Gold’s Role During Periods Of Monetary Stress (A Review)


February 9, 2012, at 2:09 pm
by Jim Sinclair i


Dear CIGAs,


Here is a review of the why of the gold price when push comes to shove.


Gold always attempts to balance the international balance sheet of the USA as a function of price multiplied by the gold supposedly held.


The subjective mind of the market is the means to the end from the beginning of written history and before gold functioned as a money based standard of value and measure.


Gold’s Role During Periods Of Monetary Stress

March 4, 2009, at 5:18 pm

by Jim Sinclair in the category General Editorial


Dear CIGAs,


Gold’s job is, and will always attempt to during periods of monetary stress, balance the INTERNATIONAL Balance Sheet of the USA.


Putting the Numbers Into The Equation:


$3,125,000,000,000 / 260,272,000 ounces of gold = $12,006.67 per ounce of gold.


In the early 70s I put an advertisement in Barrons predicting gold would rise to $900. When it got near that level, I left for 21 years.


I reappeared officially when Forbes published an article on my career December 10th of 2001. Click here to view the Forbes article…


The mathematics behind the $900 number came from the following equation plus reasonable trend estimates on the number going into the future.


You will note the number today fits in nicely with Alf’s high levels.

  • Major ONE up from $256 to $1,015 (actually 4 times the $255 low);
  • Major TWO down from $1015 to $699, say $700 (a decline of 31%);
  • Major THREE up from $700 to $3,500 (a Fibonacci 5 times the $500 low);
  • Major FOUR down from $3,500 to $2,500 (a 29% decline);
  • Major FIVE up from $2,500 to $10,000 (also a 4 fold increase, same as ONE)
I would not have revealed this unless a recognized expert who has a 100% track record such as Alf Fields predicted it first.
I did not wish to yell "fire in the theatre."


It certainly make the Comex manipulators, who could easily be stopped, look long-term silly today.


Jim


See the following two links as support:


http://research.stlouisfed.org/fred2/data/FDHBFIN.txt


http://en.wikipedia.org/wiki/Official_gold_reserves

In the past, I believe you have said that the price of gold could reach a level whereby in dollar terms this equation will hold:


Oz’s of Gold Held by US x $ Price of Gold = External Debt


From the above links we find:


Federal Debt held by Foreign Investors = $3,125,000,000,000 (as of 12/31/0


Official US Gold holdings = 8,133.5 tonnes (or 260,272,000 oz’s)


Putting the #’s into the equation:


$3,125,000,000,000 / 260,272,000 = $12,006.67 per ounce of gold


My question is – what is the mechanism or thought process that makes the equation true?


(I guess that I am looking for the why?)


Thank you for your time.

CIGA Rich Gold