Re: Sunday, February 09, 2003
Important Announcement I have made a difficult decision but am
committed to it.
Author: James Sinclair
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I would appreciate if you would review with me the "ONLY" Gold share index
in the entire advisory of the Gold community worth your time. Both the XAU
and HUI have, in my opinion, outlived their usefulness. Silver is simply
not a major player and has yet to break out from its long-term downturn
technically. This is simply an undeniable fact that ends all discussions
until the event of a breakout has taken place in terms of technical
analysis.
Hedging, which almost every gold producer from juniors to majors have done
from $248 gold, has turned out to be clearly uninformed, downright stupid
and wrong. Those producers who have not stopped and closed their hedge
books entirely (not simply spread them and declared falsely that that were
no longer hedgers) are in serious trouble no matter what spin they
perpetuate. The statement by gold producers that their institutional
stockholders approve of hedging is clearly a statement to the majority of
their shareholders (you & me) that we should "TAKE OUR OPINION AND SHOVE
IT." These producers wonder why their share prices fail to perform? Hey,
you just insulted the public and haven't seemed to notice that you are a
public company. Well, it's true they haven't noticed. Imperialist Monarchs
so separated from their citizens have been known to tell the starving
masses requesting bread that the solution is simple: "Let them eat cake."
When that statement was uttered in France by Marie Antoinette, it was the
high period of Divine Imperialistic Monarchism. Sadly, the beautiful but
naïve Marie Antoinette's head ended up on the chopping block - with 17,000
others. This period is now the high water mark of the corrupt greed and
wrongdoing of gold share management; and it will get better from here on
out because you are smart stockholders and getting smarter.
Imperialism still lives right now in the world; it survives in gold share
management, an imperialism that mocks its citizens. Take a look at the gold
corporate world. Some major CEOs are now kings who believe in the "Divine
Right of Kings." But their Divinity speaks to them at the all-male Country
Club. It is the institutional shareholders that approve of everything the
CEO does until they find themselves with a gold Enron or gold World Com, or
the myriad of other kingdoms now in ruin. Much of the blame falls at the
feet of "Do Nothing, Approve Everything" institutional shareholders.
Therefore, those indexes that have both silver and imperialistically hedged
gold and prejudicially (not intelligently) maligned South African companies
are totally worthless to guide you in gold.
Only one index is credible as a constituent for decision as to what the
gold shares are doing in reference to gold and that is the Schultz Gold
Index: An Index of Pure Gold Shares
Devoid of Corporate Noise.
Please look at the uptrend of the pure gold shares. Note that this Pure
Gold Index did in fact CONFIRM the new recovery high in gold. There is
among these shares no lack of participation and therefore TECHNICAL
CONFIRMATION in and of the long-term Bull Market in Gold.
This exposes the "big lie" that gold shares have not confirmed the new
highs in Gold Bullion. This index is FREE FROM non-performing silver
industrial/semi-precious companies. Gold shares without hedges and no known
inherent problems make up the Shultz Gold Index. This index is FREE FROM
wrongly (racially prejudiced opinions) maligned South African shares. This
INDEX confirms a new high for Gold shares and CONFIRMs the new high at $390
in bullion. Shame on all the respected gold technical analysts that are
LOUDLY DECLARING ON THE WEB the falsehood of a top in the gold market based
on this total fabrication that gold shares have not confirmed the new high
in gold bullion (you know who you are because, in fact, it is almost every
one of you). This community depends on you giving them firm, clear,
un-hedged, well-researched conclusions. You are parading a conclusion based
on wrong data that is doing a disservice to those who depend on you - the
Gold Community. STOP IT!
Cyberspace Is Filled With Hot Air
Now let's look at the inadvertent next development - that is the Cyberspace
Internet-based gold investor community. Three years ago there were a few
investment sites that had views divergent from the mainstream. They were
bearish on equities. Slowly they began to grow. They all have something
attached to their sites that are their own personal business, which there
is nothing wrong with. They sell memberships, request voluntary membership
payments, seek clients dealing in gold, or are small boutique brokerage and
money management shops. That is all fine.
As the interest in gold grew, which has a fraternal relationship with bear
markets, these Internet sites began to gain "hits" from those seeking
information on gold. Few of these sites have real credentials in the gold
market. Most of the people running these sites were not even in business of
any kind in the 1960s when it all began. Few if any have distinguished
themselves in open competition in trading gold successfully in huge
numbers. Few, if any, have distinguished themselves in currency trading.
Few, if any, of these sites have ever constructed or traded a derivative
beyond a listed gold future or gold put and call. Precious few, if any, of
these Internet sites that are so powerful in influencing the gold community
have even one small credential qualifying them for the power they exercise
with such naïve convictions.
