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Bundesbank gold repatriation is like De Gaulle lifting French gold from the US in the 70s says Jim Sinclair

By: Peter Cooper, Arabian Money


-- Posted Wednesday, 16 January 2013 | | Disqus

Hugely successful veteran gold trader Jim Sinclair says that the Bundesbank’s plans to repatriate German gold from New York reminds him of a similar move by the French leader General De Gaulle in the 1970s that caused a major upset in financial markets at the time and was very positive for the gold price.

‘This sends a message about storing gold near you and taking delivery no matter who is holding it,’ he warned. ‘When France did this years ago it sent panic amongst the US financial leadership. History will look back on this salvo as being the beginning of the end of the US dollar as the reserve currency of choice.’

70’s precedent

Now admittedly there were plenty of people who forecast the end of the US dollar in the 1970s and it never happened. Some forty years later the dollar is still the reserve currency of choice. But there certainly was an impact on the gold price in the 1970s from the French gold repatriation episode and gold temporarily became a kind of reserve currency again as the dollar went through a period of extreme weakness.

Will it be any different this time? Possibly not. Gold market observers have been waiting for a big event to break gold out of its sideways trading range. This could indeed be it.

Germany calling

The Handelsblatt newspaper reported that the Bundesbank is to announce on Wednesday that it will be moving gold from New York to Frankfurt. Germany has gold reserves totalling 3,396 tons worth some $185 billion, the second-largest reserves in the world after the US where it holds around 45 per cent of this gold, a legacy of the Cold War.

Gold bugs reckon this marks a crucial step down the road towards a de facto new gold standard and possibly a new gold-backed currency from the IMF. The Chinese authorities have previously indicated their enthusiasm for this type of development and have targeted increased gold imports.

With the Japanese trying desperately to reflate their economy with a weaker yen currency markets look anything but stable, and a renewed enthusiasm for gold and silver as the ultimate currencies could happen at anytime.

Sign-up for the ArabianMoney investment newsletter to get our views on how best to invest to capitalize on these events, with 50 per cent off for subscriptions before February 20th (subscribe here).

 


-- Posted Wednesday, 16 January 2013 | Digg This Article | Source: GoldSeek.com

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About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in 1999 to complete his first book, a history of the Bovis construction group.

Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in www.ameinfo.com, which later became the Middle East's leading English language business news website.

Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time www.ameinfo.com prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.

He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog www.arabianmoney.net is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.

Order my book online from this link




 



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