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Jim’s Mailbox

2009-11-14T21:13:20Z

Jim Sinclair’s Commentary

The analysis of the worsening conditions in bank failures reveals the absolute action of the FDIC turning to the Fed and Treasury to bail out the insurer of private deposits. I therefore assume that before this is all over bank depositors will get short term non-marketable Treasury paper rather than dollars in payment.

Dear CIGAs,

The FDIC closed three more banks this past Friday, 11/13/09. As was the case last week, the details of these closings evidence some very worrisome trends.

In order to get some perspective on the state of these banks it is useful to compare the statistics of the first three banks the FDIC closed back in 2007. According to the FDIC’s 2007 Annual Report, these banks had combined assets of about $2.3 billion and combined deposits of about $2 billion. The total cost to the Deposit Insurance Fund ("DIF") of closing them was $113.2 million, about 5.7% of their combined deposits.

Turning to this week, the smallest of the three banks closed, Pacific Coast National Bank of San Clemente, CA, had assets of $134 million and total deposits of $130.9 million. The cost of closing it is projected to be $27.4 million, about 21% of deposits. This indicates it was in far worse shape than the banks the FDIC closed in 2007.

The largest closed this week, Orion Bank of Naples, Florida, had 23 branches and assets of about $2.7 billion. It had total deposits of about $2.1 billion. The FDIC projects the cost to the DIF will be $615 million, about 29% of deposits. Again, this is a staggering number when compared to the banks closed in 2007.

The statistics surrounding the third bank closed, Century Bank, FSB, of Sarasota, Florida, are downright frightening. The FDIC says this bank had total assets of $728 million and total deposits of $631 million. The projected cost to the DIF is $344 million, almost 55% of deposits. It lost more than half its customers’ deposits by the time the FDIC got around to closing it.

The total projected cost to the DIF of the three closings is $986.4 million, about 38% of their combined deposits.

This week the FDIC announced that in order to replenish the DIF it is requiring banks to pre-pay three years of premiums. This will reportedly bring the assets of the DIF up to $45 billion.

Yet if the cost of bank closings continues to increase at the pace we have been seeing, the DIF will almost certainly be wiped out again in less than a year. There is another huge wave of residential mortgage-related losses coming in 2010 and 2011 as the majority of pay option ARMs reset.

This will be exacerbated by an unemployment rate that has become staggering. To cite one piece of evidence, it was reported this week that fully 22% of mortgages in Florida are non-current.

Banks will also be hit by staggering losses on commercial real estate loans coming due in the next couple of years.

Meanwhile, under the current plan the FDIC will not receive any new premiums from banks until after 2012. Until then, the U.S. Treasury will be the FDIC’s only source of funding.

Secretary Geithner may have found it politically expedient this week to claim the cost of bailing out the financial system will be less than originally expected, but a review of the facts indicates the opposite: the cost will certainly be much higher. In light of shrinking tax revenues the only way to fund these costs will be through increased debt and unrestrained quantitative easing. Any suggestion to the contrary is pure fantasy.

Compiled and presented by:
CIGA Richard B.

Jim,

I knew Armstrong would finally come around. It is coming…

CIGA Eric

Click charts to enlarge in PDF format

Eric,

Yes, it is. It is among Alf’s higher numbers.

Regards,
Jim

Jim,

Another trading entity has had a revelation after reading the prospectus.

CIGA BJS

Touradji Buys Barrick Gold Shares, Sells Gold ETF (Update2)
By Asjylyn Loder and Rob Williams

Nov. 13 (Bloomberg) — Touradji Capital Management LP, the New York hedge-fund firm that oversees about $2.7 billion, bought 2.23 million shares of Barrick Gold Corp., the world’s biggest gold producer, while selling shares in SPDR Gold Trust, the largest exchange-traded fund backed by bullion.

Touradji’s stake in Toronto-based Barrick, valued at $84.7 million, was 82 percent of its reported equity holdings, according to a filing with regulators and data compiled by Bloomberg. The fund sold off 126,000 shares of the SPDR Gold Trust during the quarter. The trust is an exchange-traded fund backed by bullion.

“In a gold bull market, you can expect the equities to outperform gold, and in a bear market you would expect the stocks to get beat up more than the gold,” said Chip Hanlon, president of Delta Global Advisors Inc. in Huntington Beach, California. “I would say it probably means Touradji is increasingly bullish on gold.”

Barrick shares rose 13 percent to $37.90 in the third quarter in composite trading on the New York Stock Exchange. Gold rose 8.7 percent on the Comex division of the New York Mercantile Exchange. The SPDR Gold ETF gained 8.4 percent.

