Jim Sinclair: The Weakness in Gold That Isn’t

With gold taken down violently last Wednesday and Friday around December 1st notice, a reader has brought our attention to a piece written by legendary gold trader Jim Sinclair on April 17th, 2010, at a time when gold was trading at $1150, and the gold community was convinced the metal would crash back through $1,000. 

Sinclair urged PM investors to stay the course, and not to let any weakness in gold disturb them, because the entire derivatives market looks like the Wild West and the 40 thieves, and that Greece is not the only sovereign that has used OTC derivatives weapons of mass destruction to cheat, by the time this is over, certain states of the USA are going to get caught in the OTC web.
Rather than crash through $1,000 was many feared gold would do, Sinclair stated that a stratospheric takeoff in the price of gold was at hand.

2.5 years and nearly $800 to the upside in gold later, Sinclair’s message and urging of PM investors to stay the course has not altered nor wavered. 

Sinclair’s April 17th, 2010 commentary is below:

 

The April 2010 gold chart:


From Jim Sinclair:

Dear Friends,

Let no weakness in gold disturb you at this time.

I speak directly to the biggest and the best in the metals markets worldwide. These are not talking heads and in fact are never interviewed. They speak to me because they feel I have something meaningful to contribute.

After 52 (1958 to present) years, it is safe to assume I have learned a thing or two about the noble metal.

France was big at the start of the 1968 to 1980 bull market. The Saudis came in later and were responsible, in my opinion, for taking gold from $400 on the second break through all the way up. The Middle East in general has this time been late to the market.

As the violence only increases in currencies, energy money is baffled on how to maintain the value of this paper developed from crude oil and its products.

Go back to the missive “Gold $5000+ by Martin Armstrong” and revisit his best case scenario which was a decline in April followed by one dickens of a rally thereafter.

Thanks to the Goldman Sachs revelation, the entire derivatives market looks like the Wild West and the 40 thieves.

Greece is not the only sovereign that has used OTC derivatives weapons of mass destruction to cheat.

By the time this is over, certain states of the USA are going to get caught in the OTC web.

No regulation means a damn thing now because regulations are simply from now looking forward. Nothing whatsoever can erase these trillions of dollars of toxic fraudulent BS paper out there.

Even the BIS changed their measure of notional value of OTC derivatives by going to a computer model that is called “Value to Maturity” which reduced the number from one trillion, one hundred and forty four billion of this crap outstanding to a tad over six hundred billion. All that did was create a sad cartoon.

Stay the course. We are a few days from a stratospheric takeoff in the price of gold.

Regards,

Jim

Comments

  1. We may be weary, frustrated and mad as #&!! They may kick us in the teeth and knock us down. BUT WE WON’T SELL!

    • Not yet, anyway. RRG.  ;)

    • Actually, we should be glad that the cartel is crushing gold and silver’s prices which it allows us to stack more physical precious metals very fast, cheaply and easily. We are now able to afford an ounce of silver when during the Antiquity, it took 12 hours to gain one tenth of an ounce of silver.

  2. @Tawnyard: You’re right, not yet. Who knows what comes next. I think the basta^@%* stay up nights dreaming of ways to screw us!

  3. HAAAAhahahaha! If PMs crash, they’ll be discovering my stashes a thousand or more years from now.

  4. I would rather bury it under my headstone than let TPTB have it at any price! To bad I already lost that tiny bit I had had in a boating accident!

    • @RocketsRedGlare

      YOU TOO, HUH? Man oh man, all you poor folks with the boating mishaps. Maybe you should take up mining … it seems like an easier endeavor than salvage. At least to me, anyway.

    • You also lost precious metals due to a boating accident? Almost everyone here in the precious metals community lost their precious metals due to boating accidents. I guess bad karma is very high when you bring precious metals on a boat. My lesson learned from your comment: Never bring precious metals on a boat!

    • @Sumkid It’s often a dodge. A way of declaring the loss of your precious metals, so that the govt will not know that you’ve got them any more. Gold ‘lost forever’ at the bottom of the sea, or stolen by thieves. Think it through.

    • @tiburonsmoke I guess that’s a great idea to keep your precious metals holdings safe and in secret as long as you can manage to get them back below the sea.

    • @Sumkid Dude, you don’t actually put your gold and silver at the bottom of the sea. That would be crazy. You just say they went overboard, and you’ve lost them at the bottom of the sea.  That way you can take them home and bury them in the yard and pretend they’re lost at sea, so the IRS doesn’t come after you.  Secret gold stash, yeah?

      Study economics, for sure, but don’t ever try to become a felon. You’re too honest!  ;)  

    • @tiburonsmoke Oooh. Or, I can simply never talk about my precious metals holdings to the Canada Revenue Agency and everything will be fine. If they discover my stashes, then I’ll simply tell them that I’ve lost them in the sea.

