Today legendary trader Jim Sinclair told
King World News that all hell is breaking loose after the Cyprus
catastrophe. Sinclair, who’s father was business partners with another
legendary trader, Jesse Livermore, had this to say in this extraordinary
and exclusive KWN interview:
Eric King: “Jim, your
comments over the weekend on King World News regarding the Cyprus
disaster have electrified the world. But it also seems to have
frightened a great many people.”
Sinclair: “Well, it should have
frightened many of the players involved, and served as a wake-up call.
There was a great miscalculation made with regards to Cyprus, and the
situation has quickly turned into a catastrophe. There was no real
understanding of the entities that were behind the Russian corporations
which have money in Cyprus, and the effect of what is in reality the
confiscation of Russian ex-KGB money.
The people at the IMF,
which have spearheaded this disaster, never expected the ‘Cyprus
Solution’ to blow up in their face the way it has....
“This has
quickly turned into a PR nightmare because it is not a ‘tax,’ but
instead a ‘confiscation.’ They have stolen KGB money in order to meet
the liabilities of the banks. Up to this point, bank depositors have
been held whole in this most serious Western, and by consequence
international financial meltdown.
Up to now the psychology has
been that if you have money in the bank you really don’t have to worry
too much. This represents a complete change in the strategy that has
existed up to the present time, which has been crucial in holding
together the financial world after the meltdown of the over-the-counter
derivative has done so much damage.”
Eric King: “The aftermath of this debacle and some of the chess moves that are going on here, your thoughts?”
Sinclair: “Taking Russian money is very foolish. You have to understand
the culture of the people you are dealing with. The government leaders
in Cyprus have no ability to protect themselves from the retribution of
the former Russian KGB agents, including Putin himself.
The
government leaders in Cyprus are trying to back-pedal right now in order
to save their lives. Let me say it again, they are trying to save their
own lives. Remember, ‘revenge is best served cold.’ This means the
revenge never comes at the moment of the miscreant act. But it will come
in time.
To take money from the leading economic entities in
Russia, is to take money from the former KGB officers, and taking money
from them is extremely dangerous. I think the reality has quickly set in
for the leaders of Cyprus that they have aided in the confiscation of
the most serious and dangerous money you could possibly touch. It has
these leaders more afraid for their lives than their bank accounts.
I would also add that this was the biggest mistake made by the IMF and
the ECB in their history. Every time you do business with a Russian
company, you do business with a bank in Cyprus. Money goes in, it goes
out, but it all funnels through Cyprus.
Coming down on Cyprus as
a test case for the new ‘Bail-In’ rather than ‘Bailout,’ the
utilization of the depositors money to pay for the losses, could very
well derail the entire efforts so far to maintain the appearance of
solvency in the West.
Trillions upon trillions of dollars have
been put into the system in order to maintain this appearance of
solvency, and so this Cyprus miscalculation is extremely serious. This
was a ‘test case’ and the IMF firmly believed the ‘Cyprus Solution’
wouldn’t mean anything.
The real catastrophe here was the
misidentification of the capital present in the banks, which, in fact,
turns out to be KGB money they are confiscating. And as I said earlier,
taking money from them is extremely dangerous.”
Eric King: “As
you predicted over the weekend, gold has pierced the $1,600 level on the
upside, and it looks as though the physical buyers, the central banks
and others, have begun to raise their bids and pressure the shorts.”
Sinclair: “The thesis upon which the hedge funds have gone short of
gold has now been destroyed. This is the birth of a transition of the
gold market to a cash market. The paper markets will now be moving
towards becoming cash markets. It is the birth of an entire new era of
trading in what, up until now, has been a paper dominated market for
gold when it comes to setting price.
Ultimately, this will mean
the end of the manipulation of the gold market because it will become
100% cash. Paper, in gold, is about to exit as a business as the
physical market retakes its rightful position once again, and the
physical market makes the market price in gold.
This will be the
beginning of a minimum $1,900 advance in gold. This will represent more
than a doubling of the current price of gold as all hell breaks loose,
and this Cyprus catastrophe has a ripple effect around the world.”
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