Tuesday, March 19, 2013

Gold: The Bottom Is In And We're Going MUCH Higher

Gold is about to take out $1,600...We may never see that $1,600 level ever again. - Jim Sinclair on King World News - Jim Sinclair, King World News interview  LINK
I highly recommend reading all of Jim Sinclair's recent interview postings on King World News, as he does a great job explaining the significance of the Cyprus crisis, what it means for gold and why the mainstream media is completely missing the mark in reporting the situation.

The way I see the Cyprus situation, it is the trigger we've been waiting for to ignite the next big, long-term move in gold:
Based on the current QE program, the Fed's monetary base projects out to be at $4 trillion by 2014 - a 31% increase from where it is today. If we assume that gold does a "mean reversion" in its correlation with the Fed's monetary base - a high probability assumption given the high correlation observed since 2008 - a 31% increase in the price of gold as of today - $1610 - would imply that gold has a high probability of going to $2100 by the end of 2013. In fact, I will make that my price prediction for gold for 2013.
You can read my entire commentary on this - and the indicators I'm using as my "sign-posts" here:  LINK

Those who have known me for awhile know that - because of the massive Central Bank/Government intervention in the gold markets (and all the markets) - I do not usually put out specific price and time-frame targets for gold.  But I remember the last time Jim Sinclair put out a specific price target - $1650 - he was low by $250.   Since he's forecasting $1900 on this move, I feel pretty good with my $2100 by year-end target, especially since my target is based on observable statistics.

Quite frankly, if my target is wrong by proving to be too low, then it means my worst fears about what is really going on behind the scenes in the global financial system - especially as it applies to this country - are correct.

The fact that U.S. Mint silver eagle sales midway thru March are already at 33% of 2012's full year totals - LINK - tells me that a lot more people in this country are starting to understand the same things I can see going on.  It also means that the price of silver (and gold) can not possibly stay down this low relative to the fundamentals for much longer.


  1. The M.S.M. are shills for T.P.T.B. to surpress the publics desire to own gold. I witnessed this at a investment seminar this past weekend when some shill asked how many people thought that gold was in a bubble. Almost the entire room raised their hand. I thought to myself these people just don't get it. The real moves in gold will occur when the rest of the world starts to accumulate in mass, when demand exceeds supply.

  2. Dave you know that I have always agreed with you...but I am convinced that JP Morgan is part of the plunge protection team' and the government's bank and that they use funny money to short precious metals.

    I'd love to see the producers tell the commodities market to fuck off and just quit selling metals until the CFTC invokes position limits.

    Anyway, I hope you are right. I am losing faith.

    1. No question about it. But right now, based on the COT reports, the banks are reducing their net shorts - which means it's not them selling for the most part - and the hedge funds are keeping a lid on the market - for now. We've seen this before.

  3. You have to check this out, New Zealand is going to institute a bank resolution that will punnish depositors Cyprus style.


    1. Ya, the way I read that is that is is a proposal. Thing is, and this is something that is lost on most people, bank deposits are liabilities of the bank, which means the depositor, is a creditor. We are conditioned to not look at it that way, but that's the way it is on strict terms. FDIC is supposed to give depositor/creditors confidence in the banks. BUT, if when we have the same kind of large-scale banking crisis here, if enough banks go tits-up, there's no way in hell the U.S. Govt can stand behind the FDIC guarantees.

      This "bail-in" could/will happen here eventually, although 95% of the population will not believe that it can happen until it actually does.

  4. Dave, care to give a price target for silver by the end of the year? Thanks so much for your awesome blog.

    (After the last couple of years, I really do like price predictions since a vast majority of the precious metal predictions were way off and it gave me false hope... but, I know this can only go on for so long and price predictions gives me hope for the future, financially, after a VERY tough ride, especially with my mining stocks.)

    1. I guess you can take my $2100 target, assume the gold/silver ratio likely drops to the low 40's (it will drop a lot lower before this next run is done) and come up with low $50s/high $40s. That would be by year-end. I expect to see another run comparable to the 2005-20011 run, ultimately.

  5. http://finance.yahoo.com/news/financial-meltdown-cyprus-could-happen-220149109.html?l=1

    "According to the Federal Depository Insurance Corporation, your money is safe and you shouldn’t worry.

