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Wednesday, June 08, 2005

James Sinclair Gold Interview in New York Times

On June 5, the New York Times published an interview with James Sinclair of jsmineset.com titled:

"Believing (and Believing and Believing) in Bullion" by Stephan Metcalf

James says "some of the main players in the gold market including myself. I have taken the liberty of excerpting the section about me for the Gold Community and I am also including a link so you can read the story in its entirety."

We have posted that excerpt here for Gold Price News readers, you can read the full article at the New York Times here.


Mr. James Sinclair of jsmineset.com

Among the most famous gold speculators, Sinclair proclaimed in the 70's that gold, then at $150 a troy ounce, would hit $900. (It eventually peaked at $887.50; he sold his position the following day, for a profit of more than $15 million.) Then, with some analysts predicting that gold could go as high as $2,000, he declared the gold bull market dead. (Within months, he was proved right.) In 2001, with gold near its bear-market lows, Sinclair told Forbes magazine that it could hit $430. On the day I met him, gold was trading at $434.

Sinclair remains a star attraction at gold conferences around the world, but in the 1980's he sold his brokerage firm and took his wife and two of his daughters to the foothills of the Berkshires, where he lives on a 40-acre equestrian compound featuring its own 9,000-gallon water system, its own electrical system and a shooting range. (''I like to cut a target every now and again,'' he told me. ''Get out my aggressions.'')

Sinclair's private office sports the typical C.E.O. blandishments -- a massive mahogany desk, a wall-mounted flat-panel computer monitor -- but also a profusion of religious items. Incense always burns, and a temple gong sits in the corner, along with a prominently displayed statue of Ganesh. Behind the desk there is a full-color portrait of Bhagavan Sri Sathya Baba, whom Sinclair visits frequently in India. ''I am an enquiring soul,'' he replied, when I asked if he was Hindu. ''All the great minds have wandered the Indus Valley.''

Perhaps because he has found spiritual satisfaction elsewhere, Sinclair regards gold with dispassion. ''Gold is not to be loved or hated, accepted or refused,'' he said. ''Gold is not barbaric or angelic. It fixes nothing in itself. But it is a mirror.''

Sinclair sees the health of the dollar reflected in the price of gold, and the health of the dollar is now in foreign hands. ''We're not talking about what I want, but about what is,'' he told me, as he picked through a tuna salad. ''If we go over $529, that is not good news,'' he said, referring to the price of gold. ''Anyone cheering for a high price of gold should get on Prozac.''

Sinclair says that when the dollar acts successfully as the world's currency, gold naturally returns to its status as a mere commodity. In the parlance, it demonetizes -- it loses out to the dollar as the world's reserve currency. But a mismanaged dollar, he said, could cause gold to remonetize. Our world would look very different then.

''The first sign is the foreign banks will diversify out of dollars. Then they will cease buying dollars. And then they will sell them.'' What could happen then? ''Stagflation. . . . Expansion of U.S. federal deficit. Expenses rise and incomes drop.'' Are we talking apocalypse? ''The most likely crisis is the collapse in the common stock of the operating entity. In this case, the operating entity is the United States, and the common stock is its currency.''

We had made our way up a hill, to Sinclair's koi pond and its accompanying meditation gazebo. As if on cue, what appeared to be a military airplane flew across the sky. ''That's carrying Iraqi supplies,'' Sinclair told me. ''We have war and monetary easing at the same time,'' he said, shaking his head. ''Everything has its season. That includes gold. Do I have a bet on gold? You know I do. Will I one day unravel that bet? You know I will.''

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