China, gold, the dollar crisis and Jim Sinclair
Posted on 11 August 2009 with no comments from readers
Gold guru Jim Sinclair is of the opinion that China wants out of the US dollar and that this is setting us up for a major currency crisis in which the gold price will rocket:
‘89 days to go.
‘We live in a world of skewed economic figures and algorithms.
‘All you need to do is tickle the public with figures, tip a technical point, and the algorithms fire off from the fastest first to the next fastest down to the slowest. They are all thoughtless machines at work.
‘The primary facts to keep in mind is there is a near planetary desire for the initiation of the SDR type Super Sovereign Currency, which means dollar diversification.
‘The recent China/US financial summit was not scheduled, but rather requested. I believe that China has expressed its interest for the SDR type Super Sovereign Currency before the end of 2009. It is one of the factors in the countdown of days remaining for the dollar.
‘When the dollar implodes it will be an event to behold. The crack will likely only last a few days but will penetrate many significant price figures.
‘Recall when I told you Fannie, Freddie, GM and GE were the slowest train wrecks in history and how hard it was to hold a short position? That is the US dollar. However when Fannie, Freddie, GM and GE all busted after enormous resistance, it was like a firestorm with no real recovery. That is also the dollar.
‘Since markets are momentum driven, the continuing decline in dollar demand is sufficient and does not require dollar instrument selling in order to significantly impair price for the long term. That is what is now behind the long dollar decline. That is what will take the dollar to USDX .7200. The SSCI will break the support levels of .6200.
Gold will trade at $1224 and $1650 on the way to Alf’s targets.’
Mr Sinclair has made a fortune out of his eccentric opinions and putting some money on his being right again this time would be far from foolish. Gold is money people want, the dollar is not!
But this is not inconsistent with the view that the dollar could have a last hurrah in a stock market correction that may already have started after the top last Friday. Money coming out of stocks and into dollars would rally the green back one last time.
no Comments posted by readers:
Yes, Peter. Perhaps we may see one last dollar rally for old time’s sake, a last hurrah for the world that was. Saladin would do business with the Chinese and shun the dollar, I think. Great men know it is wise to turn up for battle only when you are well prepared to win. Jim Sinclair is right to highlight momentum trading effects, and the Chinese diversification from the dollar. See how they are making mega deals to buy resources and energy in Africa and South America? Very wise. Very Chinese. When will we see Saladin’s countrymen wake up, and prepare to win in this new century?
Dear Peter, when the dollar rallies and we seek and exit from the dollar,
Whislt its on its high, what do you think we should exit too, commodity back currency like the AUD, or Norweigan Kroner?
Are other currencies and safer or should we put it into Gold, and what level of a dollar rally do you think we should take that exit, do we expect a 10% appreciation in this final rally or more when do we take that exit?
Ed note: impossible to be that precise or we could all just make enough to retire on and give up! My thinking is that we will get a last dollar rally before and during a stock market correction – and then you should switch out into almost anything else, but AUD, kroner or gold would all be good choices. The bear trap is to be negative on the dollar too early.