From Jim Sinclair and Jim Rogers

Jim Sinclair's latest.
My Dear Extended Family,

The economic system is failing, and to counter the now publicly perceived failure, central planners are manipulating the symptoms and not the problem.

Gold has never been easy.
Gold is the tell tale of a broken system.
Gold therefore is the barometer of the risk factors of economic conditions.

Therefore central planners must make, via paper gold, every effort to make it say, "All is Ok." For this reason I intend, knowing the system is in collapse, to buy gold with every resource I have at my disposal today and tomorrow.

I suggest those of stout heart do the same.

To the others who are committed to their limit, hunker down one more time knowing that in no more than the summer a brand new and most powerful bull market in gold will be at hand.

Respectfully,
Jim

Best regards,

Lannie Cohen, President

HAI: All the talk recently has been about the recent plunge in gold. You’ve been saying, for a long time now— even when prices were hitting record highs—that you weren't going to buy until prices corrected to $1,200. Are you still planning on buying there?
Rogers: Yes, if it gets there. I bought more today, as a matter of fact. I bought a little bit, not much, over the last few days in case this was the bottom. I would not be surprised if there's another chance to buy lower later on, but I'm buying and I own it. I haven't sold any.
HAI: How do you determine whether gold is a good value or not? What has to happen for you to get completely out of gold and stay out?
Rogers: All these things will end in a bubble some day. Long bull markets always end in a bubble or mania before it’s over with. And when there's a bubble in gold, I hope I'm smart enough to get out. We haven't seen a bubble yet. Until recently, if you went around any U.S. city, you would see signs outside many jewelry stores saying “We buy gold.” And the American people line up to sell gold. Later there’ll be signs there saying, “We sell gold,” and people will be lining up to buy it in big ways. That hasn’t happened yet.

• 1
• 2
• | Full Article |
• Next >>

NEWS FLASH:

Bernanke just announced that the Fed is committed to normalizing its balance sheet.  Yet he stresses that in normalizing the balance sheet the Fed WILL NOT SELL ANY ASSETS. 

 

Riddle me that, Batman…

Short Attention Span Theater and Tragedy

One big curse of the Short Attention Span, with which we are all afflicted is the inability to appreciate Tragedy.  When Oedipus kills his father and marries his mother, he thinks all is well and he's doing great.  He just became King of Greece. 

We, the audience understand that he has committed sins against the Cosmic Order, he has indulged in that which brings about Downfall: Hubris.  And by the end he will suffer the destruction that is always the result of Hubris. 

In Ancient Greece, We, the audience, are horrified in his rejoicing, and we suffer together knowing his fate is our fate.

Of course, nobody these days has the patience or the attention span to follow this arc.  Now, we rejoice in Oedipus triumph.  Then we discover he actually did something wrong - we experience momentary discomfort - but No Worries - he learns and grows wiser and all is forgiven and he get to remain as King.  Just a wiser and better king.

Yay!  Hooray for Oedipus!  Hooray for us!

Because in the Short Attention Span Theater that is our lives, nothing bad ever really happens to Americans.  Sure, we can spend money we don't have, we can make cheating a central tenet of our business philosophy, and in the end, it will all be Okay, because in the end, the Consumer gets to have his Gadgets, and he is happy.

Death and Destruction is for losers.

For the Greeks, the whole point of Tragedy is that Death and Destruction are inevitable, yet we have total control over the Dignity with which we face the inevitable.  The dignity with which we face Struggle.

Take away humbling Struggle, take away the constant awareness of Death and Destruction, and you lose the concept of Dignity of Behavior.

Take away the struggle in the face of certain Death and Destruction and all you are left with is the Appetites of Man. The appetite for power. The appetite for wealth. The appetite for I phones, efexor and artisanal chocolate (I know, I like it too.) The appetite to screw your neighbor and grab as much for yourself as you can. The appetite for glamor, comfort and vacation time.

Unfortunately, to follow the Arc of Tragedy you need a strong Attention Span.  You have to be able to look down the road, past the next earnings report, past the next data point, past the next Plot Point.  You have to look down the road at the inevitable outcome of  the indulgence in Hubris. 

