Legendary gold trader Jim Sinclair is one of the most experienced individuals in the industry and has a solid enough track record that warrants attention whenever he speaks. Sinclair has been outspoken in recent weeks that a bottom for gold had formed, and that the price of gold would skyrocket considerably in the coming months. He recently proclaimed in an interview with King World News that the recent Cyprus debacle was a much bigger disaster than being reported:
“Any attempt to shift the weight of bank solvency to depositors has failed. This was the grand experiment which was to be the defining event where the financial shift from the onus of insolvency was to be placed on the shoulders of depositors rather than on quantitative easing.” This now wrong cause was the reason why gold had three major blocks thrown at it by the hedge funds at $1775 to $1800 as it was about to break into new high ground.
Information was given to this financial clique that QE would be reduced as bailouts turned to bail-ins, shifting the pressure of holding the Western world financial system together to the depositors and away from central banks. The enormous short by hedge funds was based on the now impossible-to-continue retreat of the central banks to make the depositors the source of bailout funds. Therefore the reason why gold has been so heavily shorted in the paper market is NOT valid.”
Jim Sinclair stands as one of the most knowledgeable and respected gold traders in the world.
With over 40 years of experience and donning the nickname “Mr Gold”, Jim Sinclair is not one to make scandalous statements for some cheap publicity. His take rationalizes a lot of the weird behaviour we have witnessed in the gold market in the past 6 months as the precious metal has been in a funk despite economic conditions that would suggest a bullish case.
The latest reports from the Cyprus bailout deal suggests that the Cypriot parliament will refuse a depositor bail-in, even a revised deal that protected everyone with savings of 20,000 euro and under. If such a proposition fails to pass in the little island nation of Cyprus, it will have little chance of even being attempted in other troubled nations. That would mean that quantitative easing would once again be the lone solution to the problems we are facing, and gold is the number one asset to own in an environment of continuous money printing.
“This IMF catastrophe in Cyprus is literally a landmark event in history, and the single most important event in the entire history of the gold market” says Sinclair, and if he’s right, then we’re in for some interesting weeks ahead.