that fashion it will be you who will be killed because of its volatility.
Gold is a currency. All the analysis, questions you ask me and handholding I willingly do sit directly on that correct definition. This understanding is the route to answering your entire question and almost every foolish article you inundate me with that fails to see that.
To protect your retirement accounts you have two avenues of approach.
a. You request direct registration as a book entry at the transfer agent, naming your trust entity and your retirement account name. This creates what equates to a check requiring two signatures and thereby assures a fast settlement and payout by a bankruptcy judge.
b. You require your trust agent to assure you that your IRA is held in a true custodial form. That means the assets of the retirement account are segregated to your IRA account name and is not part of the balance sheet of the financial agent. If those assets are in the nominee name of the Trust agent your assets are on their balance sheet.
Physical gold is insurance. If some financial agent is holding physical gold for you in any form you have violated the insurance characteristic. What you do not have in your hand or safety deposit box is not insurance.
Do not send money to or deal with anyone you cannot find. The scams in gold are prolific and transparent to a professional like me.
Any entity that offers to help you violate the law will certainly violate you before you get a chance to break the law.
Any entity that, as a main attraction, offers you gold somewhere outside of your domicile that is difficult to see and touch probably has taken your money and you have nothing to worry about. The reason you have nothing to worry about is you have nothing.
Share investments in precious metals entities can be protected three ways. The first is to take paper delivery of your shares where available. The second is by you ordering direct registration as a book entry at the transfer agent. Third is that you keep your shares at a financial agent that offers true custodial accounts. **Note - Canadians cannot get direct registration at the transfer agent for Canadian entities. We are working on that.
All those holding Swiss, Euro and Cando short-term treasuries in their accounts as true custodial form need to take one more step. That is to firmly ask if the broker holding these assets are certain that the depositories for the broker have provided your broker themselves with true custodial form.
This is a systemic problem where we may need to build new forms of protection to rest comfortably. We must be sure that our broker has protected itself (the brokerage house or bank) in order to protect you when offering true custodial accounts.

Each link in the chain of ownership must be firmly segregated, not held in nominee form.

Settle for nothing less.

A new twist - isn’t:

Many of you are running to a certain cyber broker that suggests if you hold a security bought by them as an investment in a country other than your domicile that they will do this in the currency of that country as a service.

That is how it is anyway. They are doing nothing whatsoever for you that does not already exists.

There are certain subjects that I will tell you about one time and one time only.

Here is an example.

You buy a Canadian company trading in the US. You pay in dollars. Your company will rise and fall according to the exchange rate even if it was in freeze frame at one price only.

If you elect to sell via a US brokerage house on the Canadian exchange it trades on, you settle in Canadian dollars. If you have an account opened at the Canadian branch of the US house you will have to do a little one step and voila, you are in Canadian, Swiss or Euro treasuries if you wish.

That is no special service. That is what happens anywhere you deal if you know what to ask for.

The minute you buy a foreign share, regardless of where it trades, you have expatriated those funds into the currency of the domicile of the company’s funds, legally, in the light of day without any violation of any law.

This is precious information if you have the eyes to read and the ears to understand.

I will not publish or reply to questions on this specific subject again.

Keep in mind:

Gold is going to $1200 this year.
Gold will trade at $1650 on or before Jan. 14th, 2011
The US dollar will trade at .6200 and .5200 USDX.
The Euro will trade at $2 or better simply because it is the large cap not-dollar.
None of the above is worth anything to you if you fail to protect yourself against the broken financial system right now.
Respectfully yours,
Jim

Posted On: Thursday, July 31, 2008, 10:34:00 PM EST

Market Commentary From Monty Guild

Author: Monty Guild

Dear CIGAs,

Here is an important article from FT.com that we felt our readers would like.

FANNIE'S AND FREDDIE'S FREE LUNCH
By Joseph Stiglitz
Published: July 24 2008 18:25

Much has been made in recent years of private/public partnerships. The US government is about to embark on another example of such a partnership, in which the private sector takes the profits and the public sector bears the risk. The proposed bail-out of Fannie Mae and Freddie Mac entails the socialisation of risk - with all the long-term adverse implications for moral hazard - from an administration supposedly committed to free-market principles.

