Latest From Jim Sinclair on the Federal Reserve Gold Certificate Ratio

source: jsmineset.com

Jim,

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

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

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

I guess once again the US will lead the process.

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

Will it be done under the IMF umbrella?

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

Best regards,
CIGA Christopher

Christopher,

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

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

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

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

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

Regards,
Jim

Golden Comet Now Seen By The World: $1650 Target In Sight

As I write to you this evening, the very real prospect of hyper-inflation, a catastrophic currency event, is staring down the vast world of US dollar-denominated paper promissory notes. Gold is behaving like a bright comet in the sky, grabbing the attention of the keen observer and giving them an edge over others who are too distracted to look up.

The confidence model is rapidly crumbling, after many years of neglect; the US dollar bubble is finally bursting in an awesome way. If there were genuine integrity, then surely such a model would do; but the lack of sufficient moral fortitude in the hearts of men, makes it virtually impossible to have a confidence based economy for very long; because the confidence is merely an illusion and the model can only be sustained as long as the illusion persists.

On the daily chart, we see panic buying (and short covering) driving the price of gold to well above $1200 dollars. Major central banks, such as the Indian central bank, have become large-scale buyers of Gold.

It looks like my original medium-term target of $1379 is going to be upon us relatively soon. Our next target may soon be followed by a touch of the inflation-adjusted high of $1650, followed by a period of consolidation.

Gold Daily Chart: December 21, 2008 - December 2, 2009

The picture becomes clearer if we look at the inflation-adjusted monthly chart, showing the gold price action clear back to 1970. Considering official inflation statistics, we can see that gold has yet to move past its previous high, despite a vast expansion in monetary aggregates, which has occurred during the past several decades.

Gold Monthly: 1970 - 2009: $1650 Price Objective

Nobody can say for sure what will happen with the short-term fluctuations. But longer-term it is quite clear that the price of gold will move into the $5,000 range, as the reality of the need for hard assets sets in. It doesn’t take but a few billion dollars worth of gold purchases to create a significant increase in the gold price. Given all of the trillions of dollars already in circulation and the trillions planned for bailouts; the target of $5,000 will likely turn out to be a conservative target, once the dust has all cleared.

A Golden Comet in the Sky

A golden comet now lights up the sky; an omen of what is in store for our future.  Gold is up just over 50% during the last 1-year period.  Given the buying strength we are seeing lately, especially from central banks, we will likely see gold in the $1600 range quite soon.

Of course, there will be road-bumps along the way; but the general course will take us to $1650 and then into the $3000-5000 range.  Where Gold goes beyond there depends on the monitary policies of the United States and what kind of thinking takes hold as all of this inflation begins to hit hard where it hurts.

The beautiful thing about gold, is the fact that it gives us all a clear omen, which allows the wise and observant among us, a chance to prepare for difficult times ahead.  This golden comet will become ever more brilliant with the passage of time.  Perhaps most of us will soon realize what is occurring and what they must do to deal with the situation.  This situation isn’t going to go away on it’s own and nobody is going to solve the problems  it creates for us in our stead.

Gold Swiss Stair Formation Following Wedge Breakout

The Tao of Principle

Principle is originally there; just call it to mind and it is there of itself. Desire is originally not there; if you can just see through it, it disappears of itself. Stopping desire and keeping to principle are basically not two things; to the extent that you have stopped desire, to that extent you keep to principle. Nothing benefits people more than principle, yet those who keep to principle are few. Nothing harms people more than desire, yet those who indulge desires are many.

When people have desires, it is like trees having insects; consumed within unknown, before long they collapse. Those who think desire is fun do not realize desire is like fire; if you do not put it out, you will burn yourself. Your spirit will suffer from irritation, alcohol and sex will wear out your vital energy, producing illness and ulcers, so you cry out in pain day and night. Buddhists who say you suffer from your sins after death do not realize you already suffer while still alive.

–Thomas Cleary

Bill Gross: Assets Are $15 Trillion Overvalued And Fed Will Keep Rates At 0% Forever To Keep The Fantasy Alive

Henry Blodget | BusinessInsider.com

PIMCO’s Bill Gross with a great monthly letter. Here are the key points:

• Over the past 30 years, paper asset prices rose 2X as much as they should have based on economic fundamentals
• This was the result of leverage
• The asset price rise in turn pumped up the economy’s fundamentals (Soros’s reflexivity)
• The government wants to restore the “old normal” (2007) not the “new normal” (slower growth as asset prices return to trend)
• Therefore… The Fed will keep rates at 0% for at least 18 months into sustained 4% growth
• Next year, when the inventory restocking effect wears off, 4% will be tough

Bill Gross:

[I]n a New Normal economy (1) almost all assets appear to be overvalued on a long-term basis, and, therefore, (2) policymakers need to maintain artificially low interest rates and supportive easing measures in order to keep economies on the “right side of the grass.”

Let me start out by summarizing a long-standing PIMCO thesis: The U.S. and most other G-7 economies have been significantly and artificially influenced by asset price appreciation for decades. Stock and home prices went up – then consumers liquefied and spent the capital gains either by borrowing against them or selling outright. Growth, in other words, was influenced on the upside by leverage, securitization, and the belief that wealth creation was a function of asset appreciation as opposed to the production of goods and services…

My point: Asset prices are embedded not only in our psyche, but the actual growth rate of our economy. If they don’t go up – economies don’t do well, and when they go down, the economy can be horrid.

To some this might seem like a chicken and egg conundrum because they naturally move together… if long term profits match nominal GDP growth then theoretically stock prices should too.

