Wednesday, 15 February 2012

Leverage Gold through Miners - Not Comex Gold Contracts - Jim Sinclair

Today I reference a clear series of posts by Jim Sinclair revisiting certain themes he has led me to recognise in the fundamentals of the gold bull market on the "Why Gold" page on this blog.

Jim Sinclair's recent restatements of his views on gold going forwards are
1) Here
2) Here
3) Especially Here regarding gold and the monetary system.

The key message for me is that Sinclair, "Mr Gold" of the 70's bull is not using Comex contracts for leverage this time but miners. I quote.

In conclusion, gold will not fall significantly in value after finding its full valuation as a standard. It will mutate into a currency form the same way German real estate gave the Rentenmark its value when Germany did not own all that much real estate.
The producing gold companies will now return to what they were in the 1940s and 1950s, the utility sector of the equity market as the best and certain yielders.
This is why I do what I do every day. Rather than in the 70s when I carried 22,000 long Comex gold contracts, I am building an entity to carry as many ounces of mineable gold as I possibly can assemble to become a utility equity of the future via outright ownership and royalty. That is done through TRX on the NYSE and TNX on the senior Toronto Stock Exchange.
The more I think about this I should explore the royalty model.
Potentially this overcomes risks from tax impositions yet to be made on the miners.

My post from the Cara Site -The Cara site Posting is linked here

Leverage from Miners not Comex Gold Contracts

As some of you may know I'm fairly new here, with a couple of posts discussing the gold miners and explorers.
I recently started a blog focused on junior gold miners and wrote up a page "Why Gold" to pin myself down to think about some of the reasons I am trying to ride the gold bull and remind myself what I need to do to recognise when we see over-valuation, this page is:
For some of you this will strike me out as a tin foil hat gold-bug but I realised one of the key influences on my thinking has been Jim Sinclair.
When I first started reading him in 2006/7 and was new to exploring the subjects which developed into the financial crisis and monetary change I found his tone very insistent and "shrill" and was rather sceptical of his bold statements and in truth a little dismissive.
As time has gone by more and more of what he has written and offered freely with enormous energy to his readers at JS Mineset seems to me to have shown enormous insight and foresight. Jim, along with Bill here, has been a clear voice above the noise which Bill describes in his post today; when push comes to shove central banks will print, it comes in waves, it's disguised, it's renamed but printing it is. Is this a consensus view? In informed circles perhaps. The general investor let alone the population at large does not recognise the erosion of capital by devaluation and negative real yields. If they can push up house prices and the Dow by 10% who will know where it came from, who will see devaluation if currencies fall together? What will they fall against? I can only believe against gold, as Bernanke saw in the depression revaluation.
Sinclair stopped giving short or intermediate "trading" signals so I guess many traders here could well dismiss him as a "permabull" and certainly "being early" in 2011 was being wrong in the miners.
Over the past couple of days he has written 3 articles which revisit the key themes I had hunted around the web to recall and link on my blog.
I like the word serendipity.
His recent articles re-explore his views of the re-introduction of gold as a reference point in the monetary system, not a gold standard.
His most recent article today also makes explicit his rejection of trading gold through leveraged Comex contracts as he did with legendary success in the 70's bull.
This time he is looking to obtain maximum leverage through the gold miners.
He sees these as "utilities of the future".
I assume it is in his nature to trade them, but he makes no statement in this regard and given ownership in TNX/TRE he may not easily trade?
For many years he loudly declared $1,650 gold by Janaury 2011.
He was very close.
Now he points loudly to Alf Field's "wave 3 of 3" to $4,500 and possibly up to $12,000.
I wasn't there at the beginning but I want to see the finish.
This is why I see enormous value in the junior companies like Lakeshore Gold discussed by Athan yesterday and McEwen Mining referenced by Les and many others here.
Equally there are serious companies led by good management trading for less than $50m with great potential to discover gold in the ground.
There are large deposits of low grade gold for <$200m to be dramatically revalued. There will be growth consolidators who will be the Goldcorps of the future.
I think we will look back in a few years and recognise the value we could have had now in the miners and explorers after 2011 scared so many away. Every bone and sinew screamed sell.
We may well be due a futher leg down as in 2008, but the reversal in 2009 was fast.
How many are sat waiting for $1400 on a 5th wave down now?
What do members think of Sinclair?
Are you riding or trading the gold bull?
How are you going to ride? Comex or miners?
With the ETF crowd or with Cara and Sinclair in the junior miners?
Which miners and explorers will maximise leverage to the gold price? 

No comments:

Post a Comment