Jim Sinclair on Chinese gold

Gold Kiwi · Apr 19, 2012

http://www.jsmineset.com/2012/04/17/jims-mailbox-909/

How's this for thought-provoking:

Dear Jim,

I had some thoughts about China's gold policy the other day and wanted your opinion. From an outside perspective it looks like the Chinese government is hoarding gold, and telling its people it is their patriotic duty to own physical gold. At first I thought they were going to eventually make a move to offer up a gold backed currency. I don't think that is going to happen, because if the Chinese government doesn't print paper and command cities to be built, their GDP would fall off a cliff. I have heard that below 5% growth in China would cause riots, in my mind I view a gold standard as holding governments accountable and keeping the printing in check. If that were to happen it's my opinion they would see negative economic growth, their people would be in revolution. Also china does not have "safety nets" for their people like unemployment benefits etc, so telling their people to buy gold tells me the government wants them to hold insurance.

I don't think the Chinese have a chance at pulling off a gold standard, but I definitely think they see a major currency event in the coming years across the board. Like a vote of no confidence in other countries ability to maintain stable currencies.

What do you think?

Cheers,
CIGA Matthew

Dear Matthew,

China is a Maoist country that likes money. The two hundred foot picture of Mao on the Hall of the People tells you all you need to know to get along in China.

The ousting of Starbucks from the center of the Forbidden City also has a message in it. Understand this, and you will understand more about our Chinese brothers. You might actually be able to work with them if you respect this.

As such, the population of China is to serve the best interest of the program for the greater good. The gold being bought by Chinese citizens is the Chinese government's shadow inventory. If the nation needs it the civilian population will have the great honor of doing their patriotic duty by sending it in.

Small inexpensive pins made in China will be distributed to be worn in public by the citizens that have earned their patriotic status. So will you if you have gold in anywhere Chinese.

You, however, will not get a pin.

Regards,
Jim
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pmbug · Apr 19, 2012

Without respect for property rights, you have nothing.

Suckering Suckertash · Apr 21, 2012

Wow...

The term "shadow inventory" is really overwhelming when you consider the magnitude of this inventory.

Gold Kiwi · Apr 22, 2012

I decided to email Mr Sinclair to ask whether he was implying that Hong Kong may potentially be an unsafe storage location, seeing as I have some gold stored in a VIA MAT vault located there.

Unfortunately (in hindsight), I mentioned that the gold I had stored there was with GoldMoney.com.

Imagine my surprise when I received an email response from Mr Sinclair just 15 minutes later!

It would be most inappropriate for me to opine on Mr. Turk's opinion.
Jim
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A fair response, but I was like, "damn it!" LOL.

Aengrod · Apr 23, 2012

I must admit, I have subscribed to Jim Sinclair newsletter and for quite some time he has been stating wait till June ... 2012.
Was wondering what the hell he was saying? Seems like thats the answer:

Dear CIGAs,

Gold is officially replacing the US dollar June 28th. The cat is out of the bag.

Phil, you are booting any nation that dares to refuse to be legislated by any other body than themselves out of the SWIFT system.

You have officially made gold money. Now what are you going to do, declare economic war on China? They will fire dollars back at you.

You just might end the economic world as you knew it.
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"Beijing is planning to avoid U.S. financial sanctions on Iran by paying for oil with gold. China's imports of the metal are already large, and you can guess what additional purchases are going to do to prices. On the last day of 2011, President Obama signed the National Defense Authorization Act for Fiscal Year 2012. The NDAA, as it is called, attempts to reduce Iran's revenue from the sale of petroleum by imposing sanctions on foreign financial institutions conducting transactions with Iranian financial institutions in connection with those sales. This provision, which essentially cuts off sanctioned institutions from the U.S. financial system, takes effect on June 28
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pmbug · Apr 24, 2012

Jim's on a tear lately.

Gold Kiwi · Apr 25, 2012

I love reading Jim Sinclair's blog, but sometimes I wish he'd employ an editor to translate what he writes into what he really means. Some of it is like speaking in code.

