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I have a friend here in Miami who is a strong believer in gold, attends the major financial conferences, subscribes to multiple newsletters and reads the Miles Franklin Daily Gold and Silver Summary every day as well. He is also strongly invested in gold and silver and stores much of it offshore. In other words, by my standards, he does everything right and better than most. Well, he called me on Thursday night and said, “David, you’re a bright guy so tell me, why isn’t gold rising now? It should be.” First of all, he is absolutely correct, it “should be” rising.

My first reaction to his question was, if he is uncertain or at all confused, than most people must be, because he is a believer and as well read and intelligent as any of our readers. You’ve heard the statement “Preaching to the Choir.” What happens when the choir begins to question the preacher? That’s about where we are now in the gold and silver markets.

Fortunately, there are answers and that’s the good news. The bad news is that there are lots of answers and most of them are wrong, so for many, the end result is confusion. Part of the confusion is that most of the information you read is tailored to either selling a product or toward influencing attitudes. Wall Street and MSM fall into the first category and anything coming out of Washington fits the latter. I suggest the best way to make sense out of our dilemma is to step back and logically look at the big picture – because the day-to-day is nothing more than “noise.”

Just in time, along comes a Knight on a White Horse and his name is Jim Sinclair. Many of you are familiar with Sinclair because his views are prominent in this newsletter every single day, and have been for a decade. I pick my teachers carefully. I must admit, Sinclair is not known for his “clarity” and sometimes you may wonder, “What did he mean by that?” That’s his style. Plus, he only wants to take you so far and expects YOU to do the rest on your own. That’s o.k. – his information is FREE. He is consistent in his views that we are stuck with “QE to Infinity” and that “gold will top $3,500.” But what is he really saying, or better yet, WHY is he saying that? Does he have a crystal ball that the rest of us don’t have access to? No, actually what he has is a “feel” for the gold market that is the result of being heavily involved in it for the last four decades. He is also very logical and big-picture oriented, even though he is a trader by nature.

King World News just released a landmark 27-minute long interview with Jim Sinclair. I have heard him speak before, but this time he left no stone unturned and explained the “what” and the “why” and I urge you to drop everything and listen to this amazing interview:

Jim Sinclair – Bulls & Bears To Be Wiped Out 3 Times In Gold – KingWorldNews.com

March 2, 2013
by Eric King

Today legendary trader Jim Sinclair spoke with King World News in what was most likely his greatest audio interview ever.  Below is a very small portion of what Sinclair, who has been actively trading the markets for over half a century and whose father was business partners with legendary trader Jesse Livermore, had to say about what has taken place in the gold market.

Eric King:  “Jim, when we look at the other side, let’s call them ‘the manipulators,’ the ‘invisible hand’ if you will, even though you and I see them actively in the market, when you and I talk off the air we have a great respect for these guys.  They are good at what they do, they are masters.”

Sinclair:  “They are absolute masters, and if you are in conflict with an army which has excellent generals, you have to respect your enemy and strategize your success.  The machines that you’ve got to fight are, in a sense, a travesty, unless we are going to go into some sort of sci-fi world where people and machines merge….

“There are pros out there just like the old days and they are both bull and bear.  If you understand that, and if you have quality and value, and you conduct yourself with that respect, I think you have a much better chance of surviving the contest.  But how do you fight with a machine?”

Eric King:  “Let’s move to the gold and silver smash which is on everyone’s mind, Jim.  What should people be focused on?”

Sinclair:  “Let’s go back to the break from $887.50 (in 1980).  One day $100 (down), the next day $150 (down).  Two days $250 (down) against a market that wasn’t (even) at $1,000.  Over 25% change in two days.

Now, at the present people are moaning and groaning about gold, but I think it’s a hair over 10% change.  When gold goes into the $4,000 to $5,000 range, which I’m absolutely sure it will, be prepared for something very, very few people will be able to stand.

Click here to listen to what is arguably Jim Sinclair’s most powerful interview ever… 

If you decide not to listen to the interview (and that would be a mistake) you can read some of Sinclair’s views on the following King World News article. It is headlined “We are Witnessing a Historic Low in Gold.”