One sight run by a war hero tells me I know nothing about derivatives and
that he does. He refuses to publish anything I write on derivatives because
he feels I am being overly influenced by another site he is at war with.
Another site posted an article calling those that feel there is a
conspiracy in gold "Trailer Trash." Yet these supposed "trailer trash"
people actually sued the Bank for International Settlements and
personalities in the Fed. In my opinion, they were not hoping to win but
rather to expose the damning anomalies in gold trading. What courage
William, Regional, and Christopher had to expose themselves at significant
financial and reputation risk to make a point to those that would listen.
Trailer trash? Okay, I am not a conspiratorialist but I certainly know what
a conspiracy of common interest looks like in the market.
There is a popular Internet site that is publishing wonderful real-time
market information but have you ever seen one article of mine on it? No you
haven't. Yet, I have submitted every one that I felt of significance to
them, a total now of 32 articles rejected for publication. Why would they
reject 32 articles of merit since my credentials to speak on gold are
orders of magnitude greater than those they hold? Have you ever asked where
they derive their incomes from?
The result of all this is that gold sites are applying their own spin to
the news just like many anti-gold sites have done in the past and continue
to do in the present. In the end, what we are seeing here is news that is
largely based on personal objectives.
Other gold sites are being used because of their lack of in-depth knowledge
of gold which is a direct result of their lack of real experience in gold.
These are the glibly naive websites that give platforms to defrocked equity
market predictors of "disaster scare tactic book sellers" with
non-functional systems and others that seek PR by badmouthing gold in hopes
of being right by serendipitous timing and then selling more subscriptions
to worthless services. One such glaring example took place right at the
beginning of February when a well-meaning site invited a bookseller to
opine on gold.
Look at the Schultz Gold Index Chart "Event A"
Gold broke up from its downtrend on the MACD & other such indicators when a
radio website aired an interview with Mr. Bookman. This site, because it
carries known entities with the proven ability to give reasonable guidance
in gold and maybe the best credentials in the gold business to back it up,
gave "Mr. Bookman" an undeserving platform. You have to look at the
opinions this site aired with a personality without inviting an article to
balance them in early February. I feel the breakdown of the incipient rally
in general gold shares is too coincidental in timing not to believe that
this site was inadvertently used to the advantage of Mr. Bookman. The
opinion aired and soon to be published by this site with no article to
balance it printed at the time of the airing did the community harm, IMO.
The opinions spoken in that interview are so weak that my dogs, even the
stupid one, know they are totally manufactured to scare people into buying
a book.
Below are some of the statements made in that interview by Mr. Bookman and
my reactions:
1/ "I do think that gold and silver are going to remain under a lot of
pressure during this deflationary period."
JES says: This statement flagrantly disregards the accurate history of
gold. Further, this statement demonstrates a lack of knowledge that the US
Fed in the 1930-1934 period bought gold in the open market as tool of
re-flation. Please read the True History of gold which I have printed in my
article, "The Federal Reserve Gold Certificate Ratio, a.k.a the Gold Cover
Clause," in which I quote, in context, a review of the History of Gold in
the Great Depression by Dr. Mundell, a 1999 Nobel Prize award winner for
Economics. Mr. Bookman is off his rocker.
2/ "Gold stocks generally go down when the overall stock market goes down
and up when the overall stock market goes up. The only exceptions are
highly inflationary periods such as the teens and in the 70s. We are facing
a deflation period."
JES says: This demonstrates a total lack of knowledge of gold share
activity from period to period. Gold shares, as recently as the 1960s, were
akin to utility stocks. It was not unusual that a South African gold stock
(then mainstream of gold shares) would yield 18% to 20%. Now think for a
moment: what gives birth to a bull market? If there is one single item from
the beginning of time, what has it been? Yes, you are right, it is lower to
steady or slightly lower interest rates. During much of the so-called
"in-depth 85 years of research" conducted by Mr. Bookman, upon which his
fallacious opinion above stands, the gold price never moved. It was either
fixed or it just went sideways. Nothing ever happened. Okay, so stay with
me now. Let's say the equity market rises because interest rates fall. The
steady high interest rates in the 20% level for gold shares starts looking
quite good to the investor. Therefore, gold shares and general equities
would rise together. When interest rates rise the opposite occurs for gold
shares. In that instance, general equities and gold shares decline
together. Mr. Bookman hasn't a clue about the statistic he is looking at.
He pronounces then a totally wrong conclusion. The fact is most of the
time in Mr. Bookman's "in-depth research spanning 85 years," gold did
absolutely nothing as compared to the teens and the 70s and NOW!
The woefully wrong Mr. Bookman is ignorant of what inflation is. He thinks
that it is the price of goods that primarily affects the value of gold.
Hogwash, Mr. Bookman.