Defenders of the bail-out argue that these institutions are too big to be allowed to fail. If that is the case, the government had a responsibility to regulate them so that they would not fail. No insurance company would provide fire insurance without demanding adequate sprinklers; none would leave it to "self-regulation". But that is what we have done with the financial system.

Even if they are too big to fail, they are not too big to be reorganised. In effect, the administration is indeed proposing a form of financial reorganisation, but one that does not meet the basic tenets of what should constitute such a publicly sponsored scheme.

First, it should be fully transparent, with taxpayers knowing the risks they have assumed and how much has been given to the shareholders and bondholders being bailed out.

Second, there should be full accountability. Those who are responsible for the mistakes - management, shareholders and bondholders - should all bear the consequences. Taxpayers should not be asked to pony up a penny while shareholders are being protected.

Finally, taxpayers should be com¬pensated for the risks they face. The greater the risks, the greater the compensation.

All of these principles were violated in the Bear Stearns bail-out. Shareholders walked away with more than $1bn (€635m, £500m), while taxpayers still do not know the size of the risks they bear. From what can be seen, taxpayers are not receiving a cent for all this risk-bearing. Hidden in the Federal Reserve-collateralised loans to ¬JPMorgan that enabled it to take over Bear Stearns were almost surely interest rate and credit options worth billions of dollars. It would have been easy to design a restructuring that was more transparent and protected taxpayers' interests better, giving some compensation for their risk-bearing.

But the proposed bail-out of Fannie Mae and Freddie Mac makes that of Bear Stearns look like a model of good governance. It sets an example for other countries of what not to do. The same administration that failed to regulate, then seemed enthusiastic about the Bear Stearns bail-out, is now asking the American people to write a blank cheque. They say: "Trust us." Yes, we can trust the administration - to give the taxpayers another raw deal.

Something has to be done; on that everyone is agreed. We should begin with the core of the problem, the fact that millions of Americans were made loans beyond their ability to pay. We need to help them stay in their homes, including by converting the home mortgage deduction into a cashable tax credit and creating a homeowners' Chapter 11, an expedited way to restructure their liabilities. This will bring clarity to the capital markets - reducing uncertainty about the size of the hole in Fannie Mae's and Freddie Mac's balance sheets.

The government should set a limit to the size of the bail-out, at the same time making it clear that, while it will not allow Fannie Mae and Freddie Mac to fail, neither will it be extending a blank cheque. There may need to be a drastic reorganisation. There should be a charge for the "credit line" (any private firm would do as much) and, given the risk, it should be at a higher than normal rate.

The private sector knows how to protect its interests; the government should do no less. As long as the credit line is extended, no dividends should be paid. To ensure that the government is not simply bailing out creditors who failed in due diligence, at least, say, 25 per cent of any notes, loans or bonds coming due that are not lent again should be set aside in an escrow account, to be paid only after it is established that taxpayers are not at risk. Any government loans should be cumulative preferred debt: the taxpayers get paid before any other creditors receive a dime. To discourage moral hazard the interest rate should be at a penalty rate and, reflecting the rising risk, increase with the amount borrowed. Finally, the government should participate in the upside potential as well as the downside risk: for instance, by taking shares (which it might later sell) or, as it did in the Chrysler bail-out, warrants.

We should not be worried about shareholders losing their investments. In earlier years, they were amply rewarded. The management remuneration packages that they approved were designed to encourage excessive risk-taking. They got what they asked for. Nor should we be worried about creditors losing their money. Their lack of supervision fuelled the housing bubble and we are now all paying the price. We should worry about whether there is a supply of liquidity to the housing market, so that those who wish to buy a home can get a loan. This proposal provides the necessary liquidity.

A basic law of economics holds that there is no such thing as a free lunch. Those in the financial market have had a sumptuous feast and the administration is now asking the taxpayer to pick up a part of the tab. We should simply say No.