I had a conversation today with an old audio buddy who lives in Dayton, Ohio. In 2008 he lost his job as a purchasing agent for Rolls Royce and it took him a year and a relocation to get another job – this time as a purchasing agent working for the government. He makes a nice middle-class wage but he was complaining that he is feeling the “squeeze” as everything costs more but his income is not rising commensurate with inflation. That puzzled him because the media and the government assure him that inflation is very low – but experience says otherwise. Perhaps the following picture is why he is “feeling the pinch.”

He asked me, why does the stock market keep going up?  A good question and one that I often hear.  Here are a couple of basic answers.  First, the money supply has been increasing, dramatically since 2008, and the trillions of dollars the Fed and TARP injected into the system is a ready pool of funds to support the stock market.  All of the new money creation flows into the economy in a very un-democratic way.  Most of it stays at the top with a small portion of the population and most of the rest of us see little if any of the benefits.  The banks, insurance companies and hedge funds get first dip into the feeding trough.  This well-connected and favored group, invest in blue chip stocks.  In addition, the PPT, using federal money, enters the market and purchases S&P 500 futures pretty much on a daily basis.   And as that index rises, so do all the stocks in the index.

The best way for the government to convice the people that the economy is on the mend is by levitating the stock market and suppressing the price of gold.  They are very good at what they do and the result is most Americans see no reason to own gold – not when the stock market and the economy look promising.

But didn’t the fourth quarter GDP SHRINK by 0.01%?  In January there were over 1,300 mass layoffs of US workers – a mass layoff impacts at least 50 people from a single company – that involved more than 134,000 individuals.  Each of these layoffs begins in board rooms and ends up in kitchens and living rooms across America.  There is no real growth, so why the growth in the stock market?  Thanks to the Fed’s low interest rate policy, it is difficult to make a liveable return on a safe interest-bearing investment, so the stock market comes into focus as a better, make that an almost necessary alternative to CDs, Money Market Funds, bonds and annuities to boost returns to an adequate level.

The key here is that people are being conditioned to believe the stock market is a safe way to make a decent return and by modifying the “official” (and phoney) inflation rate and pumping up the Dow and S&P.  Take away the daily PPT cash infusions and I expect the stock market would tell a totally different story.  In addition to supporting the stock market, the Cartel are sitting on gold, shorting it to the max, so the message becomes “the risk is off and things are getting back to normal” and there is no need to cover “risk” by owning gold.

I realize that the Miami area is a special situation with an incredible amount of foreign money pouring into the area.  Buyers from Russia, Israel, Brazil, Argentina, Venezuela, Colombia and yes, even Mexico are all competing for high end ocean-front real estate.  At dinner last night, with a friend who is an attorney, specializing in Miami area real estate, she told us that the prices are soaring and that the condo we purchased two years ago is up hundreds of thousands of dollars!  I’m sure this is true, but the beautiful home we have in Wayzata, MN and cost us much more to build than our Miami property, is worth far less than what we built it for.  I don’t consider either property “an investment,” they are our homes, but they still are ultimately a financial “asset.”

It depends where you live.  Money congregates in Miami.  Prices rise.  Fed money congregates in the too big to fail banks and their stock prices and profitibility are on the rise.  And so does real estate prices in NYC and the  surrounding areas as hundreds of billions of Fed money flows into Wall Street.  How could it not?  The Fed is buying $40 billion a month of the big banks worst assets from them and giving them fresh cash to re-vitilize their balance sheets and to lend (up to 10-1) it out to very worthy borrowers, like the big corporatons and hedge funds.  The rich get much richer and the rest, like my friend Al in Ohio find that they are getting “squeezed.”

