Yesterdays gold and silver spot prices

Gold:+0.71 % at USD 1 290.90/oz

Silver:+0.66 % at USD 17.09/oz

Last updated November 22, 2017 GMT

  • End Game Approaching – Jim Sinclair CIGA meeting 1st June 2013

    “Once gold is free of paper gold, there will be no more smashes”. “What is going on? Transition!”. “How can we have a bear market in futures, and a bull market in physical volume?”.

    I’ve had the pleasure to shake Mr. Sinclairs hand once before. It was August 2011, also in London. At that very day, gold was trading at the famous 1650 level, set out my Jim Sinclair many years back. For their hard work and bravery, two speakers got standing ovations at the GATA event back then, Jim and Andrew Maguire. This time, I had not only the pleasure to shake Jims hand once again, but also the opportunity to ask him a serious question. As I have taken on the role of trying to get as many people out of a collapsing financial system as possible as we approach the End Game, you are also taking a stand against “the dark side of finance”. I asked him if he thought I should be careful. His answer was that there is a reason why the CIGA meetings are not recorded. There is a reason why he doesn’t tell you everything on JSMineset. There is a reason why he doesn’t spell it all out in interviews. Some truths are better told in private settings. The system will collapse on itself, but in the mean time there are powerful forces that will protect the system about to implode.

    There was definitely a sense of urgency in his voice speaking about the End Game. According to Jim Sinclair, the end game will begin when the COMEX defaults. The default will not be a total break down of the COMEX system, but rather, the exchange will settle in cash or the GLD ETF. That is the point where there is no longer a futures market, and the price of gold will be determined as the physical cash price for over the counter coins and bars. At the current rate of decline in the COMEX inventory for delivery, the default day is 30 to 90 days out. That will be the beginning of the emancipation of gold leading to a new system of currencies for global trade. Jim maintains that we’ll see a virtual reserve currency not exchangeable into gold, but set in relation to global M3 and gold. Gold is heading into the new system, not away from it. The end of the futures market for gold will be the beginning of the loss in confidence and the end of QE.

    Jim was very clear on this point: I said “QE to infinity” to get your attention. There is a limit to QE: the loss of confidence. The OTC derivative cancer will have to be written off. Some derivatives will net out, and some will not. That event will take the losing banks to bankruptcy. However, after the Cyprus debacle, bail-ins are now a template for the western financial world. No banks are safe at this point, since their derivates exposures are not transparent. There is no reserves at any FDIC equivalent in any western country. If you have currency on deposit at a bank, you are an unsecured lender to that entity. It is not yours. It never was yours. In fact, the money didn’t exist in the first place. It wasn’t even there.

    “Bank statements are cartoons”, as Jim put it. You are taking 100% risk for a return of what? 1%? 0,5%? “The mattress in not so silly”. After Cyprus, that should be evident to everyone. Before Cyprus, there was “a wall” that couldn’t be breached. Once a banks capital was lost due to financial malpractices, derivates fraud and speculation, that entity was considered bankrupt. Too big to fail bankruptcy led to bail-outs. After Cyprus, that wall of capital no longer protects the depositors. After Cyprus, the failing banks will recapitalize using depositor accounts: bail-ins.

    On top of this, the MF Global breakdown clearly showed that even segregated accounts are not safe anymore. Jim re-emphasized the necessity for long term holders of mining shares to go through the Direct Registration process, or even better, take delivery of paper certificates. When you do this (DRS or paper certificates delivery) you also take away the ability for entities to rehypothicate your shares at levels reaching 40:1. In other words, you shares can no longer be lent out to shorts. Why would you allow shorts to use your own shares agains you?

    “You have to get out of the system. Don’t speculate about the future. The future is here now.”
    - Jim Sinclair

    However, you do need currency for daily transactions. “Currencies are for transactions, and gold is for savings”. You should have cash outside the system on hand for expenditures for 3-6 months. The time to sell your gold, is when your need is greater than your greed. Your need, can only be defined by you. “Need overcomes greed equals the time to sell”. You define need.

    After the reset of the system, you will not have to look for a peak in gold. Gold will be the barometer for world currencies. In other words gold will be the ultimate form of savings as gold reaches the settling plateau. But before then, this gold market, will be “like the 70s on steroids”.

    The timeline, according to Jim, is:

    1. Potential default of the COMEX defined as cash or GLD settlement: 30-90 days out.
    2. The period most likely to be “very uncomfortable”: 2015-2017. During this time there will be a western world financial lock down during a few days, followed by a few weeks up to six months of potential basic supply disruptions.
    3. Totally different world: 2020.

    The new world will have the BRICS and some emerging markets standing, and the western world in a withering state. The new system will be defined not by Washington, London and Brussels, but by the BRICS. China will have the strongest currency in the world. The Euro will survive the US Dollar, but only if the EU moves towards Russia and China. It makes sense to bank “close to, or in the BRICS”. People not having exited the system in the western world will be surfs. Only gold will protect you now.

    Silver will perform, but Sinclair does not see silver getting back to a “historic ratio” and does not see the historic gold/silver ratio to be any useful indicator of a target price for silver. He does not see a monetary role for silver in the new system. Having said that, people will still perceive the poor mans gold to be as gold. That fact will make silver perform, but silver will perform on the merits of gold.

    A question was asked about Bitcoins. Jims reply, clearly stating that he didn’t own any or would never buy them, was “Bitcoin confirms a lot what we believe”. In other words, Bitcoins prove that the market wants currency alternatives. Jim prefers gold.

    Jim spoke for six hours with only a few brakes, a considerable performance at any age. To sum it all up is next to impossible. To me, the take-away is really: “Don’t speculate about the future. The future is here now. Get out of the system”.

    To Jim and to the fine CIGA people at JSMineSet.com: Thank you, from the bottom of my heart.

    On a personal note, after the meeting I left London for Cyprus. Talking to business owners on that beautiful island in the Mediterranean was an invaluable education. Cyprus is a cash only market. What I learned on Cyprus will have to be a topic for another blog post here at RealMoneyTracker.com.

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    About Johnny Mellgren

    Co-founder of RealMoneyTracker.com
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