JIM SINCLAIR ON GOLD & GOLD SH's.Believe it or not, it does not matter because I know 2007 and 2008 belongs to the longs, not only in gold but also all well managed attractive PM shares. These items do not need us, we need them.
Gold is trading above $640 cash. The Euro is approaching 1.33. The reasons given have some implication, but not much. The international subjective investment sense is turning towards gold and away from the dollar ever since it was announced that certain Middle East central banks were not simply diversifying their reserves but actually SELLING US Treasury instruments.
Add to this the seemingly innocuous announcement that the Euro now has in circulation the same amount of currency value as the US dollar which deflates one of the key reasons the US dollar was a reserve currency in the first place.
The result is a subjective switch towards gold which in 2007-08 will grow into a mighty flow against which no central bank or paper gold traders can successfully oppose.
While looking at the ingredients let us not forget the realization that the US economy is running in place. That means profits will fall and tax revenues are certain to decline. At the same time expenses lead by war costs are not going to decline and may expand. The result will be an explosion in the Federal Budget Deficit, further pressuring the dollar lower.