The writer, 2001 recipient of the Nobel Prize for economics, is university professor at Columbia University. He is co-author with Linda Bilmes of The Three Trillion ¬Dollar War: the True Cost of the Iraq Conflict

Copyright The Financial Times Limited 2008

Posted On: Thursday, July 31, 2008, 10:06:00 PM EST

Gold and Dollar Market Summary

Author: Dan Norcini

Click here for this month’s action in Gold, Coeur D’Alene, Minefinders, Yamana Gold, Barrick Gold, GoldCorp, Royal Gold, El Dorado Gold and Golden Star Resources with commentary from Trader Dan Norcini

Posted On: Thursday, July 31, 2008, 6:14:00 PM EST

In The News Today

Author: Jim Sinclair

Jim Sinclair’s Commentary

Before you call me in a panic to say you feel the economy could implode simply because of what some blog says, Click here to review the Formula.

U.S. Recession May Have Begun in Last Quarter of 2007
By Timothy R. Homan

July 31 (Bloomberg) -- The U.S. economy may have slipped into a recession in the last three months of 2007 as consumer spending slowed more than previously estimated and the housing slump worsened, revised government figures indicated.

The world's largest economy contracted at a 0.2 percent annual pace in the fourth quarter of last year compared with a previously reported 0.6 percent gain, the Commerce Department said today in Washington. Growth for the period from 2005 through 2007 was also trimmed.

The revisions now reinforce measures such as employment and production that already signaled the economy was shrinking. The National Bureau of Economic Research, the Cambridge, Massachusetts-based arbiter of economic cycles, defines a recession as a ``significant'' decrease in activity over a sustained period of time. The declines would be visible in GDP, payrolls, production, sales and incomes.

``We're in a recession,'' Allen Sinai, chief economist at Decision Economics Inc. in New York, said in a Bloomberg Television interview. ``It's going to widen, it's going to deepen.''

The government also said incomes grew less than previously thought, raising the risk that consumer spending will again stumble after getting a temporary boost from the tax rebates last quarter.

More…

Jim Sinclair’s Commentary

Going forward? Sure. The quadrillion plus dollars of all OTC derivatives? No way. No clearing house can value what in truth is between zero and 5%. Don't believe the spin about this entire mountain of OTC derivatives being traded on an open exchange with a clearinghouse guarantee. This is blatant nonsense.

Banks to Clear Credit Swaps Through Clearinghouse By Year End
By Shannon D. Harrington

July 31 (Bloomberg) -- Banks that handle about 90 percent of the trading in credit-default swaps told regulators today they will start processing trades through a central clearinghouse by the end of the year.

Dealers including JPMorgan Chase & Co., Deutsche Bank AG and Morgan Stanley said in a letter to Federal Reserve Bank of New York President Timothy Geithner that they will start putting U.S. credit-default swap index contracts through the clearinghouse by Dec. 31. The clearinghouse would be designed to absorb losses in the event a major market-maker fails.

More…

Jim Sinclair’s Commentary

A world awash in liquidity, a world seeking to offload dollars, a world seeking solution in nationalization, one way or another, is a world with gold at least $ 1650 and a dollar trading below USDX .6200.

Fed, ECB Free Up Billions of Dollars
31 July 2008
By Jeannine Aversa / The Associated Press

WASHINGTON – The Federal Reserve said Wednesday that it was extending its emergency borrowing program to Wall Street firms and was taking other steps to ease a severe credit crunch that has hobbled the U.S. economy.

On the other side of the Atlantic, the European Central Bank and the Swiss National Bank announced Wednesday that they would make billions of U.S. dollars available to banks still starving for the currency.

The Fed said the program, where investment houses can tap the central bank for a quick source of cash, will now be available through Jan 30. Originally the program, started on March 17, was supposed to last until mid-September.

Another program, where investment firms can temporarily swap more risky investments for super-safe Treasury securities, also will continue through Jan. 30, the Fed said. And, it also will let commercial banks, in a separate program, bid on cash loans that last longer -- for 84 days, besides the 28-day loans now available.

The Fed said it was taking these steps "in light of continued fragile circumstances in financial markets." The Fed said the emergency borrowing program for investment houses and the program that lets investment firms temporarily borrow Treasury securities would be withdrawn should the Fed determine that conditions in financial markets are "no longer unusual and exigent."

More…

Jim Sinclair’s Commentary

Consider how this speaks to your bank deposits.

