December 22, 2009
Jim Sinclair, CEO of Tanzanian Royalty Exploration Corp. and proprietor of JSMineSet.com, has just given an excellent and wide-ranging interview to Eric King of King World News. They discussed the gold and dollar markets and the Federal Reserve’s effort to rig markets through management of perceptions and suppression of interest rates, among other things. The interview is about 35 minutes long and you can listen to it at the King World News Internet site HERE
February 15, 2009
I have sent you certain emails that I consider to be the most important communications issued in my career which started in 1958.
I am the son of the man that I consider to be the greatest Lone Wolf trader in Wall Street history, Bertram J. Seligman. He was a past master at his business and was naturally sensitive to market conditions. I apprenticed to him, learned from him and inherited some of his ability. But not all, however.
From this background of experience, understanding and sensitivity to the market the following flows.
I want to bring your attention to the following emails of note:
1. Said: “This is it.”
2. Said: “It is now.”
This communication is to inform you as of 2/13/09 that “It is totally out of control.” There is no longer any means of reversal of the beginning of the final phase of the downward spiral now solidly set in motion. For your sake, protect yourselves immediately.
Be prepared for disruptions in distribution common to hyperinflation.
1. You should have already distanced yourself from your financial agents. If you haven’t, you are headed for significant displeasure and strain.
2. Make sure you stay three months ahead on necessary items that could experience distribution delays such as prescribed medicine and preferred foods.
3. Even though real estate is far from a buy, if you can afford a second home outside of major cities it would serve a good purpose.
4. Own gold.
5. Consider that good gold shares of non-US companies incorporated in a non-US country, operating in a third country and traded on multiple exchanges are a means of money expatriation legally and in broad daylight if required.
6. For currencies, all you can do is own a spread held by a true custodialship wherever that might be.
Simply said, as of Friday February 13th, 2009 the situation is confirmed as being in “Out of Control” mode as this well engineered downward spiral enters into its terminal phase.
The root cause of this mess was profit and the degree of disintegration it caused in the pursuit of this goal was not anticipated.
The key event that set things in motion was when Lehman was flushed – all hell broke loose. The hell cannot be contained in any practical manner.
I seek nothing of you but the protection of yourselves.
Respectfully yours,
Jim Sinclair
November 1, 2008
Jim Sinclair has arranged for his colleague, commodity broker J.B. Slear of Fort Wealth Trading Co., to assist those who are interested in opening commodity trading accounts for the exclusive purpose of taking delivery of precious metals from the commodities exchanges and thereby helping to end their suppression of prices. You can learn more about this at JSMineSet.com, HERE
Sinclair himself has pledged to take delivery from the New York Commodities Exchange of hundred-ounce gold bars in every delivery month henceforth: “Take A Stand Against Comex Gold Price Manipulation“
October 19, 2008
This remains true as long as the COMEX warehouse of gold is NOT meaningfully depleted by long gold contracts by taking delivery from the exchange warehouse.
As long as an exchange maintains a warehouse that historically overwhelms historical demand for delivery, then the first derivative, the COMEX listed gold future, will be the primary cause of price.
Taking delivery from the COMEX warehouse is not an easy process, as the system is designed not to violate your contract but to be a world-class pain in the ass. The COMEX requires re-assays, assuming that you wish to re-deliver. This then places another raving pain in the ass in your way.
The COMEX market is effectively an international 24-hour market as there is no location where you cannot buy or sell a COMEX clone.
Cash bullion gold, as opposed to the semi-cash markets that non-USA banks trade, is the only totally private means of buying and selling gold.
As currency problems increase, first the knowledgeable public such as you clean out the coin market.
This is the first time that the international coin markets have been cleaned out everywhere. This did not happen globally in the 1970s.
Large gold bars are still available in major markets but the backup inventory is getting low.
As long as the COMEX warehouse remains adequate and large bars still are available, the paper market, the leveraged COMEX market, will rule the price.
Only with a decline in COMEX warehouse inventories and a rundown in large bar supplies of the cash market will the cash bullion market command the price of the COMEX futures market.