The inflation that affects the price of gold is monetary inflation, not
price inflation. In fact when price inflation surfaces, when the economy of
that times turns positive, it is the time to start to think about selling
gold.
Mr. Bookman - listen carefully to the truth and stop making gross errors.
Here is the fundamental truth of gold: The Absolute Incontestable
Fundamental Truth of How and Why Bull and Bear Markets in Gold Occur about
which no Sound Argument has Ever Been Made or Ever Will be Made.
The "RATE" of creation of international reserve asset money as a momentum
concept, when expanding out of a downtrend line by whatever means, is the
practice known as "Monetary Inflation." It is then that gold lifts out of a
bear market into a bull market. The resulting Bull Market in Gold will END
when the "Rate" of creation of the international reserve currency money as
a momentum concept breaks down from its uptrend line by whatever means,
thereby contracting to offset the expansion in prices of goods. Price of
services always rise on balance (or have you not noticed). Price of
services are not relevant to this definition. A period has to exist in
which prices rise based on the rate of creation of money which is used to
restart lagging economies. During that period one witnesses a long-term
bull market in gold.
That's the entire story. All else is noise. Noise can effect the short-term
but means nothing whatsoever to the long-term bull or the long-term bear
market in gold.
I can go on and on with Mr. Bookman's scare tactics to sell a book. If you
do not believe me, then I would love to debate him but do not believe his
opinions are worthy of any significant exposure. Ask me your questions
about anything he has said and I will show you that this fellow is as
hollow as his Dow Jones predictions. A clock is right twice a day. That is
his only claim to fame.
Again, Mr. Bookman's opinions aired with no opposing views to balance his
opinion. This is especially disconcerting since this came from a website
that has gained its popularity because of postings from the likes of Harry
D. Schultz.
Now to the Matter at Hand
I am no longer going to post my articles on any popular websites. I have
asked that those that manage websites that post my material on a regular
basis to delete me from their current pages and list of contributors. I am
no longer going to give technical instructions or answer questions from
website viewers on any popular websites. I will re-start my activities on
a website specific to this service to the gold community and re-start all
my activities there. All are welcome (except nasty people).
I am splitting the "Chairman's Corner" off from the www.tanrange.com web
site THEREBY ESTABLISHING my own web site: www.JSMineset.com. This is
where I will post all my articles and opinions. All news posted will have
my commentary. Around the world, prices will be available on this site. I
intend to have this site set up so changes in gold, like the $390 during
the US non-trading hours, can be analyzed for those that want that type of
information as and when they happen. It is here that you will find
discussions with the world's best technician, in my opinion, Kenny Adams,
and from time to time I hope Harry Schultz has something to post. I don't
give a hoot about hits. I will not promote my public company. I don't even
want my site as part of my public company website.
Be assured that when I believe this bull market is going to end, I will
tell you just like I did in early 1980.
Now that only those with a strong cup of coffee among the real gold gang is
still reading this posting, the others having been thoroughly tired out,
here is the hidden message: Thanks to the badmouthing of gold by two or
three PR seekers, getting undeserved publicity on the Internet, thereby
scaring the hell out of many of the new non-committed members of the gold
community, gold will blow out the first leg of the gold bull market, in my
opinion, at between $409 and $418 in the coming weeks. Gold will react back
down, but much less than expected, and start the second leg of the
long-term gold bull market from prices higher than expected, in a shorter
time than expected. Gold shares in the pure gold category will get a long
play to new highs, in my opinion, into the top ($408 - $418) of the first
leg. Traders reduce by 33 1/3%. Investors take delivery of certificates of
core positions and stop watching at $409. Come back when I give a heads up
call. I will guide you from the new location only at www.JSMineset.com. Do
not buy into what you feel is a sure $420 at $408. I don't think it will
be. DO NOT post this anywhere as I will not repeat it until it occurs. Just
read it and delete it.
Your watchman, Jim Sinclair
*Definitions:
Spread or spreading means that instead say of taking off part of the
bearish wing of a two-sided (bull vs. bear) gold derivative in order to
take the transaction to as near to neutral as possible, you in fact add to
the transaction. In a bear spread, as most derivatives are, you would
spread to neutral by adding more transactions to this string of special
performance contracts that were bullish.
Wing of a derivative means that groupings of transactions linked to each
other making up a part of the string of special performance contracts that
constitutes a separate part of its bullishness or constitutes a separate
part of its bearishness. Each would be referred to as a bull wing or bear
wing.
Click on the following link to view the full editorial including associated
charts:
jsmineset.com
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Copyright (c) 2002 JIM SINCLAIR'S MINESET () All rights reserved. For
more information visit our website at jsmineset.com or send
mailto:tnxinvestor@tanrange.com
Message sent on Mon Feb 10, 2003 at 10:18:52 AM Pacific Time
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