The Panic Starts ? Invest In Gold !

[churchill]

Posted On: Thursday, January 17, 2008, 5:45:00 PM EST

The Panic Starts

Author: Jim Sinclair

Dear CIGAs,

There is no doubt the Fed and the PPT are meeting right now. A drop of over 300 points on the Dow after the Chairman of the Federal Reserve speaks publicly presages a 1000 point break in the Dow Jones Industrial Average coming quite quickly, if not tomorrow.

Unless the equity markets can be calmed, a panic is about to happen, making the statement "This is it" a horrible reality.

If the equity markets cannot be calmed then:

Recognize this is the Formula happening like everything else much sooner and much bigger in its implications than anticipated.

Gold will rise to $1650 as an almost immediate effect of what will be done to attempt to fend off a total panic starting to take place in general equities, therein threatening to be followed by all credit markets of all kinds.

The funds and hotshot short term traders in gold shares will be killed by the upward explosion of the gold price about to occur.

The PPT and the Fed will step out of gold’s way because gold is one of the tools used in 1930 by Roosevelt and in 2000 by Bush. It will be used again now on the upside.

Gold is the only insurance there is against what all this means because a panic in equities will blow the financial system, already coming apart, to smithereens.

All country funds would shut down on any further investments in "at the wall" financial institutions.

The rollover in credit and default derivatives would exceed the entire foreign debt of the USA.

The rest of the $450 trillion dollar mountain of derivatives would start a disintegration like nothing you have every seen in your lifetime.

Consumer demand would slam shut.

The auto industry might as well go into liquidation this coming Monday, avoiding the June 2008 rush.

The US dollar would burn a hole in the floor going directly to .5200 or lower.

As the dollar disintegrates gold would rocket to and through $1650 in days.

The markets for general equities would all have to institute total trading halts every 100 points on the downside for 30 minutes each.

All commercial call loans would be called.

All debtors one day late on any payment, lacking grace period, would be liquidated. All debtors over one day of the grace period would be liquidated.

It is clearly visible to anyone with eyes or a mind to think that the PPT has lost all semblance of control in the equity markets and will soon in all remaining markets.

The commercial paper credit market which is almost dead will die totally.

Should no emergency action take place soon, you will see an old fashioned panic of the 1929 variety.

Just as emotional fools sell gold and gold shares, be assured that more emotional general equity fools will unload and bring the averages down more than ever in history in one day.

Recognize this is the Formula happening like everything else much sooner and much bigger in its implications than anticipated.

Emergency action will be all splash and theatrics but truthfully the cat is out of the bag. It buys some time but corrects nothing. It makes the Formula 100% correct.

There now must be EMERGENCY ACTION because the Chairman of the Fed has BOMBED OUT PUBLICLY and a PANIC is about to occur. Expect EMERGENCY ACTION in days, not weeks.

If you have not protected yourself, you may only have days to do so now

[lannarebirth]

Aren't you glad you can post that stuff without using your real name?

[churchill]

Does anyone ?

[Naam]

the good news is that the aliens who abducted Jim Sinclair released him again. he nearly drove them mad with his bla-bla

[fletchsmile]

...

If the equity markets cannot be calmed then:

Recognize this is the Formula happening like everything else much sooner and much bigger in its implications than anticipated.

Gold will rise to $1650 as an almost immediate effect of what will be done to attempt to fend off a total panic starting to take place in general equities, therein threatening to be followed by all credit markets of all kinds.

The funds and hotshot short term traders in gold shares will be killed by the upward explosion of the gold price about to occur.

....

Emergency action will be all splash and theatrics but truthfully the cat is out of the bag. It buys some time but corrects nothing. It makes the Formula 100% correct.

There now must be EMERGENCY ACTION because the Chairman of the Fed has BOMBED OUT PUBLICLY and a PANIC is about to occur. Expect EMERGENCY ACTION in days, not weeks.

