Jim Sinclair - Gold to Exceed $12,500 to Balance US Debt

With continued volatility in gold and silver, today King World News interviewed the legendary Jim Sinclair to get his take on the markets.

Sinclair surprised KWN by discussing a price target for gold that to some would seem unimaginable. When asked about trading for gold this summer Sinclair stated, “I think most of your analysis of secular trends will look and say no, no, summer time doldrums nothing happens. Well we could have something very significant happen and for a very clear reason. It’s becoming obvious even to our talking heads that this great recovery which we’ve questioned for a considerable period of time is in fact more in people’s minds than in reality.

Sinclair continues:

“Quantitive easing is the only tool that the Fed has had available to them. The Fed has pumped in trillions of dollars and the result of that pump-priming in the monetary sense has been only at best a modest recovery, and certainly making trillionaires out of some bankers, billionaires out of many of them.

We’ve come to a point now where if QE were to be stopped, you would see an implosion in the general equity markets...And yes gold would go down, the market would go down hard. The dollar would go up slightly to begin, but then fall back down again as the management of the economy was seen to have been ineffective and inefficient.

Gold would then start moving back up again and I think if QE was to cease, the recovery on gold from a modest reaction would be multiples upon multiples of that reaction and would lead the way to Harry’s $2,400, to Alf’s $3,000 to $6,000.

You can’t stop quantitive easing. If you stop quantitive easing the stock market will return to its recent low or lower. That alone by its impact on decision making will cause an economic implosion. We’re tied into this monetary stimulation, there is no way out of monetary stimulation. If there was any attempt to get out of monetary stimulation it would cause an economic accident which would require central banks to go right back where they were. That would be again, loss of control

So because loss of control could be this summer’s event, the potential is gold could have a very serious run to the upside this summer.

If QE is continued then the basic uptrend in gold now so solidly intact, will continue in its power uptrend, and you could expect a stronger gold market this summer. I’d be very careful about seasonality in gold...There’s every possibility that gold could put on a summer rally of distinction.

...A cessation of quantitive easing could open up the black hole of Calcutta for the general equities markets in a way that very few really understand. You could see thousands of points taken off that market in a very short period of time.

The only way to overcome that would be by whatever name you called it to start the QE again. That would be indicative of a total loss of control. So the question is what would the price of gold be if it became publicly undeniable that control of the economic functions for the believers no longer resided in Federal Reserves and central banks?

The answer is gold would do what it historically attempts to do and that is to balance the balance sheet of the United States of America’s external foreign debt...and when we do the calculations we come up with a figure that is in excess of $12,500.”

In my opinion this is one of the most powerful interviews Jim Sinclair has ever done for King World News because he discusses upside targets for gold that are far in excess of his original $1,650 price target, and he also explains quite clearly why those levels will be achieved.