Wednesday, November 11, 2009

Jim Sinclair Says the Dollar is Dead

In his article "Motivation Behind the Countdown," precious metals specialist Jim Sinclair (August 14, 2009) gives us his view of the US dollar's fate for November, 2009. The prediction isn't pretty.

The reason for Sinclair making this assumption is that China requested a financial summit with the US. These things are seldom requested. Sinclair states a couple things he sees happening.
  1. The US need China to continue buying US debt, meaning the US needs China to continue lending it money
  2. The Chinese want the US to support a "Super Sovereign Currency as an offset to dependence on the dollar for international settlements and national reserves" (Sinclair, 2009)
  3. "The Chinese rightly feel that the greatest risk to their present dollar position’s valuation is quantitative easing. Or simply put, the monetization of one’s own debt by the electronic creation of money for funding yourself"(Sinclair, 2009)
Sinclair goes on to state that the Management of Perspective Economics only works in a strong market, which ended in 2001. No finagling will help the dollar now that the US has so much debt. Nor can the US dollar survive if we support a "Super Currency," as Asia's holdings of the dollar are the only real support the dollar has.

Sinclair closes with the following:

"All of this could have been fixed prior to the event of Lehman declaring bankruptcy. Now there are no PRACTICAL SOLUTIONS....Pandora’s Box is open, only to be closed by markets as the downward spiral goes to its practical end, a return to commodity money."

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This has been a complete summary. To view the full article, click here.

Sinclair, Jim (August 14, 2009). The Motivation Behind the Countdown. Jim Clair's MineSet.

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