Citi Saved, Nation Destroyed
By Kalidas Ref: 0905-027 of 4-May-2009
So they did it again. The investors applauded. CNBC reported that the financial sector appears to have bottomed out, and the market is up 10% in just under 3 days. The market could not have been wrong. They say the market is ahead of the events by 6 months. If that was so, why did we lend into deepest recession in post-war history. Who remembers that? The people’s memory is like RAM (Random Access Memory) which remains so long is the power up and running. The moment the power is switched off, the memory is gone forever.
It was carefully planned conmen’s game. The crooks are always suggestive so that the target does exactly what is required of them.
Look at the past events, only 2 months back. Note the following:
1. Citigroup was in dire trouble. The President and Senate were obliged to release $ 45 billions in cash in the form of Preferred Perpetual Shares with 10% coupon. It was Paulson’s brilliant idea. He may have told the President, Senators and American tax payers that they would earn 10% income by way of dividend, in addition to rights to subscribe to Citigroup’s shares under warrants attached.
a. Everyone believed them. Wow, we are getting 10% return when we are getting only 1% while lending to various banks. Excellent. And we will make money in equity too. What a fantastic idea.
b. No one asked them how Citi is going to earn when dividend servicing cost of this deal alone will be $ 4.5 billions annually. This is in addition to similar servicing costs payable to other large Middle East investors.
c. Money was released in the name of TARP. As soon as this purpose was achieved and the money was already in the kitty, these guys allowed a few days to pass. They observed that direct injection of cash was not helping them. The losses will have to be written off in the books of the bank and any money they receive from the Fed or Treasury will straight away go to write off that debit. No money will go to the market by way of lending.
d. The trio thought that this was a problem. We do not want to write off the amount from the Citigroup’s books. It also needs another does of $ 300 billions. The President and Senate will not simply release more funds if Citi goes on showing more and more losses.
e. The devil’s mind started working. Target: to get $ 300 billions; Aim: Not to show any losses in the books of Citigroup, otherwise it will be officially bankrupted. What to do?
f. IDEA – a Great Idea – Paulson appears to have screamed in the sound proof cabin.
i. Hey, Pandit – you do the following:
1. We will not give you cash, because it is impossible.
2. We have given you $ 45 billions. You better give the treasury $ 7 billions of guarantee premium and we (US government) will guarantee your obligations falling due.
3. Those junk assets when backed by the AAA rating of US government will soar. Those holders can discount those bonds with their bankers because they are backed by the guarantee and full faith of the US government.
4. Since these bonds have become realizable assets, you do not have to make any provision in your books. Although it is your bad assets, it will not be bad assets any more. They are now fully insured by the US government.
5. So you will not write off these bad assets in your books. They will now be US government’s troubled babies.
6. When you get the demand for payment under these bonds, simply redirect them to US government and ask them to pay under the guarantee for which you paid guarantee premium of $ 7 billions.
7. Pandit: Wow, great. You gave us the brilliant idea; we no longer have to write off any more bad assets. But US government will have to write them off one day in their books.
8. Paulson : Yeah, one day. By then, you will not be there, I will not be there, and perhaps this Bernie too may not be there. And who cares?
9. Pandit: Excellent. But what do I do for $ 45 billions already borrowed. I do not have money to pay even 10% dividend, forget the principal.
10. Do not worry… Bernanke will take care of it. Hey, Ben, you better convert those PPS (Perpetual Preferred shares) into common equity immediately so that Pandit does not have to bother about the dividend servicing.
11. DONE. I will take care of that. Said the Bernanke
12. Now Pandit, since you do not have to make any provision for $ 306 billions and you do not have make any payment of dividend on preference shares, you can write a memo to your staff that you have the best quarter since 2007. Your stock will soar.
13. Did you buy any? Pandit asked.
14. I have the right to remain silent, said the other guy.
This is what appears to have happened a day before.
When the Citi lost $ 45 billions and Fed gave them $ 45 billions as capital, following entries could have been passed.
