Investors wake up, It's time to fight back

There are some important things happening recently that we investors in the metals market need to be either aware or a part off. First of all many junior companies are being brutalized in the market from immoral and illegal market manipulation. Many companies with growing resources, growing cash flow and profits like a few of my favourites have unnatural and uncalled for short positions against them. Many miners are suffering from the illegal shorting of their stock by the very banks they have engaged to run their financing share offers. People who know these markets have example after example of naked shorting which is essentially fraud and counterfeiting of stocks. These practices dilute a company’s float and devalue the value of the stocks you hold, these people are stealing from you.

As I mentioned in the last post I implore you to listen to the last 4 weeks excerpts from the Financial Sense Newshour titled Crime of the Century, to learn about various aspects of identifying and fighting market manipulation.

Jim Sinclair of Jim Sinclair's MineSet is not only calling for a Chamber of Mines to coordinate information to find and crush the organizations who are illegally shorting mining companies but he’s also offering a $50,000 gold reward for anyone who supply “information leading to the identification of the managers or managers of the Hedge Fund pool operators illegally shorting junior gold shares.” Hell I wish I knew someone, I’d roll on them in an instant. If anyone out there has this information please do the right thing and speak up.


Since Mine Set does not break up it articles to individual pages I’ll just cut and paste his message, which I’m sure he wants spread any way he can.

Dear CIGAs,

I respectfully request that each member of the JSMineset community send this missive to the management of their precious and base metals junior investment company. Please follow up on it to be sure it has been reviewed.

Strength In Numbers

The junior producer and exploration and development companies need to consider the formation of a Chamber of Mines for this section of the industry.

This Chamber should be free of any individual company agenda, free of fees and other interferences with the singular intention of protecting our shareholders from being attacked by those in the shadowy part of finance.

There are close to 2000 companies in this part of the industry, many of which are experiencing the same extreme nuisances.
The naked gold short seller is an entity engaged in a criminal act with a goal of doing serious injury for the purpose of profit and is therefore a major target in terms of civil liability. The short and naked short pool operations are exactly the same but more apt to be a conspiracy to injure slightly then become subject to RICO statutes.

The job of this working Chamber of Mines as a singular unit is to pull these criminals out of the shadows into the light of day.
No matter how well they feel they are hidden there is always a paper trail going back to the perpetrator in this financial world.
Certain financial areas of secrecy in many cases do not protect the spoils of criminal activities. This may be proven soon at UBS where an officer is under arrest in the USA and is due to go to court shortly.

It does not mean anything that neither regulators nor exchanges care about the naked short or short selling pools, regardless of whether they are naked or not. If the stockholders and the company who’s values have been injured initiate civil proceedings, discovery will be full of legal opportunity. You cannot erase the paper trail that exists to every transaction.

My request is simple:
Contact the management of every junior precious metals producer, exploration and developer, asking them to contact Editor Dan at information@jsmineset.com so that the Chamber can take form.

There is no hidden agenda, no money to be collected, and no desire to stroke egos and no desire for private corporate information. I do not wish to be anything but a member. Let the organization elect its officers so we can act as one. We can speak as one. We can win as one, but we are weak when scattered as the industry is now. Organize and we are a legion. Expose the perpetrators and then it is all over. The data is there. It can be organized and it can be dissected, yielding the evidence trail of those who wish to hurt, sometime simply because they are mean, sometimes for illicit profits.

Add to that that sociopaths mistreat their associates and employees by nature. No looking may be required. It might just happen to come over the transom, even though we do not invite that.
You stockholders must push your management hard. Personally there is nothing that I will NOT do in order to protect both my and my investors’ interests.

I herewith dedicate my life, my fortune and all that I am to the identification of the perpetrators and their conduits used. Those sociopaths that take joy by inflicting severe injury for profit by conspiracy and the use of dirty tricks must be the hunted of nearly 2000 company’s determined managements and their more than 500,000 very angry stockholders.

There is only one way to defend stockholders, which is through the organization and strategy of a major offensive. Forget attorneys at this point. Regulators are of no help. A Chamber of Mines acting together can prevail.

