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QE to Infinity? Highly Unlikely.

Written by Gary North on July 18, 2013

On February 16, 2013, Jim Sinclair wrote this.

QE to Infinity, followed by Gold balancing the balance sheets of the sovereign balance sheet disasters. Just as there is no tool other than QE to feign financial solvency, there is no tool to balance the balance sheet of the offending entities other than Gold. It is just that simple.Gold will trade at $3500 and higher. Your complaint then will be that I was much too conservative in my price objective. The saying used to be “As goes Motors, so goes the USA,” which in their bankruptcy did prove true.

For 10 years, Jim Sinclair predicted that gold would go to $1650. It was a gutsy prediction, and it came true. Then it went to $1750. Then it went $1850. Then it went over $1900. Then gold started to fall in October of 2011. On July 4, 2012, he wrote:

Gold will go to and above $3500. This is the most important message I have sent you since 2001.There are very few of us dynamic thinkers that see everything as a trend constantly in motion. Anyone can be a static thinker, quoting recent economic figures or news headline (MSM), and coming up with a usually wrong opinion.

The change today is that the “Rig Is Up.”

The Bank of England turning their backs on Barclays, the company who did their bidding, will be the event in time marking the trend change.

Many of us in our areas of activity will successfully fight the Riggers. The many complaints that so many of you kindly sent in to fight manipulation released the Kraken in me.

The Kraken is back in its cage where it belongs. The paper trail is there. The worm has turned. Even more importantly is that this fight in the $1540 gold price area was not for regaining the old high in gold. The six attempts to kill gold, supported by some gold writers looking for favors from the riggers was a now failed attempt to keep gold from trading above $3500.

The battle to stop gold has been lost.

The start, like all starts towards the old high and well above, should be slow with more unfolding drama. It will build on itself but gold will trade at and above $3500. I am now as certain of this as I was over ten years ago when I told you gold was headed for $1650. I knew that as fact and to me from $248 gold was trading at $1650.

My job now is to define gold’s full valuation for you when it occurs. The timing is no less than one year from now to a maximum of three years from now. I believe I will be able to do that for you.

On July 3, 2012, gold was at $1617.50. On July 3, 2013, it was at $1250.

I have no objection to a forecast that gold will go to $3500. It might go to $4500. But if the Federal Reserve ever stops inflating, and continues in this position, gold could go to $500. It could go to $200.

If the Federal Reserve ever stops inflating, which means that it stops buying all government debt forever, and does not buy any other asset, the world will have a depression comparable to what we had in the 1930s. The entire modern economy rests on the assumption that the Federal Reserve will continue to inflate. This is taught by the Austrian theory of the business cycle. I have written on this: Chapter 4 of Mises on Money.

Sinclair believes that the Federal Reserve will continue to inflate. He believes in QE to infinity. In other words, he believes that the dollar will fall to zero value. He believes that the dollar will become comparable to the currency of Zimbabwe in 2008. I do not.

(For the rest of my article, click the link.)

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3 thoughts on “QE to Infinity? Highly Unlikely.

  1. Texas Chris says:

    Dr. North is right, central bankers will not destroy their currency with hyperinflation, because this act is irrational and self-defeating. And in his full article he admits that the choice is not theirs. That choice belongs to congress.

    Congress is ignorant enough, and selfish enough by a mile, to destroy the FRN regardless of rationality or self preservation. And thank God for that fact.

  2. There are many ugly things hidden from view, including vast amounts of U.S. bonds printed in the '30s exchanged for Chinese gold. The number of claims on our sold-long-ago 8,300 tons of gold is mind-boggling. Those ugly things will come to light as early as this fall and winter. My money is on Jim Sinclair.

  3. I don't know–to date the current crop of central bankers have not demonstrated any willingness to discontinue the current policy of purchasing government securities and currency creation. It may be that, for the sake of their own employees' salaries, they will do so. This implies, of course, that the central bank is the real sovereign and that it is completely independent of the US government and superior to it. I question that. It presupposes that the central bankers will come under no pressure from either the government or the public for their self-preserving actions, or that if they do, they can safely ignore it or otherwise obfuscate so that government and public are going after other targets while they make good their escape. I don't know. Maybe. Maybe they'll get off scot-free (in this life, anyway) for their actions of–well, really, the past 300 years. I'm doubtful.