Jim Sinclair has had an amazing career. He’s served on the boards of NYSE listed companies, owned his own brokerage firm, and is a principal in a gold mining company in Tanzania. And that’s only part of his pedigree. Now something of a “grand old man” of gold, he has been publishing his commentary for free for many years.
He recently wrote of what must precede what he calls “The Great Reset,” a time when the financial system collapses and gold returns to its place as real money with fiat currencies becoming virtually worthless.
Common types of currency issued by official order are valued based on the issuing authority’s guarantee to pay the stated (face) amount on demand, and not on any intrinsic worth or extrinsic backing. All national currencies in circulation, issued and managed by the respective central banks, are fiat currencies.
There simple is not enough fiat currency on circulation to pay off all national and business debts even if we exclude government guarantees.
Most what is called money is an accounting entry now in cyberspace.
Computer currencies are a bridge over mental gap between the common belief in money and the requirements of what money truly does.
All of this is based on confidence in a system whose foundation of convincing on a continuing basis a public that the fiat currency can pretend and extend an illusion of real money whose definition is other than that universally held now and whose foundation is set in the cement of a pure illusion without backing in kind, uninsured and failing badly in many respects.
So what we currently use as money has value only because it is believed to have value, and because “legal tender” laws require that people in the US accept dollars as payment for debts.
Expanding on what Mr. Sinclair just said, he further states that,
Not only is the monetary system insolvent if called upon to perform in even a modesty percentage. The entire system would fail miserably. However, there is no lack of resources and productivity if incentivized to make the global system again functional and durable by making real, not pretend money the basis.
He claims the US is already bankrupt.
Therefore, the United States, one of the most powerful countries in the global system, is insolvent, that is true just on the factors of OTC derivatives and unfunded obligations. You need not be a genius to understand this.
As a result of all this nothing has been economically supplied to cure the basic problem. Pretend and extend has been the basis of the illusion that the system functions.
When the economic system fails, gold re-enters the picture.
Gold is currently traded in physical form, and in a far greater amount in what might be called “paper gold.” The latter consists of futures contracts traded on exchanges which likely do not possess enough gold to satisfy all the claims should those future traders actually stand for delivery.
Sinclair claims that the trigger for the Great Reset will happen when officials lose control of the markets and the price of physical gold greatly exceeds the price gold trades on the futures markets. Buy how much?
The means to the Great reset is in place and moving forward. It started with the nine exchanges opened for trading in PHYSICAL gold and silver. Premiums have been running in the $40-$45 basis on gold and $2 on silver.
The profit by arbitrage, which is the purchase and sale of the same item.
So here is your scenario:
1. Physical gold continues to rise under Mid Eastern and Russian demand plus the demand of sleeping giants in the US typically called One Percenters.
2. The physical gold arbitrage is not cheap requiring precise logistics, insurance, and relationships.
Trust which are hard to come by. Cooperation of a major gold refiner with in place logistics and payment systems plus trust is an absolute requirement.
All of this can be purchased except trust which is a product of long and fruitful relationships.
3. As the premium for gold, that is the price on the physical markets in China and Asia rises to over $50 and remains firm regardless of the ups and downs in the paper market the arbitrage will be profitable enough.
5. This Arbitrage has one place to come from and that is out of the paper gold warehouses to the refineries delivered directly to the account of the buyer or directly to the account of the physical exchange at the refinery.
6. Normal assays require 3 days and delivery according to logistics is prompt as one/two days or is made at the refineries.
7. Therefore the mechanics of the Great Reset has little to do with anything whatsoever except the size of the premium of physical over paper gold and silver plus the above criteria.
8. As this process continues the warehouse supply of all paper exchanges will continue to dwindle until the paper contract can longer function.
9. No longer function means even pretending to be able to make delivery when called upon right now for every one ounce of gold five hundred at twenty for are promised as deliverable. That is almost as crazy as the fraudulent OTC derivatives with no mark to market that we pretend has value.
10. When delivery from the paper exchange fails which it will, what is the value of a novated contract that cannot perform at the Comex? That is right. It is zero.
11. Since in the Hunt situation the first thing the board of directors at the Comex did was unilaterally changed (one side refuses to perform) the contract to “Sellers Only.” You can be sure the same people will do the same thing.
12. What do you think a contract that does not perform is worth? Again the correct answer is nothing.
13. As this occurs, which it has to, the paper gold contract loses all value. It is also useless if you are short because it will not perform for short the paper gold cover either. You cannot buy back a novated contract and meet the requirements for a short cover.
The reason is simple as a non novated contract for paper gold is entirely different than a regularly function paper gold contract since one is an apple and the other is a banana. You may have an 1100 plus fake profit you cannot collect one cent on.
As such all the normal causes of high gold and silver prices will play but a MINOR part in the unfolding drama. No group of wizards at any institution will figure this out, make it happen or stop it from happening as long as the price differential between paper gold and the price of the physical remain at or above the price of physical market for both.
In conclusion regardless of the drama unfolding or the opinion of so many new gurus no one word they say is correct in determination of the final price of gold.
So Sinclair believes the process of moving toward the Great Reset is already in progress. And history as shown that arguing against the old gold bugs can be a losing investment.
Source: Jim Sinclair’s MineSet
expect a lot of deaths
“Great Rest” —- does that equate to World Depression ??
Page two of the website attached to this post does a really good job of explaining how the Gold and commodity markets work.
Especially Gold derivative markets which are basically Zombie derivative contracts.