I will even if I must go it alone.
Together we are legion. Alone and looking the other way you are a victim. I have never been a victim. No one depending on me will be a victim.

There is NOTHING I will not do to protect those that depend on me. I am livid. Enough is enough.

We will add risk to the bad guys. That proposition you and they can depend on.
Your friend,
Jim Sinclair

If you belong to Stockhouse.com you might want to join the Group Junior Mining Investors Robbed by Canadian Investment Banks. The Group appears to be taking the manipulation problem on by contacting various junior miners with Jim Sinclair's message and his offer to coordinate the creation of a group to route out these bastards. While the first couple of day was passive floundering they now appear to have a concerted effort to build a list of companies they've contacted and those showing interest in the project.

I would also advise you once again to read some excellent work by Ted Butler, this time he shares his discovery that the Barclays Silver EFT does not have the amount of silver to justify all the legitimate shares they have sold in contravention of the ETF’s prospectus. Added to this short fall is naked short selling of shares not representing any physical silver. Today’s short position is 2.5 million ounces of silver but the all time high was nearly 10 million ounces in March.

Now the question is much silver is represented by these shares sold by the naked shorts?

Butler believes it represents 25 to 50 million cumulative ounces of silver shorted since April, this is silver people have paid for in full yet the ETF has no backing for. This shortfall if expressed in physical silver would be enough demand to make a hell of dent in COMEX inventories and in my opinion put fear in the industrial users and panic the price well above $50.
This is stolen demand that should have been reflected in the price.
Shorting on the Silver ETF is robbing all silver investors of our profits as do silver many certificates that are totally unbacked, it’s time to physical only because when these supply issues do become critical, paper silver with just be paper.


I’m an activist at heart so I’m glad to see such moves to inform investors and fight back, and you can help too. If you have long term positions in junior miners call your broker and demand your stock certificates now, this will assure you your shares are real or make your broker buy real shares to fulfill delivery. If you know healthy juniors who are heavily shorted, take a new position and demand your shares, when the pressure builds from this anti corruption movement there will be a lot of broker buying to cover phantom shares and you will make money.

If you have silver certificates demand delivery, if you don’t have that right of delivery look to buy physical silver and sell off the paper as you take delivery. We need must send the message, we will not be sold things that do not exist!; neither will we allow the market to rob us!

If you have any information or complaints call the appropriate authorities or claim the $50k in Gold reward. Demand bull boards remove suspicious bashers and make it clear to the press through letters to the editors that these issues are important. Write or call your elected officials and complain that securities laws are not being enforced and penalties for illegal trading are far too lax.

While common place to the juniors miners these illegal activities do take place in the rest of the market so spread the word to your non commodity investing friends.


On a side note, my prediction from November of $140 oil this year was short by 11 cents on Monday, Not that I like 1.35 a litre gas but I do like being right so 11 cents was annoyingly close. Oh well, hurricane season will vindicate me.

Canadian Silver Bug - this weeks stuff

Hidden Rot

One thing we have not seen much of so far is the mass of hidden paper held by non bank organizations like pension funds and Insurance companies. While some pension funds have reported lower earnings or in some cases real loses, few have actually fessed up and told the public how much exposure they have to CDOs. A friend who works for a major Canadian Insurance company tells me there is a large sum of CDOs on the ledger books which are still marked at book value not marked to market. Don't allow the lack of bad news convince you your insurance company or pension is secure especially with the news that MBIA and AMBAC have had their credit rating slashed from AAA down two levels to AA by Standard and Poor's, both companies are also on Credit watch from Moody's and could suffer further downgrades. Such downgrades change the rating on all the bonds these companies insured which represents around a Trillion U.S. dollars.

While I'm not sure of the mechanics or time frames to liquidate positions, I do know that pension funds cannot legally hold onto bonds that lose investment grade rating and should credit ratings continue to slip the market could be flooded with 10s or 100s of billions in mortgage backed paper. If such a glut of bonds hit the market there will not be nearly enough suckers willing to buy them, at least not anywhere near their book value. Once prices fall enough vultures will enter the market to snatch some of these up at a substantial discount in hope it they can be sold at a profit later. The result of this forced selling will gut pension funds and if like most people, you probably don't have an option of cashing out without losing money up front and/or without paying a huge tax bill to get at your cash.

