Dear CIGAs,
There is nothing and no one to be fought. The end was in the beginning, and there is no force on the planet that can stop the price of gold now.
"The supreme excellence is to subdue the armies of your enemies without even having to fight them."
–Sun Tzu
Jim Sinclair’s Commentary
I have received many emails concerning the implications of Kitco’s new chart of the gold price in a basket of currencies.
What you are looking at is gold in terms of Kitco’s homemade version of a Super Sovereign Currency Index. It is an interesting concept.
The dollar to gold in the inverse remains the mover of price. An interesting concept, yes. Earthshaking? Hardly.
Kitco launches index to measure "real" gold price
By Jan Harvey
LONDON (Reuters) – Montreal-based gold dealer Kitco has launched an index tracking gold in a variety of currencies, that it says will enable investors to monitor prices independently from the U.S. dollar.
The Kitco Gold Index, launched late on Tuesday, follows the price of gold with the same basket of currencies used for the dollar index — a mechanism that measures the U.S. unit against major currencies.
The components used for the dollar index are the Japanese yen, euro, sterling, Canadian dollar, Swedish krona and Swiss franc.
Spot gold and U.S. gold futures, both of which are priced in dollars, have gained ground in league with the U.S. currency’s losses. Gold hit a record high earlier on Wednesday at $1,048.20 per ounce .
But gold priced in other currencies has seen nothing like the same sorts of gains. While the precious metal has gained almost 20 percent in dollar terms so far this year, gold priced in Australian dollars has fallen 5.6 percent .
Jim Sinclair’s Commentary
What is Mr. Rogers predicting, a commodity boom or a paper currency crash? I will go for the latter.
Either way this is great news for Africa, especially Tanzania.
Add to that the fact sub Sahara Africa is becoming in the main the safest place on the planet geopolitically and Africa wins.
In the early 90s Frank Vogl and I wrote a book titled "Boom" that featured the emergence of China. Now comes the emergence of Africa.
Jim Rogers Claims 20 Year Commodities Boom to Replace Financial Crash
In a Yang-Yin world where only two paradigms, models or states are possible – obviously not the real world – commodity boom should replace financial crash, like day follows night.
To some, including Jim Rogers, this is already in the works. Speaking from Singapore in interview with the UK Daily Telegraph on 8 October, he forecast a commodities boom able to last 20 years. He said: "Commodities are the best place to be, if you ask me, based on supply and demand". He also believes crude oil will run out in 15 or 20 years "unless something happens", despite quite large recent discoveries and slow growing demand.
"The supply of everything continues to decline," he said, adding: "If the world economy recovers, commodities will do the best, because supply is being restricted. If the world economy does not recover, commodities will still be the best place to be, because governments are printing huge amounts of money." (Daily Telegraph, 8 October 2009).
The reasoning is direct and simple, but assumes the massive Keynesian remedial spending, loans and guarantees engaged by most G20 countries, and especially by the OECD group, will trickle down to the real economy, and will not backfire. Gold and silver prices, for example, are driven upward by fiat money weakness as much as by mineral resource depletion, energy costs of production, industrial and private demand in China and India, and so on. Under a relatively robust set of scenario drivers, discussed below, the new commodity boom forecast by Jim Rogers could disappear almost instantly, like ships or planes swallowed in the Bermuda Triangle.
Jim Sinclair’s Commentary
Alf says triple in less time. Armstrong suggests the possibility of a fivefold increase in less time than the article suggests.
I am convinced that gold will trade at a minimum of $1650 on or before January 14th 2011.
Gold price ‘set to double in four years’
Gold prices, which hit record highs last week, could nearly double again in the next four years, according to a report to be published tomorrow.
By Garry White
Published: 11:06PM BST 10 Oct 2009
Analysts at Edison Investment Research have predicted that the price of gold price could hit $1,879 (£1,185) an ounce by 2013, driven by the aggressive monetary policy of central banks around the world and a chronic shortage of the precious metal.