Billions in tax deposits uninsured
State, local accounts secured, so loss unlikely
Thursday, July 31, 2008 3:22 AM
By Bill Bush

Your bank account is insured up to $100,000, but you still have a lot at stake in the event of a major failure: hundreds of billions of state and local tax dollars in accounts nationwide that are not insured by the Federal Deposit Insurance Corp.

Losses aren't likely, says a state official, but government treasurers are keeping a close eye on the funds.

Franklin County currently has $300 million of taxpayer money in banks; the city of Columbus easily has tens of millions; and local school districts hundreds of millions more, officials said.

By Ohio law, the uninsured portions of these accounts are backed by collateral purchased by the banks. But many might be backed by bonds of agencies that are in trouble themselves, namely government-sponsored mortgage behemoths Fannie Mae and Freddie Mac.

President Bush signed into law yesterday an emergency rescue bill that allows the Treasury Department to use federal money to prop up the teetering giants, which a former Federal Reserve Bank official recently called "insolvent."

More…

Jim Sinclair’s Commentary

Wait until you see the explosion coming in the US Federal Budget Deficit! Click here to review the Formula.

Paterson Warns of Economic Crisis
By SEWELL CHAN
July 29, 2008, 5:22 pm

Updated, 7:12 p.m. | In a rare, brief televised address, Gov. David A. Paterson announced on Tuesday afternoon that he would call the Legislature into an emergency session on Aug. 19 to address what he called an economic and budget crisis confronting New York State as a result of plummeting revenues and rising costs.

The new governor avoided any mention of new taxes, instead arguing forcefully for austerity. He said he was calling on the Legislature to reduce the size of the state workforce; cut agency spending; reduce property taxes for homeowners; aid New Yorkers with the soaring costs of home energy; and even consider public-private partnerships that would take over state assets.

Mr. Paterson predicted that the budget shortfall for the next fiscal year, starting April 1, would be $6.4 billion much higher than the $5 billion projected when he took office unexpectedly in March, replacing Gov. Eliot Spitzer, who resigned.

More…

Posted On: Thursday, July 31, 2008, 5:53:00 PM EST

Jim's Mailbox

Author: Jim Sinclair

Dear Jim,

Alan Greenspan says the financial crisis is a once in a century event and that stable home prices are the most important thing. In other words he is parroting back what we have all been saying for a long time.

As one of the creators of the problem (along with the greed merchants throughout the housing finance and bond finance world) Mr. Greenspan should know.

How much better off people would have been had they listened to JSMineset all of this time instead of the TV babblers and the establishment greed merchants. In my opinion, it is not too late.

INFLATION may follow (that certainly will be the problem most acceptable to the political establishment). However maybe the biggest question is will they be able to keep DEFLATION at bay? In my opinion, there is only one investment where we will be able to look back in a few years regardless of whether we have runaway inflation or deflation overtakes and we go into a deflationary depression and that is GOLD.

You, Dan and I have all thought about these issues over and over for decades. I think we may agree that historical records show that the best investment to protect in either situation has been gold. This may be all the more true this time if the US dollar collapses along with the US housing market.

Respectfully yours,
Monty Guild
www.GuildInvestment.com

Dear Jim,

Pasted below is a piece by Merrill on the acquisitions in the junior mid cap gold world. A lot of juniors have been acquired and not a few midcaps.

Your pal,
Monty Guild
www.GuildInvestment.com

Good Afternoon,
Following Goldcorp's announcement that they are acquiring Gold Eagle in a friendly transaction for $1.5b, I thought it was worth flagging Mike Jalonen's recent piece on potential M&A candidates in the Gold space. The favored names are those with reserve growth in politically friendly nations, IAMGOLD would be one name that is worth highlighting. This piece was first published ~18months ago and you will see and number of then names that have been crossed off the list.

H1’08 Global Gold M&A Update - http://research1.ml.com/C?q=bJnQqdnoT64%3d (see page 2 for the list of M&A candidates)

Goldcorp - Q2’08 adj EPS below forecast/bids for Gold Eagle

Q2’08 adjusted EPS below forecast
For Q2’08 Goldcorp reported a net loss of $9.2 million ($0.01/sh) vs. net earnings of $2.9 million ($0.00/sh) in Q2’07. Adjusted earnings from operations for Q2’08 (excluding the effect of a $91.2 million loss on foreign exchange) were $83.2 million ($0.12/sh). Stock option expense (a non cash item) lowered Q2’08 adjusted earnings by $15.3 million by another $0.02/sh. First Call was at $0.23/sh.

