By Jim Sinclair,

Gold is on its way back into the monetary system. That is certain.

It is also certain that one method being examined at the highest level is the Federal Reserve Gold Certificate Ratio, Modernized and Revitalized and no longer directly connected to interest rates.

If you are one of the gold gang that fears Volcker as an advisor to Obama, then you are ignorant of Volcker’s previous position on gold early in his career. I believe he is this time pro-gold because of the Mother of All Crises - his description of the conditions now.

Volcker does not waste words, nor is he glitzy. This is the Mother of All Crises, settlement of which demands a gold criterion which is the FRGCR.

The price will float but around a pivot point of $1650 (or higher). It will more than likely be within $200 based on expansion or contraction of a measure of US international debt.

Stable Money Is the Key to Recovery
How the G-20 can rebuild the ‘capitalism of the future.’
By JUDY SHELTON
NOVEMBER 14, 2008

Tomorrow’s “Summit on Financial Markets and the World Economy” in Washington will have a stellar cast. Leaders of the Group of 20 industrialized and emerging nations will be there, including Chinese President Hu Jintao, Brazilian President Luiz Inacio Lula da Silva, King Abdullah of Saudi Arabia and Russian President Dmitry Medvedev. French President Nicolas Sarkozy, who initiated the whole affair, in order, as he put it, “to build together the capitalism of the future,” will be in attendance, along with the host, our own President George W. Bush, and the chiefs of the World Bank, the International Monetary Fund and the United Nations.

When President Richard Nixon closed the gold window some 37 years ago, it marked the end of a golden age of robust trade and unprecedented global economic growth. The Bretton Woods system derived its strength from a commitment by the U.S. to redeem dollars for gold on demand.

True, the right of convertibility at a pre-established rate was granted only to foreign central banks, not to individual dollar holders; therein lies the distinction between the Bretton Woods gold exchange system and a classical gold standard. Under Bretton Woods, participating nations agreed to maintain their own currencies at a fixed exchange rate relative to the dollar.

Since the value of the dollar was fixed to gold at $35 per ounce of gold — guaranteed by the redemption privilege — it was as if all currencies were anchored to gold. It also meant all currencies were convertible into each other at fixed rates.

Paul Volcker, former Fed chairman, was at Camp David with Nixon on that fateful day, Aug. 15, when the system was ended. Mr. Volcker, serving as Treasury undersecretary for monetary affairs at the time, had misgivings; and he has since noted that the inflationary pressures which caused us to go off the gold standard in the first place have only worsened. Moreover, he suggests, floating rates undermine the fundamental tenets of comparative advantage.

“What can an exchange rate really mean,” he wrote in “Changing Fortunes” (1992), “in terms of everything a textbook teaches about rational economic decision making, when it changes by 30% or more in the space of 12 months only to reverse itself? What kind of signals does that send about where a businessman should intelligently invest his capital for long-term profitability? In the grand scheme of economic life first described by Adam Smith, in which nations like individuals should concentrate on the things they do best, how can anyone decide which country produces what most efficiently when the prices change so fast? The answer, to me, must be that such large swings are a symptom of a system in disarray.”

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By Jim Sinclair

Dear Friends,

Haven’t we all had enough?

Isn’t it insulting to you when major publications carry reports that Lehman nicknamed their corporate garbage can either Spinco or BadBank?

Bad banks are a product of OTC derivatives. Spin is how black is made to look like white.

Is this simply bad humor or is Lehman giving us all the middle finger salute?

So here we have a major international investment company rubbing both spin and weak banking conditions in our face as they are bailed out via the Federal Reserve Begging Bowl window.

Illegal attacks on our gold shares are costing billions of dollars in damage and there is no Begging Bowl loan window offering us or the company’s full recovery through 28 day perma-loans. In a sense the people who appear to be giving us the bird are more than likely the brokers for those that seek to injure the gold gang. Of course they think with impunity.

These power trippers seem to be intoxicated with themselves because they have recently bit the hand that feeds them. Raids of Fannie, Freddie and Bear Stearns (amongst others) is an act of turning on their benefactors. We shall see.

Let’s not forget about Mr. Gross of Pimco, who called upon the US Treasury to bail out all financial entities that made enormous profits on OTC derivatives.