It was not the buying by the Hunt Brothers that caused silver to move above $30 into the $50 area but rather the universal belief that the Hunts would take delivery, which would deplete or exceed the COMEX warehouse supply.
The war between paper gold and bullion gold is a war to determine which will take command of the price of gold, nothing more, nothing less. There will be no two markets trading at different prices. All this battle is about is if the bullion gold market is going to take the lead in making the singular price away from the traditional axiom that the most leveraged market makes the price.
I believe that bullion, in these most unique conditions, will command the one gold price, making it hard to impossible to manipulate the gold price via the paper gold market, as is the practice every day.
* * *
August 9, 2008
Posted On: Friday, August 08, 2008, 5:30:00 PM EST
Been There, Done That
Author: Jim Sinclair
“My Dear Extended Family:
It is time to regroup, recognizing that nothing has changed. What we saw today in the seven trillion dollar a day global marketplace were hedge funds, black boxes and terrified longs all heading through the same door at the exact same time.
The door is big enough but can seem awfully narrow when panicked participants head for the exits at the same time. Like the entrance way to a good rock concert, however, the traffic can be equally as heavy in both directions.
Fear is an anomaly to witness. It appears as a stampede, with people kicking and shoving to get out of the same burning building. The awful truth is that there really was no fire – although perception is often worse than reality.
Ask yourself the following questions:
1. Are US banks more trustworthy today than they were on Monday?
2. Are you aware of a new problem called Auction Rate Bonds which are estimated at between $400 to $500 Billion? The Fed will have to pony this money up as the problem is focused on just those institutions that are already at the Fed Begging Bowl window. Logically, if they are borrowing to retain wiggling room, it is simple logic to understand the new problem is very much the Fed’s problem, which in turn is another problem for your kids to bear.
3. Do you really believe that because technicals are presently supporting the dollar it will regain its prior position as the universal Reserve Currency of choice?
4. Do you really believe that your retirement funds will regain the value that has been stripped away by all forms of Securitized Investment Vehicles?
5. Do you really believe that there is such a thing as global demand destruction in the energy sector as Asia keeps ticking at high economic levels?
6. Do you really believe that after the Olympics are over that China will collapse?
7. Do you really believe that Europe’s economic situation will be more severe that the USA’s? Have you noted that the USA had a rather good head start towards a severe recession?
8. Do you really believe that any currency is a better storehouse of value than gold?
9. Do you really believe that all the OTC derivative problems are now behind us?
10. Do you really believe that the credit market is loosening up enough to benefit credit-starved businesses?
11. Do you really believe that the public entities whose entire business involves insuring the value of debt instruments can really make good as bankruptcies increase?
12. Do you really believe that present inflation is demand driven?
13. Do you not know that the price increases now being witnessed are a product of monetary inflation for which increased interest rates render no effect?
14. Do you not know that the ECB’s action of leaving rates unchanged favors the euro over the dollar?
15. Do you really believe that the next move of rates in the US is up?
16. Do you really believe that all those central banks seeking to diversify out of the US dollar have changed their minds?
17. Do you feel certain that Israel will permit Iran to reach that point where a push of a button can incinerate its citizens?
18. Are you sure that Pakistan holds no challenge to life as we know it on this planet?
If the answer to all the above is yes then buy some cheap financials, sell all your non-dollar currencies and go long the good old greenback.
If you do not accept all the above as reality then be calm. As long as you are not on margin you have no problem.
The only result of this week’s market action may be to postpone gold’s ascent to $1,200 by 90 days. That is a big maybe, however.
I accept the responsibility of my words offered to you in truth to reinforce what is correct. Today was made difficult through the din of fear and the bullying of hedge fund fiends.
Respectfully,
Jim”
***
June 22, 2008
I respectfully request that each member of the JSMineset community send this missive to the management of their precious and base metals junior investment company. Please follow up on it to be sure it has been reviewed.
Strength In Numbers
The junior producer and exploration and development companies need to consider the formation of a Chamber of Mines for this section of the industry.
This Chamber should be free of any individual company agenda, free of fees and other interferences with the singular intention of protecting our shareholders from being attacked by those in the shadowy part of finance.