1. Debit : $ 45 billions -Cash account (being sum received from the Fed)
2. Credit : $ 45 billions -Perpetual Preferred Share Capital (to US government @10% div CPN)
3. Debit : Profit & Less Account $ 45 billions (Amount written off)
4. Credit : Toxic Assets (Toxic debt assets – also contra of Toxic liability)
5. Debit : $45 Billions – Toxic Liability to Customers (could be X? We do not know)
6. Credit : $45 billions – Cash withdrawn to make the payment to the creditors
7. Debit : $45 Billions – Perpetual Preferred Shares (to US Government) to convert to common.
8. Credit : $45 Billions – Common Stocks issued to US government
9. Debit : $45 Billions – Common Stocks Issued to US Government (Capital written off)
10 Credit : $45 Billions – Profit & Loss Account (Under Item 3)
Final result – TARP fund issued by US government for issue of Perpetual Preferred Shares is finally written off by first converting into Common stock and then by way of reduction of capital of common stock to write off the debits in profit & loss account (now intangible assets)
Under above scenario, the losses are written off in the books of Citigroup because the TARP fund issued for PPS capital were required to be shown in the books of Citigroup. Also note that there was no need to convert Perpetual Preferred Shares into Common Stock in the name of boosting capital of Citigroup because both were Capital – one was Preference shares and other common stock. (Equity). Under the law, both were acceptable form of the capital, ranking subordinated to debt. What was the motive? Here is the possible answer.
While seeking approval of $ 700 billions under Paulson’s Plan, the Senators and President were told that they were going to give the funds to Citigroup with 10% dividend coupon. That is, US government was to earn 10% from Citigroup, that is, $ 4.5 billions per year (on $45 billions lent). By transferring to common stock, the dividend coupon was compromised, and the US government’s priority for preferential treatment of asset distribution in the event of insolvency was also compromised or watered down.
So first, these guys tell the Senators and President that US government or Tax Payers will earn 10% on amount lent to obtain their approval under TARP funds. Then, these guys convert PPS to common stock to forego 10% dividend, and then reduce the Equity capital to write off the debit in the Profit & Loss Account. In short, US government loses $45 billions within 6 months.
Now, see the interesting part for guarantee of $ 306 billions issued by US government for toxic debt held by the Citigroup. In this case, the guarantee was designed in such a way that the losses are not written off in the books of the Citigroup. As result, the Citigroup would not be showing any losses for next 4 quarters. The losses would be ultimately written off in the books of Federal Reserve as under:
Current Position in the books of Citigroup:
11. Debit : Toxic debt of $306 billions held by the bank (market value Zero)
12. Credit : Toxic liability of $ 306 billions payable to other creditors (could include X)
The item under 11 will need to be written off to the debit of Profit and Loss account if direct funds were received from US government under TARP.
To avoid the writing off such huge amount in the books of Citigroup, Paulson/Bernanke designed the guarantee route. They showed to US government that Citigroup would give $ 7 billions as guarantee premium to US government for arranging its guarantee. The US government is led to believe that it is just getting the income without letting out actual funds, because the guarantee does not involve movement of funds until it is invoked.
It is like we pay insurance premium to insurance company to obtain their guarantee for insured act. If the insured act materializes into real liability, then only the insurance company would be required to pay.
So these guys Paulson and Bernanke showed “moon” to the US government that they will get a premium income of $ 7 billions without telling them what it was getting into – massive deferred liability of $ 306 billions in near future.
As soon as the Toxic debt is guaranteed, the worthless junk securities are elevated to AAA credit due to the guarantee of US government.
When the Citigroup faces the claim from creditors for $306 billions,
- It will hand over the corresponding toxic debt now guaranteed by US government to the creditors.
- It will pass the contra entry in its own books as under:
a. Debit : $306 billions Creditors Account in discharge of obligations
b. Credit : $306 billions of Toxic debt transferred to the creditors.
c. In short, the Citigroup balance sheet size is reduced by $ 306 billions (both assets and liability of equal amount are reduced)
- The creditors have two options -
a. either to demand the repayment of the Citigroup’s liability
b. OR sell the Toxic debt to the market.
- When the ultimate market beneficiary of the guaranteed toxic debt needs payment, it will approach the Citigroup for payment. Citigroup, instead of making payment, will direct the claimant to the US government to demand the payment under its guarantee.
- In short, Citigroup will no longer need to write off the massive loss of $306 billions from its own book. There will be no longer losses every month. It will begin to show the profit showing the world that recovery process has started working for Citigroup which is a myth.
- The US government when facing the claim of $ 306 billions under the guarantee, will need to write off the amount in Fed’s balance sheet. In short, the debit-able losses of Citigroup will be finally written off in the Fed’s balance sheet, not Citigroup’s balance sheet.
