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Chinese must buy gold to hedge their increasing dollar exposure explains gold guru Jim Sinclair

By: Peter Cooper, Arabian Money


-- Posted Thursday, 7 March 2013 | | Disqus

One way to rise above the day-to-day noise in markets and get the longer view right is to adopt an investment sage, somebody older, wiser and considerably richer due to their past good judgement. Many in the gold market turn to Jim Sinclair, adviser to the Hunt Brothers in the 70s and a veteran market trader of considerable net worth.

Now in his eight decade Mr. Sinclair publishes a website with a mission to explain what he knows to be the truth about the gold market. Sometimes it is difficult for the uninitiated to understand the language of traders but he tries to make the message as clear as possible. Here’s what he is saying now…

$3,500 gold

‘There is no doubt in my mind that the price of gold is going to and through $3,500 with unimaginable volatility. All that anti-gold forces can accomplish is to add outrageous volatility to the gold market which will continue and increase in price spread for both the ups and downs.

‘The economic axiom known as Gresham’s Law is operating in the Central Banks of the BRICs whereby gold is being accumulated with a goal of 15 per cent of the reserve balance. To create this reserve goal you can reduce the fiat reserves as well as increase the gold reserves.

‘You can reduce your fiat reserves by long term contracts in dollars by parastatal accumulation of resources and the means of production as China has done in a huge way. China therefore due to dollar contract settlement needs over years has hedged a great deal of their dollar position.

‘The goal of 15 per cent of reserves are the currency gold, and gold’s ascent in the marketplace due to the effect of Gresham’s Law to an accepted monetary form. This is something the West has no control over.

Western reaction

‘All the West can do is to attempt to inflict outrageous volatility into gold thereby trying to make confidence in the price of gold hard for those that do not understand. This is what has just happened.

‘All you need to do every time the US Treasury and Fed seek to make the gold market outrageously volatile via their friends, the gold banks, is to do nothing…

‘When gold breaks above $3,500 and $4,000, as it will do, the US Treasury and Fed via their friends and relatives at the Gold Banks will run gold from $3,500 to $4,990 and back again a few times before gold settles into the currency as described above at $4,400 for the beginning of the greatest economic expansion the world has ever seen.’

In a nutshell, buy-and-hold and don’t try to trade gold. That is the message from one of the greatest gold traders of all-time!


-- Posted Thursday, 7 March 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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