While you may not have the means to buy a lot of metals for pure speculation both the U.S and Canada have ways to hold some form of metals in retirement accounts , see if you can find some way to divert a portion of your retirement funds in that direction as insurance against the threat of exploding pension funds.

General stuff

The economy is slowing in Europe, the U.S. and in Canada we actually announced a GDP contraction for the last reported month. I don't think this means we're in worse conditions than other countries I just believe our numbers a little more upfront and honest than the Bogus U.S. stats. Here in Ontario we've had a series of reported job cuts by automakers which is a very important segment of our economy but I can't get too worked up about it. I believe that between the coming financial crisis, oil prices and eventual fuel shortages the end of the car culture is in sight, and bail outs and bribes to GM to save jobs is just wasted money.

These most recent GM cuts are at plants that makes trucks and SUVs, but what would you expect? GM has been so intent on flogging these high end, high margin, gas hogs that they've neglected to keep up with Japan or Korea in making reasonably sized, efficient, good quality cars. How these north American automaker can continue to be so far behind the curve in reading the market for Gas prices and public demand is beyond me. Their vehicles are sized wrong, over powered, poorer quality and behind the Japanese in hybrid technology.

I have no doubt that the current recession will soon lead to GMs Bankruptcy so they can beat down the unions and shed their responsibility for a hugely under funded pension program. See how this meshes with my first warning, GM's pension is already massively under funded and what do you want to bet that the assets they do hold include a whack of these soon to be junk rated CDOs?
When you devalue the pension fund by 30-50% to cover bad investments what's left will be pitifully insufficient.

Don't expect a housing market rebound to save the CDO market, the value of the these bonds have no hope of recovering as housing prices continue to slump. There is no point in me showing you more stats when this sale that just ended in the San Diego area says it all; buy one 1.6 Million dollar home and get a second one worth $400,000 free.

Other builders have been offering mega upgrades to sell homes , lower prices, offers of a new car in the driveway and maybe some of those urban myths about agents who will do "anything" for a sale are finally coming true.

Many home builders are really hurting such as Oregon's Legend Homes which has failed to pay subcontractors after getting its main credit source cut off. Legend is playing down bankruptcy talk and has hired a restructuring expert.

Banks for the most part are still hemorrhaging but even then you can't trust their numbers as accounting loopholes are still allowing them to lie about the real damage to their books.

Lehman Brothers is facing an especially large problem as it finds itself being heavily shorted as investors either believe it's destined to crash or are encouraging it to do so. This heavy shorting follows the pattern that started the run on Bear Stearns and might be an attempt drive it into the hands of some other bank to consolidate the industry and the risk.

Money, crap and the real kind.

In the last couple of weeks the U.S. dollar has been irrationally strong but I'm not going to waste a lot of time explaining yet again why it's irrelevant to the long term trend of dollar meltdown. The last 24 hours has erased a weeks worth of hard fought dollar gains quite easily. Exuberance is one thing but when the job numbers are bad even after Government lying you know there is a problem.

Gold and silver have been bouncing around but I think they are just being played in a range while they consolidate. There have been some weird moves like the one Thursday where gold was down by a faction but silver was up by 2%. Today it looks like the dollar slap down will allow both Silver and Gold to make a strong week ending statement and hopefully signal an new up trend.

For those of you still trying to find Silver bullion

As of Wed the main Scotia Branch in Toronto, Bay and Adelaide does has some bullion but only in 100oz bars. I wanted to pick up a few small pieces but since I'm car shopping a 100oz purchase would not have been prudent. The Coin store in the arcade at Younge and Temperance has 100oz bars too, but nothing else.

Stocks

I've not mentioned my stock holdings for some time as little was happening, but in the last month I sold my position in Quinto at about 300% profit because I was very disappointed that a low ball, all share takeout by Thompson Consolidated mines was accepted by Quinto's board. This company was worth more than this offer for just the iron ore resources and the takeover gave absolutely nothing for the graphite and titanium prospects which each could have been company makers. While there may be a secondary offer I'm not very hopeful so I sold Quinto and moved it into Minefinders and Silver Wheaton.

