First with Financial Comment from Arabia

IMF gold sales a repeat of the 1970s says Jim Sinclair

with one comment

The International Monetary Fund announced that it will be selling another 191.3 tons of gold yesterday, a repeat of the action that failed to delay the gold bull market in the 1970s and indeed actually achieved the reverse effect.

‘This is a duplicate of the IMF action in the 1970s,’ commented veteran gold trader Jim Sinclair on his website. ‘It turned out to be the most positive event as each time the IMF held an auction of their gold they facilitated entry for large investors at singular prices.

‘It will be no different this time around. Gold will rise because of IMF selling as it did in the 1970s. I assure you that history will repeat itself on the same circumstances.’

Bigger gold deals

Indeed, the IMF sale may be just an opportunity for India or China to snap another large amount of gold for their central bank reserves. ArabianMoney hears talk all the time of very much bigger bilateral gold deals being put together in the Middle East.

Mr. Sinclair’s comments therefore ring particularly true. The IMF sale will be a headline deal but then these deal announcements are growing in size by the day.

George Soros managed to buy his $663 million stash behind closed doors before the end of the year but this market is going to get increasingly transparent. And as investors see the best and brightest going for gold then it would be surprising if this did not catch on.

Price check

The IMF announcement should just facilitate a lowering of prices so that whoever buys its gold gets a good deal, a strange way to behave with public funds but then dampening the gold price for a short while is a policy objective in itself.

The time is surely coming for gold to become the ‘ultimate bubble’ as George Soros said at the World Economic Forum in Davos. For investments in equities, bonds, real estate and even commodities will surely suffer further declines as the recession turns into a double-dipper and currency systems come under strain.

The man who broke the Bank of England in 1992 is playing for bigger stakes this time with gold as a hedge against the US dollar. IMF gold sales will help and not hinder this market position.


Written by Peter Cooper

February 18, 2010 at 9:31 am

One Response

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  1. They need the money for more emergency bailouts? Want to punish the speculators, or remind folks that the governments can hurt speculators by dumping gold?
    Think what would happen to the gold price if the USA and Canada (If the USA goes down, Canada does too) would tomorrow announce that they would begin some program to greatly increase gold production by leasing Governtment land for $1 an acre, with a tax of $1 on every ounce of gold produced from it, as part of a jobs creation program.
    It would probably never happen, but if I was a US Government official, and I began to feel that the high price of gold was beginning to threaten the value of the US dollar, I would do anything possible to bankrupt the gold speculators. I would also first make some statement to lure in the speculators, and then kill them a few months later, after they had made huge bets on my disinformation. I would have some obscure Government official make some statement, or accidentally ‘leak’, that the USA was going to begin buying gold, and then actually buy a few hundred tons, once or twice.
    Then surprise, surprise, announce the vast new gold mining incentive. Free Government land for gold mining, but only for American mining companies. I might also then say that the USA was considering gold sales from the World’s largest gold stockpile. Then invite TV reporters to witness the first actual gold sale transfer. “We have found so much additional gold in Alaska, that storing it all is getting too expensive. So we have decided to occasionally sell a few hundred tons.” Would you want to own a lot of gold on that day, that you bought at $1,200 an ounce? Maybe, maybe not.
    Don’t think such a thing can NEVER happen. If the Government feels threatened, they will do almost anything to remain in power. Ask the 3,200,000 19- year old men who got sent (some volunteered, and I salute every one of them) to Viet Nam to help protect capitalism from the communist system, that the fat cats thought might threaten capitalism. In case you forgot, 56,000 of them came home in body bags. Daddy never came home. The big boys only gave up, after revolution at home became viewed as a greater threat to the system, than the commies half way around the planet.
    Governments can also ban all private gold possession. They can make you sell it to the government at whatever price they wish. Sure, you can sue. Good luck with that! Ask the people in New Orleans whose homes went under 8 feet (3 m) of water due to defective levees built by the US Army Corps of Engineers that failed during Hurricane Katrina, how well that worked out for most (but not all) of them. They lost. Uncle Sam has sovereign immunity from most lawsuits. Your government probably does too. Some sacrifice is worth the price in order to maintain law and order.
    Gold isn’t like oil. The world can live without gold. You might want to think twice before investing too much of your nest egg in gold. But it’s your money. You might get really, really rich investing in gold.
    Whoa! Some guy just crashed his plane into a building which houses the Internal Revenue Service in Austin, Texas. The Government is calling it a ‘domestic incident’. Folks are mad over here in America. And crazy.

    Bill Simpson in Slidell

    February 18, 2010 at 10:48 pm

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