Q & A with Jim Sinclair, * VIP * Very Important Post
RE: Gold Bullion Today - Bullish CATAPULT
From: Jim Sinclair
Date: Friday, September 20, 2002, 4:27PM
Gold Bullion has formed an unusual, reliable and extremely powerful formation by the method of Point & Figure charting. The name of this formation tells the entire story. It is called a Bullish CATAPULT and completes at Gold $326. If you wish to know what a formation like this looks like and portends, you can find it on www.stockcharts.com under the Point & Figure tutorial. However, its name tells the entire story. JPM is going to have the fight of its life quite soon... maybe for its financial life. I smell Victory. It smells like a GOLD smelter in the morning.
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RE: JPM - Do I have a deal for you!
From: Jim Sinclair
Date: Thursday, September 19, 2002, 5:53AM
I have to share this with you, and yet I am obligated to maintain a confidence. Therefore I can only relate to you the main form of what occurred yesterday.
On Wednesday, a friend of mine, as an executive of a significant institution, was approached to make a transaction, which although not called a derivative (like last-risk bond insurance), was in fact a derivative transaction by representatives of JPM. She asked who was the counterparty to this derivative arrangement. The answer was JPM London, a subsidiary of JPM. I advised my friend to ask for a balance sheet of the subsidiary and for a certified statement revealing the total amount of notional value of all derivative to which JPM London, the subsidiary of JPM, is obligated. I also advised that she should request confirmation of the presence, or lack of, an automatic guarantee of payment of trade debts from the parent JPM to the trade creditors of the subsidiary JPM London in case of a financial problem at the subsidiary. I will keep you informed.
You need to understand that this huge pile of $72,000,000,000,000.00 of Derivatives Outstanding is a Mountain of Unfinanced Specific Performance Obligations sucked dry of capital via commissions, spreads and bonuses. This is truly the Specter of Economic Death lurking over the World Economic. A collective act of Financial Terrorism that has the potential to eventually kill more people than all the acts of Terrorism since man lived in a cave. This is in my opinion what Warren Buffett was thinking when he called this a pile of SEWAGE! See 9/13 Sinclair/Schultz Editorial
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RE: Gold, JPM and The Up & Down Spiral
From: Jim Sinclair
Date: Wednesday September 18, 2002, 8:51AM PST
As a reaction to apparent public disappointment to a conference call, all primary members of the Banking sector are under pressure. As this is written, JPM is trading at $19.08. Under $20, which is a psychological point, JPM comes under significant market concern. Under $18.50 technically, JPM appears headed back to its early 1990 levels. This would increase the problems that JPM has witnessed in the downgrading of their derivative counterparty position credit-wise. That will increase pressure on the large gold and other asset derivatives that JPM is party to.
It should be keep in mind that JPM has been one of the key dealers in what is considered last risk insurance. If you, for instance, thought that Enron might not pay its bond debt during the decline in Enron shares, you could have purchased insurance against such a default from dealers like JPM. This so-called insurance was not insurance, it was a DERIVATIVE TRADE. This type of transaction is another problem waiting in the wings to potentially affect JPM negatively.
I renew my prediction that under $20 JPM will effect gold higher. If JPM trades under $18.50 for two days as a closing price then, I believe, we will successfully challenge the $330 on gold. Keep in mind there is a 1,000,000 ounce gold in-the-money call option position still out there, near delivery date, which will easily find financing if it needs it. Further to that, today we were treated to a larger than expected US Balance of Trade announcement at $34,500,000,000. The US Trade Balance Deficit increasing will increase the US Current Account Deficit which will pressure the dollar lower. When the dollar trades (it will, IMO, soon) under 104 on the USDX, a top will occur, IMO, in the US Treasury instruments, thereby ending lower interest rates for a long time to come.
Higher interest rates will effect US economics negatively, setting into motion the US Dollar to increasingly lower levels. This is a "Down Spiral," indicating that the US Balance of Trade increasing forces the US Current Account Balance Deficit to expand, which forces the US Dollar lower, which in turn negatively impacts the US Treasury instrument market. This trend will force interest rates higher just when weak business activity can least handle such an occurrence. Lower US business activity will then impact the US Dollar lower and the down spiral goes on and on.