There are close to 2000 companies in this part of the industry, many of which are experiencing the same extreme nuisances.
The naked gold short seller is an entity engaged in a criminal act with a goal of doing serious injury for the purpose of profit and is therefore a major target in terms of civil liability. The short and naked short pool operations are exactly the same but more apt to be a conspiracy to injure slightly then become subject to RICO statutes.
The job of this working Chamber of Mines as a singular unit is to pull these criminals out of the shadows into the light of day.
No matter how well they feel they are hidden there is always a paper trail going back to the perpetrator in this financial world.
Certain financial areas of secrecy in many cases do not protect the spoils of criminal activities. This may be proven soon at UBS where an officer is under arrest in the USA and is due to go to court shortly.
It does not mean anything that neither regulators nor exchanges care about the naked short or short selling pools, regardless of whether they are naked or not. If the stockholders and the company who’s values have been injured initiate civil proceedings, discovery will be full of legal opportunity. You cannot erase the paper trail that exists to every transaction.
My request is simple:
Contact the management of every junior precious metals producer, exploration and developer, asking them to contact Editor Dan at information@jsmineset.com so that the Chamber can take form.
There is no hidden agenda, no money to be collected, and no desire to stroke egos and no desire for private corporate information. I do not wish to be anything but a member. Let the organization elect its officers so we can act as one. We can speak as one. We can win as one, but we are weak when scattered as the industry is now. Organize and we are a legion. Expose the perpetrators and then it is all over. The data is there. It can be organized and it can be dissected, yielding the evidence trail of those who wish to hurt, sometime simply because they are mean, sometimes for illicit profits.
Add to that that sociopaths mistreat their associates and employees by nature. No looking may be required. It might just happen to come over the transom, even though we do not invite that.
You stockholders must push your management hard. Personally there is nothing that I will NOT do in order to protect both my and my investors’ interests.
I herewith dedicate my life, my fortune and all that I am to the identification of the perpetrators and their conduits used. Those sociopaths that take joy by inflicting severe injury for profit by conspiracy and the use of dirty tricks must be the hunted of nearly 2000 company’s determined managements and their more than 500,000 very angry stockholders.
There is only one way to defend stockholders, which is through the organization and strategy of a major offensive. Forget attorneys at this point. Regulators are of no help. A Chamber of Mines acting together can prevail.
I will even if I must go it alone.
Together we are legion. Alone and looking the other way you are a victim. I have never been a victim. No one depending on me will be a victim.
There is NOTHING I will not do to protect those that depend on me. I am livid. Enough is enough.
We will add risk to the bad guys. That proposition you and they can depend on.
Your friend,
Jim Sinclair
April 25, 2008
March 12, 2008
The Federal Reserve action today formalizes what has been its policy from almost day one of the credit and default derivative meltdown and credit market lockup.
What is occurring is THE MONETIZATION OF BANKRUPTCY. The predictable result of monetizing bankruptcy is a significant increase in inflation and a sharply lower dollar.The result of a sharply lower dollar is sharply higher gold regardless of the dress up process being applied to the US dollar and gold today. The dress up is to prevent a stinging rebuff for the Federal Reserve paying a FARCE price for bankrupt derivative packages purely to keep the banks solvent.
This action speaks negatively for 30 year US Treasury bonds. What needs to be understood is that there are more than $20 trillion dollars worth of credit and default derivatives out there.
The next key point is that nominal value of this over $20 trillion of credit and default derivatives becomes full value when the derivative fails to perform. This comes on a modest capital injection into a bond guarantee company that facilitates pinning a tin AAA debt rating on them – something that is a total fallacy.
The problem at the heart of the deteriorating credit lockup situation is OTC credit and default derivatives that have failed to perform.
The inviting conclusion then is that $200 billion is a pimple on the ass of an elephant. Nobody in his or her right mind wishes to see what is coming in 2011. The only protection is hard assets of any type, shares (preferably not US companies) and the Federal Reserve Gold Certificate Ratio, modernized and revitalized.
