Monday, May 30, 2011

Jim Sinclair, 70/30 hyperinflation occuring

Dear CIGAs,

Long speculated upon in our community, the rock and the hard place has finally become a reality. An economy not accelerating at an accelerating rate is declining at an accelerating rate. The mirage of a recovery is getting harder and harder to MOPE about. It simply is not there. We are entering a declining phase that will not end in any kind of a soft landing.

Stimulation monetarily, QE, and fiscal are like controlled substances in that the real high is on the first injection. After that, each additional stimulation of an economy must be multiples of the first stimulation in ever increasing size just in order to hold the line. QE3 is guaranteed unless the powers that be want to see a depression that will make the Great Depression look like kindergarten in the pain department.

This week we saw a European Bank forced to sell their US mortgage derivatives and the loss was a shocker. These pieces of crap are not worth the digital bits they are written on. Smart money has not let this event pass their view, and know now how broke the US financial system really is. This event broke the camouflage of FASB’s selling their souls out to politics by allowing the banks to value their mortgage derivatives at any price the bank wanted on the bank’s cartoon balance sheets. The western balance sheets of their financial institutions are raging misstatements. The system is broke. This is why there is no recovery of merit but rather a statistical aberration, which was until recently only holding the line.

Here we are at that place we have anticipated for the past 45 years knowing that all the games being played had to play out at that point where super stimulation had no effect and it became totally appreciated that even many trillions of printed money will only impact the currency and not business.

The rock and the hard place is a time when the Western World is simply screwed.

The risk of not stimulating is stagflation at a spiritual level. The risk of stimulating is stagflation at a spiritual level. The risk of doing nothing is both an economic and currency collapse of biblical proportions.

This is what the three illustrations of the skier teach. Should the Fed lose control of this, which is predictable, then currency induced cost push inflation would take gold to Martin Armstrong’s $12,500.

The odds are 70/30 right now that hyperinflation occurs. That takes gold over $1650. If the odds shift then gold starts a run to balance the International Balance Sheet of the USA and will secure Martin Armstrong’s target of $12,500.


  1. SGS - which bank was he referring to? DH @TF's blog posted - which talks of anticipated losses versus taking loss. any ideas?

    May 27 (Bloomberg) -- Dexia SA, the bank that took the most Federal Reserve discount-window help in October 2008, said it will take a charge of 3.6 billion euros ($5.1 billion) for the anticipated sale of mostly U.S. residential mortgage-backed securities and disposals of long-term bonds, loans and units.

  2. FUUUUCKKKK!!!! we are done

  3. Perhaps this can be viewed positive. Writing down non-performing(Bad) assets and clearing balance sheets may now prove to be the trend for turning money institutions capable of doing this, and surviving, around. IF they can survive, this move will increase their odds. With our core monetary system imploding, those with less exposure to that system and debt will be better able to survive. This could be seen as trend to deleverage (part from) the system. China is deleveraging by buying metals at rising rate, and ditching the acidic fiat. China is Stacking! They are clearing their balance sheet. I would keep an eye on this to see if others follow, in particular European. The largest of institutions will experience the most stress.

  4. Most of the mortgage backed securities are worth 5%-10% on the dollar, yet the SEC let's the big prick banksters value them at 100% which is total fucking bullshit making most of the US banks insolvent.

    Sinclair is a fucking genius. He's loaded with PM's and is out in the country with a huge diesel generator and 10,000 gallons of deisel and a warehouse of food and guns to ride the upcoming shit-heaval fest out.

    I have my preps, black rifles and need to score some more AG if it corrects when QE II is decomissioned at the end of June.


  5. Mexico bought 100 tons of gold in the last two months to replace some of their dollar reserves. Other countries like Russia, India and others. are transferring their dollar reserves to gold. Central banks are buying gold rather than selling using USD and Euros. Everybody is getting rid of fiat.

  6. I expect another dip before June 30 -> Aug and the debt limit debacle.

    Maybe time to take some $ off or short once we hit $40 silver again, sit back enjoy the political/market collapse show and then watch Ben sweep in with QE ( infinity ) and buy Au/Ag when its lower!

    If you super long term, 5-10 years then do not touch anything, it wont matter if you made a little more in the interim, everything will be expensive and the country will be f'ed up!