- Supposing a top Investment Bank (X) is owed by Citigroup by, say, $ 30 billions. Citigroup will hand over the US government guaranteed debt to X. X has two choices:
a. To seek the payment of $30 billions from Fed under its own name. However, it will expose its name for scrutiny later in the event of any enquiry.
b. To sell the securities of $30 billions to the market players say, A, B, C, D. These market players will ultimately demand the payment from Fed under their own respective names. Even if there is any enquiry, the name of the penultimate holder, that is, X, will not be disclosed. It can therefore avoid any scrutiny.
c. The name of X as one of the creditors or counterparty of Citigroup is strongly suspected because the Treasury Secretary Mr. Paulson belonged to that group earlier in highest executive capacity.
d. In short, Citigroup (and possibly X or its associates) were saved by the above exercise of “US government guarantee of Toxic debt held by Citigroup”. But the final victim would be the US government or American Tax Payers. They were obviously defrauded by the antics of Bernanke, Paulson and Pandit without the knowledge of the Senators, the President of the United States of America. Or American Tax Payers.
e. When the $306 billions become finally payable, no further approval of Senate or the President would be required because the deal was already approved earlier for guarantee. US government, Senators or the American Tax Payers would not know what had hit them when they have to ooze out $ 306 billions at that time. It may happen 6 to 9 months from now on depending on the maturity profile of guaranteed debt.
It will be observed that good quarterly numbers of Citigroup or JPMC or BOA are not necessarily due to easing of credit crisis or recovery of the economy. These are the acts of window dressing. The balance sheets of most of the large banks are being white washed to look them better and more palatable to the investors. The credit crisis is in fact worsening.
It is therefore not too much to say that the “Citi is saved, the nation is destroyed”. It is a fact.
Kalidas, Hong Kong
4-May-2009 Ref: 0905-027
Link to this page
Hi Kali Baba
Where have you gone.
We are missing you.
Pl. write an article soon on the current economic situation, budget, future trends etc.
Thanks
Lalaram
chitoor
lalarampandey
14 Jul 09 at 8:21 AM
Mr. Manmohan Sing has come up with his best team this time. The most attractive decision he made is making Pranab Mukherjee as finance minister, a man who have been voted as as one of the best five finance ministers in the world by Euromoney magazine.
Will this government be able to control increasing food prices.
Also do you think this government will sustain for 5 years?
Kalidas Says …. Saturday, May 30, 2009
Forget EuroMoney. Whenever they make any assertion, it is the time for the downfall of that named person. Yes, it is a good choice, much better than Ahluvalia, but still, he is not imaginative person. He is at best a donkey not trained horse. He will manage what he has. But he will not be creative. It is beyond his knowledge. He is a good politician good for the game of chess, not finance.
Food prices will not abate. It is now a worldwide phenomenon. Except for perishables like green leafy vegetables, other products will go higher and higher. Manmohan Singh will not be able to do anything.
Sachin Jain
27 May 09 at 4:56 AM
Sir,
Now congress has retained the power, what would be the impact of this on stock markets in India, FII flows, and effects of global cues.
Regards,
V.L.Raju
Kalidas Says …. Tuesday, May 19, 2009
Congress rule was expected by me, and the majority does not surprise me. The opposition is just fragmented. It is good to know that left may not have enough pull. But the congress leadership itself is not that decisive. Unless we see the young face like Rahul Gandhi, even if he is inexperienced. We need real reformist who can stick their neck out and take risks. Too much knowledge makes one too cautious. We need persons who take risks. Man Mohan Singh is not one of them.
He was there before, he is there now. The politics in India is as murky as ever. The leaders will find some other reasons for not doing, if left can not be blamed. There will be internal left radicals who might oppose the Prime Minister.
Do not expect too0 much of FII flows – they have no money. If the global market do recover, then FII will direct their money to those markets first at the cost of Indian market. Forget FII – India is still driven by local money. India no longer needs FII money to boost the market.
Global clues will still hurt the market. After victory what? Only global leads which is going to be as bad as ever. I think the present rally was culmination of bear rally. It will end soon.
raju
17 May 09 at 2:58 AM
Hi Kalidas,
This is an excellent analysis. You have cleared the fog of my understanding on what happened to Citigroup. You have generously shared your in depth analysis on this topic. That shows your expertise in your profession. Thanks for sharing this.
I was wonder-struck when I saw the news of Citigroup posting profits for the last quarter. It was terrible to see, how in the hell can a bankrupt company post profits. With your help, now I can see the “MayaJalam” behind this.
For many days you haven’t been updating your blog. So I lost track of this. It will be motivating to see regular updates from you.
Thanks,
Narender
Bangalore.
Kalidas Says …. Monday, May 18, 2009
I will be updating from now on. I am clearing up almost all pending messages today.