Charles Gibson, a gold expert at Edison, argues in the report that the peak in the gold price has been delayed because the world was still facing deflationary forces. Previously Mr Gibson had expected gold to reach $1,567 an ounce "in the near term".
The report says: "We reiterate our belief that gold is in the second phase of its bull run and that it has the potential to spike higher." It adds: "We believe that it will take longer than anticipated for quantitative easing and loose monetary policy to express themselves in inflation statistics."
The gold price hit an all-time high on three consecutive days last week, but the rally lost steam on Friday as the dollar strengthened and as traders locked in gains.
The price of gold for immediate delivery closed up 90c at $1048.10 an ounce on
Jim Sinclair’s Commentary
The Aden Sisters makes my $1650 look like chicken feed.
$5,800 gold? But stocks okay, too.
Commentary: After a good decade, Aden sisters gleeful about gold
Oct. 8, 2009, 1:10 a.m. EDT
By Peter Brimelow, MarketWatch
NEW YORK (MarketWatch) — A skillful veteran letter is sanguine about stocks — but positively gleeful about gold and other hard assets.
Mary Anne and Pamela Aden’s Costa Rica-based Aden Forecast first came to fame in the last great gold bull market three decades ago. In the current post-2000 gold bull market, the letter has shown remarkable tactical versatility and a definite willingness to compromise its powerful long-run analysis if short term-trends dictate.
It’s worked. Over the year to date through September, the Aden Forecast is up 20.2% by Hulbert Financial Digest count, versus 21.3% for the dividend-reinvested Wilshire 5000 Total Stock Market Index. That is, it’s pretty well caught the rally.
And over the longer run, the Aden Forecast’s superiority is striking. Over the past 12 months i.e. counting the Crash of 2008, it’s up 13% versus negative 6.4%% for the total return Wilshire 5000. Over the past three years, the letter is up an annualized 5.6%, versus negative 4.8% annualized for the total return Wilshire 5000.
In fact, it’s been a good decade for the Adens: Over the last ten years, the letter is up annualized 5%, versus just 0.9% annualized for the total return Wilshire.
Long-term, the Adens expect an inflationary collapse. But that doesn’t stop them staying with stocks, although they do anticipate short-term weakness. They write:
Jim Sinclair’s Commentary
MOPE would have you believe the falsity that governments make currency values, not markets.
Please note the important part of this article that calls your attention to the acceleration of dollar problems and hollow nature of considering the US dollar a safe refuge.
This is going to be a very cold winter for the dollar.
The article says:
"The dollar’s decline is now gaining momentum."
"The reality is that "safe haven" status has shifted away from the dollar and towards tangible assets that the US government can’t debauch by printing more of them."
‘Benign currency neglect’ could spell real danger for US economy
What’s happening to the dollar? That’s the question dominating the world’s financial markets. Last week the US currency fell, on a trade-weighted basis, to a fresh 14-month low. The dollar’s decline is now gaining momentum.
By Liam Halligan
Published: 7:22PM BST 10 Oct 2009
Many American economists say the greenback is falling because the global economy is recovering – so investors no longer need the dollar as a "safe haven".
That’s nonsense. The reality is that "safe haven" status has shifted away from the dollar and towards tangible assets that the US government can’t debauch by printing more of them.
That’s why gold just hit a fresh all-time high of well over $1,000 per ounce. That’s why commodity-backed currencies like the Australian dollar are now soaring – causing howls of protest from Aussie exporters. Meanwhile, global investors are quitting the US currency because they’re worried it’s a sinking ship.
It’s hard to disagree. America is still running a current account deficit equal to almost 3pc of national income. In a single month over the summer, the gap between America’s imports and exports widened no less than 16pc.
Jim Sinclair’s Commentary
Actually you can go back to the middle of July 2009 to the Washington meeting between US and Chinese monetary luminaries.
