Gold Report per James Sinclair (by Vronsky)
Sep 18, 12:21
Wednesday, September 18th, 2002
As a reaction to apparent disappointment of the public
to a conference call, all primary members of the Banking
sector are under pressure. JPM is trading as this is
written at $19.08. Under $20, which is a psychological
point, JPM comes under significant
market concern. Under $18.50 technically JPM appears
headed back to it early 1990 levels. This would increase
the problems that JPM has witnessed in the downgrading
of their derivative counter party position credit wise.
That will increase pressure on the large
gold and other asset derivatives that JPM is party to.
It should be keep in mind that JPM has been one of the
key dealers in what is consider last risk insurance. If
you for instance thought that Enron might not pay on its
bond debt during the decline in Enron shares
you could have purchase insurance against such a default
from dealers like JPM. This so called insurance was not
insurance, it was a DERIVATIVE TRADE. This type of
transaction is another problem waiting in the wings to
potentially affect JPM negatively. I renew my prediction
that under $20 JPM will effect gold higher. If JPM
trades under $18.50 for two day's as a closing price
then, I believe, we will successfully challenge the $330
on gold. Keep in mind there is a 1,000,000 ounce gold
in-the-money call option position still out there, near
delivery date, which will easily find
financing if it needs it. Further to that, today we were
treated to a larger than expected US Balance of Trade
announcement at $34,500,000,000. The US Trade Balance
Deficit increasing will increase the US Current Account
Deficit which will pressure the dollar lower. When the
dollar trades (it will, IMO, soon) under 104
on the USDX, a top will occur, IMO, in the US Treasury
instruments thereby ending lower interest rates for a
long time to come.
Higher interest rates will effect US Economics
Negatively setting into motion the US Dollar to
increasingly lower levels. This is a "Down Spiral"
indicating that the US Balance of Trade increasing
forces the US Current Account Balance Deficit to expand
which forces the US Dollar lower which in turn
negatively impacts the US Treasury instrument market
thereby forcing interest rates higher just when weak
business activity can least handle such an occurrence.
Lower US business activity will then impact the US
Dollar lower and the down spiral goes on and no. We are
today on the precipice of that Down Spiral and JPM is an
indicator of if or not we are locked tight in that DOWN
spiral for general business and the UP Spiral in Gold up
and above $330 and $354 with the first stop at $372 in
my opinion. Watch the market on JPM to determine
the Spiral direction.
Posted on behalf of
James Sinclair
Chairman & CEO Tan Range Exploration
TNX on the Toronto Stock Exchange |