Armel Leslie, an outside spokesman for Touradji, didn’t respond to requests for comment.

More…

Dear BJS,

I would wager, yes, they read an ETF prospectus and nearly had a coronary.

I would have shifted to a mix of personally selected juniors, but hey, that is me.

I would look for a 30 multiple, not 2-3 multiple.

BJS are interesting initials, "Bertram John Seligman."

Regards,
Jim

Butler sees increasing shortage of silver, risk of exchange closing

2009-11-15T00:27:51Z

7:30p ET Saturday, November 14, 2009

Dear Friend of GATA and Gold (and Silver):

If Stocks Tank, Shouldnt Gold Soar?

2009-11-16T09:49:48Z

Large banks and more recently pension funds have suddenly become infatuated with gold. They chant the mantras that gold bugs have known for years: gold is a store of value; owning gold is financial insurance; an ounce of gold will always buy a good suit.

Gold Market Update

2009-11-16T09:49:40Z

On longer-term charts gold looks great here as it accelerates away from its recently completed 20-month consolidation pattern. The prospect is for a powerful, steep multi-month advance, punctuated by mostly brief periods of consolidation.

Silver Market Update

2009-11-16T09:49:39Z

Silver Market Update

2009-11-15T16:27:12Z

The performance of silver this year relative to gold has been paradoxical - on the one hand it has outperformed gold, while on the other it has yet to make new highs. The explanation for this behaviour is of course the fact that silver got trashed last year during the general market meltdown, when it dropped in percentage terms much more than gold, and thus this year it has had much more ground to make up.

ETF Commodity Trading Analysis & Charts

2009-11-16T09:43:29Z

ETF Commodity Trading Analysis & Charts Commodities continue to perform well as the US dollar tests the October lows. If we step back and take a look at the weekly charts of the gold, silver, oil and natural gas ETFs we...

Gold, Oil, and the US Dollar

2009-11-16T09:43:23Z

Gold, Oil, and the US Dollar In this world we are faced with an ever changing landscape. Nowhere is it truer as soon as you learn the game, the rules are changed. For instance, we are told that gold...

Gold and Silver Market Update

2009-11-16T09:43:18Z

Gold and Silver Market Update By Clive Maund On longer-term charts gold looks great here as it accelerates away from its recently completed 20-month consolidation pattern. The prospect is for a powerful, steep multi-month advance, punctuated by mostly brief periods of...

Gold Will Reach 2,000 USD In The Next Decade

2009-11-14T18:19:00Z

"Just to get back to the old high back in 1980, adjusted for inflation, the price would need to be over $2,000 now. So we'll certainly get there some time in the next decade." in Bullion Vault

GOLD - faking with Tungsten

2009-11-15T14:04:00Z

DonHarold: Death of the Dollar: Party Like It's 1997

2009-11-14T17:57:00Z

Why Electric? Why Lithium? - EV Innovations, Inc. TNR.v, CZX.v, SQM, FMC, ROC, TTM, TM, WLC.v, LI.v, RNO, NSANY, GOOG, AAPL, RIMM, BMW, DAI, BYDDY, F,

2009-11-14T15:10:00Z

With Nissan Leaf on North American tour and International Lithium on its roadshow we decided that it is time to find out new innovative companies which are working already to make Green Mobility revolution happen. We do not invest in this company and even warn you to be very careful with OTC market in U.S., which is much less strictly regulated than Venture TSX in Canada - we stay with our Lithium and REE plays, but success of green mobility depends on hundreds of small innovative companies which will bring new ideas to electric cars and infrastructure development. Mass market will not happen without major players and that is why Nissan Electric Car awareness promotion is so important, but smaller players will bring to the market necessary adaptation, geographical and product diversity in use of lithium-ion technology for electric vehicles.

Company Profile

"EV Innovations, Inc., (OTCBB: EVII) was incorporated in Nevada in 2000 and is a development stage technology company that is focusing its resources and efforts on the development and marketing of lithium-powered vehicles and products, as well as on commercial and residential properties. Everything from scooters, bicycles, mopeds, motorcycles, cars and homes are being converted successfully to zero-emission, lithium-powered vehicles and facilities.
EV Innovations opened a fully owned subsidiary in India on May 14, 2008 to create greater in-house capabilities for R&D and to tap the vast knowledge pool of engineers in India.

Why Electric?