Narender @ NExt GOod BEts
16 May 09 at 11:56 PM
Sir….
Excellent Reserch and Analysis…..
As usual Brilliant.
Keep it up.
What do you think all this gain in STOCKs all over the world is a bubble?
What would be your judgement for Indian IT companies whoes main business is because of American Banks and Insur.
Regards
Amit Sotani
Kalidas Says …. Monday, May 18, 2009
Yes, it is a big big bubble. The major investors today are not retail investors (in the world) but the mutual fund managers. They have no place to go. The bonds are falling, banks are failing, credit squeeze is continuing, no one is lending, properties too are falling. The only left outs are Gold/Precious metals and Equities. The people being familiar with the equities than gold, and equities being easily bought and sold than gold, the markets are rising. Many are spreading the talk that most of the negatives are discounted, and that the market is always ahead of the actual events by 6 months. If that was so, why did not market tell the investors in advance when the sensex was at 21000 that bad news were in the waiting and that good news were discounted?
Most analysts are in habit of floating with the trend. They are like earthworms – who has two heads. They speak with whatever suits them most.
Indian IT companies will certainly get the business from American corporations, but not now, it will be about 18 months later. India being english speaking countries, the Americans have no other alternatives. It is only a question of timing. Right now, the time is not in their favor.
Amit Sotani
15 May 09 at 7:55 AM
Kalidasji,
I think ur prediction about “Looks like Bank Of America will be the first to go” might as well become reality soon.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aUY063JtjfFI&refer=home
Regards,
Atul
Kalidas Says …. Monday, May 18, 2009
There could be 3 or 4 banks’ simultaneous failures. Citi, BOA, and two regional banks
Atul
14 May 09 at 8:45 PM
Dear Kalidasji
Long time since you have recommended any company. Can you suggest some scrips which can be bought if the market tanks post election results?
Aatush
MUMBAI
Kalidas Says …. Monday, May 18, 2009
The market has risen by 60% and some stocks have tripled. How could I suggest those companies.
Further, I was busy in my other work, so paid less attention to daily events in India in particular. I never like to suggest any company in light hearted manner.
This time around, since blue ships have gained over 20% to 25% in single day, my immediate reaction is that the market has attained higher leg. There will be profit taking which will direct the flow of money to quality second liners.
Many second liners have lagged behind. for the time being, I will be more of a seller ( I am liquidating my IFCI position by 40%, though I do not like to part with this stock even after 90% gain).
I would not go for property or infrastructure growth stocks. They do not have fundamentals in place.
Politically engineered rally or fall in massive proportion is always an opportunity to sell or buy. Do not think. Just see the gain and book it. When the senses return to the sensex, the politically inspired rally will begin to fade and with same money you can buy more stocks of same name.
I will be more specific about some stocks in coming days. Watch my reply in this column.
Aatush
12 May 09 at 9:01 AM
Kalidasji,
Excellent article as always!!!
Do you then recommend buying Citigroup stock at the CMP of 3.3USD from trading perspective for a short term (lets say for this quarter only)?
This is because I feel that Citi might post positive result for Q2 before faltering on Q3 and Q4.
Let me know your views on the same.
-Atul
Singapore
Kalidas Says …. Wednesday, May 06, 2009
Yes, they got away from major losses by shifting losses to government under guarantee. They will be reporting less loss or more nominal profit.
Yes, you may trade with this troubled baby on short term basis. I do not play such lousy company even for trading. I always play with the good stocks. If the company makes money, the stock will also make money, is the theroam I use.
Nevertheless, short term trading is useful if you can devote good time to it. Consider the time cost from Singapore point of view while investing or trading.
I agree that Citi may produce better numbers this quarter. In fact, I expected last quarter or end March
Atul
6 May 09 at 3:56 AM
I do not agree.
CITI has 31 trillion cdoS which Govt cannot afford to fail. If citi fails, the whole system might be in chaos.
That is the reason they have rescued CITI(like other banks). How would you say that they rescued citi because they bought shares in it? If Govt allows the banks to fail, then this might lead to much worst depression…
Kalidas Says …. Wednesday, May 06, 2009
Citi did not ask US government while issuing worthless CDO and CDS. Why should government bear that loss? If size alone were to determine the decision of investing or lending, the world would be most dangerous place to live in.
Do you know that US government has so far given $ 90 billions in cash and additional $306 billions of guarantees which are destined to become real liability in next 6 to 9 months, that makes total of $ 396 billions. The entire corporate America has contributed towards Income Taxes of US$ 395 billions in 2007. this year it will be less than $ 150 billions.
