For those of you who are mathematical out there I thought this was an interesting Post by Jim Sinclair from Jim's Mineset.
Jim Sinclair is a precious metals and commodities specialist. In January 2003, Mr. Sinclair launched, "Jim Sinclairs MineSet," which now hosts his gold commentary and is intended as a free service to the gold community
Gold’s Role During Periods Of Monetary Stress
Gold's job is, and will always attempt to during periods of monetary stress, balance the INTERNATIONAL Balance Sheet of the USA.
Putting the Numbers Into The Equation:
$3,125,000,000,000 / 260,272,000 ounces of gold = $12,006.67 per ounce of gold.
In the early 70s I put an advertisement in Barrons predicting gold would rise to $900. When it got near that level, I left for 21 years.
I reappeared officially when Forbes published an article on my career December 10th of 2001. Click here to view the Forbes article...
The mathematics behind the $900 number came from the following equation plus reasonable trend estimates on the number going into the future.
You will note the number today fits in nicely with Alf's high levels.
- Major ONE up from $256 to $1,015 (actually 4 times the $255 low);
- Major TWO down from $1015 to $699, say $700 (a decline of 31%);
- Major THREE up from $700 to $3,500 (a Fibonacci 5 times the $500 low);
- Major FOUR down from $3,500 to $2,500 (a 29% decline);
- Major FIVE up from $2,500 to $10,000 (also a 4 fold increase, same as ONE)
I did not wish to yell "fire in the theatre."
It certainly make the Comex manipulators, who could easily be stopped, look long-term silly today.
See the following two links as support:
In the past, I believe you have said that the price of gold could reach a level whereby in dollar terms this equation will hold:
Oz's of Gold Held by US x $ Price of Gold = External Debt
From the above links we find:
Federal Debt held by Foreign Investors = $3,125,000,000,000 (as of 12/31/08)
Official US Gold holdings = 8,133.5 tonnes (or 260,272,000 oz's)
Putting the Numbers into the equation:
$3,125,000,000,000 / 260,272,000 = $12,006.67 per ounce of gold
My question is - what is the mechanism or thought process that makes the equation true?
(I guess that I am looking for the why?)
Thank you for your time.
CIGA Rich Gold