In the last two years with Quinto and Lionore, I've actually done better with base metals than the small Gold and Silver stocks which are suffering a lot of shorting in the market. This constant shorting on companies that are in production or on the verge is insane. The spring keeps getting wound tighter on this market as good juniors get undervalued even when they are showing profits and/or increasing resources. The value on some of these companies are just stupid cheap and represent a huge opportunity should the next leg up crush the shorts as I expect/hope.

I would recommend that anyone who is frustrated by the poor prices of juniors check out the discussions on the Financial Sense News hour the last couple of weeks on stock fraud, manipulation and illegal trading. It's definitely worth listening to and if you make complaints about such activity we might finally get regulators to deal with such obviously illegal activities.

It's finally hot where I live, so I'm gonna go look for a patio and a cold one, have a good weekend

World Water Crisis

Sorry folks this was meant for a different Blog but it's impact on world stability and our finances is still important even if not metals and economics centric.

Water shortages are becoming a world wide issue as global warming and drought team up with rising populations, rising consumption and waste in a way that could make water one of the most contentious topics in next decades. Add to this a growing move to privatize and commoditize water and we have a new and compounding crisis to add to problems of peak oil and predicted famine.

An interesting article titled Coming soon, War for Water from India's Commodity online

After global warming, what is the biggest problem the globe is facing now? It is water. If you want to know the seriousness of the situation just take the case of India’s Cherrapunjee.

Cherrapunjee once boasted of being the ‘wettest place on earth’. Now also it gets around 40 feet of rain a year. However, Indian government is now seeking Israeli water management experts’ help to manage and retain water that today sluices off the area’s deforested landscape so that the area can get water when there is no rain.

Take another example of Rajasthan where lakhs of people (almost always women) spend hours per day carrying water up to several miles for their family’s needs because no source is close at hand.

On the other side of the globe, in Barcelona, Spain, people are paying a fine of $13,000 if they were caught watering their gardens.

According to media reports, a tanker ship is docked in Barcelona this month carrying 5 million gallons of precious fresh water and officials are scrambling to line up more such shipments to slake public thirst.

Again, Cyprus is ferrying water from Greece. Australian cities are buying water from farmers and building desalination plants.

Thirsty China plans to divert Himalayan water. In southern California, citizens are bracing to face water-rationing.

So, the world may go to war for water in the coming years. Experts say that water is the oil of this century.

Blue Gold
According to researchers, developed nations have taken cheap, abundant fresh water largely for granted. Now global population growth, pollution and climate change are shaping a new view of water as “blue gold”.

Global water markets, including drinking water distribution, management, waste treatment, and agriculture are a nearly $500 billion market and growing fast.

But governments pushing to privatize public water systems are colliding with a global “water is a human right” movement. Because water is essential for human life, its distribution is best left to more publicly accountable government authorities to distribute at prices the poorest can afford.

According to experts, the world is at a transition point where fundamental decisions need to be made by societies about how this basic human need is going to be provided. The profit motive and basic human need for water are just inherently in conflict.

What’s different now is that it’s increasingly obvious that the world is running up against limits to new fresh water supplies, says a water expert. It’s no longer cheap and easy to drill another well or dam another river.

The idea of “peak water” is an imperfect analogy. Unlike oil, water is not used up but only changes forms. The world still has the same 326 quintillion gallons.

But some 97 per cent of it is salty. The world’s remaining accessible fresh-water supplies are divided among industry (20 per cent), agriculture (70 per cent), and domestic use (10 per cent).

Meanwhile, fresh-water consumption worldwide has more than doubled since World War II to nearly 4,000 cubic kilometers annually and set to rise another 25 per cent by 2030.

Up to triple that is available for human use, so there should be plenty, the report says. But waste, climate change, and pollution have left clean water supplies running short.