Sounds dreary, right?  I guess the  consciousness of Death and Destruction is a bit dreary. But certainly not nearly as dreary as life is proving to be without it.

IS THE CURRENT TRUST IN CENTRAL BANKING WARRANTED?

There is no question that trust in Central Banking is at an all time high.  All time low spreads on Junk Bonds, and all time low VIX is testament to that.  As is the recent sell off in Gold.

The only question is: Is this trust justified?

 Prakash Loungani of the International Monetary Fund wrote very starkly about Central bank economists: "Their record of failure to predict recessions is virtually unblemished." 

He found this to be true not only for official organizations like the IMF, the World Bank, and government agencies but for private forecasters as well. They're all terrible. Loungani concluded that the "inability to predict recessions is a ubiquitous feature of growth forecasts." 

Most economists were not even able to recognize recessions once they had already started.

In plain English, economists don't have a clue about the future.

If you think the Fed or government agencies know what is going on with the economy, you're mistaken. Government economists are about as useful as a screen door on a submarine. Their mistakes and failures are so spectacular you couldn't make them up if you tried. Yet now, in a post-crisis world, we trust the same people to know where the economy is, where it is going, and how to manage monetary policy.

Central banks say they will know the right time to end the current policies of quantitative easing and financial repression and when to shrink the bloated monetary base. However, given their record at forecasting, how will they know?

The Federal Reserve not only failed to predict the recessions of 1990, 2001, and 2007, it also didn't even recognize them after they had already begun. 

Financial crises frequently happen because central banks cut interest rates too late and hike rates too soon.
 
Trusting central bankers now is a big bet that (1) they'll know what to do, (2) they'll know when to do it.

Sadly, given the track record, that is not a good wager. Unfortunately, the problem is not that economists are simply bad at what they do; it's that they're really, really bad. They're so bad that it cannot even be a matter of chance.

How Do I cheat thee, let me count the ways:

Big Bank Traders Said to Rig Currency Rates to Profit Off Clients

By Liam Vaughan, Gavin Finch & Ambereen Choudhury - Jun 11, 2013 7:00 PM ET

Traders at some of the world’s biggest banks manipulated benchmark foreign-exchange rates used to set the value of trillions of dollars of investments, according to five dealers with knowledge of the practice.

Employees have been front-running client orders and rigging WM/Reuters rates by pushing through trades before and during the 60-second windows when the benchmarks are set, said the current and former traders, who requested anonymity because the practice is controversial. Dealers colluded with counterparts to boost chances of moving the rates, said two of the people, who worked in the industry for a total of more than 20 years.

AIG Financial Products Probed By Ben Lawsky For New Alleged Risk Failures

Posted: 06/11/2013 11:20 pm EDT  |  Updated: 06/12/2013 8:07 am EDT

AIG, AIG Financial Products, Ben Lawsky AIG, Benjamin Lawsky, Aig Ben Lawsky, Aig Benjamin Lawsky, Aig Derivatives, Aig New York Dfs, Aig New York State, Ben Lawsky Dfs, Business News

AIG Financial Products, the derivatives unit that nearly toppled the insurance company in 2008, is under fresh scrutiny after regulators alleged it may have failed to properly measure and manage risk, misled supervisors and investors, and lacked appropriate checks to limit outsized risk-taking.

 

Singapore Regulator Said to Plan Bank Reprimand on Rates

By Andrea Tan, Gavin Finch & Sanat Vallikappen - Jun 13, 2013 6:07 AM ET

Singapore’s central bank plans to reprimand banks in the city-state as early as Friday following an 11-month review into how benchmark interest rates are set, five people with knowledge of the matter said.
The Singapore Foreign Exchange Market Committee, which includes the Monetary Authority of Singapore and banks, plans to separately announce changes to the rate-setting process on the same day, two of the people said yesterday, asking not to be identified before the announcements are made.

BBC NEWS: Libor scandal: Can we ever trust bankers again?  Posted: 06/11/2013

Can we ever trust bankers again?