They make money and the US Treasury/Fed covers the losses. They make massive money and your children and their children bail them out.

We are attacked by the financial equivalent of Highway Men and nobody gives a damn.

Haven’t we all had enough?

Another affront of one’s intelligence, and of course part of the “Hold the Hill” strategy, is the argument being broadcast by all media (and all the Hill’s friends) that spins the story that CURRENCY VALUE IS DETERMINED BY COMPETITIVE ECONOMIC ACTIVITY.

When push comes to shove, what determines a currency’s value will be the degree of financial failures and size of the financial bailouts because these events cause the volume of paper money to increase substantially.

The value of currencies, when written off by the history of this time, will not be a function of competitive levels of economic activity but rather who held the most OTC derivatives.

The USA is the eye of this hurricane of financial weapons of mass destruction already acting true to their name.

Emergency Action Required Immediately To Prevent Public From Joining The Panic Tomorrow.

Author: Jim Sinclair

Dear CIGAs,

This is it.

The DJII futures are down over 500 points.

If the Federal Reserve fails to take emergency action before the US opening tomorrow, you will see the DJII open down 1000 points as the public joins this professional panic.

Everything you see happening is contained in the Formula, which will be the catalyst that takes gold again above $887.50 and to $1650.

As long as you have followed my plea to have NO MARGIN on anything gold I see no problems.

If you have margin the rule is never meet a margin call, but sell whatever is needed to meet the call or more, never less.

It is a better wager that the Fed will immediately drop rates by 1 full percentage point.

It is a slam dunk that all Western central banks will cut loose and flood the world with more liquidity than ever seen before.

If central banks fail to cause a torrent of liquidity from their unending check books then $450 trillion of derivatives will take us to the world of Mad Max.

Monetary inflation ALWAYS causes PRICE inflation even without strong business conditions.

Prices of hard and transportable assets rise regardless of business conditions.

All currencies fall and the stronger currency is the laggard in the race to the bottom of the tank.

Visit Jim Sinclair’s website

Author: Jim Sinclair

Thursday the Chairman of the Federal Reserve expressed his support for a significant fiscal and monetary stimulus as a preemptive strike against a U.S. recession. The market answered by dropping over 300 points. Today the President of the U.S. broadly outlined a non-specific plan for economic stimulation. After the Administration’s plan for $150 billion of economic stimulation was made public, the DOW closed almost 60 points lower. The result of the Bernanke/Adminstration fiscal and monetary stimulus is a total Dow decline of 479 points, according to my calculations.

Nothing said by either luminary addresses the problem, including those that developed this afternoon by the downgrade of the debt of Ambac, one of the four major bond insurers, MBIA, MGIC and similar companies dealing in OTC Default Derivatives. Should S&P and Moody take similar action, which is expected, two trillion in debt should also be downgraded. The downgrade of the debt of the guarantor must impact the debt they have guaranteed. So the two trillion is debt that may well and should be downgraded now is another domino of titanic size.

This afternoon’s problems are new and their size says both Kings Are Wearing No Clothes” with respect to their presentations of Thursday and today.

The general equities market must be calmed. Should the Dow crater, another major domino falls. Let’s see how the PPT (Price Protection Team) brings the Dow in Tuesday morning in pre U.S. trading and then how Tuesday closes. The DOW better be higher each day than the indices are before U.S. trading or as the last two days demonstrated, the PPT has lost its tight control of the equities markets. Watch the pre-open indices and closing Dow very closely.

If the equity markets cannot be calmed then:
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Author: Jim Sinclair
Mr. Sinclair’s response to the market reaction to the Federal Resrve’s 1/4% cut in the Fed Funds rate and discount rate on December 11th, 2007.

Dear Extended Family:

Don’t be fooled by today’s market. The Fed is running a BLUFF as they are out of aces. There is simply no possibility, way or means of being HAWKISH in the face of a meltdown wherein major financial entities of all kinds are simply going too broke to be rescued. These losses are the largest in my life of 66 years. This is the worst financial crisis in modern history and the degree of liquidity that has to injected into the world monetary system is without precedent. Soon the US FEDERAL BUDGET DEFICIT WILL EXPLODE UPWARDS, THE TIC WILL GO NET NEGATIVE AND THE DOLLAR WILL DROP LIKE AN F-16 IN A FREEFALL WITH AFTERBURNERS FLAMING.

