Jim Sinclair: Default Drama Will See Global Investors Shun Treasuries in 2014

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.

 

Respectfully,
Jim

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