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Pretend and Extend: The Reason Gold Will Reach $1650 And Beyond Posted: Dec 09 2009 By: Jim Sinclair Post Edited: December 9, 2009 at 5:24 pm
Filed under: General Editorial
Dear CIGAs,
In my opinion there are two reasons why gold will, without any reservation, trade at $1650 after which it will seek both Alf and Martin’s price objectives.
For those with ears to hear it was outlined this morning in an interview with the top man of Starwood Real Estate on, of all places, F-TV.
The first reason is that we do in fact we have a 90s type Resolution Trust, but it carries another name. This time the Resolution Trust is the Federal Deposit Insurance Corporation. When you examine the mode of operation and consider what they will be required to do over the next two years and on into the future at an increasing rate, there is no question this is correct.
The second fact is that the ENTIRE plan for financial recovery is to “PRETEND and EXTEND.”
Federal and State bank examiners are being extremely lenient in allowing real estate loans of all categories, from commercial to residential, to be carried on the books of the institutions at full value even if they are behind on payments and indebtedness to the institution is greater in size than the asset’s worth is in liquidation.
This is crystal clear when you examine the numbers that are public as the FDIC takes over the bankrupt institutions.
This defines the word “PRETEND.”
The word “EXTEND” refers to all the rescue programs that wholly depend on stimulus to work. The financial industry is worse than the walking wounded. It is the walking dead. Therefore applying the name “Zombies” to major corporations and financial institutions is appropriate.
We also know that the economy of the USA is bouncing along a bottom, but far from what would have been anticipated in light of the degree of stimulation initiated. There are definitive reasons for the lack of expected results but they are not germane to this review.
In conclusion you must know that whatever the cost in terms of continued and increased stimulation, all that is required to infinity will be provided. There will be no serious attempts to drain any liquidity. Interest rates will be held at practically zero for as long as it takes or even if the economic recovery fails.
That strength in the US dollar is at best transitory as it is totally contra-indicated for business recovery in the US.
Fundamentally, PRETEND and EXTEND will create an ever increasing supply of dollars and demand for borrowing, both of which stand as the last pillar in the erection of gold as a permanent building.
So to those that understand what gold is (insurance) these wild gyrations mean nothing whatsoever to the upward trend of the entity.
The outrageous moves about to occur are simply what gold is multiplied in orders of magnitude by the total madness of the hedge funds and their automated trading systems pushing hundreds of billions of dollars into and out of markets, churning them incessantly without any regard in the case of gold. Gold cannot handle funds that size.
If you cannot stand gold’s heat then you must leave the arena now. If you choose to leave the arena please do not come back because it is only going to get harder.
Truly Main Street is in the hands of a casino.
In a sense hold my hand as we go through these outrageous machinations, as the price that gold is going to is much higher than I have anticipated.