fiat cliffIn an email alert to subscribers, legendary gold trader Jim Sinclair warns of a consequence to the debt ceiling/ US default drama that the financial MSM has not even contemplated much less discussed.   Sinclair points out the fact that the US has come so close to the edge of an outright default (which would result in an almost instantaneous default of the Western financial system), that sovereign investors dollar will be cautious at a minimum and in many cases dollar phobic- at a time when the US gov’t will need to borrow a minimum of another Trillion in fiscal year 2014. 
The selection is between gold and the US dollar for a storehouse of value.  The US debt ceiling fiasco will no doubt accelerate the global move away from the dollar and towards gold.
Sinclair’s full alert is below:

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From Jim Sinclair:

I can post all the dire warnings from every parts of the globe concerning the possibility of a default on US debt. You have seen them all, and heard all the analysts screaming bloody murder.


What no one is focusing on is the impact on future dollar sovereign investment appetite because of another close call at a default in light of next fiscal year borrowing. The US budget office yesterday forecasted 2014 borrowing at $777 billion. We know that government estimates of borrowing always seem to rise for exogenous reasons. We can easily anticipate borrowing another trillion in fiscal year 2014.


We have to ask ourselves from where are these funds to be borrowed by the USA coming from as there is an argument that people are becoming seriously dollar shy. That argument is supported by the TIC report where foreign demand for US Treasuries is way down, and on some reports negative.


The fact that things have gone as far as they have will make sovereign investors dollar cautious at a minimum and dollar phobic by some.


The selection is between gold and the US dollar for a storehouse of value. I can see nothing more logical than holding gold and GOTS.



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Gold Eagle 2

    • It has to be something like that. As I’ve said default is an avoidable choice. If it were to happen it is to implement some sort of plan or endgame. No other option as there are multiple ways out of it.
      As to the meat of the article, yeah Santa, we get it, we’re doomed at some point we’ve gotten our metals and at some point we’ll be rewarded for it, until then, shit sandwiches are on the menu every day.

    • Ranger did you pick up on the large jump in the 2 yr t-bill  It went up to .35% from .25%  That happened nearly overnight and I am a bit puzzled by that action

  1. Congress is not going to cause a panic, there will be NO default.   This is theater and nothing more. 
    The markets are not worried at all today, Dow up over 200, dollar up, and gold down.
    As far as “bail-ins”, never going to happen, that would be a deflationary event that benefits no one.

    • ZMAN, The FED CONTROLS THE MARKETS, so don’t be fooled into thinking that 6 months out is going to be better! I agree that there may be no default, but overall the government and it’s control over the media will not tell you any truth about what is really going on to avoid financial panic. Mary_B stated that she was the 50th person at her bank that cleaned out the accounts at her bank. Mary_B is no fool. ZMAN, I see you as a person who is on the edge of believing or not believing. What is wrong with being prepared for the worst and removing funds from your bank and then feeding back to your checking for current bills. If all of the distraught financial crises goes away, then if you can gain trust in the banks again and put your money back. Nothing wrong with being prepared as not one person including those who write articles here at “The Doc”, knows what is on the immediate horizon. But NO DEFAULT doesn’t mean “NO BANK BAIL-INS WILL FOLLOW”
      One’s eyes should be in focus that Obama’s goal is to destroy the United States of America and has been since he was inaugurated in 2008. Russian Premier Khrushchev once stated that America cannot be taken “WITHOUT” but by “WITH IN” and that is precisely what is happening!
      Best Regards,

    • “What is wrong with being prepared for the worst and removing funds from your bank”   Nothing at all, makes plenty of sense for many.

  2. James Sinclair is from the Seligman clan – a sinister family that worked with the Rothschild’s and other banking families to bring about debt-currency to the US.  Why here hasn’t been completely exposed and shunned for the psychopath that he is I’m not too sure.
    SD is failing on this and allowing this shill to pollute this site with his posion.
    From his own pen, “Although Bertram Seligman was my father, James
    Sinclair (from my mother) has been my name since
    birth. If it had been possible, I would have changed
    my surname back to my father’s prior to entering
    my career.
    The knowledge of Wall Street runs in my blood, my
    heart, and my soul. I have no hobbies and want none.”
    The man is pure evil, just like his buddy Rothschild.

  3. Actually Jim makes some good points here, I have been thinking this myself. I do think we are seeing many obvious signs that large entities are slowly getting out of treasuries. The 10 yr is back over 2.7, while the fed continues to buy $45 bill/month. I think we are seeing the early stages of why the fed will have to increase QE rather than decrease, and how this will all rapidly unravel. While I do believe the debt ceiling will ultimately be raised, Jim is correct in interpreting this whole fiasco as yet another reason for large holder’s of treasuries to question their positions and the urgenecy, going forward, to exit them.
    As an aside, the stock market rallying is probably a negative for the future prospects of an imminent deal. If the market remains elevated I actually think the chances of a deal decrease quite substantially. It’s somewhat of a market paradox in that the higher markets rally, anticipating a deal, the less likely they are to see a deal.

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