The world has ignored demand for decades, just assuming supplies of water would be there. Now people have to learn to manage water demand and – on top of that – deal with climate change, too.

Population and economic growth across Asia and the rest of the developing world is a major factor driving fresh-water scarcity. The earth’s human population is predicted to rise from 6 billion to about 9 billion by 2050. Feeding them will mean more irrigation for crops.

Increasing attention is also being paid to the global “virtual water” trade. It appears in food or other products that require water to produce, products that are then exported to another nation. The US may consume even more water – virtual water – by importing goods that require lots of water to make. At the same time, the US exports virtual water through goods it sells abroad.

As scarcity drives up the cost of fresh water, more efficient use of water will play a huge role, experts say.

In the US today, about 33.5 million Americans get their drinking water from privately owned utilities that make up about 16 per cent of the nation’s community water systems.

But private companies’ promises of efficient, cost-effective water delivery have not always come true. Bolivia ejected giant engineering firm Bechtel in 2000, unhappy over the spiking cost of water for the city of Cochabamba.

Last year Bolivia’s president publicly celebrated the departure of French water company Suez, which had held a 30-year contract to supply La Paz.

.Private water industry officials say those pushing to make water a “human right” are ideologues struggling to preserve inefficient public water authorities that sell water below the cost to produce it and so cheaply it is wasted — doing little to extend service to the poor.

Global warming isn’t going to change the amount of water, but some places used to getting it won’t, and others that don’t, will get more. Water scarcity may be one of the most underappreciated global political and environmental challenges now. Water woes could have an impact on global peace and stability.

China & India
In the developing world – particularly in China, India, and other parts of Asia – rising economic success means a rising demand for clean water and an increased potential for conflict.

China is one of the world’s fastest-growing nations, but its lakes, rivers, and groundwater are badly polluted because of the widespread dumping of industrial wastes. Tibet has huge fresh water reserves.

While news reports have generally cited Tibetans’ concerns over exploitation of their natural resources by China, little has been reported about China’s keen interest in Tibet’s Himalayan water supplies, locked up in rapidly melting glaciers.

Himalayan water is particularly sensitive because it supplies the rivers that bring water to more than half a dozen Asian countries. Plans to divert water could cause intense debate.

Tibet is not the only water-rich country wary of a water-poor neighbour. Canada, which has immense fresh water resources, is wary of its water-thirsty superpower neighbour to the south.

But don’t look for a water pipeline from Canada’s northern reaches to the US southwest anytime soon. Water raises national fervor in Canada, and Canadians are reluctant to share their birthright with a United States that has mismanaged – in Canada’s eyes – its own supplies.

The lack of clean, safe drinking water is estimated to kill almost 4,500 children per day. In fact, out of the 2.2 million unsafe drinking water deaths in 2004, 90% were children under the age of five. Water is essential to the treatment of diseases, something especially critical for children.

The world water crisis is created by a confluence of factors including climate and geography, lack of water systems and infrastructure, and inadequate sanitation, something that 2.6 billion people (40% of the world’s population) lack access to.

The future will offer less fresh water as global warming melts glacial ice that supplies parts India, China, Tibet, Andean countries and even a portion of Alberta and Saskatchewan.

Current discussions for or against bio fuels will also need to take into account water usage as the argument spreads from food or fuel to include water or fuel. Added to that, decisions will have to made balancing the importance of water for agriculture vs. drinking , water for agriculture vs. industry and with water being commercialized the danger will be that without water for industry there may be no jobs so people can afford clean drinking water.

I know that water issues are becoming very touchy in the Andes as mining companies fight indigenous peoples to tap glacial waters for ore processing and in one case they wish to blast and move a glacier to get at gold below the ice.

Canadians will find themselves under more pressure to export water to the States, we will need more water for irrigation as temperatures rise, evaporation rates will increase which may shrink lakes, and our declining infrastructure will continue to waste more water each year through leaks.

We need to work to make access to water a human right, we need moves to curb personal/industrial use as well as waste like leaks. The scale of rotting infrastructure is immense in North America, as an example, last year Atlanta suffered a drought that was close to draining their lake, yet leaks accounted for 11 million Gallons a day, 18% of the total consumption.

