MNeagle
21st March 2013, 06:27 PM
Yesterday the ‘legendary’ Jim Sinclair hosted an open Q&A session at the Hilton hotel in NYC. I was in attendance, asked questions and tried to furiously scribe notes over the course of the day. I was in attendance from 1:30pm until 5:30pm. In the audience were about 2000 people, with less than 100 stepping up to the microphone to query Jim for his thoughts on a range of subjects; from the supernatural/spiritual history and human attachment to gold to current and future global events that are and will continue to shape the course of human history.
Given the open Q&A format Jim chose to employ for this conference the subject matter changed with each person, but as the conversation crept on several themes and details were raised providing a more in depth picture to some of my favorite subjects.
END GAME
The hot topic of the day was, unsurprisingly, how to determine when we have reached the end game of the current bull market in gold. With this being such a prominent topic I will try and address this subject first. First on most folks mind, is price. At what price will gold be when it is time to sell? According to Sinclair, if folks remain sane, anything above $3100-$3300 is safe to start selling. Everything below $3100 is a safe buy. Sinclair is expecting, again if sanity remains in play, a mathematically deduced peak during mania of between $3500-$4400. If folks leading the financial world leave their sanity at the door, then the outrageous numbers of $8000-$50,000 are possible. “Not likely, because I think the gold market will remain sane, but possible.”
These numbers will be achieved during the second phase in the timeline, 2015-2017, which I will go into more detail about below. Sinclair mentioned several times that the FED’s policy of QE is the key for the rise in the price of gold. What is happening now to the price of gold is that gold is monetizing itself. All around the world, from farmer to central banker gold is reasserting itself as the premier method of preserving purchasing power, preserving savings as it is an asset, not a liability and is tangible and easy to store or travel with if necessary. Gold is globally recognized. The 5000 year history of this monetary metal has not been forgotten and as faith in the current batch of fiat currencies is eroding, gold’s role as mankind’s money of choice is pushing itself back into the forefront.
By 2015-2017 the unsustainability of current US economic policy will become known to all. At this time gold will begin to be mentioned on a global scale. By the period of 2020-2021 gold will have reasserted itself as the premier backing for all fiat.
TIMELINES
Sinclair spoke several times about the timelines we are looking at regarding gold and what is in store for. The timeline is broken into 3 stages. There is the NOW, which began in 2008 when the plug was pulled on Lehman. The FED’s choice to allow Lehman to collapse set the fuse on the WMD known as OTC derivatives. The OTC derivative market is now over a quadrillion dollars in size (yes, over 1 quadrillion, that is 1,000 trillion or 1,000,000 billion. A 1 followed by 15 zeros $1,000,000,000,000,000). If Lehman were to have been shut down in an orderly fashion by the FED the collapse of the US financial system could have been averted. The entire OTC derivative complex could have been unwound at near zero loss for all parties. Bankrupting Lehman created winners in the OTC derivative bomb, and officially set the fuse for OTC implosion. Alas, hindsight being 20/20, this does not help us to undo what has already been done. In the NOW part of the timeline there is an intense battle that takes place in the gold market by the bankers to push gold below $1600 and for gold to remain at $1600. Sinclair claimed that by March 27th the battle for $1600 will be over and we begin the next leg up in price, with $1800 - $2000 as the next barrier for the bankers.
The second stage in the timeline, and perhaps most tumultuous will be from 2015-2017. My personal calculations have put this day of reckoning for the US economy in 2017, something Sinclair told me he agrees with “100%”. There is always the possibility that things do not go quite as planned (see Cyprus below for more on that) and could cause this reckoning to take place as early as 2015. So what can we expect? During this period of 2015-2017 we will see a paradigm shift in gold versus paper in regards to government balance sheets. For example, current US government records (believe it or not) have the price of gold officially fixed at $42 per ounce. The official change in US policy as it bites the fiscal bullet will lead price revaluation in gold. This revaluation will trigger hyperinflation that will last 3 violent months. Be prepared for this. Sinclair stressed that “those in the room are going to do extraordinarily well” when this happens (hyperinflation comes to an end), as he was assuming everyone is a holder of precious metals. The progression of events will be as the velocity of money increases (QE currently at $85B/month, this will continue to rise), leading to an obvious rise in inflation (joe 6 pack becomes aware), which will cause a collapse in confidence triggering hyperinflation.
