Gold to hit $1 650 in 2010 – Jim Sinclair

MONEYWEB

Nations who can produce gold at reasonable prices are actually mining money.

ALEC HOGG: In this special podcast, Jim Sinclair – who is a highly knowledgeable man in the metals industry, the chairman of the Tanzanian Royalty Exploration, and a man who has been following gold for many years – joins us.

Jim the first time our paths crossed was in the early 1980s – there was an organisation called the National Committee for Monetary Reform – even back then you had an interest in gold – what attracted you to the metal?

JIM SINCLAIR: That was a very fine fellow who started that – Jim Blanchard – with a very serious purpose. That was a great organisation but I was an over-the-counter trader in the middle 1950s and as you can see, I’m a little bit long in the tooth here. I came from a European family – you know marriage was a little complicated, but my father was Bert Seligman, one of the great traders that existed in the Street and it was very much in our blood that gold was part and parcel of the monetary system, as reserves – pretty much the Austrian school.

ALEC HOGG: It’s interesting this, because young people find it hard to understand the allure of gold. Do you think it is a generational thing?

JIM SINCLAIR: Well none of them had any schooling in it – it’s not a part of the curriculum, it’s been looked at as a barbaric relic for three generations, but I would suggest to you that the gold market has brought a lot of intention on itself, and as the central banks are changing, so in fact are our major fund managers and therefore the younger generation is at least starting to look.

ALEC HOGG: Certainly in the recent few months with the gold price getting to new records – looking back to 1980 it got to $850 an ounce – in fact I think it almost got to $1 000 in inter-day trading in the US…

JIM SINCLAIR: …$887.50 was the highest tick I saw in the comments.

ALEC HOGG: …$887.50 – and then it slid and went almost into obscurity in the early 2000s – looking back on that slide before we have a look at the uptick, what would have caused that?

JIM SINCLAIR: The gold has performed as it always has – it is a quintessent currency – so in its lock-up to the dollar in the inverse – that was the beginning of a major 25-year rally in the US dollar. And accordingly it was the beginning of a major bear market in gold so gold did what it should do and that is lock itself to the dollar. But when gold rises, it’s recognised as a currency, and when gold falls even though it shouldn’t be, it receives the label as a commodity.

ALEC HOGG: So there really is this direct relationship between how many dollars are being printed, how many have been put into circulation and the gold price.

JIM SINCLAIR: It always has been and I suggest it always will be.

ALEC HOGG: Gata (Gold Anti-Trust Action), the organisation from the US has been saying that the gold price has been suppressed for many years. I suppose if you want to keep confidence in paper currencies, it might make sense if you were a central bank. What’s your position on that thought?

JIM SINCLAIR: Well if I feel that way then I can’t understand the market and I have a tremendous respect for gold marketing and for GATA – they’ve done some terrific work right on that subject. But bear in mind that my lineage goes back to being a very market sensitive person. As I said, I am a specialist in 35 markets so I have to look at it as not being influenced by an outside source but being an entity alive to itself in order to understand it. There is a bit of juxtapose between GATA and myself even though I would not deny for a moment that GATA is right. In fact recently some declassified papers do indicate clearly and without any doubt that the Federal Reserve back in the last gold market was in fact contrary to the gold price. Now, I don’t think the Federal Reserve wants to take on a gold war – all of that exists as long as governments don’t participate in the gold market.

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