With the move down in the gold market today, King World News interviewed the legendary Jim Sinclair to get his thoughts on where things stand. Many investors are badly shaken by a day like today, but Jim and I spent large chunks of our conversation laughing today as we swapped market war stories. Here is what was left that was suitable for print from that interview…
We had a big drop in sentiment in gold today. What’s funny Jim is that the sentiment today is the same as it was $400 or $500 dollars ago. You have investors and traders in gold that are still very afraid, and at the slightest hiccup in the market their fear escalates. Because of that would you say we have a little more work to do on the downside in gold?
“Yeah, whenever you make a technical hit in a technical world, you’ve created a weakness that needs to be gone through. So yes, the market breaking $40, it’s got to become a show me market before the bull takes off again. The bubble callers are celebrating a very brief period of false victory.”
What would your father Bert Seligman or his business partner Jesse Livermore do on a day like today?
“Bert or Jesse would never buy into today’s bust. They would wait for the selling to decelerate before they would in their speculative positions take a long. They might cover a short, but they would never buy into it long. However, they perceived it as merchants, not using charts. If the trader is not a merchant, the best that they will do over time is break even.”
“Bert and Jesse were market sensitives defined as true merchants, who knew when something was cheap and when it was expensive, who knew the end before the beginning. And that’s what a true trader is. When I say market sensitive, I mean predictors of the market ahead of time.”
“Those two (Bert & Jesse) are the greatest traders of all history. No charts, no Wall Street Journal, they were true merchants who, as I said, knew by feel when something was expensive and when it was cheap. They were predictors of the market, and if you are not that then you will get eaten up by the market.”
For the King World News readers globally who don’t have the market prowess of a Bert Seligman or Jesse Livermore, what should they be focused on here?
“People should just understand what they are in and why they are in it.”
“A two trillion dollar mountain of crap called securitized debt, and over the counter derivatives just rolled over today. The Federal Reserve is in this demand letter which means the Fed itself is litigating via a demand letter. No over the counter derivative can stand the light of day in a courtroom. Because of that, a demand letter in this situation is extremely powerful. And if you understand that, you understanding why you are in gold and why it is headed to $1,650 and beyond.”
It is very healthy to see fear encompassing the gold market at this time. This is normal and will intensify on any further weakness. If we were not seeing that fear it would be a cause for concern. Large accumulators such as the Chinese don’t want the price to run away here, neither do the commercials which are heavily short. When the selling shows deceleration, do what Jesse and Bert would if they were trading today, buy gold. Just make sure to buy physical gold and leave the trading to the professionals.