This time gold is not going to crater after achieving its maximum market valuation. That nullifies every top caller from $248 to middle-late 2011 without exception as well as those now so inclined. This will make mining companies very attractive businesses.
Respectfully yours,
Jim
February 25, 2008
By Pham-Duy Nguyen
Feb. 25 (Bloomberg) — Gold fell the most in almost two weeks after the U.S. said it would back “limited” sales of bullion reserves by the International Monetary Fund, the third- largest holder of the precious metal.
Some of the IMF’s $98 billion in reserves should be sold to cover a revenue shortfall, said David McCormick, the Treasury’s undersecretary for international affairs. Gold has more than tripled in the past seven years, gaining 12 percent this year and touching an all-time high of $958.40 an ounce on Feb. 21.
“Anytime there’s more supply coming into the market, the price goes lower,” said Ron Goodis, the futures trading director at Equidex Brokerage Group Inc. “There’s a fear that the large speculators who’ve been pushing this market higher might step back and wait to buy.”
Gold futures for April delivery fell $7.60, or 0.8 percent, to $940.20 an ounce at 11:37 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would be the biggest drop for a most-active contract since Feb. 12.
The IMF holds approximately 3,217.3 metric tons of gold, following the central banks of the U.S. and Germany, according to data from the producer-funded World Gold Council. The U.S. has 8,133.5 tons and Germany holds 3,417.4 tons.
Official sales by central banks rose 33 percent in 2007 to 488 metric tons, according to estimates by London-based research firm GFMS Ltd.
Limiting Sales
Under the Central Bank Gold Agreement, countries that adopted the euro, along with Switzerland and Sweden, agreed to limit sales to 2,500 metric tons from Sept. 27, 2004, to Sept. 6, 2009, or 500 tons a year.
Any sale from the IMF would be similar to the central bank accord, said George Milling-Stanley, the World Gold Council’s manager of investment and market analysis.
Second and third-tier central banks, including China’s and India’s, may buy the IMF’s gold, limiting the pressure on prices by keeping the bullion out of the hands of investors, said Dennis Gartman, economist and editor of the Suffolk, Virginia- based Gartman Letter.
“If you’re China, you’re holding all those U.S. dollars in reserves, it wouldn’t be a bad idea to swap some of that for gold,” Gartman said.
China is the 10th-largest holder of gold amongst central banks, with just 1 percent, or 600 metric tons of gold, in its reserves, according to World Gold Council data.
World gold-mine production fell 1.4 percent last year to 2,444 metric tons, an 11-year low, according to GFMS.
*****
And this from the perennial Jim Sinclair:
“…
Dear CIGAs,
The following is the history of the IMF and their gold shares.
It is important to note that their sales all have taken place at times when major bull markets were either just beginning or, as in 1976-1980, at the start of the major parabolic move to then all time highs.
Now you know why I said our friends from 2002 Chung Phat and Dr, No are high-fiving at the news that the biggest dopes in gold are about to prove their status beyond any doubt once again.
How and when the IMF used gold:
“Outflows of gold from the IMF’s holdings occurred under the original Articles of Agreement through sales of gold for currency, and via payments of remuneration and interest. Since the Second Amendment of the Articles of Agreement, outflows of gold can only occur through outright sales. Key gold transactions included:
* Sales for replenishment (1957–70). The IMF sold gold on several occasions during this period to replenish its holdings of currencies.
* South African gold (1970–71). The IMF sold gold to members in amounts roughly corresponding to those purchased in these years from South Africa.
* Investment in U.S. government securities (1956–72). In order to generate income to offset operational deficits, some IMF gold was sold to the United States and the proceeds invested in U.S. government securities. Subsequently, a significant buildup of IMF reserves prompted the IMF to reacquire this gold from the U.S. government.
* Auctions and ” restitution” sales (1976–80). The IMF sold approximately one third (50 million ounces) of its then-existing gold holdings following an agreement by its members to reduce the role of gold in the international monetary system. Half of this amount was sold in restitution to members at the then-official price of SDR 35 per ounce; the other half was auctioned to the market to finance the Trust Fund, which supported concessional lending by the IMF to low-income countries.