  5. @ RRG …. selling…selling Sir?? I won’t be selling, I will be bartering.  Good land round here goes for around £5-6k/acre just now.  I look at my neighbours 50 acre pasture and I stack and I wait and I wonder how many ounces he will accept per acre.  When TSHTF and the paper fiat ponzi scheme implodes, just two tubes of silver maples might make a pretty persuasive business proposition. 

    • “I look at my neighbours 50 acre pasture and I stack and I wait and I wonder how many ounces he will accept per acre.”

      After the SHTF, it will likely be less a matter of ounces per acre than acres per oz.!  :-)

    • @MaplesUK: Sounds like you have a good plan. May I suggest that instead of bartering, you might also give some thought to (as you gaze over at that land that will be yours someday) leveraging your silver to buy the land. That could be the best of both worlds. You get the land, you keep your silver and you don’t have the sales taxes. Good Luck Sir! 

    • @MaplesUK “Pasture” sounds so Christmassy. : )

      Maples are lovely 9999, but wouldn’t your neighbour prefer  Britannias, due to their CGT free advantages?

      @Ed_B @RocketsRedGlare @PatFields  @Marchas45 @MaryB @Slvrizgold @AGXIIK @UndeRGRound @427
      Does anybody have any idea how barter will work in the future? I mean, there are tax implications to all transactions. So how exactly will you exchange 40 ounces of silver for a field? There will be fiat taxes to pay. A transfer of deeds is a legal document in the public domain. The government don’t tax on what you say you paid for it, they tax on what they say it’s worth.

      Yes, residential property will be a lot cheaper in the UK when the crash comes. But agricultural land can only go up from here. There’s a huge difference between the two. Remember, upwards pressure on food and energy prices creates downward pressure on housing, but upward pressure on land used to produce food. This is why the farmers of Britain are going to do a lot better than the landlords.

      How does one buy a field (or a house, for that matter) with silver without falling victim to the massive tax hikes that are surely coming our way?

      How do we benefit from owning silver if the governments place, say, a 90% windfall tax on it?  

      And how do we persuade a bank to lend against one of the most volatile commodities on the planet? Gold, yeah, maybe, but what bank is going to accept silver bullion as collateral?

    • “Does anybody have any idea how barter will work in the future? I mean, there are tax implications to all transactions.”

      If we get a dollar collapse, it could bring down the national government.  No telling how long it will be before a new one is established, if ever.  Any government remaining is likely to be local.  The law as we know it will become much simpler but still probably based upon English Common Law.  Most people do know right from wrong and fair from unfair.  People will likely either write bills of exchange as proof of the trade, at least for the things that have considerable value, such as property.  If you have ever done a private party sale of a car or truck, that will be a lot like what property exchange becomes only without the need to file paperwork with a government agency and pay them fees for the privilege.

      Government will not be real popular with people after a SHTF situation and will likely view government with great distrust; equating government with all the problems that led to the collapse.  Selling people on the idea of another intrusive government will be a real tough idea to sell.  Those who survive will be well armed, independent, and paranoid of government in general… and who could blame them for that?
       

    • When the SHTF, I’ll be trading some of my precious metals especially some of my junk silver for foods at farms that are located on the north of my town. Then, I’ll be living somewhere in the north of Canada where there will be tons of untouched resources.

    • @Sumkid Do you believe that a time will come when just a couple hundred ounces of silver will buy you your own house? I try to persuade some of the kids in my hometown to forfeit the new iCrap for Christmas and ask for bullion instead. They don’t seem to get it. I guess they’re not as smart as you.  : )

    • @tiburonsmoke But you should also let the kids have some fun with games but not too much. I also buy games but very rarely. I recently bought a game for PS3 after two years!

  6. My Stash Is To Damm Pretty To Sell But I Can’t See It, Only When I Uncover It, To Add Too It. Lol
    @RocketsRedGlare Mine’s Under Water Intentionally. Lol Sorry For Your Mishap.

  7. Jim may be a legend and knows WAY more about PMs than most but just how long can stratospheric PM prices be imminent?

    Agree 100% that when the derivatives crap implodes, it will likely bring down the entire global financial network.  The 1930s will look like the good old days when that happens.

    Also agree on not selling until AFTER dire things have happened and we have had a HUGE run-up in the value of PMs.  Notice I did not say “price”, as in fiat equivalent per oz. of PM.  At  that point, fiat will be good tender for the fireplace or wood stove or be highly useful in the outhouse.
     

    • I think we all agree that a stratospheric rise in the PMs is imminent. Jim is looking at it analytically. Mathematically. He can see the big picture.

      Consider the San Andreas fault line. It’s gonna go again at some point, but nobody knows when. Right now, it’s creak, creak, creaking its way along. Experts put the chance of next ‘big one’ happening in the next 30 years at 59%. That’s substantial. They know it’s gonna go, but they can’t say when.

      The probability of a major economic collapse (hyperinflationary) is extremely high. Nobody knows where or when it will start, but the event will be catastrophic, and will have a knock-on effect on the entire world. 