As Britain awaits a major report by the Parliamentary Commission on Banking Standards, the BBC's Business Production team, in partnership with the Open University, asks what went wrong with the system and can we ever trust bankers again?

JPMorgan Faces Increased Legal Threat Following 'London Whale' Scandal, Experts Say.

 

Regulators Turn Up Heat Over Bank Fees

By SHAYNDI RAICE and ALAN ZIBEL June 11, 2013, 12:06 a.m. 

U.S. regulators are stepping up scrutiny of overdraft fees charged by banks, a big revenue stream that is helping the industry lessen the hit caused by low interest rates and the sluggish economy.The Consumer Financial Protection Bureau, in a report set for release Tuesday, plans to criticize the U.S. banking industry for practices that it says range from confusing rules on overdraft fees to increasing the likelihood of multiple fees being charged to the same customer.

155 Undercapitalized Banks Still Litter U.S.

BY Philip van Doorn | 05/30/12 - 06:00 AM EDT

Stock quotes in this article: PNBC, CBCR.PK, FMAR.OB 

Find out if (PNBC) is in Cramer's Portfolio.

NEW YORK (TheStreet) -- With year-end data for all of the nation's banks and savings and loan associations now available, there are 155 undercapitalized institutions on the TheStreet's Bank Watch List. That is 10 fewer than last quarter, although 15 banks have been shuttered by regulators since the final fourth-quarter watch list was published in February.

Based on fourth-quarter regulatory data supplied by Thomson Reuters Bank Insight for the nation's nearly 7,400 banks -- and factoring-in the 15 bank and thrift failures since TheStreet's final fourth-quarter Watch List was published on Feb. 16 -- 155 institutions were undercapitalized at as of March 31, according to the regulatory guidelines that apply to most institutions.

CHART OF THE MONTH: NYSE TOTAL VOLUME

The rigged casino we call the stock market has become rigged to the point that we now have certain features never seen before in the history of markets. 

The chart above shows a remarkable trait in which we have reached new fantastic highs on collapsing volume. 

How is that possible? 

Come up with your own explanation. 

Mine would be that nobody is participating in this market advance but a few of the largest banks.  They get money free from the Government - which is now redundant, because they own the Government thus they are the Government.  And they are pushing this thing up unencumbered by the restraints of a free market.  They are, in essence, setting prices in a monopolistic way.

Yeah, I know, this is tin foil hat analysis.  So you explain how fewer and fewer bids push a free market higher and higher over the course of several years.

All you need to know:

Why the Dow Will Hit 60,000 (and One Easy Way to Profit)

Saturday, 08 Jun 2013 07:54 PM

Share:

Bill Spetrino, editor of the Dividend Machine newsletter (ranked #1 by Hulbert Financial Digest), is taking a successful approach to investing with Warren Buffett’s concept of “Be fearful when others are greedy, and greedy when others are fearful.”

That’s why in 2009, Spetrino was lambasted for his bold moves in the stock market. “I was telling people to buy stocks as the market was taking a 50% hit,” Spetrino explains, “and they thought I was crazy.”

Four years later, Spetrino’s model portfolio is sitting on 161% returns, but according to Spetrino, that’s just the start.

“Stocks will rally 399% from here, catapulting the Dow to 60,000,” he explains.

More Nonsense

Non Farm payrolls came in at an anemic 175,000 five years into this fantastic recovery.  Not even enough to keep up with population entering the work force.  Still, it was celebrated as further proof that the economy is picking up steam.  Five years into a recovery.

What was not widely reported was that the Birth Death model, in which bureaucrats at the Bureau of Labor Statistics simply guestimate a number of unreported jobs and add that in to mix.  They guestimated that 205,000 unreported jobs were most probably created last month. 

That means that without this guestimate, employers reported a net loss of 30,000 jobs. 

This goes on under every administration.  And apologists for this practice will swear up and down that over time the guestimates even out.

Maybe.

But with average work weak flatlining, hourly earnings flatlining, and real leisure and retail jobs declining, it's tough to understand the 77,000 jobs the BLS figured were probably created in those areas.    And with manufacturing contracting, it seems odd that manufacturing would have added 5000 jobs as guestimated.

