Skip to content
HTML5 Incompatible Browser
Gold Banner

Why should people put wealth in gold coins right now?

*JSMineSet, by Jim Sinclair, October 28, 2007

“For your information, gold above $782 by 3% means $882 – $889 and then on to $1050.

It does not matter if it is next week or next month. It is coming as the price of gold makes its way to $1650. I have no doubt that $1650 will come. My concern is not that it will not happen, but that I am much too conservative in my long-term price objective since 2000.

Last week’s story is becoming too common to ignore. Keep in mind that all this damage has occurred because of a small part of the gigantic mountain of over the counter derivative paper, which if official figures are correct is only 5% of the total. What do you think the financial landscape would look like if 1/3 of the OTC derivative mountain were to melt? It will.

If major international investment banks can be torn apart how can we have faith in the small local institutions that hold most of your ready cash? How about all those retirement plans that prevent you from securing ownership without the need to pay a penalty tax?

When I said “This is IT,” it is not something that I take lightly. Never in 49 years in finance have I seen a set of circumstances so challenging to the man in the street.

If there is a severe financial challenge to the man in the street, there is possible decimation on the top. Decimation may well be too conservative a statement because that means one out of ten. Right now it looks like 80% of major names have problems from their principle position in the issuance of over the counter derivatives. It should not be a shock because the financial capacity to perform on these instruments depends on the balance sheet of the loser in the transaction. Add to that no clearinghouse financial structure and performance is not improbable but impossible in a crunch.

What I am getting at is a simple question. Are you prepared?

You would be amazed how little space $1,000,000 in gold coins takes up. $100,000 looks like a small loaf of bread. Now you can see the actual transformation from the US dollar to gold as a currency of choice. It has happened.”

*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.