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BookmarkToday Jim Sinclair spoke with King World News about what he believes will create the “Mother of all financial crises.” He also discussed the coming collapse and the desperate government intervention taking place in key markets. Below is what Sinclair, who was once called on by former Fed Chairman Paul Volcker to assist during a Wall Street crisis, had to say.
Sinclair: “The Plunge Protection Team (PPT) is not a speculation. There is a group of advisors to the White House which deals with markets. They also gather when markets are in extreme conditions. So to be clear, there is an organization which is designed to intervene in the markets.
The problem now is they are manipulating every market on the planet. So you had this group which was created to stabilize during extreme conditions that has now decided their job is to run all of the markets of the world….
“Part of what these new masters of the markets do is control the price of key commodities such as oil and gold. When oil rises it indicates inflation. As gold rises it casts doubt over the dollar. So as I have mentioned previously, on the opposite side of the PPT, you have to have the RPT or Rally Protection Team.
What has been happening in the gold market since the Cyprus disaster is a depreciation of the price of gold that has no fundamental rationale to it whatsoever. The idea that you can take depositors’ money is a complete reversal of the strategy which has been in place since 2008.
But right now the government is manipulating so many markets it’s hard to understand how they can keep it all straight. Almost every major market in the world is being controlled in one way or another by one government group or another. It’s like a dam that’s about to fall apart and there are 1,000 fingers in every possible hole.
It will be like magic if in fact this type of strategy can be successfully employed for any significant length of time. You also have to bear in mind that all of these manipulations result in net positions. If there is selling in the paper markets by eight agents acting on behalf of the US government, who are in there to protect the dollar, when they sell something such as gold they create a position.
Even though these positions are not properly reported to the public, they do pile up. They do create a crowded corner in a market and interfere with a free market and its activity. So the idea that governments can do anything they please to fails to take into consideration that in suppressing the price of gold, positions are in fact taken.
People also have to keep in mind that a market which would only go to one side would be a market that would cease creating price in any kind of orderly manner. I believe we are now at a point where the tape and physical market in gold are now working directly against the government positions and the market is ready for a turn.
My opinion remains unchanged about what the gold market is going to do. I may have been off by a few days, but everything I see here indicates the depreciation in the price of gold has run its course, and will be proven to have run its course this week as the physical market is calling the government’s bluff.”
Eric King: “What were your thoughts on what Dr. Paul Craig Roberts had to say on KWN?”
Sinclair: “Dr. Roberts said something that most people didn’t really understand in his KWN interview. He was speaking about the limitations of QE. We believe in QE to infinity, but Dr. Roberts clearly pointed out that infinity would be a period of time in which the dollar would begin to reflect the enormous creation of dollars and subsequently weaken.
So in a sense, yes, QE is limited by the ability of the US dollar to have a firm appearance. Right now the dollar is free and clear, but under .79 it comes into question, and under .72 on the USDX it’s (QE is) impossible. That would mean the crisis was at hand if the dollar broke under .72 and QE couldn’t continue.
The situation would then feed on itself and we would see a significantly lower dollar with a contracting economic environment that would create the Mother of all financial crises.”
Eric King: “Dr. Roberts also mentioned that Bernanke wants to pass the torch to the next guy before the collapse happens.”
Sinclair: “It may not be the next guy, it may be the next gal (Yellen). The general thesis of can-kicking is when the can can’t be kicked any more, you are not there. During the crisis in Cyprus, in answer to questions, the Chairman (Bernanke) did open up the door to a strong possibility he might not choose to remain as Chairman of the Fed.
That is a significant consideration because I don’t think the Chairman, who is really the ‘bagman’ of the previous Chairman (Greenspan), really wants to be there when the collapse is in full swing. This is especially true if Cyprus is an attempt to create a change in how Chairman Bernanke had in fact planned the bailouts.
So if Cyprus is used to take depositors’ money, that’s a key change. If this is in fact the new strategy, then in a very short period of time you are going to see that all of the money put into the financial system from 2008 forward has been wasted. The Chairman’s effective resignation, by failing to stand for reappointment, would indicate he sees all of his efforts have been destroyed by the IMF’s ‘Cyprus Solution,’ and this will be a key signal that the end is at hand.”
