Dear Friends,
2011 was a year of confusion among financial leadership, many conversations, much speculation, spectacular MOPE and no action. Europe almost talked the euro to death while the media carefully avoided the epic debt of Great Britain and the insolvency of US States.
2012 is going to be year of action and consequences. Today action by the IMF simply throws more money at the problem, which is treating symptoms. The question now is where are these funds coming from? The US Fed has already provided more than $600 billion via swaps with the ECB, who in turn lend this money to the Euro banks, who in turn buy Euro debt. It is international debt monetization, a thinly bearded global QE3. You can be certain that the creation of funds for the IMF’s eventual one trillion in financial aid will be created as thinly bearded global QE3.
Before 2012 is out, political pressures in the US will bring the Fed out of the closet and full-blown QE3 will actively be pursued in daylight.
Rather than a collapsing euro there will be a collapsing dollar. The economic effect of QE3 will bring on extremely complex factors of monetary science. A contraction in general business activity will be contrary to what will be anticipated.
2012 will be the year of actions and consequences with a range in the price of gold, in my opinion, between $1700 and $2100. This is the absolute opposite of what was generally anticipated just one week ago.
Gold shares were actively depreciated by scheming hedge funds run by young bucks that have no knowledge of the extractive industry. They all will make spectacular recoveries.
Take the most recent transaction in the gold market between Eldorado and Euro Gold as a benchmark. It took place at $271 per pounce average price from inferred to proven. Many of these companies are selling at a discount to wholesale value and all the campaigning by the hedge fund shorts cannot hold the price at such a discount to wholesale value. The unsolicited calls of the concerned stockholder hedge fund trader should be viewed against the size of their put positions before using their hedge long to hammer the market in order to profit from their short via put positions taken listed and as OTC derivatives. These destroyers have no idea of what building entails.
I spent a 12-hour day traveling to New York City meeting with six different major investment funds and firms specializing in precious metals shares. In the last four months I have met with over 100 professional money managers in precious metals and have no intention of letting up slack in my activities. We discussed the economics of gold and gold shares. I can guarantee you that the change, when it comes for bullied and forced lower price gold shares, now in many cases below wholesale value of the entities, gold resources will move violently to the upside.
The cash and willingness to act is there. All that is needed is a catalyst and the upside move will be as or more vicious than the calculated manipulation was by young destroyers to the downside.
2012 will be the year of consequences for actions, more so than just in the price of gold and the unexpected dollar weakness of the 2nd half. It will be payback time.
Respectfully,
Jim
Jim Sinclair is the Chairman and CEO of Tanzanian Royalty Exploration Corporation (TRE: Altanext NYSE platform, TNX: Senior Toronto Stock Exchange). He is a precious metals and commodities specialist. Some of the highlights of his nearly 50 year career include the founding of Sinclair Group of Companies (1977), which offered full brokerage services. Mr. Sinclair served as a Precious Metals Advisor to Hunt Oil and the Hunt family for the liquidation of their silver position as a prerequisite for the $1 billion loan arranged by the Chairman of the Federal Reserve, Paul Volcker. He was also a General Partner and Member of the Executive Committee of two New York Stock Exchange firms and President of Sinclair Global Clearing Corporation and Global Arbitrage .
He has authored numerous magazine articles and three books dealing with a variety of investment subjects. He is a regular speaker at various commodities related events.
In January 2003, Mr. Sinclair launched, “Jim Sinclairs MineSet,” which now hosts his gold commentary and is intended as a free service to the gold community.
