Jim Sinclair sees IMF money printing, dollar collapse and $2,100 gold in 2012
Posted on 19 January 2012 with 9 comments from readers
Doyen of the gold bugs Jim Sinclair is the man who advized the Hunt Brothers on precious metals in the 70s’ bull market and a highly successful gold trader. His thoughts for 2012 are therefore keenly anticipated. He writes…
2012 is going to be year of action and consequences. Today action by the IMF simply throws more money at the problem, which is treating symptoms. The question now is where are these funds coming from?
Money printing?
The US Fed has already provided more than $600 billion via swaps with the ECB, who in turn lend this money to the euro banks, who in turn buy euro debt. It is international debt monetization, a thinly bearded global QE3. You can be certain that the creation of funds for the IMF’s eventual one trillion in financial aid will be created as thinly bearded global QE3.
Before 2012 is out, political pressures in the US will bring the Fed out of the closet and full-blown QE3 will actively be pursued in daylight.
Rather than a collapsing euro there will be a collapsing dollar. The economic effect of QE3 will bring on extremely complex factors of monetary science. A contraction in general business activity will be contrary to what will be anticipated.
2012 will be the year of actions and consequences with a range in the price of gold, in my opinion, between $1,700 and $2,100. This is the absolute opposite of what was generally anticipated just one week ago.
Gold shares were actively depreciated by scheming hedge funds run by young bucks that have no knowledge of the extractive industry. They all will make spectacular recoveries.
Take the most recent transaction in the gold market between Eldorado and Euro Gold as a benchmark. It took place at $271 per ounce average price from inferred to proven. Many of these companies are selling at a discount to wholesale value and all the campaigning by the hedge fund shorts cannot hold the price at such a discount to wholesale value.
The unsolicited calls of the concerned stockholder hedge fund trader should be viewed against the size of their put positions before using their hedge long to hammer the market in order to profit from their short via put positions taken listed and as OTC derivatives. These destroyers have no idea of what building entails.
New York calls
I spent a 12-hour day traveling to New York City meeting with six different major investment funds and firms specializing in precious metals shares. In the last four months I have met with over 100 professional money managers in precious metals and have no intention of letting up slack in my activities.
We discussed the economics of gold and gold shares. I can guarantee you that the change, when it comes for bullied and forced lower price gold shares, now in many cases below wholesale value of the entities, gold resources will move violently to the upside.
The cash and willingness to act is there. All that is needed is a catalyst and the upside move will be as or more vicious than the calculated manipulation was by young destroyers to the downside.
2012 will be the year of consequences for actions, more so than just in the price of gold and the unexpected dollar weakness of the second half. It will be payback time.
9 Comments posted by readers:
I believe all the fundamentals are in place for gold and silver to succeed in 2012, as suggested by ArabianMoney.
Some unforseen issues hvae started arising, I read an article on Reuters (I think) which mentioned that the UAE and China have agreed a 200B USD currency swap. This means that the Middle East is starting to become weary of the dollar as a solid currency backing. The article also mentioned that other countries are moving to a Yuan backed currency like Nigeria and they mentioned another. If this wave continues, more USD currency (m3) will be available on the market. Add this with QE3 and we have the settings for hyperinflation of the USD.
I welcome all comments and disagreements, because I would love to figure out whats going to happen this year!
A directive to sell all gold reserves in Euro will push gold down.
Ed Note: hardly likely the’ve been net buyers recently.
for myself, i doubt european banks are buying european debts: why would they do it?
- ECB lent short duration to european banks ( 3 years) much less than average duration of european bonds (5 and 10 years): 489 billion euro at 1 % rate.
- at the same time, the european banks made 450 billions euro deposits to the ECB, at a 0.25 % rate: it means, they prefer lose 0.75 % than lending to each other or buying new european bonds with increasing rate.
- at least, they seem to prefer buying german bonds at negative rate than italian ones at a “good” rate. This leads to more and more difference between the bonds in europe, in other words, increase the explosion danger of the euro.
- that’s why i better share the point of view of Felix Zulauf :
http://www.businessinsider.com/felix-zulauf-on-the-key-to-2012-and-the-coming-banking-bust-2012-1
than the one of jim Sinclair.
I always look forward to the articles on this website. Must say though that whenever Mr Sinclair is quoted I have no idea what he’s talking about. It might be that I don’t understand the concepts but I also think a large part is the idioms used. A commentary from the editor would be most welcome!
As far as the price of gold is concerned I’m only able to look at this in a very simplistic way (lack of knowledge and brainpower). As I see it the indebted governments of the world are trying to print their way out of their debts one way or another. I’d have thought that any asset that isn’t a fiat currency would increase in the long term.
Or have I just broadcast my ignorance to the world?!
not at all, Ian.
its just that gold front runs inflation.
then comes beer.
houses are probly last to get it.
@ yves bauswein:
I have followed Felix Zulauf for the past 20 years, and his track record speaks for itself; most of the time, his comments are prescient.
There’s “Dark Matter” on Wall St.:
While I agree with some of what Jim Sinclair is saying (see above commentary), he tends to be overly dramatic at times. No doubt, there’s a ton of “dark matter” on Wall St. and I have no doubt that some of the NY hedge funds are being rewarded handsomely for consistently suppressing the share price of gold stocks since mid 2011.
Paper Gold vs. Real, Physical Gold:
The shares of gold mining stocks will eventually “have their day”; when there’s a lot of snakes being kept in a basket, eventually they’ll get out. For example, the truly big buyers of physical gold and silver have been avoiding the COMEX over the past few months, because the CME (which runs the COMEX) refused to step in to resolve the MF Global debacle and refused to reimburse those who lost a lot of money, yet the CME “claims” to have over $50 billion to make clients whole when these things happen.
The COMEX Has Lost Credibility:
So the big buyers of gold know that the CME/COMEX is rigged by the JPM cartel (which includes the CME/COMEX/CFTC gang); they will not make the mistake of buying gold futures from the COMEX again. The large buyers of physical gold and silver are now going directly to the big miners to make deals and obtain physical gold; they are bypassing the corrupt COMEX and to a lesser extent, the corrupt LBME. If this trend continues, as I believe it will, then there will be much greater “price discovery” between the “paper gold” of the COMEX and the real physical stuff. For a very interesting read on this topic, go here:
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/1/17_London_Trader_-_Staggering_Gold_Demand_Creating_Shortages.html
For more reading on the subject of the “gold price suppression game” and the resultant impact, read what John Embry (of Sprott Asset Management) has to say. Sprott is one of those firms that buys a lot of physical gold and silver, and they have the very best contacts in the industry; hence their comments have credibility.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/1/18_John_Embry_-_Gold_to_Rapidly_Triple_in_Price_on_This_Move.html
@ Ian
You are correct. The governments of Europe and the USA are too much in debt to pay it off without using inflation to reduce its’ real value. Trying to use austerity alone will only cause their economies to contract, and might eventually cause a deflationary downward spiral. Ben Bernanke has publicly said that he will do whatever it takes to prevent deflation. Globalization and the policies of the Chinese government make predicting what will happen impossible.
Here are my predictions for New Years Eve, 2013.
Gold $2,000
DOW 13,500 (I missed the 2011 top by 250 before the European debt blew up)
Oil $125
Silver $35
Should things go terribly wrong in Europe, or conflict start around the Gulf, (neither of which I expect THIS year) all bets are off. That is why conservative investors should probably stay 40% in dollar linked cash until the European mess is resolved. That could take several years.
The US election is too close to call, but if I had to bet, I would guess that Obama will win. The result depends on the unemployment rate in November when people go to the polls.
finally an article basis in reality… congratulations!