All financial markets are to some extent a battle of the Titans between the bulls and the bears. Recently the bears in the gold pit have been growling loudly. Welcome veteran gold trader Jim Sinclair with the voice of sanity to knock them out…
He sums up the bear case succinctly: ‘With a recovering global economy, and prospect for real interest rates increasing, gold should lag.’ But then come the critical punches:
1. Is there a solid recovery in the global economy? Yes or No?
2. Will the Fed reduce or cancel their QE program? Yes or No?
‘My answer is a simple: No on both counts,’ says Mr. Sinclair in his latest missive. ‘If you disagree with me do so on a fundamental basis. That is certainly more acceptable than relying on your emotions, or being influenced by the brute forces in markets common today.
‘You don’t need to be a brain surgeon, economist or monetary scientist because the above quote is the fundamental argument underlying markets right now, both in the dollar and gold.
‘This should explain to you why a firm dollar and weak gold is being preached by the establishment banking firms and their voices on the air waves.’
In short Mr. Sinclair says to ask yourself whether there a real global economic recovery and can the Fed really reduce or cancel its money printing, and then you have your answer. Those who buy and hold and listen to the voice of the man who knows gold backwards will do well. Panic and exit this market and you are going to end up a bear with a sore head.