Sinclair - Stunning Shift In US Government & Fed Gold Policy

Today Jim Sinclair told King World News the world is about to witness a stunning shift in the US government and Fed gold policy.  This remarkable change in strategy will shock investors and professionals around the globe as the Fed’s policy of gold manipulation will undergo a radical transformation.  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.

Eric King:  “Jim, we will get to the West in just a minute, but what about China?  I have word from London that the Chinese are in there buying massive amounts of gold right now.  What is their perspective as you see it?”

Sinclair:  “The Chinese are known and respected for having a plan for everything.  In order to have a plan you have to have an analysis.  You can’t pick a plan out of nowhere.  In order to have analysis you’ve got to have facts.

So the Chinese have fully analyzed what the West is doing, which is in fact destroying itself, and they are taking appropriate offensive and defensive measures....  

“The Chinese have said publicly and chastised the West continually for their laxity in terms of how they created internal demand for goods and services.  Basically this has to do with how the West has used fiscal and monetary stimulation.  Now the Chinese currency is advancing in terms of respect and utilization.  But you have to remember that each time that advance by the yuan takes place, it takes place at the expense of the dollar.

The Chinese see exactly what’s going on.  The Chinese know exactly where all of this is going to go, and they know the role of gold is going to increase significantly in the physical market.  They also know that gold will eventually have a connection to the new financial system.  What I am saying is the Chinese have the answer.  

Every time we go through a significant reaction in gold, which is brought about by Western manipulation, we give a gift to the Chinese.  He who has the gold has the power.  And the West has basically, since Greenspan, taken everything that former Fed Chairman Volcker had won for the West, packaged it neatly and sent it to China.  

This is what the Chinese know.  This is what their plan is.  Their analysis is correct and the future is exactly as they expect it to be.  The US dollar will begin to significantly weaken primarily because of settlement utilization moving towards the Chinese and away from the West.  

Gold is no longer the enemy of the dollar.  It might in fact be what saves it.  Eric, I have been talking to you about the Western suppression of the price of gold, and while that may last for a little while longer, I suspect that time period has now in fact come to an end.

What you are going to see now, and what the gold community doesn’t understand, is that the Fed and the West are now going to encourage the price of gold to go higher.”

Eric King:  “Jim, as you know up to now the Chinese have been mercilessly taxing the West out of its own gold.  Meaning the price of manipulation for the West has been devastating in terms of the outflow of gold out of Western vaults.  The advantage to the West of manipulating gold higher would also be to stop the flow of gold out of Western vaults because the Chinese do not like to chase price.”

Sinclair:  “Regardless of whatever opinions may be publicly given from Federal Reserve Governors, the Chairman, or from the US Treasury, there certainly is a very strong understanding of the history of gold and how important it is to any country, especially in times of stress.  \

It is very possible, and in my opinion probable, that the importance of gold is now being recognized at very high levels.  And from this point forward, it is my strong belief that the Federal Reserve will be more friendly, rather than the enemy of gold, and the price in the market will show you that I’m correct.

An increase in the price of gold, aided by the Fed and the West, would definitely be to stop the further draining of gold out of Western central bank vaults.  China will then compensate by increasing their mining activities around the world as well as inside China itself. 

The reality is that gold has never been the enemy of the dollar anywhere else but in the minds of the Fed.  Now they will finally come to view gold and the advancing gold price as their friend.  This is the major shift which is taking place.

What people expected to occur in 1979 has now occurred in orders of magnitude greater than almost anyone believed possible, and in this ongoing and rolling financial crisis the US is not going to allow a total drain of its gold reserves.  What people around the world need to understand is that the US government and the Federal Reserve will continue their active manipulation of gold, only this time it will be to the upside.”