    The FDIC’s core mission is to create stability in the banking system and to protect depositors’ savings,” said FDIC spokesperson David Barr. “During the current economic crisis, consumers have seen firsthand how the FDIC protects their money by swiftly making deposits available when a bank is closed. In the FDIC’s 80-year history, not a single depositor has ever lost a penny of insured money as a result of a bank failure. Our proven track record has helped prevent bank runs during some very difficult economic times.”

    This is the kind of BS people read and believe in. It's like using facebook and twitter as your financial advisors.

    I like to see where silver will lead in all this as this metal is the "poor man's gold". It's easily affordable compared with Gold, which may explain its increased in volume. Wonder how far its price will go down before it goes back up?

  6. This may be a bit off topic, but here goes...

    Many are starting to lose faith in gold and silver with the prices stuck in a rut. These new buyers have no idea what stuck in a rut PM wise is unless they bought in the 1990's and watched silver sit in the $4-$5 range for YEARS. I bought some silver in the nineties and watched the metal price go vertical for years until I gave up and sold some of what I had. Back then I wasn't as up to date on all things silver (the internet was still the domain of computer wizards and internet access was not yet world wide for many of us.)
    Now we see the price of silver and gold stuck in a narrow range, this does not mean it will stay in this range forever. Unlike the nineties when only true PM bugs were buying, we have nations and central banks buying, we have mine production declining in spite of higher prices (USGS.gov has the data, go look it up and see for yourself/do due dilligence/double check the data etc)
    Finally, we never had the FED buying up billions of junk loans and a large chunk of US Debt before, we never had so many countries in Europe in so much debt before, we never had China buying gold in the nineties, the PM demand has never had a time like this before.
    I am not saying "this time is different" I am saying something fundamental has changed, maybe Russia/China are planning a new currency partially backed by PM and oil, maybe a new Bretton Woods is in the works, I myself don't know, all I do know is that the US is feeling more and more like Wiemar before the hyper inflation hit. PM's might be the gold/silver lifeboat you will need when the HMS Fiat-titanic finally hits that iceburg dead ahead.

  7. Great blog, Dave--thank you! Always on my (short) must-read list.

  8. New PCs, cell phones, tablets, other e-products now use 320 tons of gold, 7,500 tons of silver per year, and rising.

    July 6, 2012

    "A staggering 320 tons of gold and more than 7,500 tons of silver are now used annually to make PCs, cell phones, tablet computers and other new electronic and electrical products worldwide, adding more than $21 billion in value each year to the rich fortunes in metals eventually available through "urban mining" of e-waste, experts say.

    Manufacturing these high-tech products requires more than $16 billion in gold and $5 billion in silver: a total of $21 billion -- equal to the GDP of El Salvador -- locked away annually in e-products. Most of those valuable metals will be squandered, however; just 15% or less is recovered from e-waste today in developed and developing countries alike.

    Electronic waste now contains precious metal "deposits" 40 to 50 times richer than ores mined from the ground..."

    I'm not into e-waste recycling as it would take a lot of work trying to get all this metals back. It would lead to a lot of health issues for the workers trying to do this.

  9. The media has been stating not to buy gold for years. Here are a just few examples…

    June 2008

    Dec 2011http://www.forbes.com/sites/joshuabrown/2011/12/19/the-trouble-with-gold/

    June 2010

    Oct 2009

    Oct 2009

    Sept 2009

    Oct 2010

    Sept 2010

  10. Do we really think that Jim Sinclair knew of this insider info leaked to hedge funds months in advance. It seems rather opportunistic to bring up this revelation now. If he is being honest though, I do expect us to break 2000 sometime in the next couple of months.

    1. Is the Fink being honest?

      BlackRock’s CEO Fink Says Cyprus Is Not a Major Problem

      Laurence D. Fink, chief executive officer of BlackRock Inc. (BLK), the world’s largest asset manager, said Cyprus is not a major problem and U.S. equities will rise 20 percent this year as the economy rebounds.

      “It has some symbolism impact on Europe, but it’s not a really major economic issue,” Fink said in a Bloomberg Television interview in Hong Kong today. “It’s a $10 billion issue. It does remind us of the frailty of Europe. It does remind us that the European fix will be multiple years.”

      “It was really people putting money to work and now some people are taking that money off,” Fink said. “Depending on the economic information that we receive, we can be in the beginning of a 5 percent correction or we’re going to be in a probably prolonged one- or two-month pause, which I don’t mind. But I would say by year-end equity markets are going to be much higher.”

      The dollar will “revalue upwards” in the next two years, while the yen will stabilize at 95 yen to 100 yen to the dollar this year, Fink said.


