Downward Economic Spiral Gains Momentum Faster Than Expected
Author: Jim Sinclair
My Dear Extended Family,
Looking out the window you can see that business has rolled over but there are no beggars on the street. Many of the new kids wonder what all the noise is about concerning recent developments. The answer is that the foundation of economic activity, the credit markets, has been broken and cannot be put back together for a considerable amount of time.
There is one and only one tool that can work to camouflage the damage until after the election. After the election and assuming the more liberal party wins the problem will only worsen in terms of fiscal stimulation.
I have for a long time told you that monetary inflation comes first and without any exception causes price inflation that few can understand.
Price inflation always seeks out the hot market, making it hotter. Once it was equities, once it was bonds, once it was derivatives but these are not now the hot-comfortable place for participation.
The place drawing in the price inflation is commodities. You haven’t seen anything yet. I say that because the US dollar is now buffeted by a ragging commodity bull and the start of lousy business.
Business is going to crater for one reason. Its foundation and the foundation of free enterprise, even personal free enterprise, is the availability of credit. The credit system is totally decimated, ruined and broken.
You can be sure interest rates are headed for zero and fiscal spending is going skyward even if it takes another war to accomplish that.
The US will under the edict of a preemptive strike attack Pakistan if a clandestine relationship between management and the Taliban/al Qaeda takes shape.
Intelligence agencies as you can see are painting this picture. They have closed off the Iranian situation because of the investment there by large and influential others. Pakistan is on the front burner and truthfully may well deserve that distinction.
The minor magnet pulling at gold is $961. The major magnets are $1050 and $1650.
This is happening faster than anticipated making me think that I may be wrong in my suggestion $1650 is the high side target. As we see what the market wants to do and when it wants to do it we will discuss what new magnets develop.
This time gold will not crater after reaching its maximum market valuation. I have already shown you the vehicle that will prevent that while preserving the values for the real force behind all of this.
For the time being know that the expansion of fiscal and monetary stimulation must continue. There is no choice in that. It is mandated by the broken credit system.
Nothing can stop the march of gold up or the march of the dollar down. Monty and Dan have identified the return of dollar that has muffled its decline here, however I believe that the pressure downward is so much greater than the inflow that the US dollar has no chance of making any real gain. The potential for a total flop is much higher than any improvement.
Keep this all in mind when you start to panic as many of you did a week ago.
Gold is going without any doubt in my mind to $1650, a magnet that was originally published in 2000 and has not been altered since.
Below is a reposting of the valuation model I did for you recently on your gold shares.
When you wish to vomit it is the bottom of whatever you are contemplating vomiting over. The rises in a commodity price take all shares representing that commodity with it, first to reflect and secondarily to predict future increasing prices in the commodity itself.
For those of you that believe I can be beat or am wrong in any of my activities, know that I do take it personally. Know you haven’t connected the dots as I advised you to do. Know I will win this game as I have many times before. Know your risk is infinite while mine is finite and defined.
I will prevail and multiply in this battle because I have the ammunition of knowledge; that, I promise you. This I am dedicated t -.it is my life experience.
I am half Irish and half Jewish so clearly I love to fight and make money.
Respectfully Yours,
Jim
For those of you that believe I can be beat or am wrong in any of my activities, know that I do take it personally
Jim, you're an idiot. But don't take it personally.