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Jim Sinclair on the $1.50 euro battle ground

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We are in a storm of verbal intervention where the US dollar is concerned.

Everything from statements that cannot be based on data such as the US dollar is “the mother of all carry trades,” to the warnings to the East by Western Central banks not to apply currency controls as they are ineffective, to the Maginot Line drawn in the sand in the Euro at $1.50, are all structured to slow down the decline of the US dollar at a critical point in its descent.

On the other side of the coin the fundamentals for the dollar are not supportive.

All the moves towards currency diversification by central banks remain in place. Many central banks and Vietnam by increasing its importing of gold are following in the footsteps of India and China.

There is no question that there are governmental stops in the price of gold. If you read Armstrong’s conviction last evening, you know about the effects of imports and the ongoing long-term problems in the housing market and financial sectors that render no fundamental support for the dollar.

As the dollar makes it’s way below key levels already outlined to you and gold moves toward $1650 and beyond, there will be times like now where the advice of top callers seems rational, but is not.

I do not address my comments to those seeking a tip sheet or who are traders. I see that as contra-productive in the gold field now.

Understanding what is happening in complex currency trades, the impact of imports/export, and the financial industry that is now able to mark up toxic paper at will is not easy.

We have traveled together from $248 to the present level.

Those who have been here from the beginning will recall that when gold passed $529.40 it entered into a runaway and trading was suggested only for professionals.

I would like to reiterate that it is only going to get harder between here and $1650 and after on the way to Alf and Armstrong’s numbers. Swings can be hundreds of dollars from high to low in single days.

Look at this as insurance unavailable anywhere else.

Treat gold like the insurance policy it is with your gold and gold related item cost being the cost of the arrangement.

Ask yourself if you are succumbing to a top caller if you really want to be long dollars for any appreciable period of time.

Do not be run ragged by algorithm and hedge fund trading. Carry markets can be extremely violent.

Look at CIT and Middle America. Look at unemployment, and do not succumb to the new normal in a depraved economic world.

Have courage because you are going to need more than you already have called upon.

I am here for you to the absolute ability of one man communicating. Speculate if you must, but don’t call me when you hit the fan.

For those that understand the insurance character of gold, stand strong and stay the course.

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Written by Peter Cooper

November 21, 2009 at 9:03 am

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