    2. Russian Leader Warns, “Get All Money Out Of Western Banks Now!”

      A Ministry of Foreign Affairs (MFA) “urgent bulletin” being sent to Embassies around the world today is advising both Russian citizens and companies to begin divesting their assets from Western banking and financial institutions “immediately” as Kremlin fears grow that both the European Union and United States are preparing for the largest theft of private wealth in modern history.

      According to this “urgent bulletin,” this warning is being made at the behest of Prime Minister Medvedev who earlier today warned against the Western banking systems actions against EU Member Cyprus by stating:

      “All possible mistakes that could be made have been made by them, the measure that was proposed is of a confiscation nature, and unprecedented in its character. I can’t compare it with anything but … decisions made by Soviet authorities … when they didn’t think much about the savings of their population. But we are living in the 21st century, under market economic conditions. Everybody has been insisting that ownership rights should be respected.”

      Medvedev’s statements echo those of President Putin who, likewise, warned about the EU’s unprecedented private asset grab in Cyprus calling it “unjust, unprofessional, and dangerous.”

      In our 17 March report “Europe Recoils In Shock After Bankster Raid, US Warned Is Next” we noted how Russian entities have €23-31 billion ($30-$40) in cross-border loans to Cypriot companies tied to Moscow, and €9 billion ($12 billion) on deposit with Cypriot banks [as compared to the €127 billion ($166 billion) being kept in similar circumstances by 60 of the United States largest corporations in offshore accounts to avoid paying American taxes] which are in danger of being confiscated by EU banksters.


  11. (Quinn in Littleton)

    Dave: Great post today. I think that the wheels are coming off this thing. I have noticed a change in many of the people I speak with in the last few months. The poeple that used to look at me as if I was from another planet regarding my views on fiat money are now calling me asking me for my local PM dealer. For instance, I had one client ask me about a week ago if .22 ammo would be a better bartering tool if the system collapsed than silver. I also had a good friend message me on FaceBook and ask me if he should take all of his money out of the bank. This would never have happened a year or two ago. I know it is all anecdotal in nature, but the people I know are beginning to sense that something is "off". Keep on keepin on Dave. Thanks for what you do. Q

  12. "The computer networks of three major South Korean banks and three television networks went offline nearly simultaneously at 2pm Seoul time on Wednesday, according to South Korea's National Police Agency. The government confirmed that malware was used to bring the networks down, and it is looking into whether North Korea is behind the attack."

    Another reason for physical Gold/Silver.

  13. "The amount of debt worldwide is more than all of the bank accounts in the world, and the current financial situation in Cyprus is the inevitable next phase: Confiscation.

    All pretense is now gone that central or global bankers can 'securitize' growth by packaging and repackaging debt; by hypothicating and rehypothicating debt; by regulating and rergulating debt. Since the bond market rally began in the early 1980s (yes, it's that old) each crisis has been met by central and global bankers – the IMF, EU and ECB, to name a few – and their Wall St. and City of London brethren with an increase in debt, and an extension of the debt's maturity.

    The result has been – as of 2007 – the biggest mountain of on-balance sheet and off-balance sheet debt in history: A staggering $220 trillion in debt in America's $14-trillion economy alone (when you include all public, private and contingent liabilities of unfunded entitlement programs). Deals in the global debt derivatives market now stand in excess of $1 quadrillion, riding above a global GDP of approximately $60 trillion.

    But starting in 2007, and then becoming spectacularly apparent in 2008 with the Lehman collapse, the ability of the world's taxpayers to pay either the interest or principal on this debt has hit a brick wall. And for several years now, governments around the world have tried the same old tricks of 'extend and pretend.' Repackage and extend the maturity, and pray that tax receipts start picking up enough to pay some of the debt off. It didn't work. The debt bomb just got bigger. Now in Cyprus we see the inevitable next phase: Confiscation.

    To pay off the debts that were incurred to finance the biggest wealth grab in history, we see in Cyprus, as well as central and global banking institutions around the world, a trend to just reach in and grab people's money from their 'insured' bank accounts. We should have figured out this was coming when JP Morgan (read: Jamie Dimon) reached in and illegally stepped ahead of customers at MF Global and grabbed over $1 billion, with the help of his crony pal Jon Corzine.

    Have we learned our lesson yet? They have more debts to pay than there is money in all the bank accounts in the world. This means that chances are, you – whoever you are, and whatever country you live in – will have a sizable percent of your savings stolen by banksters.

