This morning Sinclair released his latest masterpiece at jsminest. The timing of his missive is not coincidental in that under normal circumstances, the current Gold cycle is set to peak next week. In the coming days I'll elaborate more about what the EGM (ESL's Gold model) predicts going forward, but for now I'd like to say it does predict a peak next week, and offer a few comments on Sinclair's warning.

In general, clearly JS is shouting from the rooftops warning Gold has entered an accelerating, runaway phase and under these circumstances, Gold cycles will not behave as they have in the past. I agree with Uncle Jim based on the odd behaviour of the past 2 cycles that I wrote about earlier this week. More specifically, Gold does faithfully turn around direction of the dominant trend at the beginning of each cycle but this flipside move tends to last but a brief while

This presents a problem for traders who need to become very nimble at their "trade" (profession) to be able to capitalize on these fast moving trend shifts. Small wonder Alf Fields went silent 2 years ago. He was only trying to protect the average Gold investor from himself, by trading themselves out of this increasingly volatile market. Mr Fields made a wise choice knowing full well every Golden dropout serves to strengthen the enemy's resolve and add to their bank account balances.

In light of the above, consider Sinclairs number one warning:

1. There are no signs whatsoever of a top in the gold price.

Clearly he agrees a cyclic top is due next week. No question about it. Just be warned that you had better be a master of your trade or you could end up positioning yourself right out of the greatest bull market of all time from the whipsaw effect:

4. As gold approaches that number ($1764) you can anticipate furious but very short price reactions.

The bombshell annoucement this weekend of S&P downgrading US Soverign debt will only add fuel to the fire underneath the PMs. No question insiders knew this was coming and they had to take down G&S as hard as possible before the weekend for fear PMs would take out all resistance like a hot knife through butter at the open Sunday overnight and Monday morning. Consider the effect of technicians who rely on black boxes instead of fundamental common sense, to ply their trade. They will become completely rudderless in an environment where fundamentals rule the roost. How will they know when to buy and sell? I imagine a large number of HFs will be forced to increase their core hold positions as a result and this is going to lift up PMs to a whole new floor. We definitely live in interesting times!