TEMR: With gold near $1,750.00 an ounce, is bullion cheap right now?

Jim Sinclair: Yes bullion is cheap right now because it’s not fully reflecting the dire conditions that exist in the U.S. banking system where balance sheets are cartoons, cartoons which have been permitted by the keepers of auditing. FASBE, when they capitulated to valuing things at a market and allowed the banks to value the so-called paper assets at whatever they thought they were presently worth taking no consideration into the probability that most everything they hold and every single what they call legacy asset is in fact going to fail. The height that the gold can go to is depths that the paper currency can find. Right now the dollar trades against the euro. It’s a systemic system mirror, meaning values are created only by what happens to one in reverse to the other. If the euro goes up, the dollar goes down, vice versa. But, there’s no intrinsic value being measured by that in the marketplace. Once the euro finally meets its maker or as they settle their problems, in between either of those, then the dollar will become the major focus of the marketplaces and will go significantly lower.

TEMR: And, at some point, gold and gold stocks have to completely decouple from that, don’t they?

Jim Sinclair: Well, with gold and gold stocks the gold will be valued obviously as it is each day in the marketplace. And, gold shares will be valued even if the general investors don’t take interest by other major producers who have clearly not increased their resources or reserves will be looking to accumulate those companies that have. So, whether it happens in the marketplace through marketplace valuation or whether it happens by major mining companies seeking additional reserves the potential for the gold shares, especially as depressed as they are right now, is significant.

TEMR: When do you see gold stocks more commensurate with the price of bullion? We see a huge disparity at the moment. When’s that going to turnaround in your opinion?

Jim Sinclair: Well, what you’ve got right now is significant competition in things that people can trade become more comfortable with, like the exchange traded funds that our gold funds have taken huge amount of money away from investment in the gold share. But, what the general public fails to recognize and can easily find out if they read the prospectus of these exchange traded funds is that these are bags of paper gold. And, those that aren’t are attractive but they’re few but those that are, the majority, are no better than having your money with MF Clearing. And, in a sense that’s the beginning. When it’s recognized that the ETFs are dealing in derivatives on gold and not primarily gold it’s my opinion that the ETF will become less popular. I think that will make the gold shares a great deal more popular. And, acquisition will have an impact on price. Buyers beget buyers and the bear market in gold shares illogical as it is will turn into a bull market.

TEMR: Now we’re talking primarily to an American audience and we’re still a reactionary culture. We do what we’re told through the media and through advertising. Isn’t it just a matter of getting the word out to where everybody believes that it’s hip to buy gold and by gosh that’s where I should put my money in gold?

Jim Sinclair: By the time that it’s gotten to that degree gold will be trading in $3,000.00 and $4,000.00 an ounce. There’s still a need to understand the problem and to understand what makes the price of gold shares benefit buy it because by the time the cheap are awake the probability that gold is nearing some period of high valuation is quite high.

TEMR: There’s such a potential for great rewards with gold stocks. Of course there’s always great risks as well. The rewards long-term I believe exist with several of these gold stocks.

Jim Sinclair: Well, you’re not wrong. Gold stocks have to have the ounces. They have to have the 43-101 complaint reports which stand to prove those assets. They have to have the funds necessary to bring these assets into production or to their positive definitive feasibility condition. They need to have (inaudible) as it was in terms of cash reserves and ounces, production and management. And, to the degree that they have any and all of that they move up the ladder of probable greater profit.