In fact, over the last four months the economy has been averaging 150,000 jobs per month.  This number is horrible - five years into a recovery.  But when you take into account the 148,000 of the 150,000 are accounted for not by the BLS survey, but by additions to the survey guestimated by the BLS Birth/Death adjustment, it pretty difficult to understand the enthusiasm over the recovery.

The things is, The Labor Force participation rate at 63% - counting all those part time workers - is still 3 percentage points below the worst figure of the 2008 recession.

All those people out of work, working part time, fighting to survive are not terribly likely to be fooled by the bureaucrats at the BLS.

Maybe you shouldn't be either.

Nonsense

Why has gold moved down to $1400 and what is affecting the price?

Here are the current arguments as to why Gold must head lower as put forth by none other than Nouriel Roubini:

1) Gold is a poor investment as it can move down in price even when one would expect it should move up. 

This is so stupid it doesn't bear refuting.  It can be said for every investment ever.

2) Gold is a barberous relic only championed by right wing gold-standard nuts.

Again, embarrassing.  You might was well call gold a "socialist plot" or "a fundamentalist islamist terror investment."  Just simple minded name calling.

3) Gold provides no income.

Neither do Goverment Bonds, Bank deposits, CD's etc.  This is in fact an pro gold argument because Real Rates are still deeply negative.

4)  Gold is an inflation hedge and there is no inflation.

First, there's plenty of inflation just inflation that doesn't show in the CPI.  But anyway: Gold is not an inflation hedge.  Gold is a monetary instability Hedge.  This is the single most misunderstood factor in valuing gold.

5) With the RECOVERY TAKING HOLD there are a host of better investments. 

Sure invest in the stock market with valuation at ALL TIME HIGHS.  Good idea.

4) With the RECOVERY TAKING HOLD the Fed will draw back on quantitative easing.

Okay,. the recovery is a dream.  But that said, if the Fed backs off on easing yes, we might experience a serious bout of DEFLATION that will bring down all asset prices, including gold

Perhaps this is what gold is seeing.  Perhaps this will drive gold lower. 

BUT: AT THE SLIGHTEST WHIFF OF DEFLATION THE FED WILL PULL OUT ALL THE STOPS AND DOUBLE DOWN ON EASING.  THEY'VE TOLD US SO MANY TIMES. 

THE PRICE OF GOLD WILL REACT ACCORDINGLY....

SO DON'T TRADE.  INVEST LONG TERM

The Socialist States of America

For all the blather about Obama being a socialist, there's nary a peep out of right wing media concerning the Socialist Cadre Leadership that continues to suck all the capital out of the Socialist States of America.  The Top Five Socialist Aparatchicks - all working at companies that were bailed out to the tune of Trillions and Trillions of yours and my tax dollars - awarded themselves 75 Million dollars in BONUSES this year.

That's right, 5 top US Socialist Officers took in Seventy five million dollars this year just 5 years after having driven their socialist institutions into bankruptcy and then having been bailed out with our Tax Money:

The Top 5 US Socialist Aparatchicks:

Lloyd Blankfein from the Bailed out Goldman Sachs .....................$26 Million

John Stumpf from the Bailed out Wells Fargo...................................$19.3 million

Richard Fairbank from the Bailed out Capital One Bank....................$17.5 million

Brian Moynihan from the Bailed out and still Bankrupt B of A...........$12 milion

Jamie Dimon from the Bailed out JP Morgan........................................$11 million

These Socialist Officers who run the Socialist States of America are celebrated as innovators, paragons of hard work, Great Success stories of capitalism, while they gamble with free money from the state, bale out their losses with tax payer largesse and keep all winnings as pure marginally taxed profit.  Meanwhile the Right Wing Media machine continues to bloviate about their socialist betes noirs du jour: Those darn Grade School Teachers and their socialist pensions, that darn Obama and his socialist Health Care giveaway and some bridge to nowhere in some god forsaken corner of the country that's wasting  a few thousand dollars here and there.

Meanwhile the greatest socialist transfer of wealth in the history of the world marches on in our Great Socialist Banking Sector.