* Off-market transactions in gold (1999–2000). In December 1999, the Executive Board authorized off-market transactions in gold of up to 14 million ounces to help finance IMF participation in the Heavily Indebted Poor Countries (HIPC) Initiative. Between December 1999 and April 2000, separate but closely linked transactions involving a total of 12.9 million ounces of gold were carried out between the IMF and two members (Brazil and Mexico) that had financial obligations falling due to the IMF. In the first step, the IMF sold gold to the member at the prevailing market price and the profits were placed in a special account invested for the benefit of the HIPC Initiative. In the second step, the IMF immediately accepted back, at the same market price, the same amount of gold from the member in settlement of that member’s financial obligations. The net effect of these transactions was to leave the balance of the IMF’s holdings of physical gold unchanged…”
Should they sell in April of 2008 then gold is going to the next Angel above $1650.
That is the only implication IMF sales have to the price of gold. It has been the most powerfully bullish event every time they have done it, and will be again.
If any newcomer to gold sees the IMF news as a reason to sell gold these newcomers are as DOPEY as the IMF has proved to be every time, time and time again.
Respectfully,
Jim
…”
February 10, 2008
The OTC derivative market is $516 trillion, dwarfing the $92 billion worth that the IMF holds. In today’s financial world the $92 billion is chump change.
One large banking entity could easily lose $92 billion on failed derivatives in the final analysis.
The article below is designed to make a mountain out of a mole hill. I do not think it means a damn thing to the gold price trend. The only important fact is that the IMF just demonstrated its total lack of financial sense as it might only hold depreciating paper promises to pay nothing at all backed by nothing whatsoever.
Selling gold like this only occurs in bull markets and has historically been useless in stopping the price from increasing. In fact, these sales helped the price of gold move higher by facilitating demand from huge interests in the 70s and it will even more so now.
There are those who would try to make this look serious but it is not. This indicates the price of gold is not even half way to its upside resting point. This was true in the 70s and is today as well.
Finally, those that control black gold also control real gold. Those that you feel have caused the problem and are anti-gold are really NOT. To know this, you need only the eyes to see and the ability to connect the dots.
This will be looked on as something great for the price of gold as was the case in the 70s when the same entity, the IMF, proposed and did the same thing, only to stop before the buyers took all their gold. The same will happen if they even start. Note that the proposed sales come when the US Economic rescue plan is about to occur. The reason is clear.
*************************************************
This from GATA:
Dear Friend of GATA and Gold:
Before panicking about the Reuters story appended here, reporting that the G7 conference in Tokyo likes the idea that the International Monetary Fund should raise money for itself by selling some of its gold reserves, consider a few things.
1) The prospect of gold sales by the IMF has been hanging over the gold market for years.
2) For almost a decade now central bank gold sales have been accompanied by higher gold prices, not lower prices. Gold demand has been exceeding gold production by about a thousand tonnes per year, the gap being covered only by central bank dishoarding. Even with the rising price gold production is declining, the price still not being high enough to make greater production generally profitable.
3) Mobilization of IMF gold suggests that individual central bank gold reserves are nearing exhaustion or that individual central banks are no longer willing to dishoard what they have left.
4) There’s no assurance that the IMF has the gold attributed to it and no report as to where the gold its kept. Further, as the Reuters story here acknowledges, any gold sales by the IMF would require approval by the U.S. Congress, which has opposed the idea in the past. This opposition has been offered in the name of supporting developing countries whose economies rely to a great extent on gold mining, but given the secrecy and unaccountability around the gold reserves of various nations, including the United States itself, it is fair to wonder whether the opposition is not also a matter of concealing some impairment of the IMF gold.
5) Though it is never questioned by the financial press, the rationale that continues to be offered for selling the IMF’s gold is plainly ridiculous. That rationale is, as the Reuters story here reports, that the IMF gold should be liquidated and the proceeds invested “in financial securities with positive yields.” But what “yields” could be more positive than the “yield” acknowledged for the IMF gold, an increase in value of 400 percent in five years? Is the IMF supposed to be happier with government bonds paying 4 percent per year against inflation rates several times that?