Not so. What has happened is that our “paper asset” economy has driven not only stock prices, but all asset prices higher than the economic growth required to justify them…

[L]et me introduce Chart 2 a PIMCO long-term (half-century) chart comparing the annual percentage growth rate of a much broader category of assets than stocks alone relative to nominal GDP. Let’s not just make this a stock market roast, let’s extend it to bonds, commercial real estate, and anything that has a price tag on it to see if those price stickers are justified by historical growth in the economy.

more…

Lao Tzu on Continuity

“Looked at but cannot be seen – it is beyond form;
Listened to but cannot be heard – it is beyond sound;
Grasped at but cannot be touched – it is beyond reach;
These depthless things evade definition,
And blend into a single mystery.

In its rising there is no light,
In its falling there is no darkness,
A continuous thread beyond description,
Lining what can not exist,
Its form formless,
Its image nothing,
Its name mystery,
Meet it, it has no face,
Follow it, it has no back.

Understand the past, but attend the present;
In this way you know the continuity of Tao,
Which is its essence.”

–Lao Tzu (Tao Te Ching – Peter Merel’s Interpolation)

Lao Tzu on Love

“Embracing Tao, you become embraced.
Supple, breathing gently, you become reborn.
Clearing your vision, you become clear.
Nurturing your beloved, you become impartial.
Opening your heart, you become accepted.
Accepting the World, you embrace Tao.

Bearing and nurturing,
Creating but not owning,
Giving without demanding,
Controlling without authority,
This is love.”

— Lao Tzu (Tao te Ching — Peter Merel’s Interpolation)

What the Matrix Can Teach us About Life and Rules

Morpheus in this conversation with Neo (‘the One’) in the first Matrix movie:

‘I’ve seen an agent punch through a concrete wall. Men have emptied entire clips at them and hit nothing but air. Yet their strength and their speed are still based in a world that is built on rules. Because of that, they will never be as strong or as fast as you can be.’

‘What are you trying to tell me, that I can dodge bullets?’

‘No, Neo. I’m trying to tell you that when you’re ready, you won’t have to.’

Many years ago, I entered this movie without a clue of what to expect. Incidentally, I find that these kinds of unexpected surprises, are often the best kinds of transformative experiences. The mind has no time to prepare any expectations for the experience. Instead the mind is just hit with the new reality and must quickly transform itself in response; there is no time to filter or deflect the experience.

The Matrix exceeded my wildest expectations and instilled a newfound curiosity towards the very nature of our experiential reality. At first there was a stream of thought to the effect that, maybe we are literally plugged into a mechanical device which simulates our reality. This further brought about thoughts such as, “What in fact is reality anyways?”

If our conscious reality is simply impulses arriving via the nervous system, then the reality is quite literally a projection in our own minds and is therefore holographic in it’s very nature. This essentially means there is not a solid, tangible, world out there, as our rational minds often like to think. Instead, we have this biological operating system which constructs these rule sets, which govern our impression of reality, in order to function more effectively (by it’s own definition, of course) in our environment.

What I am getting at here is the fact that our minds have a basic rule-set by which they operate, in order to survive in the current environment. This rule-set is generally set-up for the basic survival of our biological envelopes (bodies). However, by no-means are these foundational rules concrete; they are simply the consensus that we have, as a collective, chosen to instill via the socialization process.

When I imply that the rules are not concrete, I mean there may be a different, perhaps more succinct, set of rules; which will at some point, allow us an even deeper connection with the world around us. We have to be willing to look at the current set of rules in a critical light, in order to enable our selves to do this. Clearly there is an inherent resistance to this, which seems to be a product of the Ego not wanting to let go.

If we, on an individual level, can genuinely undock from this control grid, as many have done in the Matrix; then I foresee many of the limitations which now impede our day-to-day lives falling by the wayside.

If such a movement were to come to fruition, perhaps the people who made this conscious decision to undock from the control grid and redesign reality, will again build great societies, where they and their descendants can better self-actualize. A society where novelty is in great abundance, where individuals are no longer a drain on resources; but instead a priceless asset which compounds novelty as they reflect it from their own unique perspective in order to generate a richness of experience which most of us can only dream of in today’s world.

Lao Tzu on Utopia

“Let your community be small, with only a few people;
Keep tools in abundance, but do not depend upon them;

Appreciate your life and be content with your home;
Sail boats and ride horses, but don’t go too far;
Keep weapons and armour, but do not employ them;
Let everyone read and write,
Eat well and make beautiful things.

Live peacefully and delight in your own society;
Dwell within cock-crow of your neighbours,
But maintain your independence from them.”

–Lao Tzu (Tao te Ching — Peter Merel’s Interpolation)

The Value of Worthlessness

The trees on the mountain can be used to build and so are cut down.

When fat is added to the fire it consumes itself.

Cinnamon can be eaten and so is harvested.

The lacquer tree can be used and so is slashed.

Everyone knows the usefulness of the useful

But no one knows the usefulness of the useless!

— Chuang Tzu

A certain carpenter was traveling with his helper. They came to a town where a giant oak tree filled the square. It was huge, with many limbs spreading out; large enough to shade a hundred oxen and its shade covered the entire square. The helper was amazed at the potential lumber contained in this one tree but the carpenter passed it by with a mere glance. When his helper asked him why he had passed up such a magnificent specimen the carpenter replied that he could see at once that the great oak’s branches were useless to him.

“They are so hard,” he said, “that were I to take my ax to them it would split. The wood is so heavy that a boat made of it would sink. The branches themselves are so gnarled and twisted they cannot be made into planks. If I tried to fashion house beams with it they would collapse. If I made a coffin from it you would not be able to fit someone inside. Altogether it is a completely useless tree. And that is the secret of its long life.”

— Chuang Tzu