After the US revaluation of gold takes place, and assuming the country does not tear itself apart during this 3 month hyperinflation event, we move into a new era of global monetary policy. Sinclair thinks we will see a new currency system based on a global M3 figure, tied to the amount of gold held by nations. This will be a new fiat and like it or not, the mafia that controls global finance is not going away, nor is their fiat money. Gold however, will see itself become a basis of 3%-15% of government holdings relative the amount of fiat it is permitted to create.
This leads to the end of the gold bull in the years 2020-2021. Unlike 1980, the gold price will not collapse but rather find an equilibrium price point as it retakes the throne of global reserve asset. The goal for current gold holders is not to pass down the metal to their children per se, but by this time to be able to safely convert the mental into tangible goods, such as real estate, education for their children and a return to the general principle of holding 10% or so of one’s net worth in precious metals.
For those unaware of what is happening in the global finance system this revolution in the perception of money will be violent. As I wrote above protect yourself accordingly.
After the 2020-2021 time we will see gold stocks return to their traditional investment role of high dividend paying, 10-15% year over year returns.
He also thinks the Euro will end up surviving this crisis, because they are taking whatever austerity steps are necessary now. The dollar, as we know it, will not survive as debt monetization ends.
CYPRUS
Sinclair repeated several times that the bail-in, rather than bail-out plan attempted by the IMF was a tremendous mistake on their part. To attempt this outright theft has let the horse out of the barn and there is no way to get it back in. Along these lines there were many questions about whether or not this can happen here in the US. The US has insurance via FDIC (so does Cyprus), so many in the media are claiming this will not happen here. Sinclair thinks, and I happen to agree here, that this type of austerity measure will happen in the US. The difference will be that the ‘haircut’ in savings accounts is going to occur to the various retirement plans and pensions. Given this information, Sinclair claimed this will happen in the US within the 2015-2017 time period. He suggested that everyone in the room stop contributing to any IRA immediately, and to withdraw all funds, taking the tax hit before 2015 when the FED/IMF will make its push for a US ‘bail-in’. How much they will try to steal from the people in unknown.
SILVER
Gold is a rich man’s game. Silver is a poor man’s game, even though there are some very rich men that hold silver. On the subject of silver Jim said he does not advocate holding silver over gold. If you do own silver, it is expected to rise on the coattails of gold like it always has, but the potential for monetization of silver is ‘slim to none’ while the monetization of gold is near guaranteed. Silver will make dramatic moves as the world economy shifts to gold. Personally, I think he is simply biased towards gold. Sinclair was close to the Hunts during the 70’s attempted market corner, and watched silver’s rise to $50 in the past. He does not think silver will see prices in the hundreds. Perhaps a brief moment of $100-$200 if things get crazy, but thinks the fair value of silver should be ~$50.
PAPER MARKETS
Jim spoke occasionally to questions about where to invest cash that is not/cannot go directly into physical. His only recommendations are the Central Fund of Canada (CEF on TSX) and McEwen Mining (MUX on TSX). He claimed that any US based ETF is not exactly safe (expect for Sprott, “who is a gentleman”). If the COMEX has issues, so too will all metal based ETFs reliant upon the COMEX for clearing. Sprott is trying to accumulate as much metal as he can without breaking the COMEX. He claimed he does not want to be the man to go down in history as the one that broke COMEX.
Generally speaking all “Major miners are so undervalued, relative to the stock price versus metal in the ground, it is insane. The time to buy is now.”
