Last week I featured an article from the Sovereign Investor’s Jeff Opdyke titled, Follow China’s Lead into Gold that warned the Chinese would stun the world with an announcement that they had accumulated some five or six thousand tonnes of gold. They typically make such announcements once every five years and the announcements are expected the end of May.
A similar report is making the rounds, this one issued by Stansberry’s Matt Badiali. Badiali also documents that the Chinese will lite the fuse on the price of gold (and simultaneously cut the legs off of the price of gold) by announcing they have at least five or six thousand tonnes of gold.
In many ways the two reports are very similar. The only important difference is that Opdyke’s report highlights the fact that the only place this gold could have come from is from the U.S. Fed. And the result will be a collapse in confidence in the dollar and the U.S. Fed and Government.
We agree that China has been sourcing huge amounts of gold, record amounts in fact, and it is evident that they intend to use the gold as backing for their Renminbi. They hope to remove the U.S. dollar as the world’s reserve currency.
Both reports seem factual, logical and lead to the same conclusion: The time to sell dollars and buy gold is now! They both state that we have just one month left before the Chinese announcement.
While I agree with their information, and their conclusions, I am not as certain as they are as to the timing. I don’t say that they are wrong, but it makes more sense to me that before the Chinese play this card, they wait until they can NO LONGER source gold, in quantity at these low prices. The West is having a great deal of trouble coming up with the 1000+ tonnes of gold that they are importing every year, but until we can’t make delivery, why upset the apple cart?
I believe that day is near, but is it really only one month away? In a sense, this is a very minor distinction because the day IS COMING and it is NOT FAR AWAY.
One may ask, “Why would the Chinese do anything that would slash the value of their trillion plus dollar holdings? If they have accumulated enough gold, the rise in the price of their gold will cover the loss in their dollar portfolio – plus they will have won the currency war and the dollar’s days as the world’s reserve currency will be over.
When this happens, life in America, as we know it will be over. For starters, we will experience rapid inflation, civil unrest, rising taxes and political upheaval. Can WWIII be far behind? This all must sound very extreme, but actually it is perfectly logical and can be justified with facts.
Other writers that I find worth reading, including Gerald Celente and John Williams are very much on board with these conclusions and the timing. At the very least, we should experience a rapid rise in the price of gold (and silver) and it will become harder and harder to find any to buy regardless of price. We will experience a large increase in our cost of living as the falling dollar buys less and less of everything we import. I am fairly certain that this is coming, and soon, so time is now of the essence.
This is all consistent with the things I write about, that Andy Hoffman writes about and that Bill Holter writes about. We do not consult with each other and come up with a company “view.” Independently, this is how we see things unfolding. And we are not alone. Stansberry and the Sovereign Investor and highly respected sources of information. If we are correct, we will not be the winners; we will all be the losers. But I would rather be a loser with few dollars and lots of gold and silver.
Does gold hit $1400 this week? I think so. Gold is rapidly moving away from Larry Edelson’s target of $1000. I do hope his followers are not still sitting on the sidelines. This will all resolve itself either in a month, or no later than by year’s end.
Here is the most important article I read over the weekend by Greg Hunter. It discusses the threat the dollar is under, this time from Russia. It discusses why gold will hit $2000 this year and why our reckless foreign policy is leading us closer and closer to war…
Putin Has Nuclear Economic Bomb-Jim Sinclair – www.usawatchdog.com
By Greg Hunter On March 16, 2014
By Greg Hunter’s USAWatchdog.com (Early Sunday Release)
World renowned gold expert Jim Sinclair is worried about the crisis in Ukraine. Sinclair says, “Welcome back to the cold war that can get hot overnight.” It appears President Obama has brought back the Cold War, and Sinclair contends, “He’s brought it back by changing to a new normal diplomacy, making outrageous threats on a continuing basis rather than seeking a solution.” The referendum vote in Crimea that is overwhelmingly in favor of joining Russia, and yet, officials in the West say it is illegal or illegitimate. Sinclair says, “To say that is to deny the reality the government in the Ukraine is a government created by a coup. To say that is to bring us to the brink of war. . . . Mistakes can happen. War can start anytime you have two entities together with weapons of war looking at each other with lots of hate. I am concerned about the mistake of aggressive machinery and aggressive people looking right at each other.”
On possible U.S. sanctions on Russia, such as excluding them out of the international payment system called the SWIFT system, Sinclair says, “The use of the SWIFT system (Society for Worldwide Interbank Financial Telecommunication) to create a difficulty, almost a prohibitive difficulty in doing business by preventing bank wires, that would be one of the possibilities. Already, the BRICS nations are developing their own SWIFT system. So, the mistake of using the SWIFT system, short of absolute war, is that it has created a competitor that all the BRICS will be using.” Sinclair also thinks, “To sanction Russia is to forget that Russia supplies Europe with its gas supplies. To sanction Russia is to forget there are many U.S. and European corporations operating within Russia right now. I honestly believe sanctioning Russia is the same as shooting yourself in the foot.” Sinclair goes on to say, “When you think you can push an ex-colonel of the KGB, you are not making a proper analysis of the personality of the person. The whole idea that Russia is only a regional power–where in the world did that come from? Anybody that is nuclear capable to the degree that Russia is with its delivery systems is a world power. We hear constantly Russia is only a regional power. We hear lies. We hear untruths. We don’t have a clear picture to what is taking place.”
On Russia countering Western sanctions, Sinclair says watch the “struggling dollar” and Russia accepting any currency for oil and natural gas. Sinclair explains, “It’s struggling . . . because it smells the real teeth of retaliation for sanctions being in the simple acceptance of any currency whatsoever for payment for gas to Europe. Believe me, they will settle in other currencies. . . . It makes energy cheaper. Why in the world would anyone want to pay in dollars if they can pay in their own currency? Russia could retaliate in a way that would have phenomenal impact on the U.S. dollar. . . . Russia has the upper hand. They have it in their ability to turn the U.S. economy upside down and into collapse. There is no question whatsoever. Putin doesn’t need a nuclear bomb. He has a nuclear economic bomb that he can set off at any time.”
What would the price of gold be this year? Sinclair predicts, “Gold has $2,000 an ounce in its sites in 2014.” On silver, Sinclair says, “Silver is gold on steroids. When gold takes off, silver goes up faster. . . . So, the idea you are going to get an old high on silver or better is a given.”
Last year, Sinclair, predicted gold will hit $50,000 an ounce sometime in the next several years. Is he still sticking with that prediction? Sinclair says, “I am still sticking by that, and the $50,000 per ounce is predicated on a shift in the mechanism on determining gold’s value from the paper markets to the physical markets. Should that emancipation take place, it is a possibility and could become a reality.” Sinclair goes on to explain, “Something has to happen. Emancipation of gold from the paper market will be a product of the drawdown of the inventories of the warehouses. I don’t believe for a moment that the COMEX is going to default, but I believe quite certainly that the COMEX will go from settling in gold to settling in cash.” So, how can the gold market be manipulated up or down in price? Sinclair says, “I can tell you exactly how it’s done. You just offer or demand supply . . . that is beyond any capacity that can be met. We’ve already had one day where two and a half years production was offered for sale. It couldn’t be in a physical market that has to deliver within three days. It can only be in a paper market that doesn’t have to deliver.”
Join Greg Hunter as he goes One-on-One with Jim Sinclair of JSMinset.com.
(There is much more in the video interview)