Q2’08 operations review – higher output yoy
For Q2’08, Goldcorp produced 551,600 oz of gold at a total cash cost (net copper & silver byproduct credits) of $308/oz, compared to 526,000 oz at a cash cost of $133/oz in Q2’07. We had been looking for Goldcorp to produce around 575- 600,000 ozs of gold at a cash cost of around $260/oz. The realized gold and copper prices were $897/oz and $3.93/lb in Q2’08.

The variance to our forecast was partly attributable to the Red Lake mine, where gold output in Q2’08 was 23,900 ozs lower than last year (149,600 vs. 173,500 ozs a year ago), Marlin (due a loss of power on site on June 11th; power restored on July 26th), Los Filos, and San Dimas (19,500 vs. 28,300 ozs last year). Goldcorp noted that Red Lake experienced an improved Q2’08 after resolving the mine sequencing issues during Q1’08 (which impacted the early part of Q2’08), where several primary high grade stopes from the lower Red Lake operation were simultaneously in their fill cycle and were unavailable for mining. The company sees higher output and lower costs at Red Lake in 2009, though production is not expected meet 2008 projections (now forecast to be 670,000 ozs of gold).

More…

Jim Sinclair’s Commentary

Here is an example of modern day sociopathic bullshit thinking that has spread its deadly disease into every market, therein bringing the financial system to its knees. This attitude, common among OTC derivative manufacturers, is going to kill more people in time than the Korean Police Action and the Vietnam and Iraq wars combined.

Control over desires leads to contentment. Pure greed destroys everything it touches.

Jim,

Greed is good. Don’t be so hypocritical. Every financial move you make is greed driven. Greed, for lack of a better word, purifies, clarifies and drives men to build a better life!

~Anonymous email

Jim,

Greenspan is preparing the market for the nationalization of Fannie Mae and Freddie Mac. This is PR and it is a preparation for the next BIG news from

Washington or the Fed.

He said: "The solution'' is the ``nationalization'' of the companies."

The news came out today at 16:01pm.

Gold, here we go to $1000 and beyond!

Regards,
CIGA Christopher

Greenspan Says Housing Prices Not Yet Near Bottom (Update1)
By Steve Matthews

July 31 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said falling U.S. home prices are ``nowhere near the bottom'' and the resulting market turmoil isn't showing signs of abating.

While the odds of a recession are 50-50, achieving stable markets will ``take a while,'' Greenspan said today in a CNBC interview.

The economy grew at a 1.9 percent annualized rate in the second quarter after expanding 0.9 percent in the first quarter, the Commerce Department said in

Washington. Gross domestic product was revised to show a contraction in the final three months of 2007.

More Americans filed claims for unemployment insurance last week than at any time in more than five years, the Labor Department said. Fed policy makers have cut the benchmark rate to 2 percent from 5.25 percent since September, halting the reductions in June amid rising concern about inflation.

Fannie Mae and Freddie Mac, the largest sources of money for U.S. home loans, are a ``major accident waiting to happen,'' Greenspan said. ``The solution'' is the ``nationalization'' of the companies, he said.

More…

Dear Jim,

I am amazed that the news of California cutting all state employee wages to minimum wage for the foreseeable future due to its $15 Billion debt that it cannot handle is no news at all in financial circles.

Is it contagious?

Thanks for watching out for us,
CIGA Fred W

Dear Fred,

I am not surprised.

All the best,
Jim

Posted On: Thursday, July 31, 2008, 1:44:00 PM EST

Hourly Action In Gold From Trader Dan

Author: Dan Norcini

Click chart to enlarge today’s 4 hour action in gold in PDF format as of 12:30 pm CDT with commentary from Trader Dan Norcini.

Posted On: Wednesday, July 30, 2008, 7:09:00 PM EST

Gold and Dollar Market Summary

Author: Dan Norcini

Click here for today's action in Gold, the XAU, GoldCorp, Newmont, Royal Gold, El Dorado Gold, Golden Star Resources and Coeur D'Alene with commentary from Trader Dan Norcini

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