Wednesday, October 22, 2008

Gold opinions: what's happening & were it's going

Jim Sinclair's unshakable belief in holding physical gold is currently stronger than ever - 'I know without any shadow of doubt that I am right so let the margin traders and constant whiners go to hell.'

He's telling readers that between the election and inauguration day the world's economies are going to spiral out of control. He's maintained for years that those behind the curtain whose minions suppress the price of gold are ultimately the biggest long players.

Jim Sinclair's site

Dear Friends,

Gold is a currency that you will see perform as the currency of choice. There is no doubt we are headed into a planetary Weimar experience to some degree.

Dollars are being created faster now than in any other period in history. The Fed and treasury are guaranteeing everything from money market funds to large corporate entities in one way or another.

The first valuation of worthless OTC derivatives via a public sale of these at .0875 to .02 cents shocked anyone with a brain. Now the downturn in business is hitting financial entities and shortly litigation will smoke whatever is left.

The FDIC is already yelling for additional and significant funding from congress as their capital contracts on every Friday’s bailout.

People expect things to return to normal in 2010. That is a fairy tale.

The Fed has only started creating money for bailouts. You saw what happened when they stepped away from Lehman. If you say you didn't look out the window.

All these bailouts and Federal guarantees on credit items constitute a white wash on a falling economic structure going out of control and soon.

The out of control point of major planetary dislocation is between 14 and 89 days from now.

Moving On:

As you may have already seen from Chetlv's link, Sprott Asset Management's chief investment strategist, John Embry, went on Business News Network in Canada Tuesday morning to discuss, among other things, the suppression of the gold price on the New York Commodities Exchange. Embry believe that long contract holders may call for delivery of enough December contracts as to prompt a claim of force majeure when the exchange cannot delivery enough real metal. Embry's interview begins at the 11 minute mark - get's real good ~ 14 min mark:

BNN Commodities Report, October 21, 2008

More still from the Midas Letter:

Aftershock and Gold Rocket

Some article excerpts below:

Welcome to the opening ceremony of a modern depression.

The effects of the financial shock are starting to make themselves felt in my neck of the woods. Neighbors on three sides not involved even peripherally in the financial markets are unemployed now. Vacations for the year have been cancelled.

Even Paramount Pictures announced this week that they would only be “green lighting” 20 films for production instead of their originally budgeted 25.

General Motors (NYSE:GM), Ford (NYSE:F) and Chrysler (DCX) are laying off thousands upon thousands.

Copper and nickel mines are closing, and feasibility studies are being postponed. Yahoo is laying off 10% of its workforce.

There is barely a single industry outside of anything related to home foreclosure that is not in the process or about to enter the process of hunkering down and trimming the workforce to survive what is now universally perceived to be lean times ahead.

The joke of the week I heard was this: I went into Starbucks (NYSE:SBUX) to buy a coffee and they offered me a free bank with it.

Starbucks is closing 600 stores this year. Bah humbug.

If for some reason you’re still wearing rose colored glasses through all of this, now is the time to prepare for the biggest social upheaval these generations will ever see.

Crime is about to become rampant. As police forces start laying off due to reduced tax revenue at the municipal, state, provincial, county and federal level, desperate times will force good people to do bad things. Bad people won’t even wait for times to toughen up.

There is nothing but trouble as far as the eye can see. Major threatened industries include airlines, tourism, automotive and of course, the financial industry.

For many, a Merry Christmas is as likely as gold falling from the sky. At least Fed Chairman Benranke has promised to dump dollar bills from helicopters… by the time that happens, they’ll probably be more useful as litter box liner.

The most common question being asked is, “If gold is in such strong demand and short supply, why is the price so weak?”

The bottom line is this: the massive repatriation of US Dollars as a result of de-leveraging globally and the unwinding of so many credit contingent deals is making the US Dollar look strong, while the gold manipulation cartel is exerting its utmost effort to keep the spot price of gold low through concentrated short positions on COMEX. The price of gold will emerge from this negative influence on the next leg down and the economy goes into a broader paralysis instead of being limited as it is now to real estate and financials. Most credible analysts are recommending a minimum 30% exposure to gold for institutional portfolios.

Though its hard to imagine in the current price environment, both gold and silver are on the verge of a tremendous breakout to the upside.


Justin_n_IL said...

But what about Governments power to make it illegal to posses physical gold? I understand the logic in stocking up on gold. However I suspect that it's usefulness will be short lived.

Randy said...

Hope it doesn't happen, but it's quite possible Justin.

If/when this does happen again, gold will likely be at a much higher price than today - the price the gvt will have to offer for you to redeem. They will, of course, after all redemptions are complete, increase the price overnight - screwing you out of future profit potential.

On a side note: when gold bullion was outlawed by Roosevelt in 1933, silver and historic gold coins were not - thus the reason I hold quite a few graded Numismatics along w/silver.

If you have any recent links discussing this issue, please post em up.


Chetlv said...

The possibility of gold confiscation is the reason i hold mostly silver. silver is still available here for about $4 over spot for Canadian Maple Leaf. You can then sell it on ebay for $22/per troy ounce easily for a quick profit. I call this 'coin flipping' :D

Anonymous said...

whats considered "historic" gold coin?