Jim Sinclair: Any IMF sales will be great for gold

Section:

From Jim Sinclair's MineSet
Wednesday, January 31, 2007

http://www.jsmineset.com/

Dear Mr. Sinclair:

Can you comment on the Bloomberg article about the possible gold sales by the International Monetary Fund? It sounds innocuous enough and the experience of 1976-80 certainly does not cause any alarm, but you know better than I what the perception and effect on the price of gold from this article would be given the people making the recommendation and the actuality if it comes to pass.

Best regards,

Jerry L.

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Dear Jerry:

Any gold sold by the IMF or any central bank will never see the market.

Historically such sales, even if they appear to be related to the market, are in fact made to other central banks.

With almost every central bank wishing to diversify its reserves and with gold clearly as a performing asset, selling all the IMF gold would be easy because of central bank interest.

The selling of gold by the IMF was the most bullish thing that happened for the 1968-1980 bull market. This is because it allows major players to enter the gold market in large lots at one price and free of commission.

Should the IMF decide to sell gold, it is a bullish, not a bearish event. Only the announcement of such an event could impact the not knowledgeable, and even that would last only a very short time.

This is true for all the above reasons and because the cash market for gold has overtaken the paper gold market.

Regards,

Jim

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