Sinclair - You’re Out of Your Mind If You Sell Gold Assets Now

With stock markets and other asset classes getting mauled, real money, gold and silver, are attempting to hold their ground, so today King World News interviewed legendary Jim Sinclair.  When asked about the action Sinclair stated, “Well I think the gold market today is acting extraordinarily well being on the positive side when every other asset that people can find are being thrown out the window, especially in the equity markets...Where gold is concerned you are dealing with the condition of the international banks, with the balance sheets of the financial entities of the world.

So the potential right now, right here, right at this point for an error in judgment that would set off a loss of confidence is present, clear and in all probability something that we are going to be facing well into the summer months.  Yeah, gold can rally (here), contrary to the opinions of those who believe in seasonality in monetary items.”

“The problem is so serious, the problem is so present time, the problem is so real that it has inherent in it the probability that the economy is not going to have a significant recovery for more than a decade.  And the standard of living in the United States, the standard of many who are reading this now, especially those who have taken no measures whatsoever to protect themselves, who simply look at it as reading something of interest but not really acting on it, is going to be so significantly impacted as to make the middle-class or higher middle-class join the serf class.  This is as serious as it gets.

...This has gone so far that there is no solution that can be applied and the only practical  method is to continue to expand their (the Fed’s) monetary aggregates to continue to hold down interest rates.  And hopefully kicking the can down the road until somebody else is in charge and that’s exactly what they are doing.

Well let’s just assume for a moment that QE is in fact limited to June 30th and let’s assume for a moment that the central bank of the United States would take a conservative restrictive approach towards monetary policy, I would suggest to you that the stock market would peel off 4,000 points so fast you would get wind burns.  I suggest that if anything like that happened exposing the balance sheets of the financial institutions, that you would have to return to QE with a vengeance, unparalleled, unprecedented in history....

“That’s not something that only I know, that’s something that the Fed knows very well themselves, and today is giving them a little bit of a preview of what would happen if in fact they curtail QE and don’t enter into a QE3 by whatever name they choose to call it.

The Dow under 12,000 is starting to scare a lot of people.  A minus 200 Dow Jones is something that is so close to a point of causing such problems.  Bear in mind that the last time we were minus 300 we ran into the flash crash.  We have not entered into a new area of regulation that could prevent that in the future.  You start putting orders in when there’s no bids and you’re going to get prices you won’t believe.

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