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Jim Sinclair on Greek debt and the gold price

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Dear Comrades In Golden Arms,

Greece will fail and be rescued is all that is discussed in the financial world. Here is the real skinny:

1. Greece getting bailed out means QE (printing of money) to infinity. That means gold would rise from here to $1650 by January of 2011, or as Martin Armstrong said, by June of 2011. The dollar would fall. Equities and commodities would rise.

2. Greece getting flushed means that would enrich the CDS OTC derivative tool. Immediately the next target currencies will be attacked by this tool. Currencies will fall like dominoes. At first the dollar will strengthen, equities will fall and gold will go lower. However, soon the recognition will come that a disaster has occurred that is more serious than the Lehman flushing. Confidence in currencies will fall everywhere. Gold will then rise not to $1650 by the same time in 2011 but to $5000 and perhaps beyond.

Either way both paved the road to a single virtual reserve currency and a single Central Bank (IMF) of Central Banks.

If Greece is bailed out it will take longer for the establishment of the single virtual reserve currency. If Greece is flushed it will happen so fast you will lose your breathe.

Either way I see gold as the only reliable fundamentally correct safe harbor. Gold will play a part at a very high price with the single virtual reserve currency in order to keep gold from being a competitor with it.

Gold’s role will be in the form of the Federal Reserve Gold Certificate Ratio, not tied to the dollar, but rather tied to the single virtual reserve currency in a ratio to a measure of world liquidity. There will be no interest rate automaticity to the new form for gold’s role in a monetary system. It will follow the many articles I have written on the FRGCR but not tied to the dollar but rather the single virtual reserve currency.

Gold will not be fixed or convertible but will trade within a market as a close band of the price gold is trading at when the single virtual reserve currency is created and will lend to this construct some real validity.

I do not favor any of this, but it will occur.

There is no other possibility to this unprecedented calamity at hand.

Respectfully,
Jim

Written by Peter Cooper

March 3, 2010 at 12:16 pm

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

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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

Gold superbug Jim Sinclair explains the gold market

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Click here for the most recent interview with Jim Sinclair

When Mr. Sinclair appears on the front cover of Time magazine it will be time to sell gold but right now he is little known outside goldbug circles, so it is still a time to buy.

Written by Peter Cooper

February 16, 2010 at 9:51 am

Jim Sinclair predicts a global currency and $1,650 gold

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Dear Comrades In Golden Arms,

1. Bretton Woods was folded.
2. The floating exchange rate system is about to be folded.
3. By default or design we are going to a one-world currency and a one-world central bank of central banks.
4. For Portugal, Ireland, Italy, Greece or Spain to break off from the euro would be an expansion of the floating exchange rate system under present conditions.
5. There are presently 3 major currencies. That is the US dollar, the euro and gold.
6. The SDR was an attempt to form a single reserve currency that never took flight.
7. The SDR is an accounting unit made up of an index of currencies much like the USDX.

There is no immunity now from the size of funds seeking to speculate or manipulate markets. This type of money is attacking the debt of the weaker euro states by intention or coincidence. Their success in the Iceland situation was only the first chapter of a multi chapter play.

Central bankers fear that this type of action, most certainly if it is as successful as it was on Iceland, succeeding against the weaker euro states could easily attack the present functional reserve currencies, the US dollar and the euro.

There is an implicit fear that if the ECB refuses to or cannot sustain the debt of Portugal, Ireland, Italy, Greece and Spain the next to fall will be both the US dollar and the euro.

The states of the US are no different, in form or short opportunity, than weak members of the euro. Already major money is short California, New York and Pennsylvania debt. A pounding of state debt is as easy as the pounding of the weaker members of the euro.

Attack of a currency is primarily an attack of the debt representing that currency.

Central banks are run by bankers who used to measure their capital in millions only a few years ago. After the invention of the OTC derivative they measured their capital as today in billions. They now imagine measuring their capital both of their banks and personally in the trillions as they challenge nations, not companies.

China knows this and is insulating itself from this.

To accomplish this end whilst maintaining and increasing the value of hard assets ( assets of major players) a new single reserve currency must be functionally initiated either by default or by design.

A singular world currency must be an index of many currencies adjusted from time to time. Adjustment within its membership is the key to a common currency that the EU forgot about.

Whatever institution manages that index becomes the central bank of central banks able to create artificial money according to its allocation of the single currency index. This is what was desired of the SDR originally.

The chances of reverting to a Bretton Woods or increasing the Floating Exchange rates are unlikely.

A collapse of the weaker states of the euro would be an expansion of the floating exchange rate strengthening the market forces that will attack all nations one by one after their success in Iceland. The weakest will be the first to go, but none are safe.

The chance of an abrupt change to something new now, as above, is unlikely. The probability of moving towards a one world currency in stages over the next 5 years is a reality.

In order to make that transition a method of raising the status of the IMF and the SDR would be most likely. Such a transition would be for this entity to assist in sustaining the weaker states of the euro and the USA as the states of the USA are now rolling over harder, balance sheet wise, than the weaker states of the euro

The debt of nations is not immune to the tsunami of these speculative and manipulative funds attacking by design or coincidence, focusing on a market all on one side – short.