      When I look at the global oil production chart, the national debt chart, the dollar index, the gold price chart, I can see the creaking. I can feel it in my gut. She’s gonna blow. These are exponential graphs. As a trained mathematician, I can see that we haven’t got much further to go. Certainly by the end of the decade, and quite possibly before 2015. It’s that close.

      Jim is looking at waves within curves. I’m looking at curves. We’re both seeing the same thing.

    • Tawny… perhaps my difference with Jim lies in our definitions of the word “imminent”.  For me, imminent is something that will happen VERY soon… in hours or perhaps days but not in terms of years.  Months could be that time that lies on the edge of imminent.  ;-)
       

  8. Sooner or later some big paper player is going to demand physical and when they can’t deliver all hell will break loose in the price department. I think the trigger for that will e either the euro or dollar collapsing.

  9. I think there’s a strong case to be made to switch from gold to silver now while we’re still above 50:1     Not saying go all in that way, but I am thinking about chipping off about 10 or 15% and switching to the most reflective element.    Maybe if we had a big raid PM and equity drop that would be the time to do it if you are patient and/or conservative it could shoot back up to 60:1 area one last time I suppose, but I doubt it.    That would be a retest of $1500s gold and silver $26.    Nahhhhh….    That was the opportunity that may not arrive again?

    @MaplesUK    That’s kinda low to want to take your neighbors land for 2 tubes of shiny.    Unless he’s a real ahole who watches TV propaganda and mocks your economic and political viewpoints.   LOL 

    • Even if he is a “SWELL GUY” pretend he isn’t!

    • As in all transactions that people freely enter into to, if both parties of a trade are satisfied with the result, it is none of anyone else’s business.  High or low really does not enter into it.  If having that silver saves the landowner and his family from starvation, he may well see it as being worth part of some pasture land that he doesn’t use for much of anything anyway.  Others can only take advantage of us IF we let them.  We need to be Awake And Aware… AAA.  :-)

    • 1500$ per ounce for gold and 26$ per ounce for silver is long gone in my opinion. The reason why gold and silver didn’t go back to their previous price levels is due to QE3.

    • @Ed_B thank you for your views on barter, private transactions, true value and the probable shape of things post-TSHTF…..I think we have a very similar outlook.

      @Slvrizgold I would never (be able to) conclude a transaction that the other party did not agree to.  His agreement would be acceptance of fair exchange.  I might then pop into the local town with my neighbour and get some formal paper, signed by a Notary and witnessed, but that’s about it.  We might even pop into a local tavern for an ale or cider to toast our deal.

      @Ed_B again….Right now its winter, the grass has stopped growing and he’s got hungry poop-droppers on it, and he lives several miles away….said pasture is contiguous with my land, so it would make sense to sell it for several reasons – not least of which it would have become hard for him to drive over and look after it (….and all my rifles shoot clean to the far hedge…..and any one of my several horses could have me over there in under a minute – 1796 Pattern Light Cavalry sabre in hand ;-)  I foresee significant rationalisation of boundaries across the country as people once again seek to ‘ring-fence’ their holdings with the Home Farm at the centre.

    • MaplesUK… can you even own a rifle in the UK or are you in Canada?

      “and any one of my several horses could have me over there in under a minute – 1796 Pattern Light Cavalry sabre in hand ;-) ”

      Now THAT would be a sight worth seeing!  lol

      “I foresee significant rationalisation of boundaries across the country as people once again seek to ‘ring-fence’ their holdings with the Home Farm at the centre.”

      That would seem correct to me as well.  Property that is producing food items will be VERY valuable and it will need to be protected from those who would over-run it and make off with anything and everything of value.  A good shotgun can be an effective discourager of such activities.  ;-) 

  10. Most people forget about the long term when they see weaknesses in the gold and silver’s prices. The Federal Reserve has admitted itself publicly that it will do QE infinity until the economy recovers but it won’t which will devalue the US dollar a lot.

    • @Sumkid I hope you’re doing economics at school. You seem to have a head for it.

    • @tiburonsmoke I don’t know what I should study later on. I’m worried that the economist teachers teach their students about financial propaganda. The teachers might say that gold is a bad investment like in the USA.

    • I would agree with studying Austrian economics but not the Keynesian trash that is taught in schools today.  Much of the world has been a laboratory for these experiments and they have been utter failures in virtually every case.  Austrian or “classic” economics is far more interesting, practical, and useful, IMO.

      Although some careers require a college degree or even a graduate degree, I would very much recommend that young people look seriously at attending a 2-year trade school to learn how to do things that are very practical.  Chief among these would be farming and repair work of just about any kind, such as automotive, electrical, plumbing, heating/AC, etc.  Medical and nursing skills of all kinds will also be quite valuable.

      If we do have a SHTF event at some point in the not too distant future, those who can actually do jobs that are needed will do pretty well.  Out of work lawyers, bankers, politicians, and economists will be lowest on the list of desirable occupations.  Heh, there might even be a bounty on some of them.  ;-)
       

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