GENERAL THOUGHTS AND QUOTES
The following are some general highlights and quotes from the Q&A session:
“Trends, trends, trends!” Keep your eyes on what is happening in the world. The general trends are now global in nature. China’s military spending increasing at exponential rates. BRICs rise will become global leader by 2020-2021.
“Now is not the time to convert silver to gold. Just sit tight with your silver.”
Regarding holding metal overseas, Jim says doing what he does is best, but not for everyone. If you can establish political clout in a foreign nation, get all your metal there. Make sure it is fully registered in your name. Ensure both that government and the US government knows what you hold. For small time holders, keep it in your own possession and do not rely upon someone else to hold the metal for you. “The cost of unallocated versus allocated in Perth Mint is too high. I don’t like it.”
On Bitcoin, “If I were a techie I would like it a lot more than I do. I respect what it stands for, that people have lost faith in banker controlled fiat. This is a great example of the current trend.” (paraphrasing – ‘For now, I prefer gold.’
“Finance is a criminal enterprise.” “At this point in time, it is a ponzi. But times change.”
“Remonetization of silver is most unlikely. Gold is monetizing itself. Silver’s price wise will not be as stable as gold, but as gold rises, so will silver. Gold is key because it is all relative to monetary policy.”
On the subject of confiscation; “1930’s was done to increase the $ money supply. Now for confiscation to occur it would have to be a type of punishment since gold is not tied to the dollar anymore. Highly doubtful.”
On punishment style taxes on gold selling “Highly doubtful. I do not think they are going to try that.”
On Cyprus, “The IMG is no competition to Russia. Huge mistake, nothing more.”
2015-2017 US bites the bullet and physical price will formally overtake the paper price due to gov balance sheets. Then price will stabalilze.”
“Hyperinflation will last 3 violent months.”
“If they try to confiscate guns it could lead to violent uprising.”
“2-3 years until IRAs have serious issues.”
“Velocity is sensitive to confidence.”
Speaking of gold prices “It could go to outrageous prices. I don’t think it will, but it could.”
“If the USDX drops below 72 you better not own any variable rate loans.” (paraphrasing) ‘You’ll be screwed.’
Please let me know if you have any questions or comments and feel free to share this summary of the conference. Thanks for reading.
-DM
Given the open Q&A format Jim chose to employ for this conference the subject matter changed with each person, but as the conversation crept on several themes and details were raised providing a more in depth picture to some of my favorite subjects.
END GAME
The hot topic of the day was, unsurprisingly, how to determine when we have reached the end game of the current bull market in gold. With this being such a prominent topic I will try and address this subject first. First on most folks mind, is price. At what price will gold be when it is time to sell? According to Sinclair, if folks remain sane, anything above $3100-$3300 is safe to start selling. Everything below $3100 is a safe buy. Sinclair is expecting, again if sanity remains in play, a mathematically deduced peak during mania of between $3500-$4400. If folks leading the financial world leave their sanity at the door, then the outrageous numbers of $8000-$50,000 are possible. “Not likely, because I think the gold market will remain sane, but possible.”
These numbers will be achieved during the second phase in the timeline, 2015-2017, which I will go into more detail about below. Sinclair mentioned several times that the FED’s policy of QE is the key for the rise in the price of gold. What is happening now to the price of gold is that gold is monetizing itself. All around the world, from farmer to central banker gold is reasserting itself as the premier method of preserving purchasing power, preserving savings as it is an asset, not a liability and is tangible and easy to store or travel with if necessary. Gold is globally recognized. The 5000 year history of this monetary metal has not been forgotten and as faith in the current batch of fiat currencies is eroding, gold’s role as mankind’s money of choice is pushing itself back into the forefront.
By 2015-2017 the unsustainability of current US economic policy will become known to all. At this time gold will begin to be mentioned on a global scale. By the period of 2020-2021 gold will have reasserted itself as the premier backing for all fiat.
