Friday, March 18, 2005, 11:42:00 PM EST
Gold and Dollar Market Summary
Author: Jim Sinclair
Dear CIGA:
You can’t fool Mother Nature and there are certain immutable truths in this world that you just can’t talk your way out of. One of those truisms is that gravity will always bring you down. Gravity in this case takes the form of the systemic weakness of the US dollar. Talking your way out of a systemic weakness is the process of "spin" which this country has taken to a new level.
The question begs to be asked: Am I or other commentators smarter than the policy makers? Do we know something that major policy makers do not? Ego would like to say yes but reason argues for no. Therefore, it is reasonable to assume that those in charge know exactly what they are doing, why they are doing it, and what will be the end result of these actions.
I am convinced that we are in a major transition from one form of government and economics to another. To argue the merit of this transition produces no gain. So it's better to observe what is happening and adjust to this new environment in order to gain.
We know who the monied interests are in this world. History attests to the fact that major wealth is rarely separated from its roots. Wealth may decide to become less conspicuous but it usually increases rather than decreases. Do not believe for a moment -with the exception of a few rare cases - that huge fortunes are left to halfwits. The wits usually know which family members are halfwits and do not enrich them as a rule. They may be well cared for but the halfwits become "trust-a-farians." They can look at significant funds but can't touch them. The real money finds its way to those who will continue the line and that is not necessarily the family line.
So where is this all going? This analysis is an attempt to define the logical path that has been set in motion towards the new system of "Authoritarian Free Enterprise."
Spreading democracy around the globe is a laudable goal, assuming that one can find democrats to spread it to. The laudable premise requires trillions of dollars to be spent as well as many lives, but should it really occur the world will be changed forever.
But how you ask? My answer is a new world of Authoritarian Free Enterprise in which the rich get richer than Crosous, the Roman real estate operator, the Donald Trump of his time .
The US dollar is a technical disaster regardless of any short covering rallies that occur from time to time. It is headed quite a bit lower and gold significantly higher for defined purposes.
I believe that when a dollar crisis is recognized universally sometime between 2006 and 2008 two things will occur that are foundational to the system of Authoritarian Free Enterprise.
1. All government entitlement costs will be reviewed and cut sharply - if not eliminated.
2. Gold will return to the world monetary stage via a form of Federal Reserve Gold Certificate Ratio - not tied to interest rates but to liquidity.
It is my opinion that Bernanke has set the stage for both number one and number two.
Reduction and practical elimination of entitlements will be one of the policies that will be seen as a means of shifting the triple deficits back to surplus. Gold in its role as a control item over world liquidity will be the second dollar-positive policy to sustain the gains of a US Federal Budget as wars end and spending drops dynamically.
The question that should be asked is whether the conclusion takes place in 2008 or 2012? I favor crisis conditions first and a conclusion four years later.
Putin seized on the school crisis in Beslan to turn back the hands of time and implement his own agenda as a form of Authoritarian Free Enterprise. The former head of the successor to the KGB , now president of Russia, has no interest in acquiring land by force, but rather huge amounts of money by stealth.
The KGB operatives who stayed loyal to their boss are the mayors, governors and legislators now in Russia. The purpose of Yukos was to bring the Robber Barons in Russia back into line. Fear is the key to keeping the troops in line during this transition. Who knows what is next, maybe Spooky Molder and Hanger 51?
The conclusion to all this is simple. Gold is going to $1650
and the US dollar as measured by the USDX to .5200. Therefore, where gold is concerned continue to sell 1/3 into strength and buy it back on weakness. The opposite is, IMO, the most successful way to deal in the US dollar. You need only learn how to use a straight edge ruler in order to prosper with that strategy.
"Borrowers will default. Markets will collapse. Gold (the ultimate form of safe money) will skyrocket." - Michael Belkin
Soll man dem nun glauben schenken ?????
-----------------------------------
Eldo