Jim Sinclair - A markets bear, but gold bull, crying in the wilderness

Jim Sinclair can't find a markets bear anywhere and that rings warning bells!

Author: Lawrence Williams
Posted: Wednesday , 30 Dec 2009

LONDON -

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Jim Sinclair, a much respected and followed bull on the gold price, despairs of the analysts predicting a stock market boom in 2010.

In a note yesterday Sinclair says "As we approach the New Year it seems the party has already begun, and the commentators are all full of spirits. I can't find a bear in the woods."

"According to them the equity market is going up, the dollar is going up, commodities are going up, and even lip service is being paid to gold, but lip service only. The conviction being blasted out there is a line up of former pro-gold guys like Faber and Rogers. Today they rolled out Barton Biggs for his bullish equity-bullish dollar forecast. Soros and Buffett have already made their contribution to a dollar rally."

Sinclair contrasts this with almost a year ago when you couldn't find a bull anywhere - except perhaps Sinclair himself who said in February that the markets would bottom in March '09. Everywhere else the analysts and commentators were predicting continuing doom and gloom.

Well, maybe the market analysts were right then, but got their timing wrong - and likewise maybe they are right now, but again could have their timings horribly wrong. Sinclair sees the current strength in the markets as 1932 repeating itself with the economy bottom bouncing as a result of unprecedented fiscal stimulation by Western governments.

Sinclair remains confident in gold though, looking for new highs above $1224 then moving on to $1274- $1278 before visiting $1650.

Maybe he has a point. The Western ‘recovery' still looks fragile. Some countries, and some U.S. states even, look vulnerable to defaulting on their financial commitments. Unemployment is still rising, although maybe not as fast as before and largesse is still being pushed out by governments mostly seemingly to the benefit of the bankers who many believe got us into the financial mess in the first place, although perhaps extremely loose government fiscal policies - much praised at the time as the world was seemingly in a never-ending upwards spiral - were most to blame.

Unprecedented amounts of cash have been provided by governments in the West, and in the East too - although Sinclair points out that there is a difference here with the Asian fiscal stimuli being more directed to business than to the banks.

The latest reports on improved retail performance over the holiday season seem to an extent to suggest that the general public is beginning to believe the political hype that the recession is past, but it won't take much to knock back perceptions again. China, where the growth does at least seem solid for the moment, can't carry the rest of the World on its shoulders for ever although the country's massive continuing growth has been hugely supportive of the metals commodities sector, but with reports that much of the rise in commodity prices has been down to speculation, markets should beware. Remember the oil price! Not so long ago speculation took it up to around $147 dollars a barrel with many respected analysts predicting $200 or higher (not Mineweb I'm pleased to say - we called the top!) - and then it came crashing down. While we don't necessarily believe that metals will do the same, it is possible that they are in far more of a bubble situation than gold.