TIMELINES
Sinclair spoke several times about the timelines we are looking at regarding gold and what is in store for. The timeline is broken into 3 stages. There is the NOW, which began in 2008 when the plug was pulled on Lehman. The FED’s choice to allow Lehman to collapse set the fuse on the WMD known as OTC derivatives. The OTC derivative market is now over a quadrillion dollars in size (yes, over 1 quadrillion, that is 1,000 trillion or 1,000,000 billion. A 1 followed by 15 zeros $1,000,000,000,000,000). If Lehman were to have been shut down in an orderly fashion by the FED the collapse of the US financial system could have been averted. The entire OTC derivative complex could have been unwound at near zero loss for all parties. Bankrupting Lehman created winners in the OTC derivative bomb, and officially set the fuse for OTC implosion. Alas, hindsight being 20/20, this does not help us to undo what has already been done. In the NOW part of the timeline there is an intense battle that takes place in the gold market by the bankers to push gold below $1600 and for gold to remain at $1600. Sinclair claimed that by March 27th the battle for $1600 will be over and we begin the next leg up in price, with $1800 - $2000 as the next barrier for the bankers.
The second stage in the timeline, and perhaps most tumultuous will be from 2015-2017. My personal calculations have put this day of reckoning for the US economy in 2017, something Sinclair told me he agrees with “100%”. There is always the possibility that things do not go quite as planned (see Cyprus below for more on that) and could cause this reckoning to take place as early as 2015. So what can we expect? During this period of 2015-2017 we will see a paradigm shift in gold versus paper in regards to government balance sheets. For example, current US government records (believe it or not) have the price of gold officially fixed at $42 per ounce. The official change in US policy as it bites the fiscal bullet will lead price revaluation in gold. This revaluation will trigger hyperinflation that will last 3 violent months. Be prepared for this. Sinclair stressed that “those in the room are going to do extraordinarily well” when this happens (hyperinflation comes to an end), as he was assuming everyone is a holder of precious metals. The progression of events will be as the velocity of money increases (QE currently at $85B/month, this will continue to rise), leading to an obvious rise in inflation (joe 6 pack becomes aware), which will cause a collapse in confidence triggering hyperinflation.
After the US revaluation of gold takes place, and assuming the country does not tear itself apart during this 3 month hyperinflation event, we move into a new era of global monetary policy. Sinclair thinks we will see a new currency system based on a global M3 figure, tied to the amount of gold held by nations. This will be a new fiat and like it or not, the mafia that controls global finance is not going away, nor is their fiat money. Gold however, will see itself become a basis of 3%-15% of government holdings relative the amount of fiat it is permitted to create.
This leads to the end of the gold bull in the years 2020-2021. Unlike 1980, the gold price will not collapse but rather find an equilibrium price point as it retakes the throne of global reserve asset. The goal for current gold holders is not to pass down the metal to their children per se, but by this time to be able to safely convert the mental into tangible goods, such as real estate, education for their children and a return to the general principle of holding 10% or so of one’s net worth in precious metals.
For those unaware of what is happening in the global finance system this revolution in the perception of money will be violent. As I wrote above protect yourself accordingly.
After the 2020-2021 time we will see gold stocks return to their traditional investment role of high dividend paying, 10-15% year over year returns.
He also thinks the Euro will end up surviving this crisis, because they are taking whatever austerity steps are necessary now. The dollar, as we know it, will not survive as debt monetization ends.
CYPRUS
Sinclair repeated several times that the bail-in, rather than bail-out plan attempted by the IMF was a tremendous mistake on their part. To attempt this outright theft has let the horse out of the barn and there is no way to get it back in. Along these lines there were many questions about whether or not this can happen here in the US. The US has insurance via FDIC (so does Cyprus), so many in the media are claiming this will not happen here. Sinclair thinks, and I happen to agree here, that this type of austerity measure will happen in the US. The difference will be that the ‘haircut’ in savings accounts is going to occur to the various retirement plans and pensions. Given this information, Sinclair claimed this will happen in the US within the 2015-2017 time period. He suggested that everyone in the room stop contributing to any IRA immediately, and to withdraw all funds, taking the tax hit before 2015 when the FED/IMF will make its push for a US ‘bail-in’. How much they will try to steal from the people in unknown.