If you have not protected yourself, you may only have days to do so now

the good news is that the aliens who abducted Jim Sinclair released him again. he nearly drove them mad with his bla-bla

That's not what Shirgar told me and Elvis just before Lord Lucan arrived. We reckoned it was Dorothy's fault for clicking her heels to early

Edited January 18, 2008 by fletchsmile

[toptuan]

The sky is falling, the sky is falling.

Methinks the OP has a hidden pot of gold which he hopes will increase by 50% in value in the next couple days due entirely to his efforts here in this corner of SE Asia.

Edited January 18, 2008 by toptuan

[lannarebirth]

It's not that Gold can't run up higher. It certainly can, and might. The thing is, so what?

[churchill]

The sky is falling, the sky is falling.

Methinks the OP has a hidden pot of gold which he hopes will increase by 50% in value in the next couple days due entirely to his efforts here in this corner of SE Asia.

Yes I have money invested in Gold - , my opinion only but I think in present markets gold will become increasingly interesting to more investors including the major funds that invest -

50% increase over the next year ( not gold but mining shares )-yes - I do not have much faith that other investments have as much potential at this time .

[sonicdragon]

The sky is falling, the sky is falling.

Methinks the OP has a hidden pot of gold which he hopes will increase by 50% in value in the next couple days due entirely to his efforts here in this corner of SE Asia.

Yes I have money invested in Gold - , my opinion only but I think in present markets gold will become increasingly interesting to more investors including the major funds that invest -

50% increase over the next year ( not gold but mining shares )-yes - I do not have much faith that other investments have as much potential at this time .

Well, that's a more reasoned statement than the ones you quoted from that nutter Jim Sinclair. Even for most people who are bullish on gold (me for example), the kind of statements in your OP simply come across as fanatical drivel.......

[LivinLOS]

I too think the chances of something really ugly happening are much higher.. Forget subprime, the whole debt is money paradigm could be about to change. Kondratieff waves predict this is the next great depression, the incredible debt bubbles made by the fed need popping, the entire US economy seems to be hanging on via an idea that you can borrow and spend and that makes wealth.

I too own gold (and silver) but having bet the farm on them back at mid 300's and mid 6's I am not unduly concerned.. I personally think Gold could correct quite a bit from its latest levels and will be much more volatile thanks in part to the ease with which buy and sell orders can be executed on the ETF's.. I am confident gold will be higher in nominal dollar terms (if that means anything.. Its spending power and wealth preservation I am more concerned with) so until I see a better asset class I will hold. The time will come (in the darkest hour before dawn) when commercial property / a performing UK country estate or farm / or other long term bet will appeal more than the metal of kings. But for now the fear hasnt really hit.

Those intending to retire based on portfolios with large equity portions will probably need a good long time horizon to realize gains this time round.

[britmaveric]

Don't buy gold at current rates - most people missed the boat on this one.

Yank economy is still growing at 2-3% rate. Its downfall is largely exaggerated.

[LivinLOS]

We shall see.. Were you not saying the same about gold a year or two back ?? And how the dollar would recover when it was 90 ish on the index ??

I would take gold over USD.. I would definitely take gold over normal spread equity..

The only 20/20 vision is hindsight..

[backflip]

Adjusted for inflation, the gold price in 1980 was $2000 in 2007 dollars. That's what I want to do, invest in an asset that has lost one-half of its value in one generation! Gold is a precious metal, and it takes precious little intelligence to buy it.

[Gary A]

Gold would probably be an average investment for me. I ALWAYS buy high and sell low. I think it's topped out but what do I know. My VERY safe ETF's are down more than 30 percent in the past year. If things continue this way, my kids are going to be quite disappointed with their inheritance.

[Abrak]

Adjusted for inflation, the gold price in 1980 was $2000 in 2007 dollars. That's what I want to do, invest in an asset that has lost one-half of its value in one generation! Gold is a precious metal, and it takes precious little intelligence to buy it.

That is such a spurious statistic - clearly if you buy something at the top you dont do well.