Today we are on the precipice of that Down Spiral and JPM is an indicator of whether or not we are locked tight in that DOWN spiral for general business and on the UP Spiral in Gold -- up and above $330 and $354 with the first stop at $372 in my opinion. Watch the market on JPM to determine the Spiral direction.
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RE: Iraq Invites Inspectors Back. Gold at $316 rises $3 off Asian Low.
From: Jim Sinclair
Date: Tuesday, September 17, 2002
At 7:10 AM gold is coming into the US over the counter market up $3 off the overnight low. Three guesses who the buyers were and we know it was not JPM, Goldman, Merrill or Lehman or any other US or GB interest. Please reread the 5 Fundamental Reasons for a Long-term Bull market in Gold on www.financialsense.com. Only when these fundamentals change will the basic bull in gold change. Certainly, short-term influences will impact the gold market, but basic views should only be consider for alteration based on an alteration in the basic fundamentals. There is at this time, in my opinion, no change other than positive in the underlying reason for gold going higher.
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RE: Why Gold is Lower Friday Noon to Present
From: Jim Sinclair
Date: Monday, 9/16/2002
The reason for gold weakness Friday afternoon to present is the maturity today of 10,000 gold calls which are in the money. That means that the call options have a strike (execution) price under the price of gold. That represents 1,000,000 ounces of gold. The market expects that the holder will try and hedge by selling into the cash or forward as he/she takes delivery. Therefore, traders have sold short since Friday morning betting on their conclusion.
The market would get a bullish shock if the holder takes delivery and the gold disappears. We shall see shortly as this is a USA market phenomena.
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Monday, September 16 "FOUNDATIONAL ENERGY DERIVATIVES & GOLD DERIVATIVES ARE FRAUDULENT"
Q: Jim says: "We still have not heard the details of the "Money Laundering" charge that the Enron executive pleaded guilty to. I believe that the phony offshore partnerships of Enron could have been used (probably was) to flow Billions of Dollars from Enron to the partnerships to offshore accounts. Derivatives are primary vehicles for money laundering, so far too sophisticated for the FBI, US Treasury Department, CIA, CFTC or SEC to figure out. I also believe the foundational energy derivative contracts that gave birth to the energy derivatives were frauds pre-arranged between these Enron straw partnerships just as the foundational gold derivative contracts were frauds between certain straw partnerships in the early-mid 90s."
Good morning, Jim. I've read this several times and am in a state of disbelief in the seeming transparency of the contents. Being that the surety bonds were made in regards to transactions between the dubious offshore entity Mahonia and Enron, the insurers clearly knew the entire operation was a derivatives operation. JP Morgan states that they were duped by the insurers (oh please) and that surety bond were not permitted as part of financial transactions.
A: The insurers claim that the energy trades were shams to hide loans to Enron.
Q: The judge isn't buying Morgan's story. Is this the part where the financial center "Titans" begin selling each other out on the road to a death match? Morgan Suffers Setback in Fight With Insurers Over Enron, September 14, 2002 By BLOOMBERG NEWS
"A federal judge dismissed fraud claims against 11 insurers yesterday, dealing a setback to efforts by J. P. Morgan Chase & Company to collect $965 million for losses on gas and oil trades with Enron."
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RE: Greenspan Predicts Significantly Lower US Dollar
From: Jim Sinclair (Q & A context)
Date: 9/15/2002
Q: I understand that you see a lower Dollar.
A: You have heard this prediction as well from Greenspan, the US Federal Reserve Chairman. By predicting deeper Trade Deficits, he is predicting deeper Current Account Deficits which implicitly is predicting a lower dollar and therefore the top in the US Treasury Bond Market similar to 30 years ago. This is true because, simply stated, that is fundamentally how it works.
Q: About two weeks ago there was an article in the FT that US energy companies have at present a paper loss of more than 600 billion in the derivatives market because they speculated with higher energy prices. About 30 years ago, the world was full weight Dollars and the price of the Dollar dropped constantly. Suddenly the Shah of Persia increased the price of oil by more than 300%. The result: Europe and Japan had to buy Dollars to settle their oil bills.
A: Take note of the GOLD DINAR and congratulations, you now know the real reason for this very new actor on the scene, assuming they do it June of 2003.