OTC derivatives are being used in the strategy to collapse the weaker states of the euro.

OTC derivatives are the cause of this entire trauma by design or coincidence.

Nothing has been done to curtail or reduce the ever-growing mountain of these instruments.

All that has occurred is the new means of valuation as value to maturity, and the collapse of FASB requiring market valuation. Both items repaired the appearance of the balance sheet of the financial entities by allowing a cartoon of valuations to re-enter the system.

The decision will take place that is in the best interest of the majority power of four groups ruling these bi-polar central bank meetings. Those groups are the banksters, bankers, Daddy Warbucks and politicians.

Results:

1. Gold will progressively lock price-wise in the inverse to the SDR or similar item.
2. An exchange will soon begin to trade a virtual SDR or similar item just as they trade a virtual dollar as the USDX or virtual gold as a paper gold.
3. The USDX will become redundant.
4. The ability to pay off the debt of previous reserve currencies with market de-valued paper is facilitated.
5. Currencies as a whole will decline.
6. That decline will be the SDR versus the gold price.
7. The method of attacking a currency is inherent in attacking its debt.

The answer is simple even though the problem is complex.

Reduce all your currency positions into strength. Buy gold in all its forms other than US or Euro based in weakness.

Gold will trade at $1650 and above. The US dollar continues its march in phases towards worth-less and worthlessness.

Respectfully,
Jim

Written by Peter Cooper

February 8, 2010 at 10:13 am

Gold price correction good news for much higher prices

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The pull-back in gold prices from $1,226 an ounce in December is alway liable to be interpreted as the end of the road for gold. If you look at the monthly graph this does look a bit like a spike:

But look again at the chart for the decade, and it is very clear that no price spike has actually occured:

Indeed, the pull-back since December is a good thing as it keeps the long-term uptrend in tact. Prices are simply going to go higher and follow the momentum upwards. Trends of this type are very powerful in financial markets.

A sudden upward shift towards a parabolic shape would indeed indicate that gold prices are reaching a peak. But no sign of it yet. When will that happen? Jim Sinclair has his $1 million bet open for the gold price to be $1,650 in a year’s time, but that would only be the start of a truly parabolic price uptrend.

Graphs courtesy of http://www.preciousmetalswarrants.com.

Written by Peter Cooper

February 4, 2010 at 10:55 am

Jim Sinclair a lonely bear going into 2010

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Dear Comrades In Golden Arms,

As we approach the New Year it seems the party has already begun, and the commentators are all full of spirits. I can’t find a bear in the woods.

According to them the equity market is going up, the dollar is going up, commodities are going up, and even lip service is being paid to gold, but lip service only. The conviction being blasted out there is a line up of former pro-gold guys like Faber and Rogers. Today they rolled out Barton Biggs for his bullish equity-bullish dollar forecast. Soros and Buffett have already made their contribution to a dollar rally.

Now go back to February of 2009. You could not find a bull on anything anywhere. I did an interview for a major F-TV station where I specifically said that the bottom of the equity market would occur in March 09. Even the interviewer argued with me.

Right now it is the absolute opposite even though the economic improvement given as green shots do not equal the real rate of inflation at the checkout counter.

In my opinion, the economy as a result of unprecedented stimulation is simply bottom bouncing, an experience seen in 1932.

I am posting this interview so you can travel back in time to witness the absolute opposite of the present pep rally for everything tradable that is taking place.

I do not buy this spirited party but it is damn lonely out here.

I take comfort from having seen the best of my friends in full retreat in the 70s, leaving me out there looking like an army of one.

With credit card write offs (more than 90 days past due – no payment) rising today above 10%, and unemployment staying high this recovery looks more like bottom bouncing lacking the proper input to adjust for inflation at the checkout counter.

Asia is a different story because their stimulation was more towards business than the banksters. They execute, not bail out, banksters.

As I see it gold will return and better $1224 then move on to $1274- $1278 before visiting $1650.

I would bet on Alf and Martin’s numbers more than mine.

Respectfully,
Jim

Written by Peter Cooper

December 30, 2009 at 9:23 am

Jim Sinclair’s message on gold for 2010

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Gold guru Jim Sinclair is on record as predicting gold prices will hit $1,650 by early 2011, so you would expect an upbeat message for 2010:

Dear Comrades In Golden Arms,

The US dollar represents a common economic union of states as much as the euro does. 40 US states are on the very edge of bankruptcy.

Be serious. Think about it. Don’t fluff it off because you prefer flag waving and pleasing your readers.

The difference is the euro would be stronger without Greece, Spain and Ireland. Also, don’t forget Turkey.

Gold will trade through $1224 to $1278 and then onward to $1650. After $1650 has been achieved, we will move on to Alf and Martin’s numbers.

China is trying to operate the gold market because they want the rest of the IMF’s gold.

Written by Peter Cooper

December 23, 2009 at 9:36 am