How would you justify to lend entire nation’s Corporate Tax collection to single entity – Citigroup who is never going to pay taxes for next 30 years due to carried over losses?
Newmember
5 May 09 at 11:01 PM
When will one country’s own market rise or fall on its own strength by not following other markets ?
Mathi, Madurai, India
Mathi
5 May 09 at 9:44 PM
Hi Kalidas
What is your view on the Hassan Ali Tax case wherein the Tax department is asking for Rs 72,000 crores as tax. I guess his income would be around 2,50,000 crores and if so then his name should at the top of the Forbes list. Do you think this is hog wash?
Another observation is while you are predicting a very gloomy picture, yesterday the whole world shrug it off and the markets shot off as if there was no tommorrow, could you explain why?
Xavier
UAE
Kalidas Says …. Tuesday, May 05, 2009
Honestly, I do not know much about Hassan Ali Tax case. The higher tax amount may be due to penalty, not necessarily the outcome of higher income of Rs 250,000 crores. No one makes that kind of money. If some one makes 250,000 crores as pre-tax income, and prsuming 10% Net margin, it means that the annual sales would be 2,500,000 crores or US$ 500 billions, much larger than what is given to Citigroup.
The market shot up due to some reasons unrelated to India or USA. China decided to permit investment into Taiwan which engineered the rally in Hong Kong and Taiwan. Because Hang Sang went up so strongly, Indian market picked up the cues and went soaring.
I can not anticipate an event like this – that China will permit the investment into Taiwan. The politicians are doing every trick to boost the market. If China invests into Taiwan stock market, what is so big deal. Actually, it is Taiwan who is investing into China. Almost all manufacturing facilities are being shifted from China to Taiwan. Will China re-transfer manufacturing from low cost center in China to high cost center like Taiwan?
Such illogical rise permit us to sell what we want. It is a sale opportunity.
Xavier
4 May 09 at 8:58 PM
Dear Sir,
A good technical breakup ..! I think finally the numbers matter ..the clarity of books matter. I am sure 50% of the CNBC anchors wont even understand that.
Sir, you have been writing about USA a lot. But what is your view of India. Are you planning a writeup on overall economy, job situation, equity markets in india ???
Kalidas Says …. Tuesday, May 05, 2009
You will see more India from now on. Please understand that US is the key. If the key is lost, no one can go inside the house where one room is India.
Amit Aggarwal
4 May 09 at 8:55 AM
Sir,
Almost every day Iam visiting your blog to see whether any new article has come from your side.
The strength of the present rally in Indian Equity markets really puzzling, when compared to the results which are appearing. Whether the operators are taking advantage of election time to lift Indian Stocks or they expecting something horrible is going to happen in next 2 to 3 months for which they are creating cushion?
How it will affect the economy of USA for the losses suffered by FED on account of rescue of banks? Pls. comment.
Thanks
Raju
Kalidas Says …. Tuesday, May 05, 2009
I was sorry that I was absent from posting major article on the blog for over 45 days due to my pre-occupation with the book. It is over and I will be more prompt enough not to disappoint readers like you.
The markets are so down and almost every investor, government officials are so much down that any slight positive factor (which is concocted one) is treated as sign of recovery.
The real interest rates have started perking up. They are still not indicative of trend. the 10 years treasury yield has shot up by 10% from 2.91 to 3.18 or about. That means that money has started getting dearer. The days of free money will be over soon both for Fed and any other class of borrowers. The only winner will be depositors. Their good days are coming back.
Higher Interest rates are biggest enemy of stocks. Once the interest rate go higher, almost every bond fund manager will begin to lose heavily. 1% rise interest rate causes 10% losses in capital value for first 4 or 5 steps. The equity will also begin to falter. The corporate sector will again begin to feel pinch and the home mortgager will see the horror coming.
The signs are all on the extreme. How could there be recovery when people continue to lose jobs? Even in Hong Kong, the employees are being fired left and right and wages are reduced by 20% to 30%. I know a few cases where the high earning employees have started going back to India because Hong Kong is one of the costilest place to work.
We in Hong Kong feel the signs of recovery first. If the demand rises in US, the first effects are felt in Hong Kong because the orders start coming in for purchase of goods from China. Recent exhibitions were all flop, with over 40% less traffic. When the people do not want to come and see the new products, where is the question of demand materializing?
