Message: Jim Sinclair - Gold to Swing $100 to $300 in a Day
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November 12, 2010
With gold getting hit hard today, King World News interviewed legendary trader Jim Sinclair. When asked about the volatility in gold Sinclair stated, “I think from this point forward you are going to see unprecedented volatility. You’ll see $100 swings to $150 swings in a day, and if you go back to 1979 to 1980 we had $150 in one direction. So if we had $150 in one direction back then, what’s to stop this market from doing $300?”“There is very little understanding of gold anywhere. The primary culprit that is threatening every country and that’s currency induced cost push inflation.
What started all of this was three things. The discussion early on about price controls in China. The discussion in Brazil about currency controls, and then on top of that talk of raising interest rates in China. Then the general commodity market collapsed on itself because everyone is up to their eyeballs in margin debt.
And gold is an item which can get taken advantage of because the primary traders are significant and the market is insignificant in the Comex. So if you’re down on the floor and you are looking to buy 10 and somebody offers you 2,000 and you get hit on the 10, as a floor trader you’re going to sell that out instantaneously. So it feeds on itself and I think from this point forward you are going to see unprecedented volatility.”Shouldn’t bulls be embracing this volatility rather than fearing it?
“It’s common, it’s required, it’s axiomatically part of a major bull market, and it normally is accompanied by the biggest move on the upside in previous markets.”
Meaning embrace it, don’t be afraid of it?
“Exactly.”And buy into the dips?
“Exactly. This is the characteristic of a gold market getting ready to go ballistic.
What about the instability of currencies and bond markets in some regions?
With regards to the so called currency or bond vigilantes in some of these countries, these are really sociopaths who are looking to break countries. They took out stocks in the break and they found out they could make Citicorp go broke. And even if it was broke it doesn’t matter because they got it down under $1. And the problem is there isn’t enough money in securities and if these guys are going to play they play big.
So it doesn’t make a difference if they destroy a currency as long as their unbroken profitability in each trading day is maintained. I mean the greatest enemies you can have can be your friends in a democracy. You don’t need to be attacked by a powerful enemy, your financiers will destroy you.”
They’ll turn on their own countries?
“They’ll turn on their own companies before they are finished. If you’ve been laundering money for the mafia you’ve got to burn down the restaurant. If you laundered money through Enron, you’ve got to break it because if you break it you bury the trail.”
So some of these major houses will go into oblivion?
“When the sharks finish eating each other they’ll self consume. Markets have become battle grounds against countries who don’t even know it is happening.”
For the professional traders Sinclair had this to say:
“My approach is and the truth is Bert’s (Seligman) and Jesse’s (Livermore) was you don’t have to make it all. If you can knock off the middle 50% or 80% of the move, you’ve hit the jackpot. But the guys who want bragging rights buying bottoms and selling tops go broke. And you want to do it when it’s easy, and you want to do it better than anyone else.
If Bert and Jess were around they would have covered today into the weakness, but not gone long yet. The last 72 minutes of trading today was all short covering. That’s what pros do, they sell strength and buy weakness.”
On a day like today you want to hear from a legend like Jim Sinclair. Thank you Jim for making yourself available.
3 Recommendations
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