Jim Sinclair: The Singular Most Important Development in the Gold Market in My 53 Years Involved in Gold!

Jim Sinclair sent subscribers an email alert over the weekend regarding Russia’s announcement that it will develop and launch a cash bullion market, stating that the development is the singular most important development in the gold market in my 53 years being involved in gold.
Sinclair goes on to state that the manipulators will be flattened in late 2014 after one more try to manipulate the price of gold.

Sinclair’s full alert is below:

 

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From Jim Sinclair:

 

The singular most important development in the gold market in my 53 years being involved in gold is the Russian cash bullion market now in the process of development. This is a new broad public means of gold price discovery that sits ready to replace the paper gold manipulative fraud market.

 

Russia and China cannot be pleased by the Fed utilizing the Gold banks to move gold around so violently. Yes, they can buy cheap but so can you. Are you happy with the COMEX paper gold ability to manipulate price at will? You can buy gold cheap, but I hear precious few voices enthralled with the opportunity the COMEX knuckle draggers have offered us at $1187.

 

With a cash exchange functioning in Russia, the bombastic paper offering of multi year world production will get its hand called and head handed to the paper manipulators. On this exchange you deliver the real gold or get bought in real gold.

 

I would love to have a membership on that exchange.

 

After one more try in late 2014 the manipulators will be flattened by Russia’s “Free Gold” friends.

 

COMEX revealed: Investigating the paper gold market  Posted Jun 6 2013 by Jan Skoyles

 

Since the gold price crash in April there has been wide debate about how the gold market works. Analysts have contrasted paper gold versus physical gold, urging that the different parts of the gold markets offer very different services to investors. Conspiracy theories have also abounded.

 

In our previous analysis we looked at the different parts of the gold market and found that the COMEX was still the beating heart of gold price discovery. COMEX still had greater volumes and numbers of bids and offers setting the gold price than the largest ETFs and physical suppliers.

 

When the gold price tumbled in April, it was the huge orders that had appeared on COMEX that were to blame. Hundreds of tonnes of gold were sold in seconds, knocking prices down dramatically.

 

For some gold commentators the way the gold price is set on COMEX distorts the gold market, meaning the gold price is often detached from actual gold bullion demand. These analysts argue that since it is mainly paper traded at COMEX and because small percentages of this paper gold can ever be delivered in physical form, COMEX is the flawed central part of setting gold prices.

 

Gold bullion being drained from COMEX

 

The recent decrease in inventories, particularly from the JPMorgan warehouse, has attracted much scrutiny of late. Discussion of COMEX settling large gold contracts with cash, rather than gold, i.e. defaulting, continue to animate many a gold market discussion.

 

Notable investors, such as Eric Sprott, believe the odds of cash settlement occurring in the futures markets are ‘about 100%’.

 

In light of this we take a look at the health of COMEX and ask if it is close to breaking point.

 

Open Interest on COMEX reached a peak at the end of 2010 at 650,000. It has never reached similar levels since and at the time of writing many appear concerned that the overall open interest is continuing to fall.

 

However, looking at the graph below there does not appear to be a clear downward trend in activity on COMEX. Market participants appear happy to keep bringing their business to this exchange.

 

 

More…

 

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Comments

  1. Who will this exchange’s customers? Russians don’t stack much, they don’t like the 18% VAT that is in place even on GOLD.
    Surely other counties will appreciate being able to buy cash and not be settled back in cash.
    But who will the Russian exchange supply itself? From Russia’s own production, or just siphoning the LBMA as fast as it will leak? When delays appear, the Russians could make that public, and state where the bottle neck occurs.
    I hope this will be as huge as JS says. He’s been wrong before.

    • When you think about it, we are so fortunate in the U.S. that we can stack without an oppressive VAT and with no sales tax in most states. 

    • @UglyDog: Ye of little faith in your own government’s abity to screw things up.  :-)
      Have no fear.  It will not be long before the US government adds a VAT to everything and taxes on gold and silver will eventually go up too.

    • Wombat…you made me laugh.  Knowing the government the VAT implementation manual will be 60,000 pages.

    • @Flying Wombat
       
      I agree that a VAT is on the way.  This is how the Europeans do it and this is how the Obamunists will want to do it too.  A far more sinister reason exists for this, however, and that is to effectively apply a tax to the tax-free Roth IRA and 401K plan withdrawals, without technically breaking their word on not taxing them on withdrawal.  OK, so Roth money is not taxed on withdrawal… but it IS when it is spent!
       
      Having the VAT apply to gold and silver purchases would just be a bonus for the fiat-supporting crowd in that it would make gold and silver seem even less desirable than they are now while at the same time raking in a few hundred million USD for them to blow on pet projects.  That makes it a classic 2-fer… in their eyes, anyway.  Worst of all, since most Americans do not buy gold or silver, outside of a little jewelry here and there, there will be MUCH less political opposition to this than there should be.  No doubt it will be spun as yet another TAX THE RICH scheme.
       
       

    • Last I checked COMEX still requires physical settlement through the delivery system.  Gold is being drained, but it is eligible gold that is leaving, not registered.  Interesting and something that needs to be watched?  Absolutely.  Threatening to the stability of the contract?  Methinks not.
       