How will this all end?  Forget about the daily “noise.”  It  doesn’t matter what gold or the dollar does today or next Thursday.  Ask yourself, “Where will our national debt be in five years? Where will gold be in five years?  Where will the dollar be in five years?”  Your view of today’s value of the dollar and gold will look much different when you step back, with a longer-term perspective, and when you take the long-term, big picture view.  2016-17 should be the backdrop for Jim Sinclair’s $4,000-$5,000 gold and in order for that to happen, the dollar must lose tremendous value, likely down up to 50% from today’s purchasing power value.  That’s the way I see it and I act accordingly.

He asked me, why does the stock market keep going up? A good question and one that I often hear. Here are a couple of basic answers. First, the money supply has been increasing, dramatically since 2008, and the trillions of dollars the Fed and TARP injected into the system is a ready pool of funds to support the stock market. All of the new money creation flows into the economy in a very un-democratic way. Most of it stays at the top with a small portion of the population and most of the rest of us see little if any of the benefits. The banks, insurance companies and hedge funds get first dip into the feeding trough. This well-connected and favored group, invest in blue chip stocks. In addition, the PPT, using federal money, enters the market and purchases S&P 500 futures pretty much on a daily basis.   And as that index rises, so do all the stocks in the index.

The best way for the government to convince the people that the economy is on the mend is by levitating the stock market and suppressing the price of gold. They are very good at what they do and the result is most Americans see no reason to own gold – not when the stock market and the economy look promising.

But didn’t the fourth quarter GDP SHRINK by 0.01%? In January there were over 1,300 mass layoffs of US workers – a mass layoff impacts at least 50 people from a single company – that involved more than 134,000 individuals. Each of these layoffs begins in board rooms and ends up in kitchens and living rooms across America. There is no real growth, so why the growth in the stock market? Thanks to the Fed’s low interest rate policy, it is difficult to make a liveable return on a safe interest-bearing investment, so the stock market comes into focus as a better, make that an almost necessary alternative to CDs, Money Market Funds, bonds and annuities to boost returns to an adequate level.

The key here is that people are being conditioned to believe the stock market is a safe way to make a decent return and by modifying the “official” (and phoney) inflation rate and pumping up the Dow and S&P. Take away the daily PPT cash infusions and I expect the stock market would tell a totally different story. In addition to supporting the stock market, the Cartel are sitting on gold, shorting it to the max, so the message becomes “the risk is off and things are getting back to normal” and there is no need to cover “risk” by owning gold.

I realize that the Miami area is a special situation with an incredible amount of foreign money pouring into the area. Buyers from Russia, Israel, Brazil, Argentina, Venezuela, Colombia and yes, even Mexico are all competing for high end ocean-front real estate. At dinner last night, with a friend who is an attorney, specializing in Miami area real estate, she told us that the prices are soaring and that the condo we purchased two years ago is up hundreds of thousands of dollars! I’m sure this is true, but the beautiful home we have in Wayzata, MN and cost us much more to build than our Miami property, is worth far less than what we built it for. I don’t consider either property “an investment,” they are our homes, but they still are ultimately a financial “asset.”

It depends where you live. Money congregates in Miami. Prices rise. Fed money congregates in the too big to fail banks and their stock prices and profitability are on the rise. And so does real estate prices in NYC and the surrounding areas as hundreds of billions of Fed money flows into Wall Street. How could it not? The Fed is buying $40 billion a month of the big banks worst assets from them and giving them fresh cash to revitalize their balance sheets and to lend (up to 10-1) it out to very worthy borrowers, like the big corporations and hedge funds. The rich get much richer and the rest, like my friend Al in Ohio find that they are getting “squeezed.”

How will this all end? Forget about the daily “noise.” It doesn’t matter what gold or the dollar does today or next Thursday. Ask yourself, “Where will our national debt be in five years? Where will gold be in five years? Where will the dollar be in five years?” Your view of today’s value of the dollar and gold will look much different when you step back, with a longer-term perspective, and when you take the long-term, big picture view. 2016-17 should be the backdrop for Jim Sinclair’s $4,000-$5,000 gold and in order for that to happen, the dollar must lose tremendous value, likely down up to 50% from today’s purchasing power value. That’s the way I see it and I act accordingly.