SILVER
Gold is a rich man’s game. Silver is a poor man’s game, even though there are some very rich men that hold silver. On the subject of silver Jim said he does not advocate holding silver over gold. If you do own silver, it is expected to rise on the coattails of gold like it always has, but the potential for monetization of silver is ‘slim to none’ while the monetization of gold is near guaranteed. Silver will make dramatic moves as the world economy shifts to gold. Personally, I think he is simply biased towards gold. Sinclair was close to the Hunts during the 70’s attempted market corner, and watched silver’s rise to $50 in the past. He does not think silver will see prices in the hundreds. Perhaps a brief moment of $100-$200 if things get crazy, but thinks the fair value of silver should be ~$50.
PAPER MARKETS
Jim spoke occasionally to questions about where to invest cash that is not/cannot go directly into physical. His only recommendations are the Central Fund of Canada (CEF on TSX) and McEwen Mining (MUX on TSX). He claimed that any US based ETF is not exactly safe (expect for Sprott, “who is a gentleman”). If the COMEX has issues, so too will all metal based ETFs reliant upon the COMEX for clearing. Sprott is trying to accumulate as much metal as he can without breaking the COMEX. He claimed he does not want to be the man to go down in history as the one that broke COMEX.
Generally speaking all “Major miners are so undervalued, relative to the stock price versus metal in the ground, it is insane. The time to buy is now.”
GENERAL THOUGHTS AND QUOTES
The following are some general highlights and quotes from the Q&A session:
“Trends, trends, trends!” Keep your eyes on what is happening in the world. The general trends are now global in nature. China’s military spending increasing at exponential rates. BRICs rise will become global leader by 2020-2021.
“Now is not the time to convert silver to gold. Just sit tight with your silver.”
Regarding holding metal overseas, Jim says doing what he does is best, but not for everyone. If you can establish political clout in a foreign nation, get all your metal there. Make sure it is fully registered in your name. Ensure both that government and the US government knows what you hold. For small time holders, keep it in your own possession and do not rely upon someone else to hold the metal for you. “The cost of unallocated versus allocated in Perth Mint is too high. I don’t like it.”
On Bitcoin, “If I were a techie I would like it a lot more than I do. I respect what it stands for, that people have lost faith in banker controlled fiat. This is a great example of the current trend.” (paraphrasing – ‘For now, I prefer gold.’
“Finance is a criminal enterprise.” “At this point in time, it is a ponzi. But times change.”
“Remonetization of silver is most unlikely. Gold is monetizing itself. Silver’s price wise will not be as stable as gold, but as gold rises, so will silver. Gold is key because it is all relative to monetary policy.”
On the subject of confiscation; “1930’s was done to increase the $ money supply. Now for confiscation to occur it would have to be a type of punishment since gold is not tied to the dollar anymore. Highly doubtful.”
On punishment style taxes on gold selling “Highly doubtful. I do not think they are going to try that.”
On Cyprus, “The IMG is no competition to Russia. Huge mistake, nothing more.”
2015-2017 US bites the bullet and physical price will formally overtake the paper price due to gov balance sheets. Then price will stabalilze.”
“Hyperinflation will last 3 violent months.”
“If they try to confiscate guns it could lead to violent uprising.”
“2-3 years until IRAs have serious issues.”
“Velocity is sensitive to confidence.”
Speaking of gold prices “It could go to outrageous prices. I don’t think it will, but it could.”
“If the USDX drops below 72 you better not own any variable rate loans.” (paraphrasing) ‘You’ll be screwed.’
Please let me know if you have any questions or comments and feel free to share this summary of the conference. Thanks for reading.
-DM