I feel compassion for those that did today fall for the Fed Bluff by throwing away gold, throwing away good gold shares and even worse, maybe buying the dollar or covering the short. Today’s Fed action in the great scheme of things is a scheme doomed to failure by the reality of the meltdown.

When business is scared to death that things might be falling off a cliff the failure to cut 1/2 to a full point is going to bite the Fed in the ass. As more and more poor business reports come in the dollar will swoon. Gold will rocket and the shares that participated well even to today’s morning will be the unquestioned leaders of the pack.

Don’t let Ben the poker player BLUFF you out of a pot of gold, your only insurance policy possible which will protect you from the problem that has NO PRACTICAL SOLUTION.

We are on an Express Train to Armageddon in the financial sense. Don’t let Ben the Great Fooler, make a fool out of you. Hang tight using fishing lines to buy and Rhino horns to sell if you must trade.

Gold is going to $1050 and onward to $1650.

Regards,
Jim

Visit Mr. Sinclair’s website.

Tuesday, October 23, 2007, 2:11:00 PM EST

Author: Jim Sinclair

Many of you have asked what exactly I mean by “This is it,” so here it is in point form:

1. There is a rampant, serious financial problem with terminal potential and no practical solution hidden just outside of the public’s view (OTC Derivatives).
2. Because central banks have gotten so out of hand and political which cannot be controlled by investors or the man in the street, we need to adjust our actions so that each person takes on the responsibilities normal to central banks for their own finances.
3. Everything we buy is getting more expensive and many assets people have, other than gold, are losing value. Because of this credit is not a proper idea regardless of the weak dollar for the majority of people reading this.
4. Major financial institutions, Internet financial entities and banks operate without transparency where their derivative holdings are concerned. Losses the financial institutions are publishing are considered by media as having extinguished all the risk. I do not believe this. I believe they are still marked to model, only the model is moving slowly towards reality of worthlessness.
5. There is an acceleration of bankruptcy among financial institutions. This translates to the individual needing to act as their own financial institution by having their share investments in paper form, gold in their close possession with no one in-between and available cash. The individual must be their own bank and central bank as one has failed us and both may.
6. The savings rate in the US is negative while the expansion of credit is totally over the top.
7. Business is turning south so the US Federal Budget Deficit will move up exponentially.
8. The US dollar has become a bombed out and lost battle zone. There is nothing good anyone can say fundamentally about the US dollar.
9. Non US entities are fed up with financing the US consumer and US Federal activities. This is clear from the recent TIC report, which is now down trending.
10. Financial privacy is non-existent.
11. There is a model for exactly what is happening now and that is the Weimar Republic. Name war retributions as OTC derivatives and you begin to see the picture.
12. The US dollar has now made a clear indication of the final head and shoulders; the massive formation from the absolute top is breaking down.
Number 12 is the item that impacts all of the above because of the dollar’s technical position now beginning to reflect the dire fundamentals. This is it

This is it because you now have to perform not only as your own bank but also as your own central bank. This is it because the US dollar has completed a major head and shoulders bear formation, pulled back to the underside of the neckline and thereafter declining below the major support line drawn from the beginning of the big dollar bull under Chairman Paul Volcker. Volcker made the dollar and Greenspan gave it all back to Asia.

The dollar break below the recent and most important major, major support line drawn from 1980 to now is the fundamental basis which will push Gold to $1650. The US dollar is without any doubt in my mind is going to .7200, followed by .6200.

Ladies and gentlemen, prepare to defend yourselves.

Visit Jim Sinclair’s website at www.jsmineset.com

Gold and Dollar Market Summary, July 18th, 2007

Author: Jim Sinclair

Dear CIGAs,

You simply must have gold.

As you can see from the mast head of JSMineset, gold is the standard because there simply isn’t much of it. Alchemy in real terms is nothing more than an entertaining joke distributed for a laugh from the people at www.GATA.org. As a realistic possibility alchemy has to be at the bottom of the barrel of disinformation.

The US dollar is in miserable condition even though the Exchange Stabilization Fund did show within that five minute window of opportunity we pointed out earlier this morning. Is that a coincidence? Probably.

