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When will gold take its next leap forward?

*Jim Sinclair's MineSet, by James Sinclair, January 25, 2006

“Gold has a strong magnet pulling on it from above $600. The move seems to me to be here and now. The box formation that I outlined to you yesterday as the tightening of the supply/demand forces between the Titans broke out to the upside today. $575 – $580 and then to a shoot out at $600 appears to me to be directly in front of us.

The US dollar is the common share of the US Inc and the clouds are darkening on the horizon. Both the fundamentals and the technicals are now weak so a bullish case for the US dollar, short of a major terrorist attack on Europe, is weak at best.

You need to keep in mind that there is a simple equation out there. This equation is a roll over a US economic recovery = a significant drop of a much greater percentage in tax receipts = a huge move up in the US Federal Budget deficit. At the same time a larger US
Trade deficit balance will impact along with the US Federal Budget deficit, the deficit in the US Current Account. All of this, when recognized, will result in the US dollar going to new lows below the low at which the counter trend bear market rally where the US dollar started, .8050 on the USDX.

Today a large US Treasury auction for 2 year treasuries fell flat on its rear end leaving the underwriting US brokerage firms the buyers of the US Treasuries. A 2 year auction failing is a terrible embarrassment to it issuer, the US Treasury, and therefore the U.S. dollar. It will not be long before the school of differential interest rates valuing currency falls on its rear end.

*This information is solely a highlight of the opinion of a third-party publication and is incomplete.  Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.