3 Minute Gold News
A Quick Read for Busy People.
3 minute synopsis of the recent video interview with Jim Sinclair, called Mr. Gold, by Greg Hunter from USAWatchDog today.
From Jim Sinclair’s website http://www.jsmineset.com –
Jim Sinclair is primarily a precious metals specialist and a commodities and foreign currency trader. He founded the Sinclair Group of Companies (1977), which offered full brokerage services in stocks, bonds, and other investment vehicles. The companies, which operated branches in New York , Kansas City, Toronto , Chicago , London and Geneva , were sold in 1983.
From 1981 to 1984, Mr. Sinclair served as a Precious Metals Advisor to Hunt Oil and the Hunt family for the liquidation of their silver position as a prerequisite for the $1 billion loan arranged by the Chairman of the Federal Reserve, Paul Volcker.
He was also a General Partner and Member of the Executive Committee of two New York Stock Exchange firms and President of Sinclair Global Clearing Corporation (commodity clearing firm) and Global Arbitrage (derivative dealer in metals and currencies).
In April 2002, shareholders of Tanzanian Royalty Exploration (formerly Tan Range Exploration) approved the acquisition of Tanzania American International, a company managed by the Sinclair family. Following this transaction, Mr. Sinclair became Chairman of Tanzanian Royalty and now leads its efforts to become a gold producer and royalty company.
He has authored numerous magazine articles and three books dealing with a variety of investment subjects, including precious metals, trading strategies and geopolitical events, and their relationship to world economics and the markets. He is a frequent and enormously popular speaker at gold investment conferences and his commentary on gold and other financial issues garners extensive media coverage at home and abroad.
In January 2003, Mr. Sinclair launched, “Jim Sinclair’s MineSet” which now hosts his gold commentary and is intended as a free service to the gold community.
This is an extended 45 minute interview and I highly recommend viewing the entire video.
Why Own Gold
Physical or Paper
Bail Ins Coming
IMF and Retirement Funds
QE and Debt
Emancipation of Physical Gold
$50,000 Per Ounce Gold
Interview with Jim Sinclair
October 30, 2013
WHY OWN GOLD
Gold is insurance.
What it insures you against is everything that has to do with the confidence in which the gold currency is traded – the dollar.
So all of this debt situation, even NSA spying on our allies, anything that can affect confidence in the US dollar, is hedged (insured) by gold.
The combination is debt, dollar, and gold. That’s the influence, the items that all come down to confidence.
Confidence lost is a currency event.
Hyperinflation, which Jim expects, is not a situation of economics, it’s an event of a currency – losing confidence in a very short period of time.
Jim believes the dollar will get hammered and that we’re headed for hyperinflation. He says it’s important to understand that in every period where hyperinflation was part and parcel of an economy, business was terrible.
Everyone thinks that inflation has something to do with demand. They don’t recognize that you can get a cost push effect because currencies go into disarray, or lower. It’s a currency event or a loss of confidence in the dollar.
This will result in hyperinflation, and gold, without any doubt in his mind whatsoever, will insure the investor against this.
We have so many holes in the economy, so many holes in the dike, with fingers in the dike trying to hold it all together. There are ten, twenty, thirty events that could create a loss of confidence.
Nothing has changed. Derivatives have gotten worse. Debt hasn’t gone away, it has gone up exponentially. There is nothing that says the dollar is entering a period of strength.
Jim believes the appreciation of gold will be brought about by the BRICs, and the price of gold, when it rises to the levels he predicts, will not fall below 20% of those levels.
He believes that this takedown is similar to the two periods in the 1970s where gold dropped sharply, and where the gold banks and those considered to be anti-gold made the most on the long side in the shortest amount of time.
Jim said gold would go to $800 per ounce in 1974 and people did not believe him, because it had already gone from $35 to $160 per ounce, After that it went down from $200 to just over $100. Three years later it was back at $200.
This is similar to the last few years where we had $1,900 go down to about $1,200. Now we’re coming back up.
Jim says patterns repeat and it is the same now. No question about it.
The people who make the most money over the shortest period of time are always the gold banks normally identified with the desire to depreciate the value of gold.
PHYSICAL OR PAPER
Jim recommends physical gold because the exchange traded funds don’t necessarily own physical gold. In fact, they own gold in various derivative forms, and they’re lending of gold is controled by the same entities that are associated with the depreciation of price.
If an exchange, say the COMEX, goes into cash settlement because the COMEX inventory warehouse of gold was capable, able and ready for delivery, and goes down to too low a number, then you can expect the paper to come into question. To question the paper is to question the entire makeup.
Please read the prospectus before you go the easy way of the GLD. It’s the wrong way.
We are facing the annihilation of the currency.
We are facing the shift from America being the most influencial, leading nation of the world, to some form of banana republic.