All the King’s horses and all the King’s men cannot put the Humpty Dumpy Dollar back together again, but they sure are trying. The dollar is trading now at .8025 as the Exchange Stabilization Fund funded by the US Treasury who is in turn funded by the Fed is doing everything possible to get the buck back to .8031. The problem with the heroic attempt is you have to keep it there. Keeping it there means you have to clean out the offerings in the cash market not only now but repeatedly, which is simply not possible.

The only way to support the dollar is to sell the hell out of it then use OPM for support. The other means is to spread it in a huge way to operate the spread just as is done in the equity indices to support that. The rub in this tactic for the US dollar is that you would have to cream it to help it and that is contra-productive. So far no real effort has been made to play the market to support the dollar. That is what makes it quite hard to start now. For this reason I do not see the present effort to hold that line (.8030) as a successful strategy.

We live in a world without restraints, almost without ethics, hateful people almost everywhere and no standards at all. This is enough of a reason to own gold. It is limited in quantity and becomes a currency when the previous reserve currency fails. The demand for gold will without any doubt rise. The supply cannot rise in any meaningful way. Therefore the price of gold must rise. It is that simple.

US paper is in trouble as senior paper is US and worldwide bonds, not necessarily equities. The sub prime debt level is following economic law we spoke of before. That is any level of debt, be it the lowest, will impact all levels of debt, even the best.

This then begins to fill in the final pillar that sustains the generational bull market in gold.

This Pillar is taking form as the awful number $666 is breached. Maybe the number has something to do with the COT boys.

Bernanke Confirms the Formula:
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By Jim Sinclair, June 29, 2007

They can manipulate as much as they want but it is all in the US dollar!

It is my opinion that those powerful short interests — both legal and illegal -are frantic to cover and are therefore pulling out all the stops.

Dirty tricks, use of media pals, and all the usual underhanded methods seem to populate everything these days from gold to gold shares of good value.

Using the baseball analogy, “Three strikes and you’re out,” I rate today as strike number two at the .8050 to .8150 range on the USDX. The interesting part of this is that commentators are looking at the differential rate between the US Fed and other Central Banks. My comment is, “Like hell that is the reason.”

The real reason is a meltdown of sub prime mortgages that appears to have caused Bear Stearns more of a problem than was first thought. When you see a new man come on board at Bear Stearns who specialized in asset maximization of corporations you know the horse dung has hit the proverbial fan.

I believe that Over the Counter Derivatives are now melting down, threatening many other well known international investment firms. And that is why the dollar looks like death warmed over. In addition, that is why the price of gold is under the great power of manipulation to hold it down so as not to reveal the degree of the problem.

Remember this about Over the Counter Derivatives:

1. They have no regulation.
2. They have no standards.
3. Without standards there can be no viable market.
4. They are unlisted
5. They are traded by private treaty negotiation
6. They are valued by “Mark to Model” which is a total cartoon.
7. They have no financial guarantee such as a clearing house.
8. They are unfunded special performance contracts floating in cyberspace. All funds in the OTC Derivatives are taken out as spreads and commissions.
9. More than 50% of the earnings of major international investment banks come from granting in private treaty negotiations these instruments of mass financial destruction.
10. The financial performance of the specific performance contract called OTC Derivatives depends on the financial capacity of the loser in the transaction.
11. Control has been loose in the interest sensitive OTC Derivatives because of multiple dealings outside of the initiating two until no one knows who has what.
12. The replacement value of these instruments is in the multi trillions of dollars.

Interest rate differential would not hammer the dollar as we are seeing today. Remember that three strikes and the US dollar is out. Expect every dirty trick and media negativity towards everything gold as quiet but frantic insiders attempt to offset a panic by subverting early warning systems.

Those in the know are frantic to cover their short positions which can only be accomplished if they stampede you by every means possible. They are going to fail. You are not. If you wish to screw the shorts royally - simply do nothing. They can make price but they cannot make cover as long as you are not spooked into selling everything gold. The gloves are off and the major battle between longs and shorts in gold is here!

Gold is going to $682 - $761 and then to $887.50 - $1000 plus

The bear market in gold shares is a total construction of bear raiding hedge funds that is doomed to failure

Their really bad day is close at hand!

Visit Jim Sinclair’s website