6) Those who want gold restored as the independent arbiter of the international financial system should be thrilled if all central banks and the IMF dishoarded all their gold at once and got out of the gold market for good. Until then, there really won’t be a market price for gold, just a desperately manipulated one, a price well below the cost of production — still a bargain.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
*****************************************
Newsitem:
By Gavin Jones
Reuters
Saturday, February 9, 2008
TOKYO — The Group of Seven rich nations on Saturday approved the sale of gold by the International Monetary Fund from April as part of a broad reform of its budget, Italian Economy Minister Tommaso Padoa-Schioppa said.
“There was an acceptance among the G7 that resources should be raised by selling gold,” Padoa-Schioppa, who is also the head of the IMF’s steering committee (IMFC), told reporters after a meeting of G7 finance ministers in Tokyo.
He said the agreement would be finalised in April and would complement spending cuts being drawn up by the IMF under its new managing director, Dominique Strauss-Kahn.
“The current gold price means a flow of income can be ensured,” Padoa-Schioppa said.
Morgan Stanley analyst Stephen Jen said the fund held 103.4 million ounces of gold worth some $92 billion at current market prices. That was up from $23 billion just five years ago.
“The IMF is rich, if it wants to be,” he wrote in a recent note to clients, issued before the G7’s approval of the gold sales. “This is arguably a good time to consider selling some of these gold holdings and investing the proceeds in financial securities with positive yields.”
A surge in oil prices has boosted gold’s appeal as a hedge against inflation.
The precious metal gained more than 30 percent in 2007 as safe-haven buying increased due to the credit market turmoil and worries about the health of the dollar as it fell to record lows against the euro.
Gold continued its upward march this year. Cash gold hit a record high of $936.50 an ounce on Feb. 1, up about 12 percent since the start of the year, and was quoted at $918.00/918.70 an ounce in late New York on Friday.
Padoa-Schioppa noted that in the case of the United States, approval for gold sales would be required by Congress, meaning “the administration must present a proposal and support it.”
Padoa-Schioppa said he would step down as president of the IMFC because of the recent fall of the Italian government, which meant he would soon lose his job as economy minister.
Asked if he would continue as IMFC head, he said: “I don’t believe so. It has to be a minister in office, and soon I will no longer be a minister in office.”
* * *
November 4, 2007
Dear Friends,
If you have not started to protect yourself do so on Monday please.
I am quite concerned for all of you as inertia usually prevents people from protecting themselves. I always wondered how a certain ethnic and religious persuasion could remain in Germany as Hitler was clearly coming into power. I would have been out.
Even then, many of those who remained in Germany saved a great deal of their fortunes by certifying their investment shares in international companies, then burning the paper certificates.
What I am getting at is that the signs of an international financial accident are in those incidents that have recently happened.
There is no hiding place as this is a product of the greed and avarice of the new geek kids on the block who have killed themselves, their industry and hurt everyone everywhere. I am sure that in years to come derivative traders will be seen as pariahs and criminals deserving of prison – not as the multi-millionaires they are today.
On Monday start to protect yourself to the degree it can be accomplished by removing people and institutions between you and your assets. This is the real thing. This is what was discussed in the 1970s but did not happen. It was discussed by many in 2000 but it is happening here and now. There is no functional tool to stop a derivative meltdown. It will like the grim reaper clean out many financial institutions and start a domino effect that I do not want you to be caught up in.
You understand by now that I have the wherewithal (experience/industry contacts/etc.) to know these things before others. Call it cell memory, genetics or my historic access to some of the best teachers on earth in finance, risk management and markets. It’s simply ingrained in me. Truth be told, Bert Seligman, my father, knew before the market knew; Jesse Livermore, one of the greatest traders of all time, knew before the market knew. Who knows how? I generally know before the markets figure things out. I tend to know the end at the beginning. It has been so all my life. This is why I am able to do the things I do, take the risks I take, and build the companies I have built.
I want you to be safe. What can it cost you to take precautions? I believe that the cost to you is nothing. I am telling you to take less risk, not more. I know the central bankers will burn the dollar before all this comes down. What concerns me is that all this could easily get out of hand.
