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Why did Sinclair predict gold would break above its $645 high?

*Jim Sinclair's MineSet, by James Sinclair, April 27, 2006

“The threat to the dollar is a hammer being swung by Russia over any US reaction to the Iranian nuclear situation. If the US and GB stand down from the pressure this will put Iran in a position that even they had only dreamed of.

The dollar has real problems well beyond Professors Ben’s questionable performance today. If the dollar heads for the first price objective shown this evening on the charts, gold will take out the high at $645 and run for $682, surprising even me with its power at this point.

Read the following please in full and think deeply about it. ”

The Threat to a Fistful of Petrodollars
By Liam Halligan, Economics Correspondent at Channel 4 News

“From Russia, you might say, with love. This weekend, Alexei Kudrin, Russia’s finance minister, dropped a bombshell in Washington.

Attending the annual meetings of the World Bank and International Monetary Fund, Kudrin caused his American hosts discomfort by openly questioning the dollar’s pre-eminence as the world’s “absolute” reserve currency.

The greenback’s recent volatility and the yawning US trade deficit, “are definitely causing concern with regard to its reserve currency status,” he said. “The international community can hardly be satisfied with this instability.”

Kudrin’s intervention coincided with another meeting, also in Washington, of finance ministers and central bankers from the Group of Seven – which doesn’t include Russia.

Top of the agenda: the effect of ever-rising oil prices on inflation and interest rates.

G7 countries are worried the spiraling price of crude – which closed at $72.79 a barrel on Friday and which has now trebled in three years – could inflict real economic damage. The US Federal Reserve, in particular, has been forced to take drastic action – raising interest rates 15 times since June 2004 to keep inflation in check.

Given that fragility, it is significant that Kudrin is now wondering aloud if the long-standing dollar hegemony can last. For him to do so is to highlight that America is vulnerable should that status be lost. That’s because Russia, with its awesome oil and gas reserves, could kick-start a challenge to the dollar’s supremacy.

Most nations stockpile their foreign exchange holdings in dollars. The US currency accounts for more than two thirds of all central bank reserves worldwide.

This reserve status means that the dollar is constantly in demand, whatever the underlying strength of the US economy.

And now, with massive trade and budget deficits to finance, America is increasingly reliant on that status. The unprecedented weight of US liabilities means a threat to the dollar’s dominance could result in a currency collapse, plunging the world’s largest economy into recession.”


*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.

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