From: Jim Sinclair's JSMineset [information@jsmineset.com]
Sent: Friday, October 19, 2012 10:20 AM
Subject: How A Metals Dealer Works
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About Jim Sinclair
Jim Sinclair

Jim Sinclair is the Chairman and CEO of Tanzanian Royalty Exploration Corporation (TRX: Altanext NYSE platform, TNX: Senior Toronto Stock Exchange). He is a precious metals and commodities specialist. Some of the highlights of his nearly 50 year career include the founding of Sinclair Group of Companies (1977), which offered full brokerage services. Mr. Sinclair served as a Precious Metals Advisor to Hunt Oil and the Hunt family for the liquidation of their silver position as a prerequisite for the $1 billion loan arranged by the Chairman of the Federal Reserve, Paul Volcker. He was also a General Partner and Member of the Executive Committee of two New York Stock Exchange firms and President of Sinclair Global Clearing Corporation and Global Arbitrage .
 
He has authored numerous magazine articles and three books dealing with a variety of investment subjects. He is a regular speaker at various commodities related events.
 
In January 2003, Mr. Sinclair launched, "Jim Sinclairs MineSet," which now hosts his gold commentary and is intended as a free service to the gold community.
"Nothing will unnerve the paper gold shorts more quickly and do more to undercut their confidence than to strip them of the real metal and force them to come up with more hard gold bullion to make good on deliveries. "Stand and Deliver or Go Home" should be the rallying cry of the gold longs to the paper gold shorts." --Trader Dan Norcini

My Dear Extended Family,   

 

Jim,

 

Happy to have brought a smile to you yesterday. Days can be long and trying at times, so a laugh is welcomed. I have hesitated for weeks to write this but I am not in sync, so here I go.

 

The action in the 'Crimex' this week was not unexpected. The political demands and possible (a hair's breathe from) commercial signal failure, meant the paper gold printing machines would be pushed to emptied toner cartridges. As said, not unexpected. Temporary but not unexpected.

 

My head scratching comes from the question, where does the 'physical' metal come from to satisfy the growing buy stops hit as price comes down? And to piggy back on this question, do foreign entities, Central Banks , and investors 'take' delivery; in other words, leave the Bullion System with the metal? Or does it sit in their care? (lol)

 

Realizing they are 'Bullion Banks', could you step through how they receive their physical metal from miners/refiners and the mechanism used to arrive at that price (I am familiar and understand the 'FIX'). But it appears that the industry 'allows' these banks to paper push the price paid around based solely on the Bank's own contract positions.

 

This is where I scratch my head , WHY??? The miners hold the commodity and are at the mercy of the Bullion Banks for their very survival, as it appears to me . Where am I wrong?

 

CIGA Earl

 

Dear Earl,

 

Many are asking themselves the same question. 

 

In order to explain to you the proper answer to this question I need to ask you a question. What is the "Strong Dollar Policy" of the US Treasury? The answer is it is a policy of support of the dollar at key technical points so that the dollar will decline in an orderly fashion. This has been in place since the dollar was trading in the mid one hundred and twenty-five area on the USDX. In comparison the "Weak Gold Policy" has been in place since $248 which means gold's appreciation will not be an insult to the dollar by spiking to $3500 and beyond, but rather rise in an orderly fashion. How could you not have noticed this in both the dollar and gold? This opens the bonanza to the metals dealer to run what looks like a huge short but rather to operate their business where I was pleased to make one half a dollar unwinding the spread (a long position versus a short position offsetting between my buying product from the producer versus Comex short).

 

Today the metals dealer want to make fifty dollars, not 50 cents on that spread.

 

I owned a metals dealer here and in London. I made a cash market for gold. I know about what I speak. There might be outside of the gold banks less than five people who understand the big short that is always being screamed about by the so called gold experts, and COT is a crock. You are looking at least seventy-five percent at a managed spread position. What happened at $1800 then at $1775 and again at $1750 was the long side of the spread was dropped, leaving the short side exploded and the gold banks pounding the market to make a 50% profit by putting back on the long side of the spreads, locking the huge physical long versus the Comex short into a no risk position that reads on COT like the greatest short in human history. The same is true of silver. In this financially debased world, with the rules of a metal dealer's company and a little help for standard financial fraud and you will never find this in the COT numbers.

 

I am telling you the truth. I am telling you how a metals dealer works. I know because I was successful in the entire 1970s gold bull market play against this game.

 

Here comes the "Golden Truth." When the gold banks perceive that the gold market is about to go ballistic, just like any bull market does, they need only reverse the strategy in place from $248 called "The Weak Gold Policy" in how they handle the 75% risk-less spread. Now when gold falls you takes off the short aside of the spread with gusto and let the long run. The biggest money I ever made was when my very interesting partner and I went into the Sinclair Global Arbitrage Company and asked them how many ounces of gold and silver they had in a spread position. When they told us the huge number over 15,000 contracts spread we told them follow our instruction. Take every short off the spread making us naked long. This was when the gold price broke $400 the second time over, running like a bunny to $887.75.

 

You must note how central banks are either buying or protecting their gold reserve positions now. This is total about face two years ago. There is another change coming which is a replacement monetary system and the need for some asset on central bank's balance sheets to have positive value, especially in the USA. Soon all that is required is a change in spread management by the gold banks and you will have whatever price the gold banks want from $3,500 to $12,400.

 

All the COT numbers are nonsense and a means of operating the markets. COT experts give buy and sell signals which help the physical metals dealers profit on their spread trading. The COT experts help this spread trading looking for immense profit to profit immensely. Nonsense makes markets so the COT analyst looks like a genius while really interpreting nonsense when he/she is being duped into a tool to help the metals dealers spread position profit.

 

I have told you 1000 times that the greatest profit over the shortest period of time will be made by the gold bank physical dealers.

 

Because I know.
Because it requires only a shift in spread trading tactic handling of the spreads. 
Because it is simple.
Because in truth the gold banks are simple.
Because I did not get named "Mr. Gold" in the seventies because I wrote on gold.
Because in the 70s I ran the gold market and the gold price by attacking the dealer's spread position which no one has done so far in this market.
Because attacking a spread position is simple. You simple run the opposite spread tactics with major balls and major PR.
Because I like keeping it simple.
Because the proof on this is that the gold banks got pissed. Both I and my partner were brought before the board of directors of the exchange under the accusation that we two running huge spreads between us, thereby manipulating the world's gold markets.

 

Wake up experts, you have been had and your comments to the community are helping make sure they are had. You are tools of the gold banks and do not even know it. Your sage comments when I hear them from readers makes me sick because it is ignorant of the business.

 

Now I know this is going to cost me big, but you must understand what I am teaching you above. If you do not understand ask me the questions but no tomes please, all in at least 24 font, no other "expert" articles please. Just write me on what you are stuck on and I will try to clear your understanding of what you own or trade.

 

Please do not argue with me because you will only be demonstrating your ignorance, not your knowledge.

 

If you are convinced the decorated professor is a turkey, guess who really is the turkey.

 

Respectfully,
Jim


 

 


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