Jim Sinclair - Paper Markets To Disappear As Gold War Rages

Just to give you a background on Jim Sinclair, he declared gold would be $1650 when it was under $300 ten years ago.  Think about that for a minute, and how outlandish that sounds to an untrained eye.  Lo and behold, he was right, as gold went beyond his price target all the way up to $1923 in 2011.

If you choose to dismiss it, realize that if you had $1000 of gold back then, you'd have $6000 today.  Or $1 million then would be worth $6 million today.  In other words, the appreciation scales up, and if anybody had followed his advice, they'd be in a much better place today.  Sinclair's call was not insignificant.  He talks the talk, and walks the walk.

Sinclair is now saying the next upside target is $3500 and higher, which is equally hyperbolic, right?  Not really.  A move from $280 to $1650 is huge, a six-fold rise.  Getting to $3500 from here is merely a double.  And the Fed is printing many more trillions today than they did back in 2002.  That price target, as crazy as it sounds initially, is not far-fetched at all when looking through the prism of the trillions in currency units the world's central banks are creating.  In a currency war, the race to debase is extremely constructive for the price of gold. 

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/3/6_Jim_Sinclair_-_Paper_Markets_To_Disappear_As_Gold_War_Rages.html

Paper vs. Physical

Commodities prices are getting hammered--including precious metals, because the collapse of the Euro is becoming more apparent, causing the (transient) rise in the USDollar.  Spot prices for gold and silver are plummeting, yet the premiums for physical bullion and coins are widening, suggesting shortages still exist.

One has to ask oneself, why spot prices are dropping, yet supply is still tight, and prices for the physical metals haven't dropped accordingly.  The answer is the paper markets are being manipulated, even in the face of physical shortages.  The margined weak hands are liquidating.  Strong hands are holding and even adding via dollar cost-averaging.

Silver Action a Reminder of the Risks of the Paper Market

http://news.silverseek.com/SilverSeek/1305294114.php

http://www.newswire.ca/en/releases/archive/January2011/10/c9211.html

TORONTO, Jan. 10 /CNW/ - Sprott Asset Management LP is pleased to provide investors with an update on the delivery status of silver bullion purchased by the Sprott Physical Silver Trust (NYSE ARCA: PSLV, TSX: PHS.U) ("Trust").

As of November 10, 2010, the Trust had contracted to purchase a total of 22,298,525 ounces of silver bullion. As of December 31, 2010 a total of 20,919,022 ounces of silver bullion had been delivered to the Trust. The Trust expects to take delivery of the final 1,379,503 ounces of silver bullion by January 12, 2011 and will subsequently publish the serial numbers of all bars held by the Trust on its website: www.sprottphysicalsilver.com.

"Frankly, we are concerned about the illiquidity in the physical silver market," said Eric Sprott, Chief Investment Officer of Sprott Asset Management. "We believe the delays involved in the delivery of physical silver to the Trust highlight the disconnect that exists between the paper and physical markets for silver."