Author: Jim Sinclair
Dear Friends:
What definitions and explanations can be derived from the gold and Euro action last week? Here they are:
1. The intervention without any doubt has established that gold is a currency. Because the Euro will trade at $2 or more before this drama has finally ended, gold is guaranteed to follow - probably in multiples of the Euro?s action.
2. In hindsight, intervention started when the Euro was at $1.5975. This reveals the point above which no intervention can have any appreciable impact. That level is $1.6025 three times for 24 hours in a row.
3. Paulson?s desire not to remain Secretary of the Treasury says that any plan currently in place will play out in 161 days at the most. That does not say that current markets have a 161 life but rather that everything between now and day 161 is short term, camouflage, spin and inherently weak from a market perspective. Paulson's decision not to remain in this most prestigious financial position speaks to the degree of danger that the psychologist-packed Plunge Protection Team (PPT) has worked so diligently to keep mass perception from being focused upon.
Summary:
Everything remains the same but the fear factor has increased. What's happening in the stock market at the moment is no more than another bear market rally in which the purchase of index puts on the Rhino (when the market appreciation resembles a Rhino horn) makes sense.
Gold will rise to $1,200 possibly 90 days later than anticipated. Gold will trade at $1,650 or more before the second week of January 2011. The US dollar will trade at .62 USDX and after great efforts to stop the decline trade at .52 USDX. Black Boxes are primarily momentum driven so keep an eye on that fact in terms of the US dollar versus the Euro.
