Jim Sinclair Article In The NY Times.....It’s a splendid spring day in Connecticut's horse country and James E. Sinclair, perhaps the best-known gold speculator of his era, is sitting before his trading terminal, contemplating the upward thrust of gold on his trader's chart. The sun, bursting through the bay windows, catches the glint of gold that is everywhere in Mr. Sinclair's home office: on the coins near his computer, on his chunky Rolex watch, on the rings on three of his fingers, on the cuff links on his monogrammed shirt, and — could it be? — a hint of it in his one working eye.
"I love gold, O.K.?" he said, his voice rising in excitement. "Gold has made me wealthy. It feels nice. It's exchangeable. It's money."
On his television set, which is tuned to CNBC, news breaks of a terrorist attack in Egypt, the price of oil pushes higher and traders continue to sell the dollar, which is approaching a one-year low against the euro.
With gold trading at $683.80 an ounce, a 25-year high, it's a good time to be a gold bug like Mr. Sinclair, especially if, like him, you own a gold exploration company (his is in Tanzania) and were a buyer when the metal sank as low as $250 an ounce in 2001. Now Wall Street, traditionally a laggard when it comes to making the investment case for gold, has jumped on Mr. Sinclair's bandwagon.
Investment banks like J. P. Morgan and Goldman Sachs are putting out bullish research notes, retail investors are heavy buyers through exchange-traded funds and hedge funds; and the trading desks of investment banks have been piling into the market, especially in the last week.
For Mr. Sinclair, who rode the last bull market in gold to its peak, in 1980, the surging price of his beloved metal is sending out clear signals that take him back to the 1970's, when inflation, a weak dollar and an oil spike driven by turmoil in the Middle East propelled gold to a high of $875 an ounce, or more than $1,800 in current dollars after adjusting for inflation. His ultimate price target now is not far from that: $1,650 an ounce, assuming that things become really bad.
"Gold is a barometer of the common stock of a country, and right now gold is sniffing out weakness in the management of the United States as a business," said Mr. Sinclair, 65, a lifelong Republican who twice voted for President Bush. "Iran is becoming a nuclear power. The chairman of the Federal Reserve is on a puppet string controlled by the White House, and there is no such thing as a strong-dollar policy when the dollar is heading south."
For more than two decades, the apocalyptic lament of Mr. Sinclair and other gold bugs has been largely dismissed as the United States has experienced — aside from a few hiccups — a 25-year bull market in a range of assets, from stocks and bonds to real estate and art.
Sustained by a continuing flood of liquidity, these assets have continued their mighty climb, even as crucial gauges of economic health in the United States — the budget and current account deficits — have continued to worsen. But now, with gold making a run for $700, dedicated gold investors are getting a wider hearing.
THEIR passion notwithstanding, gold bugs tend to be small-time investors. Gold's recent surge has instead been underpinned by a rush of mainstream investors, including hedge funds, commodity-based mutual funds and exchange-traded funds.
For these investors, gold is less a way of life than it is hedge against inflation and a prudent measure of diversification during an increasingly worrisome time. The extent to which this new wave of capital remains invested in gold will determine if the recent spike is just another anomaly or the onset of the second coming of the great gold bull market that the true believers have been calling for since the price of gold crashed a quarter-century ago.
Of course, many investors say that given gold's sharp recent climb, a correction would not be surprising. It's another asset bubble, they say, the latest investment fad. But for Mr. Sinclair and a small clutch of other self-exiled Wall Streeters, the metal's recent climb is just deserts for their unwavering, if not mystical, devotion to gold as an investment, an adornment, a means of exchange and, more than anything else, a moral bulwark in a corrupting sea of paper money, credit and what they see as insidious financial instruments.
Mr. Sinclair, who in the 1970's ran his own trading firm, achieved his renown by selling 900,000 ounces of gold at an average price 0f $810 in early 1980. That was when the metal was capping a decade-long bull market that commenced in 1971, when President Richard M. Nixon severed once and for all the dollar's link to gold.