Then look to November for dollar difficulties, and gold delivery complications.
China calls time on dollar hegemony
You can date the end of dollar hegemony from China’s decision last month to sell its first batch of sovereign bonds in Chinese yuan to foreigners.
By Ambrose Evans-Pritchard
Published: 7:33PM BST 06 Oct 2009
Beijing does not need to raise money abroad since it has $2 trillion (£1.26 trillion) in reserves. The sole purpose is to prepare the way for the emergence of the yuan as a full-fledged global currency.
"It’s the tolling of the bell," said Michael Power from Investec Asset Management. "We are only beginning to grasp the enormity and historical significance of what has happened."
It is this shift in China and other parts of rising Asia and Latin America that threatens dollar domination, not the pricing of oil contracts. The markets were rattled yesterday by reports – since denied – that China, France, Japan, Russia, and Gulf states were plotting to replace the Greenback as the currency for commodity sales, but it makes little difference whether crude is sold in dollars, euros, or Venetian Ducats.
What matters is where OPEC oil producers and rising export powers choose to invest their surpluses. If they cease to rotate this wealth into US Treasuries, mortgage bonds, and other US assets, the dollar must weaken over time.
"Everybody in the world is massively overweight the US dollar," said David Bloom, currency chief at HSBC. "As they invest a little here and little there in other currencies, or gold, it slowly erodes the dollar. It is like sterling after World War One. Everybody can see it’s happening."
Jim Sinclair’s Commentary
Pakistan continues to boil. Afghanistan threatens to swallow one more nation. In Iraq the "Awakening" is running out of funding.
Latest Pakistan Bombing Seen as Warning to Government
By ISMAIL KHAN and SALMAN MASOOD
Published: October 9, 2009
PESHAWAR, Pakistan — A huge and lethal blast rocked a crowded market in the northwestern city of Peshawar on Friday, in what appeared to be a warning about the government’s plans to launch a military offensive against militants in the frontier region of South Waziristan.
The blast, which police and security officials suspected was caused by a suicide car bomb containing more than 100 pounds of explosives, was the biggest in Pakistan in months, killing at least 48 people, including seven children and one woman, and wounding 148 others.
It was the second attack by militants this week, after the bombing of a United Nations agency on Monday, raising concern that Taliban militants were preparing a new wave of attacks in a country where scores of suicide bombings have occurred.
Peshawar, the capital of the North-West Frontier Province, has long been an easy target for the militants; it is also crucial to both the Taliban and the government because of its proximity to Pakistan’s mountainous frontier. Furthermore, the city is of strategic value to NATO because it serves as a transportation hub for supplies bound for neighboring Afghanistan.
A majority of the people killed were passengers traveling in a public minibus, which was passing beside the car used in the attack. Several pedestrians were also killed or seriously wounded.
Jim Sinclair’s Commentary
Here is the low man on this weekend’s gold price totem pole.
The people who historically have known the least about gold are those that dig it out of the ground.
Why should anything change?
Goldcorp CEO ‘won’t argue’ with $1 200 – $1 500/oz gold in next few years
By: Liezel Hill
10th October 2009
VANCOUVER (miningweekly.com) – In one of the first interviews he gave after replacingKevin McArthur as CEO of Canadian gold miner Goldcorp, in January, Chuck Jeanneswent on record with a prediction that bullion prices would beat the all time record before the year was out.
“Thankfully, I managed to stay on the right side of that,” he said in an interview this week.
“I was pretty glad to see that happen, for sure.”
Jeannes said he expects that concern about inflation, and reaction to the weakening dollar will keep gold strong.
“I think there has been a fundamental shift on the demand side to investment demand for gold.”
There is also a renewed view of gold as an asset class.
“It’s being purchased for portfolio diversification purposes, and it’s even being discussed again as a currency, with the news we’re hearing about diversification of various central bank reserve holdings.”
“So I think all of those things bode well for the gold price in the long term.”
