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Jim Sinclair on the Gold Bears

Written by Gary North on December 23, 2011

Jim Sinclair has been writing on gold for decades. He is a gold bull.  His latest article is important.

There is a certain extremely important market reality that must be kept in mind as you listen to all the bearish gold predictions.

What is good for the dollar is bad for gold.

This is wrong because it depend what dollar related factors are giving a positive dollar price action.

If the good for the dollar was strong US economic activity, sound balance sheets in the US financial industry and a US consumer ready and credit able to expand, the answer would be yes if these activities were for the long term

That strong dollar would not be good for gold.

However there is only one dollar positive out there. That is the largest currency market on the planet is the dollar vs. euro market in which the so called vigilantes (International Investment Banks) are shorting the euro to infinity. That downward pressure on the euro creates a mirror image of dollar strength but give that strength no greater legs than the euro problem posses.

What happens the third weeks post and euro settlement be that a changed euro or no euro.

There will be an end to the euro’s problems one way or another sometime sooner than later as that is the nature of failing euro hopes as today and fruitless euro financial programs as every proposal has been so far.

That process brings you closer to a crisis rather than further away. Even if there was a miracle that saved the euro at today’s price, the soap opera then ends.

Within three weeks from whatever date is the final act in the euro soap opera the US dollar will be the primary focus of the vigilantes via US dollar and long bonds.

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