Gold close to repeating late 1979 takeoff says Jim Sinclair

Posted on 22 November 2010 with no comments from readers

Gold trading legend Jim Sinclair thinks the gold market is right in front of a major move and current weakness is like that seen in late 1979 before the gold price shot higher.

What makes Mr Sinclair so exceptional is his long-term forecasting record. He predicted gold would hit $1,650 in February 2011 some eight years ago when gold was $300 an ounce. Nobody else has come close for forecasting accuracy.

Major move

Interviewed by King World News he said: ‘We have to be right in front of a major move in gold. Today the gold market had all of the indications of what would be considered by the old-time traders (Bert Seligman & Jesse Livermore) as a major turn. This would be a sign to them that the bulls are gaining strength in the market, and given any excuse it will rise violently.

‘The strategy now would not be to run after spikes and strength, but to begin to take in those periods which will certainly come, of weakness that exist during the day. This is really the first time since we came off of the high, that it’s starting to show a character of wanting to make a new high.

‘The chorus of complaints about the Fed and their adoption of QE, I call that the backfire of MOPE. You have so many of the new guys convinced that yes, the economy is recovering but not really that fast, and there is no inflation anywhere.


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Then why in the world is Bernanke going to a $600 billion project which is a rescue plan that comes up during a period of crisis? They can’t understand it.

‘The other thing is the belief that the financial institutions balance sheets have made such great progress. The bottom line is he (Bernanke) sees what they don’t see. The stumped recovery we’ve had is in fact an economy headed down.

‘Getting back to gold, this is late 1979. It’s got all of the characteristics of late 1979. If people will go back and look at the long chart they’ll see that there was one violent flip right before it took off and never looked back. And it’s getting very close to that point now. I think what you have seen is a major shake of the tree right before gold takes off.’

Buy and hold

Gold investors should therefore be buying on any weakness over the next couple of weeks. That weakness might emerge as the global stock markets sell-off because of fears about the resumption of more global financial turmoil, particularly affecting the banking sector.

This would initially also hit the gold price because gold will be sold to meet margin payments on a falling stock market. But looking at the 1979 gold chart below it is hard to imagine gold going much below $1,300 in this correction or silver below $25, or is this correction almost finished?