People and industry must start paying realistic prices for water, without creating a barrier for basic uses like drinking and cooking. We need to support the third world with water management expertise as well as weening them of water intensive crop varieties like those Monsanto's and others flog and let farmers go back to crops that are actually adapted to their conditions. The same marketing ploys have convinced farmers to buy animals that require far more water than indigenous breeds would.

It starting to get pretty crazy out there as a series of overlapping crisises are poised to jump on civilization with both feet.

False U.S. dollar hope

It get’s tough sitting down and never having any good news to share, each time I write it seems to be the same thing, housing down, bankruptcies up, inflation and unemployment up, so I took the last couple of weeks off giving all those who will not accept the reality of the U.S. dollar a little time to bask in their delusion that the U.S Dollar was putting in what they took to be a major rally, Major it was not!

I’ve responded several times in the last couple of weeks to people who write me directly but won’t post comments that nothing has really changed, that the fundamentals of a broken economy and a dying currency remained fixed, sure exports went up a bit, Chinese imports might be slipping a bit but each and every day borrowed money just barely keeps the wheels on the bus. As several people I read have asserted, the U.S. could have a 100% personal income tax rate, or close the military down and still not cover the government real financial obligations including unfunded liabilities. It’s quite simple there is no answer short of massive defaults or massive inflation with the intent to destroy U.S. Gov financial obligations at both home and abroad.

Right now this is a game of chicken, holders of U.S. dollars don’t want to piss of the U.S. or encourage a run which would cause financial earth quakes in the world economy, so the U.S. gets away with passing off its potential worthless script and debt vehicles. In the mean time the U.S. is obviously involved in massive debasement of their currency all while daring the world to pull their finger! Every one knows what will happen if the finger gets pulled but they also know you can only hold a stinker so long before it gets away regardless. It might be one hostile country who’s had enough and pulls the trigger, it could be a glitch in a trading program or it could happen incrementally like what’s happening so far, but in the end the US dollar will burn.

And don’t think the other countries of the world don’t know what’s happening and won’t eventually act to protect their self interest, even if they risk unraveling the entire system. An example would be the usually pro U.S. Philippines whose congress today urged their central bank to lower its ratio of U.S. dollar reserves. The Philippines are currently importing inflation with their current peg and the recent bans on rice exports by other countries is going to impact the Philippines very hard, they cannot afford continue riding the U.S inflation coaster and lose more buying power when they will require imports of 500,000 tones of rice to meet this years needs.

In the Philippines this conversation is happening in the open but I assure you this same conversation is happening in every central bank and in every government that has U.S. reserves, pegs to the U.S. dollar or worse still, don’t have a domestic currency and use the greenback instead. I still believe that country like Ecuador will create a domestic currency this year or change to Euros or join a new regional currency.

So what about the so called dollar rally?

The U.S. dollar index shows that 2/3rds of the recent one month rally in the dollar up to an anemic 73.757 has been washed away in the last 3-4 days of trading back to 71.888 by wed pm. The result has been strong bounce in gold and silver but since they are still below their recent highs and my predicted highs for the years definitely still a strong buy. We have another small dollar rebound this morning but it is definitely small compared to the drops in the 50 pt range the last couple of trading days and will be nothing but a speed bump on the way down.

The Canadian dollar is also strengthening from U.S. weakness and with an upward blip in inflation this month I hope the BoC stops its reckless policy lower interest rates in an attempt to catch a falling knife called the U.S. dollar.

Most years people say Sell in May and go away, but this year I’d suggest convert to gold and dig a bunker. I’m sticking to my prediction of more banks and at least one large home builder will be down for the count this year, probably sooner than later. Add into the mix insolvent high end retailers, more crashed airlines, the first wave of municipal bankruptcies and most States going into deficit and you’ve got the makings of one hell of a mess.