We are facing losing our military to being a second rate country.
In the banking industry, we’re facing the possibility of a bail in rather than a bail out.
On the individual level, if it wasn’t for food stamps we would have long lines waiting for free food.
If it wasn’t for the fact that we educate every night as we watch the evening news or we watch the financial TV, and that education says everything is OK – that a bad figure was unexpected.
The spin that is put on negative things, is the spin that would give you confidence that there is a recovery in the future.
(from Elaine – this is refered to in the article Gold Rises as the Empire Wags the Dog)
The figures we’re looking at are so massaged since 1970s that it would be hard for the indices to show inflation. It would be very hard for the normal indices we look at to know the condition of the economy.
We are told we are in a decelerating recovery, which by definition is an accelerated recession.
BAIL INs COMING
Since the 1850s in British law, but also US and Canadian law, if you put your money in a bank you are an unsecured lender to that bank.
An unsecured lender.
That’s not even as good as a bond holder.
The lenders are going to take the brunt and not the taxpayers, is how this will be packaged and sold.
The problem is that the lenders are the people who are watching this interview, they think they have money in the bank. They think that money is their asset.
The moment you put your money in the bank it is no longer your asset. It becomes an asset of the bank and you become an unsecured lender.
IMF and RETIREMENT FUNDS
The IMF posed one more very important criteria for the most recent bail out – retirement funds are to be nationalized.
After that we’ve had retirement funds nationalized in Russia, where the Russians are told they will be paid back some. We’ve had retirment income nationalized in Poland, where there has been no comment on any type of pay back.
The IMF seems to be the center for all change. Ms. Lagarde seems to be the voice of change in the banking system, which will put the onus of rescuing banks on the depositers and bond holders.
It is up to the people watching this interview to come up with the losses which, if you’ll take everything into consideration with Cyprus, was a total of 83% of the assets.
If you get back worthless bank shares in a worthless banking corporation you can’t count that as money.
When you can’t take your money out you can’t call that money.
All that is money is the cheque that is actually paid out to you. The loss in Cyprus was catastrophic.
Jim believes that Cyprus is the blueprint for what will be experienced in the United States.
Bail In is written into the budget for the Canadians.
It’s written into law in the Netherlands, the United States and England.
It’s written in the BIS papers, and people can look and see that they are in harm’s way.
Jim recommends you get out of the system.
He believes it is coming to the United States and not in isolated areas.
QE and DEBT
Jim said that when they did QE 1 that they would do QE 2 and then to infinity.
His definition of infinity is 70 on the USDX.
It was a significant weakness into the US dollar that caused the original QE.
Let’s say that Bernanke was successful with QE and we were in a significant, sustained long term economic recovery without any doubt. Then they could make the money back. But it has not happened. They will never pay it back.
QE is limited to the condition of the US dollar, and the US dollar is tied to confidence. What would happen if there was a loss of confidence? A higher price in gold.
We’re not going to bring down the debt level. The US and Europe are not in a sustainable recovery.
We are in a situation that is as bad or worse than 2008.
Now we have so many fingers in so many dike and it would be a miracle if it held together.
The main strength of the dollar is petro dollars. The main source of petro dollars in exchange for oil is Saudi Arabia. If something changed with Saudi Arabia then the dollar would drop 300 points in a single day. Jim says over time the dollar would go to 56 on the USDX.
If the dollar took a big hit like that then gasoline would be $10 per gallon. It would take the Euro to very high levels. Jim believes the Euro will lead the dollar coming into 2014.
Fixed incomes would take a hit. With fixed mortgages, in history the peso in 1994 was revalued, and mortgages were reset against the new peso.
Jim believes that the currency would be revalued, and mortgages would also be remortgaged so the homeowner would not get a free pass.
Jim says you must own gold or the strongest currency.
Do not trade gold because you’re up against the best minds dealing with inside information. Jim recommends you hold gold, not shares, and no borrowing to buy gold.
Gold is going up because of policy and not speculation. His long term call on gold is based on the emancipation of physical gold from paper gold.
EMANCIPATION OF PHYSICAL GOLD
Jim says the tool of emancipation is the warehouses of the futures exchanges. If the warehouses of the future exchanges can’t be counted on to make normal deliveries then the exchanges will have to make a change in the contract in order to avoid default.
Jim just accepted a position as Chairman of the Advisory Commitee for the Singapore Gold Exchange. It will trade physical gold and not futures. It will give cash three days and gold one week.
Russia is starting a cash exchange on the Russian stock exchange. There will be five locations around the world and Jim believes Singapore will be the leading one.
The price finding mechanism from paper to physical – physical gold will be much easier to hold a price and much harder to feign supply.
Gold will take its proper position as a value. A standard.
Jim believes that half the globe is pricing their gold at market price, including the Euro.