For example, don't take "Gold is officially replacing the US dollar June 28th" literally. He probably means this is the date when it becomes apparent to all that the US dollar is losing its relevance.

pmbug · Apr 26, 2012

^ Yes, he means it's a pivot point in history - the beginning of the end. Something most people won't recognize until years afterwards.

Aengrod · Apr 27, 2012

Great interview with Jim:

http://www.futuresmag.com/2012/05/01/jim-sinclair-has-something-to-say

FM: There are benefits to having the reserve currency. How will that change?

JS: There is a serendipitous but huge demand factor that a reserve currency enjoys as the settlement mechanism for international contracts. That is the dollar weakness now. Part of that demand factor will be going away as a result of utilization of other currencies that didn't exist prior to the machinations that we just have gone through since 2008. It will take away some of the predominance--politically, socially and economically--that is inherent with a reserve currency and with sound monetary management of that reserve currency. This is what gold is all about. Gold is the currency of choice. The difference between gold as a currency of choice is that gold has no liabilities attached to it. It owes nobody anything, while every currency has liabilities attached to it that have to be [considered] in its international valuation through the market mechanism
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More in link, actually 8 pages. Enjoy

JulieW · Apr 27, 2012

Sinclair is becoming my first port of call for opinion.

This was a rehash of his previous points, but quite succinct.

FM: Where is gold going this year?

JM: I am looking for the real range for gold, post-June, being $1,700 on the low end and $2,100 on the high end. We have a strong dollar policy that is interpreted as not allowing the dollar to drop precipitously but intervening to moderate the decline. We also have a weak gold policy, which is not to depress the price of gold but to intervene in the gold market so it doesn't start screaming to extreme prices. The primary level it must not go above is $1,764 but that will fall in time and the next level after $1,764, I assure you, is $2,111 it must not go above. That is the weak gold policy and you do have the legal intervention in those markets by the Exchange Stabilization Fund and other entities. The Exchange Stabilization Fund is run by two people, the President of the United States and the Secretary of the Treasury.

What you don't want gold doing when you are trying to calm the system, is go ballistic. Our entire world is a sea of algorithms and the people who intervene in the markets are more savvy than your general hedge fund industry. So the weak gold policy is not a policy to decrease the price of gold but a policy to prevent it from being a tattletale at the wrong time. Right now they think $1,764 is tattletaling and that has been the swing point for gold ever since it broke over $1,650.
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thatguy · Jun 4, 2012

The Hoarding Continues: China Purchases A Record 100 Tons Of Gold In April From Hong Kong
http://www.zerohedge.com/news/hoard...urchases-record-100-tons-gold-april-hong-kong

"Gold imports by mainland China from Hong Kong climbed 65 percent to a record in April, advancing for a third straight month as investors sought a hedge against financial-market turmoil and an economic slowdown. Shipments totaled 103,644.5 kilograms (103.6 metric tons) in the month from 62,913 kilograms in March,
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BTFD!

"We can't rule out the possibility that the central bank is buying gold," said Wang at Agricultural Bank of China, referring to the People's Bank of China. The PBOC last made known its gold reserves more than two years ago, announcing that it held 33.89 million ounces, or 1,054 tons, as of June 30, 2009.
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Shhh! this stuff is a worthless tradition

JulieW · Jun 5, 2012

Yes they're very superstitious. They use this ancient artifact to ward off inflation devils.

hiho · Jun 5, 2012

never fear if push comes to shove your gold will be Julia and Waynes when they need it, along with your super and silver too

Naphthalene Man · Jun 5, 2012

hiho said:

never fear if push comes to shove your gold will be Julia and Waynes when they need it, along with your super and silver too
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Lucky i sold most of mine then, :lol: ha ha... ...err... hmmm :/

Dogmatix · Jun 5, 2012

hiho said:

never fear if push comes to shove your gold will be Julia and Waynes when they need it, along with your super and silver too
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Totally agree about the super, but as for the PMs I think they'll stop at nationalising the mines.

pmbug · Jun 5, 2012

Goldcore is reporting that Iran also imported a massive amount of gold last month:

http://www.zerohedge.com/news/iran-...illion-usd-precious-metals-turkey-april-alone

Likely related to some oil for gold trading I'd guess, but the sub $1600 prices probably made gold very attractive to a number of central banks.

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