Not only do we have the Sub prime mess continuing but you also have bad Alt As, ARMs, commercial loans, car, credit cards and student loans defaulting and pension funds destroyed by investing in this bad paper. Do not be complacent and ignore the markets this summer the end is near and it will not matter what season we are in when the chain reaction starts. Prices are still well below their peaks and should be considered buys. Stocks, especially small producers and the better exploration plays are so far off their real value it is depressing, even more depressing that I don’t have the kind of cash available to take part in a private placement.

For those friends, family and readers who’ve ignored my calls to buy metals starting over two years ago, you’ve missed out on some serious profits, how are those bank stocks working out for you? Are they keeping up with food and energy inflation?

Summer is hard to post regularly, but I do post up relevant articles on my facebook on days I don’t have enough time to anything else, drop by if you like.

For those who were having problems sourcing physical silver, has the situation improved? Has NWT mint started delivering on time?

Canadian Silver Bug- Friday files

Bloomberg reports that other Gulf States may soon follow Kuwait’s lead and drop their dollar peg (another one of my predictions for the year)


In the words of Kuwaiti Finance Minister Mustafa al-Shimali

``Yes, there are some'' Gulf Cooperation Council states considering dropping their pegs to the dollar, which has fallen 13 percent against the euro in the last 12 months. Some countries will do what we are doing”

The problem for the Gulf States is that their peg to the U.S. dollar has them importing double digit inflation resulting from the prolonged devaluation of the U.S. dollar. The Kuwaiti's acted on this danger almost a year ago when they moved their peg to a mixed basket of currency. As a result the Dinar has appreciated nearly 8% in the last year and though I could not find the numbers must certainly have decreased their non food inflation rate since.

This is definitely bad news for the U.S. dollar and it’s probably a good bet that rampant inflation will encourage the Gulf States to move more actively towards a proposed regional currency which I doubt would be pegged to the dollar. Even before the 2010 deadline for the new currency I believe some if not all Gulf States will move to a variation of Kuwait’s currency basket peg.

Liquidity

Despite the claims bottom and a quick end to banking problems the E.U and the Fed have increased their injections into the market with announcements the Fed will increase the Term Auction Facility to $150 billion this month from the previous $100B and the EU will increase their equivalent program from the $15 Billion range to $25 billion. Yep every looks fine here.

Bottom? What bottom!

For anybody keeping track apparently Las Vegas is winning the, who can lose the most in home value contest with a whopping 22.8% loss in one year, close runner ups are Miami and Phoenix.



2.9% of non rental homes in the U.S. are now vacant and up for sale, that’s some 2.28 million houses.

We have finally reached the half way point for ARM resets and while resets will start dropping off in the future, there are still a substantial number of ARMs yet to reset. Also don't forget it takes 3 months or so for arrears to turn into defaults, and even longer for defaults to turn into foreclosures. The peak in resets equals neither the peak in defaults nor foreclosures; that may have to wait until the end of the year or the beginning of 2009.

We've not even seen any major job loss related foreclosures yet, I have no doubt that numbers will reach at LEAST 4 million vacant homes before this is over.

Food prices.

I’m all for farmers making a decent living and I know they’ve been had it hard over the last decades but the rampant speculation that is going to cost millions of lives concerns me greatly. The west systematically destroyed domestic agriculture in the third world through the use of mechanized agriculture, subsidizing cheap grain production and globalisation; in the end foreign farmers could not compete with government supported imports and went out of business, but at least they could eat cheap.

This decade after they’ve lost the skills, the access to locally adapted seed, and often even the land to farm, bio-fuels and speculations rips their means of sustenance from their mouths. While there is certainly money to be made here I’m not comfortable doing it.

Metals

We’ve taken a beating this week and my only solace is its Friday (the usual suppression day for metals) and we are holding with a little strength.

What is really annoying me is some of my stocks are at prices not seen since gold was $600 and silver $10. I honestly think the big players are shorting the juniors to cripple them in a bid to snatch up cheap resources. The juniors have operating costs, drilling to do, but they can’t borrow right now and if you depress their price enough that share offer would cause too much dilution you just might squeeze them into a corner where a cheap take over is possible. It stinks, half the shorting is probably naked and we small investors are being brutalized.

Have a good weekend,
Do yourself and the world a favour, dig up part of your lawn and plant some veggies.