    Since the crisis hit (and for several years leading up to it) we've been recommending on ‘Keiser Report’ to put as much money as you can in gold and silver. Our advice then and now is: The only money you should keep in a bank is money you're willing to lose."


  14. Feldkamp: Fraud is Fraud at JP Morgan

    The New York Times reports today: “Some investors and even members of the bank’s board, however, are growing frustrated with what one shareholder called his “off-putting arrogance.”...Two board members are concerned about the repercussions of Mr. Dimon’s statements on an earnings call last April that dismissed news reports about the trades as a “tempest in a teapot,” say people briefed on the board’s thinking...Dimon, faulted in the Senate report for strong-arming regulators, is also losing sway with some authorities in Washington...senior executives not only misinformed investors and regulators about the excessive risks the bank was taking, but also withheld this information from their own board...“I’m richer than you.”...he was informed for months about potential problems with the trading position at the bank’s chief investment office. Rather than rein in the risk, the subcommittee found that Mr. Dimon had allowed the bank to alter its internal alarm system in January 2012, enabling the traders to continue building the big bets...Mr. Dimon possessed a wider window into the problems than his fellow board members...Senate report also paints a critical picture of Mr. Dimon’s defiant stance with the bank’s primary regulator...Mr. Dimon took an adversarial tone, according to testimony on Friday from the examiner...That attitude appeared to seep into the broader ranks of JPMorgan. Examiners who asked for more information were routinely met with resistance...comptroller’s office pressed for details in early 2012 about variables the bank was using to calculate its stress test, the bank resisted...“Even that was treated like a blasphemous request...”” Fraud is Fraud
    Frederick Feldkamp JP Morgan’s latest “whale-trade defense”—that “senior management acted in good faith and never had any intent to mislead anyone"—is self-condemning. Actionable “fraud” includes a right to rescind transactions based on innocent lies that mislead others. Those misled cannot sue for “damage” unless intent to defraud is shown, but rescission for innocent fraud is law throughout the US and other “common law” nations. Anyone misled by a false statement can use fraud to rescind transactions made with the liar in reliance on the lie. To suggest otherwise is beyond stupid. No nation ruled by law can permit liars to PROFIT by lying. Thus, transactions are rescinded (a 100% remedy when values fall) on proof of (1) a lie and (2) another’s reliance. That is the foundation of equity on which the rule of law stands. The world’s biggest and “best” bank, responsible for assets supported by liabilities that exceed the gross domestic product of Britain, backstopped by the accumulated wealth of every citizen of the US, must not be permitted to assert lack of “intent” as an “escape” from accountability. Jamie Dimon may be the best banker in history, but if lack of “intent” to mislead is his “defense” for lying, today should be his last day as a banker. Fraud, even innocent fraud, cannot be tolerated among those to be entrusted with full faith and credit taxpayer guarantees. Their duty is total candor— especially when it hurts. Anglo-American “bankster fraud”—begun with a 1711 scheme to hide imperial speculation by the phony “South Sea Company,” accumulated to a $37 trillion “off balance sheet liability” fraud allowed by “international accounting” (and another $30 trillion allowed by “GAAP”) and caused, in 2007-8, the worst financial debacle in the history of government—must end NOW.


  15. "In the Up & Down trends published in the GEAB January issue, our team wrote the following in the Down section “Economic indicators”: « Between short-term economic indicators which describe only what occurred in the week, others which are manipulated by governments to reflect the message they want to give, and finally others which no longer have any relevance in today’s world, economic reality is at the very least very badly portrayed, even disguised, by these figures followed however by businesses, banks, and even countries. As an example, only currency exchange rate variations make it no longer possible to say if it’s Brazil or the United Kingdom which is the sixth largest world power. This statistical fog prevents dependable navigation which is paramount in these times of crisis ». Whether it be the fruit of intentional manipulation by the players in their efforts to survive or the result of the extreme volatility of the bases for calculation (such as currency values and the US dollar in particular), this trend is, in fact, confirmed.

    Reliable and relevant indicators on the world economic, political and social situation are, however, essential in order to get through the crisis without mishap. But those used by governments or businesses are, at best, useless in the current period of major world restructuring and, at worst, harmful. This is why in this GEAB issue our team has decided to detail which indicators reflect the true situation and those which are window-dressing. This work also makes it possible to highlight that it’s not always the indicators themselves which are skewed, but the way in which they are interpreted or the reasons studied which make them change. "


    "Germany has warned Cyprus that the European Central Bank (ECB) will pull the plug on its two largest banks in the absence of a bailout programme and said the terms of the rescue will not change."


