Today legendary trader Jim Sinclair warned King World News that investors should brace themselves and expect to see unprecedented financial destruction going forward as the gold war continues to rage on both sides of the Atlantic. Below is what Sinclair, who was once called on by former Fed Chairman Paul Volcker to assist during a Wall Street crisis, had to say in this remarkable interview.
Sinclair: “The worst thing they (central planners) could have done was to smash the paper gold price down into an unprecedented bull market for physical. Should it ever occur again, the results will be the same. What this has done for the keen observers is to reveal how the future mechanism for gold price discovery will in fact be set.
This initiative by the gold banks, who are both members and directors of the COMEX, insures that the COMEX will lose its position in terms of price discovery for gold….
Eric King: “Keith Barron reported to KWN that the Japanese have literally come rushing into the physical gold market. He said there were $500 premiums for US one ounce American Gold Eagles and you couldn’t find any in all of Tokyo.”
Sinclair: “The Japanese have what almost appears as an insured bet in gold with the central bank of Japan purchasing not only Japanese denominated debt, but also euro debt and US Treasuries. It’s clear that the currency has nowhere to go but lower. This is another way of saying there is a central bank put being offered on the purchase of gold, denominated in yen.”
Eric King: “The Japanese are known as very savvy traders in these currency markets, but it’s like someone just flipped a switch and the whole country is stampeding into physical gold.”
Sinclair: “It’s because the whole country is very knowledgeable regarding currency risk, and they are also recognizing that Japan is taking over the lead from the US Fed. Japan is acting almost as if it was a state of the United States and it is bringing QE to the world in infinite amounts. Gold then becomes a sure thing denominated in yen, and the Japanese know this.