If you had bought the SET at the top - 1787 in Jan 1994 - you would have lost half your money even before adjusting for inflation.

Gold has not been a bad investment.

If you had bought gold ten years ago you would have outperformed US equities. Over shorter periods you would have done very much better.

There are periods of time where commodities outperform paper assets and vise versa.

[LivinLOS]

Adjusted for inflation, the gold price in 1980 was $2000 in 2007 dollars. That's what I want to do, invest in an asset that has lost one-half of its value in one generation! Gold is a precious metal, and it takes precious little intelligence to buy it.

Of course if you cherry pick from the last recent mania you can make stats say anything..

The same amount of gold has been calculated to have purchased about the same in ancient rome in wine and foodstuffs as it can today.. The comparisons between an ounce of gold and a suit or other items are well known.. At the same time the USD is -97% since the FED came in in 1913..

Gold is a wealth preserver.. in times of trouble, chaos, rising inflation, higher economic risk.. Basically everything we are seeing now and for the next couple of years.

[Abrak]

I have a question related to gold investing which I hope someone can help me out.

I own GLD and CEF but I also own Newmont Mining (NEM). I wonder why NEM - an unhedged miner - performs so badly relatively to the price of gold.

[Naam]

Adjusted for inflation, the gold price in 1980 was $2000 in 2007 dollars. That's what I want to do, invest in an asset that has lost one-half of its value in one generation! Gold is a precious metal, and it takes precious little intelligence to buy it.

The same amount of gold has been calculated to have purchased about the same in ancient rome in wine and foodstuffs as it can today.. The comparisons between an ounce of gold and a suit or other items are well known.. At the same time the USD is -97% since the FED came in in 1913..

Gold is a wealth preserver.. in times of trouble, chaos, rising inflation, higher economic risk.. Basically everything we are seeing now and for the next couple of years.

but do we want to preserve our wealth/savings for the next two-thousand years or do we rather let our investment work hard and grow?

[Abrak]

Adjusted for inflation, the gold price in 1980 was $2000 in 2007 dollars. That's what I want to do, invest in an asset that has lost one-half of its value in one generation! Gold is a precious metal, and it takes precious little intelligence to buy it.

The same amount of gold has been calculated to have purchased about the same in ancient rome in wine and foodstuffs as it can today.. The comparisons between an ounce of gold and a suit or other items are well known.. At the same time the USD is -97% since the FED came in in 1913..

Gold is a wealth preserver.. in times of trouble, chaos, rising inflation, higher economic risk.. Basically everything we are seeing now and for the next couple of years.

but do we want to preserve our wealth/savings for the next two-thousand years or do we rather let our investment work hard and grow?

Generally speaking you want your investments to work hard and grow. The current climate is quite different though - slowing growth and rising inflation - wealth preservation is at a premium. If you can find ways to make money in the current environment then you are very sharp indeed - we are seeing wealth destroyed very rapidly.

I am not someone who believes you should always hold gold. I just think it is a safe bet now unless I am wrong about the US and things are going much better than they appear.

Also why own a paper currency when money supplies are all increasing by double digit growth?

Edited January 19, 2008 by Abrak

[Naam]

Gold has not been a bad investment. If you had bought gold ten years ago you would have outperformed US equities. Over shorter periods you would have done very much better. There are periods of time where commodities outperform paper assets and vise versa.

a [not so] innocent question: are all of you aware that there is life beyond DOW, S&P and that other currencies exist besides the mighty US-Dollar and the weak Thai Baht?

back to gold. here's a graph, unfortunately max period only from 1995 till today.

the blue line indicates the result of an investment in USD at 8% yield which would have beaten gold during that period.

[Abrak]

the blue line indicates the result of an investment in USD at 8% yield which would have beaten gold during that period.

And how exactly would you have got a USD 8% yield?

Not easy.... London property certainly....

[Naam]

Generally speaking you want your investments to work hard and grow. The current climate is quite different though - slowing growth and rising inflation - wealth preservation is at a premium. If you can find ways to make money in the current environment then you are very sharp indeed - we are seeing wealth destroyed very rapidly.