      This russian exchange appears to operate just the same as COMEX.  I am shocked that someone would decry COMEX in the same article they praise a yet-to-open exchanges that will operate and settle basically the same way.  Traders will arbitrage this market with LBMA and COMEX, same as happens today.  If the price gets too high, buy LBMA and transport to russian vaults.  If price is too low, drain the russian vaults and move to another market.
       
      This will provide a more legitimate hedge for people who produce and use closer to russia, but to me it does not seem to be ‘the single greatest development in 53 years’

    • From an article about the new exchange, we’ll see:

      “However, when asked about the potential of the product launch, a member of an internationally based large Russian broker whose firm is prominent player in FX trading, but was unauthorized to speak, told Forex Magnates that he was skeptical about the precious metal trading outlook, saying “I am personally doubtful that they will generate significant liquidity, difficult to see what value this adds in a global context and not convinced there is much in the way of local demand. They do put up a lot of new contracts, often on a quite speculative basis – liquidity remains concentrated in very few.”

    • Mikey, go peddle your paper elsewhere. There have been multiple cases of comex settling in cash. It is written into the fine print as I have pointed out to you TWICE

    • I think you’ll realize I’m not going away, and once again you misread my intent.  I’m not peddling anything, I just find a high degree of hypocrisy in saying System A is a total piece of crap, but System B that operates the same exact way, just halfway across the world is going to be oh so much better.
       
      PS – Since you bring it up, I’ve yet to see one instance of a true ‘cash settle’ as you mention, please feel free to correct me, but the ABN issue was not COMEX (as I’ve mentioned to you TWICE).  While I’ve not heard of one true cash settle, you’re right, it is in the fine print that they can take whatever measure is necessary to fulfill a contract.  The second they start cash settleing is the day the contract dies which is why they will never cash settle unless absolutely necessary, then kiss it goodbye.  As I’ve said before i don’t expect to see that anytime soon, maybe ever in my lifetime.
       
      PPS – Awaiting delivery of a nice sized shipment (for me) of libertads!  Still need to work on the lead throwers.

  2. Sinclair predicts so many things that are going to happen but never do has finally given himself a nice big time gap.
    “After one more try in late 2014 the manipulators will be flattened by Russia’s “Free Gold” friends”
    How can someone be so wrong so many times and still keep a straight face.   I give you the one and only “legendary” Jim Sinclair.
     
    .

    • He’s not wrong about Free Gold.  It’s coming.  It’s really the only way all this can ultimately play out.  Need to be convinced?  Read through and digest FOFOA, FOA, and especially ANOTHER.

  3. This Jan Skoyles is a complete idiot to say “When the gold price tumbled in April, it was the huge orders that had appeared on COMEX that were to blame. Hundreds of tonnes of gold were sold in seconds, knocking prices down dramatically.”. NO GOLD TRADED, just paper wager-slips! THEN, goes on to say “Being a fractional market COMEX is vulnerable to runs, as banks are, but at this time COMEX continues to function and hold the liquidity monopoly in the gold markets accessible to Western investors.” Yeah, right, with a little more than four percent cover ratio! You’re watching it, Jan? Good … don’t blink too often.

  4. Late 2014, huh?  
    Sinclair is an insider, and I find this call very bearish.
    pFFFffft.
     
     

  5. Why The Doc continues to post this guy is beyond me.

  6. Well Ranger the guy has made $100M’s in the gold markets.  He’s lived and breathed markets since he was a boy with his father, Burt Seligman, and his father’s business partner, Jesse Livermoore.  I think he deserves to be heard.  The only knock on Sinclair that gets people all riled up is his market timing misses.  Sinclair even says he’s a terrible market timer.  But, when it comes to understanding how the gold market functions I can think of none better than Jim Sinclair,  And if Sinclair says this Russian development is a game changer, then you better believe it is.  However, the game does not change overnight.  Give it time. 

  7. late 2014 is really an eternity away…I’m sure 1 or more black swans will surface before then.

  8. Wonder if it will get killed like the chinese attempt at this same feat.  That was supposed to be a “game changer” and “end the paper manipulation” as well… and then it was dead.

  9. I believe if Jim said the sky is blue, water is wet and dogs like to bark, there would be people here that would say he is wrong. Almost everyone is wrong about most things, you have to look beyond all that and know for yourself what is right, even though you will probably be wrong also.

  10. On the contrary, Jim Sinclair IS NOT an insider any longer- hence all the bad timing calls recently. Had he come out and said that he was outside the information loop and his calls were a best guess scenario, fewer people would have bought at the highs and taken a more cautious longterm approach to purchasing. That’s the point. When a guy with his background and reputation dogmatically starts picking dates, people(including myself) are going to listen and react to the advice. The fact that the gold manipulation could go on for a couple more years doesn’t help those of us that were told 2 years ago that the paper market crash was imminent. We all know Now that this could go on for quite some time. Doesn’t change the fact at some point pm’s will surge, but I’m in this to not only survive the bad times that are coming, but make money also.

    • Whether PMs surge or the bottom falls out of the US dollar, both of which are possible, owning a nice stack will be a VERY good thing.  :-)

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