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Jim Sinclair: Any IMF sales will be great for gold

Section: Daily Dispatches

By Jim Sinclair
Saturday, February 9, 2008

China has a trillion dollars in reserves and wishes to offload dollars, and this is a perfect fit. The year of the rat is a year of opportunity for some.

Any sales of gold have nothing to do with the market for gold, as not one ounce will ever see the free market.

The buyers will be gold-poor central banks.

The history of IMF sales in the 1970s is that they allowed huge buyers to enter the market at one price. That attracts the major buyers.

The OTC derivative market is $516 trillion, dwarfing the $92 billion estimated value of the IMF's gold. In today's messed-up financial world $92 billion is chump change.

One large banking entity could easily lose $92 billion on failed derivatives. ...

I do not think the reports of an IMF gold sale mean anything to the gold price trend. The only important fact is that the IMF has just demonstrated its total lack of financial sense, as in exchange for its gold it might end up holding only depreciating paper promises to pay nothing at all backed by nothing whatsoever.

Selling of gold like this occurs only in bull markets and has historically been useless to stop the price increase. In fact in the 1970s these sales pushed gold higher by facilitating demand from huge interests, and will do so even more so now.

Large traders could try to make this look serious but it is not.

This has Chung Phat and Dr. No high-fiving, as it indicates that the price of gold is not even halfway to its upside resting point. This was true in the '70s.

Finally, those who control black gold also control gold gold. Those you feel have caused the problem and are anti-gold are not. To know this you need only the eyes to see and the ability to connect the dots.

This will be looked back on as great for the price of gold, as was the case in the '70s when the same entity, the IMF, proposed and did the same thing, only to stop before the buyers took all their gold. The same will happen if the IMF even starts.

Note that the proposed sales would come when the U.S. economic rescue plan is to occur. The reason is clear.

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