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Gold back above $1,600 and heading to $1,900 due to Cyprus banking crisis says Jim Sinclair

Posted on 19 March 2013 with 5 comments from readers

Gold prices ran decisively past $1,600 an ounce yesterday, and this marks a breakout from recent disappointing range-bound performance by the yellow metal that will now head up to $1,900 before pausing for breath again in the opinion of one of the world’s legendary gold traders Jim Sinclair.

Mr. Sinclair actually predicted this breakout for gold a couple of weeks back before the Cyprus banking bail-in crisis erupted, saying that gold would bottom out on or before his birthday on March 27th and to trust him on this. If he has gotten this much right perhaps he knows what comes next.

Market reaction

Global stock markets reacted negatively to events in Cyprus where the government and European Union have agreed that up to 10 per cent of bank deposits will be confiscated as part of a rescue plan for the whole banking system. They seem to have underestimated the contagion.

It is not simply that nobody will want to hold money in Cyprus anymore. This action calls into question the absolute security of money held in any EU bank, and particularly countries also in financial trouble like Greece, Portugal, Spain and even Italy and France. Depositors will not leave their money where governments might help themselves.

Why will gold benefit? Well it is money that governments cannot devalue or steal directly. The gold price recently fell back in part because the world economy was asssumed to be recovering and that made risk-on assets like equities look more attractive. If the euro zone financial crisis is only half done then this is not the case.

German Chancellor Angela Merkel warned as much in her New Year statement but nobody took a blind bit of notice. Now we know to what she referred.

Butterfly wings?

Cyprus is tiny with about 0.2 per cent of the GDP of the EU but its over-sized banking system is disproportionately large. Many large, quasi-state Russian companies channel all their export business through its banks. They are naturally furious at losing money from their Cypriot deposits. Mr. Sinclair reckons these deposits are very much larger than generally thought, and so will be the losses. That has implications.

His view is that the reaction will be a return to gold by Russia and further purchases by the Russian Central Bank where President Putin has just installed his right-hand woman in the top job. If so it is only a continuation of a vigorous gold buying program that is already in place. The Cyprus debacle will do nothing to reassure Russians that the Western banking system can be trusted with their money, and they are a major force these days.

Gold should indeed head back to $1,900 quite quickly and then surely we will see an assault on the previous $1,923 all-time high and finally $2,000 will be taken out.

Posted on 19 March 2013 Categories: Banking & Finance, Bond Markets, Global Economics, Gold & Silver, Investment Gurus, US Stocks

5 Comments posted by readers:

Comment by Fuad - 19 March 2013

The Arabian Money website continually publishes the views of Jim Sinclair who constantly pushes the narrative that gold prices are going to go into the stratosphere. I haven’t bothered reading his opinion for sometime now as his articles are always variations along the same theme i.e.predictions of an imminent rise in gold prices.

I don’t have any reason to doubt this narrative as I know that central banks have been net buyers for some time now, additionally I have invested somewhat in gold. However the performance of gold over the last few months has been disappointing, to say the least.

Couldn’t this website publish something more informative, like how the gold price is manipulated. This would be more beneficial than listening to the same record day in day out (no offence to Jim Sinclair).

Comment by Bradford - 19 March 2013

In a hyper-inflation event or in an event where we have some form of a collapse, why does Sinclair think that silver would only go to $100-$200? Pricing of silver adjusted for inflation today should be $150 right now. $200 silver does not seem to be the right asset to be putting our hopes in if that is all we can expect. Heck, $200 is only 7x todays pricing and probably won’t protect holders if that’s where it ends up in a big collapse or reset like we are expecting. Is he talking $200 short term?

Comment by Andy - 20 March 2013

Recently Silver and Gold took quite a beating or quite a plunge and Mr. Sinclair did not call this drop nor did I see a mention of such a huge correction about to happen. I saw many correction predictions made here about the market tanking and the market did nothing but set new highs in the US.

Comment by obewon - 21 March 2013

@ Fuad:
You’ve got a good point.

There are a number of web sites that reveal details on how the western banks have been, and continue to manipulate the gold and silver prices. As an American, I am ashamed of western governments and their corrupt banking practices, and their deliberate suppression of “honest” money, which is gold and silver. I suggest you try a few “google searches”; you’ll be surprised at what you’ll find.

In brief, here’s an oversimplified explanation:
The central banks of the West, most notably the US FED & the UK Bank of England, work in close cooperation with their agents, the big Western banks (most notably JP Morgan, who is their “ringleader” in this suppression game!), to depress the precious metals prices on a consistent basis. These banks enter naked shorts on the US Comex and in London (or enter bids to “buy long” then remove those bids quickly + enter massive naked shorts), and these governments (primarily the UK and the US) have been net sellers of physical gold for many, many years now; the governments provide the physical gold and silver to these banks, which then turn around and sell large quantities of the physical metal into the open market while at the same time, they are entering naked “paper shorts” on the COMEX. This drives the price almost straight down, as you can often see if you visit a site like Kitco (go here: http://www.kitco.com/charts/livegold.html).

Sprott Has Provided Proof Recently:
Eric Sprott (founder of Sprott Asset Managment) released a very powerful, very compelling, and very damning report today, showing evidence of “some very big entity” who has been selling many tons of physical gold into the open market for the past 20+ years. Who else within the confines of the USA, but the sovereign government itself, would have the means and the capability to consistently sell thousands of tons of gold without any concern for profit?

For a fascinating read on this topic, go here:
http://www.zerohedge.com/news/2013-03-19/sprott-do-western-central-banks-have-any-gold-left-part-ii

Or Go Directly to Sprott’s Site to Read it Here:
http://sprott.com/markets-at-a-glance/do-western-central-banks-have-any-gold-left-part-ii/

This SHOULD BE earth-shattering news around the world, since the USA has been furiously printing fiat paper currency for the past 4+ years; and the QE-for-Eternity will continue (but the western elites will suppress this info, so that citizens of the world are kept in darkness regarding these truths). What if these citizens of the world were to “suddenly discover” that the USA has no gold (because they sold it all into the open market!)? The US government will never allow an independent and open audit of all 400 ounce bars; instead, they’ll insist that it’s all still there.

But if the world knew the truth, how long would it take for the US Dollar to deteriorate sharply, and follow the same path as the Zimbabwe Dollar?

Comment by Howard - 28 March 2013

I trespect Sinclair but he has been predicting gold at imminent huge prices for three years now and not once has he been correct.

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