Operation “White Noise,” is getting hair thin as more and more financial institutions fess up to their ignorant greed-driven self destruction.
Tell me if you have started. I want to get a feel for how many of our CIGAs are taking action. Drop me an email at trechairman108@mac.com. I am not asking for a tome but simply “yes, I have started to protect myself.” Help me help you by giving me a feeling for how many of you have taken action.
But first some advice:
1. What you cannot withdraw and is in cash put into short term treasury instruments. For those able, I prefer Swiss and Canadian dollar Federal T bills.
2. Convert your investment shares into paper certificates. Do not lose them!
3. Reduce personal debt for peace of mind.
4. If you have coins stored at a coin dealer take delivery of them and request prompt service.
5. If you have accounts at Internet financial entities close them and transfer the accounts to a smaller firm that can confirm in writing that they have no over the counter derivative exposure. Be sure to ask for certificates for your share investments and take delivery of them.
6. Reduce – if not eliminate – your margined position even if that means selling down to rid yourself of debt on your securities or gold assets. The swings in gold now are going to become so violent that most people will not be able to tolerate it when debt is attached to their positions.
This is a time to be conservative, not adventurous. Gold is going to range trade wildly, but it is as I see it targeted here and now for $1,050.
My greatest concern is that my longstanding price objective of $1,650 might be much too low an estimate.
Sincerely,
Jim
October 30, 2007
Here’s a word of caution from the man who knows gold like the palm his hand:
Dear CIGAs,
For your information, gold above $782 by 3% means $882 – $889 and then on to $1050.
It does not matter if it is next week or next month. It is coming as the price of gold makes its way to $1650.
I have no doubt that $1650 will come. My concern is not that it will not happen, but that I am much too conservative in my long-term price objective since 2000.
Last week’s story is becoming too common to ignore. Keep in mind that all this damage has occurred because of a small part of the gigantic mountain of over the counter derivative paper, which if official figures are correct is only 5% of the total. What do you think the financial landscape would look like if 1/3 of the OTC derivative mountain were to melt? It will.
If major international investment banks can be torn apart how can we have faith in the small local institutions that hold most of your ready cash? How about all those retirement plans that prevent you from securing ownership without the need to pay a penalty tax?
When I said “This is IT,” it is not something that I take lightly. Never in 49 years in finance have I seen a set of circumstances so challenging to the man in the street.
If there is a severe financial challenge to the man in the street, there is possible decimation on the top. Decimation may well be too conservative a statement because that means one out of ten. Right now it looks like 80% of major names have problems from their principle position in the issuance of over the counter derivatives. It should not be a shock because the financial capacity to perform on these instruments depends on the balance sheet of the loser in the transaction. Add to that no clearinghouse financial structure and performance is not improbable but impossible in a crunch.
What I am getting at is a simple question. Are you prepared?
You would be amazed how little space $1,000,000 in gold coins takes up. $100,000 looks like a small loaf of bread. Now you can see the actual transformation from the US dollar to gold as a currency of choice. It has happened.
When gold is purchased as money there is no reason why you should play it as a speculative item trying to buy it cheaply as it may well leave you in the lurch.
It becomes more important now to take delivery of whatever investments you have in shares as paper certificates. Whenever a broker tells you it cannot be done it is either self-serving or rank stupidity. Once you do have them in your position DO NOT lose them.
The basic goal now is to eliminate intermediaries between your assets and yourself. What do you stand to lose by taking this action, a few percentage points interest, and a tax advantage? You gain the advantage of possession in the financial world that is separating people from billions, probably trillions of dollars. It cannot be contained among the Blue Blood International Investment firms. This is coming our way and you cannot simply weave and duck to avoid it. You need to be your own bank, your own broker and your own central bank.
If the once most respected international investment firms are teetering, if not already broke, how can you sit by without taking precautions? You have nothing to lose and your fortune to protect.
If there is no need for the actions I am suggesting then simply put it back. No bank will refuse your money if you wish to deposit it. No broker will turn you away if you want to convert your paper certificate back to a transfer agent’s computer entry.