Q: On the other hand, the economy in the US recovered because their oil production went up. End result. Europe and Japan had problems and the US was stronger than before. Thanks Mr. Kissinger! I am worried that Bush plans the same game again.
A: If you wish to make God laugh, tell Him/Her or It your long term strategy. That worked 30 years ago, probably more by mistake than by preplanning. This time around any such strategy would fall flat on its paper bum.
Q: Start with Iraq, than increase the problems with the Saudis.
A: The Saudis have serious problems, but more with the longevity of the Royals if they do not support the Fundamentalists. Do not count on the support of the Saudis for Western interests that are contrary to the interests of the Saudi Fundamentalists. Saudi Arabia as a US outpost in the Mid East is history.
Q: Result: Oil 40 dollars and more. US energy companies will prosper.
A: Is that not a given in the present Administration in terms of coddling special interest to some degree?
Q: The world needs dollars to pay energy bills...
A: You speak of oil revenue settlement in dollars as if it was the 11th Commandment. It is not. It simply was practical 30 years ago before Islam flexed it muscles and before all the quiet money in the world that has undergone the laundry process surfaced in Asia where the long arm of Washington and Interpol (Washington West) does not reach. 30 years ago names like Chase Manhattan, First National City Bank & JP Morgan were pronouncement made in solemn tones, quietly due to the sanctity of their financial structure. Today things are quite different. Your money is safer being run in markets by Dr. No and Hung Fat under the account title of "Malaysia Plumbing Ltd." on deposit in Salaam Brokerage Services Ltd. of Hong Kong, than on deposit in the leading banking institutions of the western world.
There is $72,000,000,000,000.00 that has been sucked dry of earnings back to their creators and now is outstanding like a skeleton of their former self. But they are made of material that portends TERROR for the Western world financially and like plastic, cannot be gotten rid of. Yes, the Mountain of Derivatives are not functional financial items. The Derivative Mountain is a pile of bankrupt constructions like the huge oil loss and now huge gold loss. Just read the text that major Universities teach from on these Weapons of Financial Terrorism, built by the uncontrolled greed primarily North AMERICAN. The basic premise of modern (sewage) unlisted derivatives is all dislocations in financial relationships return in time to equilibrium. Therefore NEVER-NEVER ABANDON a DERIVATIVE. Now you know why the oil companies sit with a $600,000,000,000 loss in derivatives waiting for the relationships to return to what they call equilibrium. What that means is they pray for the return to previous market conditions. This is why, IMO, gold producers do not cover their entire derivative books, assuming they could, and the gold cartel sits with $300,000,000,000.00. Kids, today, they are going to kill us all with Nintendo Finance.
Q: ... with the dollars are over for the US. The only real problem: History will not always repeat itself.
A: History does repeat itself, but not exactly. If History did repeat itself exactly, then derivatives are right. They are not.
Q: Therefore, I think Bush is playing a dangerous game but using your comments with all this derivate positions and the other problems in the financial markets, there is may be no other way out.
A: Wow!!, I just spent three quarters of a hour with my coffee in hand, my dog feeling abandoned, making my case and in your last sentence you knew it all along. Extremely well done! Well, review never hurts as others will read this. Someday, I will learn to read the question entirely before launching into answers, maybe? However, look what you drew out of me. Thank you.
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RE: Why Doesn't the Asian/Islamic Interest Take Gold Higher?
From: Jim Sinclair (Q & A context)
Date: 9/12/2002
Q: You have mentioned on many occurrences that the primary buyers of gold are of Asian/Islamic origin. You have also mentioned that gold is traded globally and the primary buyers would care less if COMEX trading was halted. We also have seen, on occasion, the cartel hitting the access market hard to bring the gold price down in a time period that is thinly traded.
A: Who do you think bought the gold in Australia? A USA or GB interest? Hardly. Why do you think a long-term bull interest has to stand at a price when the sledge hammer boys arrive? Why pay $5 or $10 higher, when you can get it cheaper and you know it is going much much higher in time?
Q: My question is this: Why do we not see major gold buying by these Asian interests in the overnight Hong Kong market which might create a huge uptick in the price of gold overnight which might catch the cartel off guard so to speak?