Also why own a paper currency when money supplies are all increasing by double digit growth?

none of my "wealth" was destroyed in 2007. i have made money last year and i am convinced i will make money this year. of course i won't see those results i was used to till a year ago, but enough to cover my living expenses and reinvest the lion share of my income.

[Naam]

the blue line indicates the result of an investment in USD at 8% yield which would have beaten gold during that period.

And how exactly would you have got a USD 8% yield?

Not easy.... London property certainly....

i've never had a lucky hand with property and that includes the various roofs i owned under which i lived. i am investing since more than 25 years in bonds. high yield, mainly emerging markets, till 2004 exclusively sovereign debtors since then (nearly) exclusively corporate debtors. anybody who did not make a yield in excess of 15% during the period i mentioned was either a dummy or not diversified or did not act (sell) during a crisis.

presently i hold ~52% cash (€UR @ a meagre 4.50%) but my average yield is (as of today) still 8.21% without lifting a finger that is... if none of the debtors i hold bonds defaults!

[LivinLOS]

I have a question related to gold investing which I hope someone can help me out.

I own GLD and CEF but I also own Newmont Mining (NEM). I wonder why NEM - an unhedged miner - performs so badly relatively to the price of gold.

The miners are having tough times with rising energy costs, geopolitical issues, nationalization risks, wage rates, etc etc etc..

I hold about 30% of my assets in a HUI tracker.. Given golds rise I would have liked better returns but either way its still done 'well' for the last 24 months.

[BEENTHEREDONETHAT]

I bought into the gold rush in the early 80's and paid in the low $800 for it then. Would not have done much worse off burying my money in a can. Still have it, well some of it and I'm waiting for the big run up. If it goes up to $3,000 or so it will not have been a bad investment. Thanks but I will go with something that works for me a bit.

[shochu]

Smart investors buy gold at the bottom and sell some of the profits at the top while maintaining a growing portion of gold to preserve wealth.

One can also bring out stats to say such things as it took the stock market from 1930 to 1960 just to reach the same highs before that crash and the market has not progressed in value when inflation is considered since 1999, and much more of the same.

It really is about timing your play and always has been - and in this climate - since the 1980's when the market chose to create a debtor market - the writing has been on the wall long enough for anyone who wanted to see it. The pain has just begun and the solution is a long ways off - if you actually understand the full impact of what is happening. Perhaps it will be sideslammed with yet another new investment idea/package to deal with it yet again - we shall see. One would hope it is a little better than this ridiculous global warming/carbon trading thing they thought would stave things off a bit!

Edited January 19, 2008 by shochu

[churchill]

If you don't trust gold, do you trust the logic of taking a pine tree, worth $4,000-$5,000, cutting it up, turning it into pulp, putting some ink on it and then calling it one billion dollars?

[egg]

buy in gloom and sell in boom ,, that applies to most things ,,,, says he who stuffs up everytime he buys something

cheers

egg

[LivinLOS]

I bought into the gold rush in the early 80's and paid in the low $800 for it then. Would not have done much worse off burying my money in a can. Still have it, well some of it and I'm waiting for the big run up. If it goes up to $3,000 or so it will not have been a bad investment. Thanks but I will go with something that works for me a bit.

Amazing.. I thought it was only over 750 for a 5 day window ?? You must have timed it almost to the day !!

[Abrak]

If you don't trust gold, do you trust the logic of taking a pine tree, worth $4,000-$5,000, cutting it up, turning it into pulp, putting some ink on it and then calling it one billion dollars?

I am sure if I followed this logic I would simply buy something like wheat (which is inherently useful) rather than gold or useless bits of paper.

Incidentally I would be happy to invest in crappy bits of currency paper if they would stop printing so much of it. If you increase the dollar money supply by 20% per annum it is hardly surprising that its value falls 20% relative to gold whose supply is relatively fixed.