    "New Zealand banks are readying their IT systems for Open Bank Resolution, a Reserve Bank policy that in extreme cases like insolvency would see a bank's losses shouldered in part by its shareholders and creditors - including everyday depositors."


  16. Just out of curiosity Dave. Could it be possible that Cyprus was a safe haven for Gold / silver and this was another raid completely understated by the M.S.M.? Cyprus is being compared to Switzerland! Whoops were bankrupt M.F.Global style!!! Nothing to see here folks. Wash, rinse, repeat...

    1. I have not seen any reference anywhere to that being the case. I think Cyprus is about an invsolvent banking system desperate to find the funds to keep everything from collapsing. Truth is, bank depositors are creditors of a bank. Look on any bank balance sheet. Deposits are listed as liabilities. There's no guarantee on bank deposits except the flimsy Govt insurance. The Cypriot Govt could not afford to pay the insurance so they crafted a restructuring that included haircuts for the depositor/creditors.

      The Russians held this deal up. Cyprus is a tiny system. Wait until we see this spread to bigger countries.

  17. Dave if they were to let their two major banks fail, blame could be placed on the greedy people. The "Too Big To Fail" stigma could be removed. Could the bank holiday be allowing the Russians time to remove their gold / silver and the rest be confiscated in bankruptcy. This would teach people around the world a lesson. This would make people around the world appreciate a Bailout and accept the idea of a "wealth tax"on deposits rather than lose everything! Just a thought... We will soon see.. thanks for all of your hard work!

  18. I do believe Dave that Jim Sinclair did not "target" a move to 1900$, although he certainly expects that to be achieved soon. I believe that his reference to an additional 1900$ gain from here (current 1600$ level) would achieve his target of 3500$ which he has referenced many times. Sinclair speak . . .

    Of course we would love to see 1900$ by year end, but his bullishness is not restrained at that price - - only enhanced.

  19. I dont think so. Gold shares are underperforming drastically. Aussie gold stocks oollapsing the last few days and the aussie gold index asx:xgd breaking down with a target 50% lower, this signals a major stock market collapse is imminent. The USD is ready to break overhead resstance.

  20. Texas May Start Hoarding Gold…Secession Next?

    We all know the cliché: ‘Don’t mess with Texas.’

    Well, a new piece of legislation is being proposed to send that message to Washington, when it comes to protecting Texas’ gold.

    A lawmaker has proposed a bill to create a Texas Bullion Depository, which would allow the state and its citizens to store gold bullion in its own facility in Texas, with the protection of the state.

    If passed, the Texas bill would tell Washington to “shove off” under the 10th amendment power given the states, if we ever saw the kind of currency craziness we saw during the Great Depression when President Franklin D. Roosevelt mandated citizens hand over most of their gold.

    Texas isn't the first state to think about hedging its monetary destiny with precious metals.

    As for the Texas proposal, Jim Rickards, senior managing director of Tangent Capital Partners and author of Currency Wars, tells The Daily Ticker you can think of it like the “Fort Knox of Texas.”

    And on the legal side Rickards says, “you’ve got the state of Texas standing up for you if the federal government tries to do what they tried to do in 1933, which is take the people’s gold." Rickards is also a lawyer and has read the legislation.

    So, is Texas making preparations to start hoarding gold?

    “It may end up that way,” Rickards says. “Personally, I think this is a game changer in terms of the way institutional investors are going to look at gold.”

    That’s because large Texas pension funds haven’t been allowed to invest in physical gold, but Rickards explains this law would change that.


  21. Michael Hudson On The Financialization of Higher Education

    Education, like healthcare and commercial banking, would be best treated as public utilties and not 'winner take all' businesses with extravagant executive salaries and arcane investments.

    A strong vocational secondary educational effort would do wonders for those who are not inclined to college.

    There is always room for private enterprise for those who wish something different, above and beyond.

    But in those cases they ought not to be tax exempt unless there is some integral religious affiliation, or subsidized in any way with public funding, except to fund specific special programs and research.

    If a private educational institution were to desire tax exempt status, it would have to comply with some strict regulation on management salaries and investments for example. If they wish to be businesses, let them be businesses.

    Wall Street and their financiers can take any human endeavor and turn it into a parasitical racket. Wait until you see what they do with agriculture, energy, housing, elder care, and water if the people allow it.