The present rally is only due to hype being fostered by business channels like CNBC. They are asking “suggestive questions” to the interviewee to get the desired answers. And who they are interviewing – same people who caused the mess.
raju
4 May 09 at 7:42 AM
Sorry, I am VC Sekar from Delhi, India.
vc sekar
4 May 09 at 7:00 AM
As usual, a well-researched and complete article. Here, the sharp movement of share price of ICICI Bank in a very short-time is worri-some. Further, in Indian banking industry, apart from the future health of industrial loans, educational loans will be a matter of more worry than even home-loans. Would like to have your views.
Kalidas Says …. Tuesday, May 05, 2009
I do not hink that educational loans will create wories for the banks. Most Indians do not like to default on educational loans because they are incurred for their children for their well being. They will be thankful to their banks. However, the default could arise if the parents themselves may develop financial difficulties due to job loss or otherwise.
If loans are contracted by the student himself without income or guarantee (which is not possible in India), then the problem could occur.
The markets are doing much better than expected that propels ICICI much higher in spite of massive losses in derivatives which forced it to raise over $ 1 to 2 billions capital (Rs 10000 crores). They may be concealing the losses for the time being, the way Mukesh Ambani concealsed the losses of RPL to the extent of Rs 8000 crores by merging with RIL.
Everyone thinks, believes and accept that the recovery is in the offing. I am not in that camp, so I am avoiding full participation in the market. I am focussing only few stocks which are valuable.I go by fundamentals first. Yes market movement also govern my recommendations. This is why I had mentioned earlier the stock specific selection regardless of the market.
Look at the HPCL. During bad market it was brilliant performer. I then mentioned that when the market recovers, this stock will be underperformer. This is what is happening now.
vc sekar
4 May 09 at 6:59 AM
Respected Sir,
Really nice article after a long wait which was due to your busy schedule now what will happen to America ,will it survive or will perish in this loot because looters are more in number and looting amount is also very huge and in this situation common American will suffer which will lead to financial suffering of planet earth as I think Obama does not have the quality to stop this nonsense?
kd chahar Pune India
KD chahar
4 May 09 at 5:51 AM
This is the original article on COMEX delivery of gold.
http://seekingalpha.com/article/129128-did-the-ecb-save-comex-from-gold-default
Rajesh
Mumbai, India
Rajesh
4 May 09 at 12:43 AM
Nice article sir, once again. Written in a way which is very easy to understand.
This is the citi story. What is your view on JP Morgan, which also seems to be neck deep in problems.
Recently, on COMEX, Deutsche bank was saved by European central bank when ECB sold over 1 million ounces of gold to avoid default in gold future trading in comex. Request your views on this and expected gold price movements.
http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=429:did-ecb-save-deutsche-bank-from-comex-gold-default&catid=51:commentary&Itemid=99
Rajesh
Mumbai, India
Kalidas Says …. Monday, May 04, 2009
JPMC is technically bankrupt. They have had 88 trillions of derivative exposures. When the lesser mortals have booked $500 billions of losses. how could JPMC remain like a teflon coated frying pan?
They also owe 1000 MT of gold to Fed which is concealed in their balance sheets. They valued their liability @ $42.22 per troy ounce whereas the current market price is $900 – 22 times
Let my book be formally published and then see the gold prices where do they go? I have written almost 30 pages long chapter on the manipulation of gold prices for many years. It also discloses hitherto unknown fact with full facts and figures.
HSBC, JPM Chase, Citicorp and UBS are the most notorious short sellers of gold and silver. Once these metals rise several times, these banks will come into severe liquidity problems.
Rajesh
4 May 09 at 12:38 AM
Kalidas
Nice articel after a long time.
What about you mentioning USA getting split some time back ? Is this one of the causes or reasons that would lead to that event if it happens and when do you expect it to happen.
I will want to ask you again about gold which I have been pursuing with you since October 2008. Yesterday the local merchant said that gold is likely to move lower in the near future. What are your views on the same ?
Regards
Xavier
UAE
Kalidas Says …. Monday, May 04, 2009
It all depends whether the President Obama is taking right steps in next 6 months or so. At the moment, he is relying more on his personal popularity than performance. However, if he does take some of the actions suggested by me in my book, then the situation will improve a lot and what I predicted may not happen at all.
Stay with the gold for some more time. At least 2 months or so. You may see scintillating performance by that time.
If you have taken leveraged position on gold, then you may to have trade it for a while, at least until 20th May, 2009. Then, just hold
Xavier
3 May 09 at 9:07 PM