Dear Jim,

If Bernanke talks tough today all he will accomplish is a laugh from those that understand plus accelerating the momentum to the roll over. Lately, it has been a habit to call for a government rescue. Today, US auto-makers are asking the US government to basically bail them out of financial distress through a subsidy of $25 Billion. Also, Mobius says the Fed should cut rates to 1% to spur growth. This is pathetic but bail out they will. There is no question about that. I expect the US current account deficit to be much much larger and the dollar should slump like a stone. How long the US government can fool the market and foreigners holding US debt is, for me, the big unknown. Once again gold shares took a hit today. It is very frustrating. But at the end, I am sure patience will pay off.

Regards,

Dear Christopher:

I am deluged with calls and fax messages from people with call spreads, those on margin, and some speculating on futures who are telling me they are ruined. If they are invested on a cash basis they have nothing at all to worry about. What we are going through is another BLACK BOX BARF day.

You and I know that gold is going to $1,200 and then to $1,650 because of all the traffic going to the Begging Bowl Fed Window. This will crater the dollar, meaning gold must go to at least $1,650. That is an axiom that will not be cheated.

Having all this incoming crying and whining is really no fun. But what can I say. No one else is doing it so that person has to be me.

Jim Sinclair

Dear Jovanka

All the black ink below can be said primarily in three words: Black Box Barfing long positions and turning to the short side.

All the best,

Jim