In an all-electric car, high energy density and light weight rechargeable lithium ion batteries are used. The batteries can be charged simply by using household electricity outlets which are discharged to power electric motors with zero emissions.
Electric cars are very reliable and maintenance free. There is no need of oil changes and filter change and tuning. Electric Vehicles have fewer than 1/10th as many parts as a gas car. There's no engine, transmission, spark plugs, valves, fuel tank, tailpipe, distributor, starter, clutch, muffler or catalytic converter.
The best way to reduce carbon emissions is to utilize the ever cleaner, greener, more renewable grid to power transportation. Only grid-rechargeable cars can attain the end goal of zero-emissions and ensure fuel price stability.

Why Battery Electric Vehicle and Not Fuel Cell?

Fuel Cells consumes 4 times as much electricity per mile as similarly sized Battery Electric Vehicle.
Fuel Cells require electricity to compress Hydrogen.
Fuel Cells-Hydrogen emits 12.5 kg of Carbon-di-Oxide per kg of Hydrogen produced.
Driving range of Battery Electric Vehicle is 2 times compared to Fuel Cell Vehicle using same vehicle weight.
Fuel Cell Vehicle fueling and system is complicated compared to Battery Electric Vehicle plug-in system.
Fuel cell hydrogen tank safety is a major concern.

Plugin Vehicle Facts

Battery Electric Vehicles (EVs) are by far the most efficient vehicles in the world.
According to the Department of Energy, enough excess generating capacity exists at night in the U.S. to charge 180 million EVs without adding any new capacity.
All of our electricity is domestic except for a small percentage from Canada.
Most people worldwide waste more electricity in their homes than they would use to drive their cars.
We will never fight a war over electricity.
Driving on electricity from the U.S. grid is far cleaner than driving on oil.
A survey of EV owners found that 48% of them used solar energy to power their houses and cars.
EVs by the millions could be built today.
Plug-in cars capable of 50 miles per day would meet the needs of 80% of the American driving public. Source: U.S. Department of Transportation

EV INNOVATIONS, INC (OTCBB: EVII) ANNOUNCES THE CONVERSION OF ITS FIRST LITIUM-ION FULLY ELECTRIC TRUCK
Mooresville, NC
November 13, 2009
EV Innovations Inc. (OTCBB: EVII) http://www.evinnovations.com/, 21st Century Design & Engineering of emission-free automotive propulsion systems using the latest lithium battery technology, is pleased to announce that it has just completed the conversion of a 12,000 GVWR (class 3) cab and Chassis truck to all electric lithium ion."

Gold: investor demand remains strong as price hovers around 1100/oz

2009-11-13T16:53:20Z

Harrods reports strong sales of gold with the 100 gram bar the most popular.

Gold Seeker Weekly Wrap-Up: Gold Ends the Week at a New Record Closing High

2009-11-13T21:20:29Z

Gold traded mostly slightly higher in Asia and London before it dipped in early New York trade to see a loss of $3.30 at about 9:30AM EST, but it then stormed back higher midday and ended near its late session high of $1117.30 with a gain of 0.92% at a new record closing high. Silver followed a similar pattern and dropped to see an almost 1.5% loss at as low as $17.015 by about 9:30AM EST, but it also rallied back higher in late trade and ended near its session high of $17.43 with a gain of 0.41%.

COT Silver Report - November 13, 2009

2009-11-13T20:33:13Z

COT Silver Report - November 13, 2009

It's About Gold, Not Inflation or Deflation

2009-11-14T12:52:49Z

Gold's getting ready to have a short-term correction if it didn't start today. Trying to game short-term corrections in a raging bull market is a fool's game and there's no reason to do it. Simply buy on sharp pullbacks and hold on.

Gold in Not Dollars

2009-11-14T12:52:24Z

Gold in Not Dollars by Adrian Ash BullionVault Friday, 13 November 2009 Non-US investors haven't enjoyed the same stock rally as Wall Street. Whereas in gold... "THE DOLLAR is still driving gold," agree the analysts, pundits and chart-watchers now scratching their...

If Stocks Tank, Shouldn't Gold Soar

2009-11-14T12:52:17Z

If Stocks Tank, Shouldn't Gold Soar? Have you seen or read ANYTHING like this in the past two weeks? --> November 13, 2009 The following article is provided courtesy of Elliott Wave International (EWI). For more insights that challenge conventional financial...

Are Gold and Silver Overbought?

2009-11-14T12:51:51Z

by Troy Schwensen. "Last issue we discussed consolidation patterns in the gold price and how everything had set up nicely for a significant rally. Gold was trading at US$991/oz and the stage was seemingly set."