hyperinflationLegendary gold trader Jim Sinclair sent subscribers a shocking and MUST READ email alert last night regarding the possibility that the dollar as reserve currency will enter the initial stages of hyperinflation by mid-year, and the effects the debasement of the dollar will have on gold.
Sinclair states that by midyear of 2013 the US Federal Reserve will have to make a decision in order to keep the US bond market which is US interest rates at the low levels that have been promised until employment has made a sustained recovery and that The Fed’s defense of the US bond market is demanded by the huge pile of original and old OTC derivatives that still haunt the monetary system as specific performance contracts with any financing floating in cyber space. This could drop the US dollar below .7200 to .5600 on the USDX in a short period of time.

Sinclair states that the effects of the Fed’s increased pace of quantitative easing will lead to severe cost push inflation, a derivative of hyperinflation running from mid 2013 through 2017, and that This will be the entrance to the second phase of the gold market ascendancy. Gold got to $1900 on threatened systemic failure. Gold will go to $3500 and above on pure monetary fiat currency concerns.

Jim Sinclair’s full MUST READ alert on the imminent cost-push inflation/hyperinflation of the US dollar due to QE∞ is below:

In January of 1919, one ounce of silver was worth approximately 12 Deutsche Marks.  By the end of 1923, one ounce of silver was worth 543,750,000,000 Deutsche marks.  Unfortunately, the similarities to the years immediately preceding the Weimar hyperinflation are uncanny to our current fiscal and debt crisis.
For a visual picture of what will happen to the dollar value of silver during a hyperinflation, we present a chart of Deutsche Mark silver from 1919-1923 below.