Gold will be worn around the neck of currencies that run their businesses correctly and have the surpluses required to buy gold.
And the value of currencies will be very strongly influenced by the amount of gold held.
That’s why China is buying so much. That’s why Russia is buying so much.
2016 is when Jim sees a Great Reset after a Great Leveling.
Jim suggests that the BRICs will make the suggestions and it will be ignored by the United States. By 2020 the Great Reset will be in place, and probably claimed to be the invention of the West. That’s when we start again, like back in the 50s, with great long term industrial and agricultural expansions.
Jim predicts a value of $3,200 – $3,500 per ounce before the Great Reset. After the great reset he leaves that to other people.
The Great Flushing was Lehman Brothers. It got rid of the blue collar class – functionally it doesn’t exist anymore.
The Great Leveling starts next year, from 2014 – 2016, and will take out the comfortable middle class who are working for the corporations.
That would involve a peak in the stock market, and after that would be higher interest rates forced by the market, forced by a loss of confidence in the US dollar more than the supply of US Treasuries for sale.
The BRICs, who have been accumulating gold, have fundamentally better economies through the miracle of being able to bring people into a ‘consumption function’ who up to now were peasants. They were not consumers.
This is the Great Miracle – you bring in millions upon millions upon billions of new consumers.
That economic truth, that the BRICs have created consumers, is greater than any news of economic recovery in the west.
When the BRICs go to a system where gold reflects the value of the currency, and then say to the US, “To hell with you, we’re not going to listen to you.”, then the US will fall in line with the BRICs.
Liquidity has always been the grease of the wheels of equity markets. We have hyper liquidity and the stock market will find a value as all stock markets have.
There was a time when the Zimbabwe stock index was the finest stock index in the world. Similarly, the real reason for equities being so strong is the subjective knowledge of what hyper liquidity means to general equities. They all find a top.
And when they do the drop is spectacular.
The stock market is over extended and will become more over extended. Jim defined infinity on QE as the USDX at 70, down from about 79 where it is now, and dropping from a high of 125.
If Saudi Arabia decides to go to all currencies including US currency, then all predictions of economic recovery would fall right into the ash can.
If the dollar declined for any reason to 70 then it would be threatening a free fall and QE would have to be tapered.
Israel is beginning to paint itself into a corner with its statements of what it will do with Iran. It is better not to threaten. It is better to do, if you really are going to. Jim believes the amount of threatening comes more from weakness than from strength, and so believes it is not going to happen.
If you say you are only going to give them one more month, as your red line, what are you going to do when the month ends?
You lose credibility.
The US has lost credibility with all the red lines it has drawn.
Credibility speaks to confidence and confidence speaks to gold.
If Israel attacks Iran then gold would find higher levels because of what will happen to energy prices. If the war did not spread past the combatants then it would go back down.
If the war spread past the combatants to other areas then you would have a bank holiday because it would be impossible to trade derivatives.
The change in interest rates would be the biggest problem the derivatives would find themselves in. Interest rate related derivatives primarily make up a huge mountain of paper that the BIS has understated.
The next biggest derivative is derivatives in currencies.
Currencies in combat would start flying all over the place. So it would be impossible to trade them.
A system melt down.
There’s just feel good news camouflaging very difficult situations and too many holes in the dike at the same time – from food stamps to then currencies.
The only reason you don’t have bread lines today is because of food stamps.
Can you imagine if half of the Americans are on food stamps, if half of the Americans legitimately don’t have food?
$50,000 PER OUNCE GOLD
Jim’s biggest fear is misplaced comfort in the banking system. He believes people could lose at least what was lost in Cyprus – 83% one way or another.
Jim believes in the next 2 – 5 months that gold will be at $1,650 US. It will rise to $2,400, then drop, and then rise to $3,200 – $3,500 US before we go into the Great Reset.
Gold has a life of its own and has participants of its own. Jim’s predictions are made without the view that the world has turned towards gold as an investment. They are made with the view that the usual participants lose their fear of gold, which has been manipulated from $1,900 down to its current levels, and which seem to have bottomed.
Physical gold emancipated from paper gold, which Jim believes will happen through the new exchanges that he is involved in, would then be $50,000 per ounce.
He sees this after 2016 to 2020, when the Great Reset actually involves the West.
The reason that gold was confiscated back in the 1930s was that gold was QE. You had to have more gold to manufacture more currency. Now that doesn’t exist.
Jim does not believe gold will be confiscated.
Another Week on Wall Street
words and music Elaine Diane Taylor
©2013 Intelligentsia Media Inc. All rights reserved.
from the album Coins and Crowns
Coins and Crowns
words and music Elaine Diane Taylor
©2013 Intelligentsia Media Inc. All rights reserved.
from the album Coins and Crowns
A featured in Episode 1 of Mike Maloney’s documentary series – Hidden Secrets of Money