What we need is the second coming of a determined trader so convinced of his/her opinion and feel for the market that taking on the gold banks would seem like a divine calling.
The same stuff we see today went on in the great gold bull market of the 1970s. Then I was a kid in my mid 30s with more guts than is usually good for ones financial health.
I watched the gold dealer’s brokers, then of Phillips Brothers and J. Aron, running the living hell out of the gold gang with the locals jumping on the bandwagon the moment the dealers showed their selling interest. I also saw the same quietly covering by the brokers for the dealers taking back their sells after they had bullied the market lower, exactly like the Goldmans and their pals do today.
The difference between today and then was there is no one with cojones that are big and well financed enough to say enough and take them on for mega profits. I learned from the dealers and used UBS and DB to do my largest buying.
I fought them at key technical points only. The second time gold tried to come up through the $400 level I was long 19,000 contracts. I had run the locals every evening for two weeks making their shorting a losing proposition.
Someone bought information from Bache and Company, my clearing agent, to find out what cash I had. Down went gold through $400 with the gold dealers selling.
I had to preserve my cash so I had to dump 9000 contracts. This dump was not by a margin call as I never permitted that to occur. I called myself well before the close.
All of sudden in comes DB at $380 buying with both hands and feet and it was not me. I went out using my own floor traders to openly buy back 9000 at the market price and added an additional 5000 in Chicago.
Gold in that market never went under $400 again, but rather made it’s great run to $887.50 with the formerly short gold dealers leading the charge.
Sinclair called for $1625 gold in Jan 2011. He was off by about two months. He made this call years before, when it was the height of audacity, and was roundly denounced as another zany goldbug kook, by those of the intellectual caliber of John Nadler.
Jim Sinclair can add brains to his balls. He makes his calls and piles in, and gets rich. He sold his gold in 1980 when Volker’s interest rate writing was on the wall. I dont think the Bernank is going to be raising rates to 20% any time soon.
Sinclair was right in the 1980s, he was right in 2007 when he was calling for $1625 gold 4 years later. You can take or leave his ‘insanely optimistic goldbug lunacy’ prognosis for gold now.
@strannick
I think you missed the point of the review. What I got from it is that if somebody actually causes a massive short squeeze in the price of gold, then the price will spike, and a lot of those who own gold will sell, and then the bull market will be over.
Do yo think that Sinclair held his 24,000 gold contracts after the price spiked? No, he sold those to the shorts, and when it was all over the price of gold plummeted and stayed in a bear market for 20 years. So this “golden idea” is nothing more than a Ponzi scheme which he is trying to mastermind AGAIN so he can add to his riches!
You people are being played for fools.
@David
David, you also are missing the point of what JS has been claiming for years and that is that with some sort of reserve currency realignment which will have a gold component, gold will be valued much higher than it is today and will retain that valuation and not come crashing down to earth like in the eighties.
@kjm
Well then why is there a need to enlist billionaires to put on a short squeeze in the market? Sinclair is the president of Tanzanian Royalty. Don’t you see how he would benefit from a sudden rise in the price of gold? If there is no short squeeze, then gold and oil will likely move higher in tandem, gradually, and then his company will be graded by performance rather than a fleeting market bubble. Sinclair is a speculator and trader, and if there is a sudden rise in gold, he will sell his stock, futures, AND physical, and then he will buy something else.
As a speculator, you should be aware of the wolves in sheep’s clothing, otherwise you will contribute to those wolves sheering you and taking your wealth. In other words, don’t think that gold will stay in a parabolic rise, because nothing ever does.
Let’s compare what Eric Janszen has to say on gold. Quite a different and logical answer.
http://www.itulip.com/forums/showthread.php/21868-Did-Eric-miss-this-Gold-drop?p=222994#post222994
Sinclair was saying the same thing in the 1970′s so he has been wrong about that in the past. Even so, there is a strong possibility that gold will play a larger role in currency systems than it does now once the current monetary fiasco resolves so no arguing about that. The point, as David explains very well, is how to get there. Sinclair seems to be advocating an active role by a wealthy individual or group in forcing the situation by, in effect, cornering the gold market. Well I’m sure James Fisk and Jay Gould had a noble reason for trying to do exactly that in 1869, just like the Hunt brothers did, as did Sinclair himself in 1979 (though Sinclair was just a player in that group and not the leader). In any case, here is why it doesn’t work: gold will become a more significant monetary asset if it shows itself to be a reserve asset instead of a tool for speculators to manipulate and what Sinclair is advocating is the the opposite of that (spike the price so there is no other choice). So here it is in a nutshell: YOU DON’T FORCE GOLD DOWN THE THROATS OF SOCIETY!!! If you do, then you better not expect that everyone will magically accept it as the savior and readily embrace it as money (despite the massive price volatility that Sinclair’s gambit would cause). So no, there is zero chance that gold would gain monetary credibility from a massive spike and thus there is nearly zero chance that such a spike would be followed by some magical stable price that is much higher than it is today. Even the Chinese realize this, which is why they are so carefully accumulating without causing the price to rise too quickly. The brutal truth is this: Sinclair is getting old and probably worried that he won’t see the “golden” day when he is proven right so he wants somebody to hurry things up a bit. Why he doesn’t realize this is a bad idea I don’t know but wisdom in old age sometimes takes different forms.
To me the point is gold should not trade on a paper/ fractional basis. Physical or fully allocated only. Then maybe we can know it’s real price.
@Rob
Isn’t the “real” price of gold that an ounce of it should be able to buy a well-tailored gentleman’s suit? If you restrict gold trading to physical only, then you will have very few uses for it other than speculative hoarding, and the buyer’s premium will be massive to account for price volatility. Trading would be haphazard, costly and inefficient, and the gold price would be quite unpredictable. Anybody who wants to trade only physical gold can already do so, and thus it seems to me that wishing to restrict gold trading is the equivalent of imposing a non-free-market “solution” in a situation where market participants are in fact already able to chose (and for one reason or another still prefer in many cases “paper” gold).
The more ways to trade gold, the more “honest” price discovery will be. You’ve got to take the good with the bad in the more complex marketplace. In short, be very careful to keep your ears and eyes open for signals that hint at major changes in the works.
I feel very fortunate to live in a time and place where ownership of physical is allowed with virtually zero government intrusion. No limits, no value added tax, no sales tax, no government record keeping on purchases or sales. All those things would be much worse than any market manipulation that has so far patently failed to keep the price of gold suppressed.
http://www.gold.org/media/press_releases/archive/2012/02/gold_demand_trends_q4_2011_pr/
Will gold continue to rise in Dollar terms?
Absolutely! But over what time frame? We all know that our central banks are “printing” like crazy to cover the unfunded liabilities the politicians have created. But what if the current gold price is the product of a kind of market frenzy where the price is way ahead of the actual devaluation of national currencies? The gold price could meander in the doldrums for a generation if market participant’s perceptions change.
IMHO, bond default fears coupled with artificially low interest rates have been the primary drivers in gold’s decade long ascent….not inflation or inflation fears. Why risk holding “zero” yielding bonds when you can get equal or better returns holding “riskless” gold?
Gold has to be grandest greater fool market! Very little gold is consumed. It’s all hoarded in one form or another. It is indeed the ultimate currency in a world awash with confidence game paper, but its price is still very much subject to the whims of a marketplace full of schizophrenic humans. And I’m sure that, in a panic, a herd of schizos will be willing to sell their hoard of gold at well below current production costs. The PM mining industry could be devastated for years.