A: That is unprofessional and total contra-productive because:
1. When you know there is a short out there equal to all the gold in all the central banks on Earth, why pay up?
2. When you totally understand the 5 Fundamental Criteria for a long-term gold bull market, why pay up?
3. When you know the real reason behind discussion of the Gold Dinar, why pay up?
4. When you know you are the only real buyer of size and have been for the past six year with the money and dedication to continue, why pay up?
5. When your real target is not the $300,000,000,000.00 in gold derivatives, but the worst Terrorist Act in the history of Mankind which is the building of a $72,000,000,000,000.00 Mountain of Sewage called Derivatives, why pay up? When the pile of derivatives begins to burn, it will impact more lives than all the terrorist acts in history all put together. The mountain of greed driven, over the top, maniacally insane derivatives is a combined act of financial terrorism. As the public now wants amoral corporate executives given long hard jail terms, they will want any attached to derivatives publicly executed. Why pay up?
6. When you know that the gold cartel subsidiaries of major investment and commercial bank dealers have sucked by phony mark to markets all the profits real and spurious out of this mountain of derivative sewage into bonuses and phony corporate earnings, why pay up?
7. When you know that you have the power to topple not only the gold derivative, but all derivatives in time, why pay up?
8. When you know that by toppling the gold derivative that the price of gold will rise to between $1450 & $1700, why pay up?
9. When you know that the event of the gold derivative meltdown will shake the tree of all derivatives sending the dollar into a NASDOG-type wide open break, why pay up?
10. When you know that gold will reenter the monetary system by the resuscitation of the now sterilized Gold Cover Clause as an enforced ethic, why pay up?
Do you now know why the Asian/Islamic interest does not pay up?
Q: If the gold cartel can create huge down moves in gold in overnight trading as they have done before, I don't see why the Asian interests, who you say have much more money than the cartel, can't take the opposite approach to create upward price pressure in the thinly traded time zones?
A: See above 10 points. Are we now today at $319.25 up from the low of yesterday at $314. And you are not satisfied that gold acts well? Gold had a high in the upper $330s and is now $319.25, yet many many of the gold shareholders actually ask me if gold is in a bull or bear market.
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RE: Lower Reaction in Gold
From: Jim Sinclair
Date: 9/11/2002
I believe this reaction lower in gold will be quite short and shallow from today's closing. For that reason, I now advise that, IMO, for those who have been following gold situations for purchase or buy back to tighten up their French Curve downtrends. Also watch your MACD in setting 3-6-7 and Momentum 14 day for any even slight upwards move. That is your signal for commitment. I believe that another attempt to close above $330 is not too far distant.
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RE: Gold Approaching $330
From: Jim Sinclair
Date: 9/9/2002
As gold approaches $330, I an inundated with one question that needs immediate clarification. I respectfully request that you post both on the General as well as Technical Q&A the following:
I still recommend sales of gold shares equal to 1/3 of your portfolio into strength as the gold market appreciates. However, sales must be Technically correct, in terms of the specific share. That means that sales of stock positions must be done for sound technical reasons based on the share itself, not the gold price itself and therefore action is not keyed off any certain gold price. There is no guarantee that $330 or $354 will stop march to higher prices. Gold shares at every key point have flashed sell signals before bullion's has. Therefore, all sales should be keyed off the technical condition of the shares and NOT any specific price of gold as gold approaches specific prices.
Now tighten up you French Curve and Power Arithmetic straight line up trend lines as gold approaches $330.
AGAIN, Sales should be made based on the TA of the share and not the price of gold.
The game played properly is to stay in your 1/3 share position as long as Technical Analysis allows you to. If you do not understand this then email me jes108@aol.com your question or fax me your chart with conclusion for my comment to 1-860-364-0673. I am inundated beyond my ability to promptly respond by emails on this exact point. I hope that this posting gives you a clear understand.
Shares make Bullion happen at key levels rather than Bullion making shares happen at key levels. The why of this phenomena still eludes me, but I am practical enough to give any constant a repetitive market event the respect I would give a Junkyard Dog.
Regards, Jim
(a lot of really really smart sumbitches named Jim
e.g. Puplava, Sinclair, Grant) |
