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 Mr. Sinclair,
I sincerely hope that this doesn’t turn into a lasting feud. Nevertheless, I am not about to back down. Rather, my brand of ‘community service’ is to warn investors about some of the dangers in the marketplace. In other words, warn investors about you.
Yes, we both agree that gold should trade higher for legitimate reasons. However, only one of us knows/admits that they have absolutely no clue about what is going to happen in the FX market in the near term. That Warren Buffett is a billionaire investing against the dollar is relevant information. But alas, not even Buffett is sure when the dollar will tumble next. With this in mind, I ask the question: why is Jim Sinclair so sure?
The following comments are in response to your June 30 letter to me (which was in response to my June 30 commentary) . Please let me know if I have misquoted you.
Jim: “Gotta get it right, Brady. $410 by June, not $430.”
Brady: Here are the notes I had on file, which were extracted from your commentaries in April 2004.
“Gold is now trading at $396.60. Soon it will bolt to $409-$412 and start its military campaign to blast COT and $430.30 to smithereens…You know and I know that gold is going through 419.70 and 430.30 real soon. Maybe even in the lifetime of the June gold call strike $430.”
Was I wrong to conclude from these statements that you thought gold could reach $430 in June? Better yet, were these comments made by someone who can predict the movement of gold ‘to the penny’?
Jim: “Yes, I am going to get smaller and that somehow bothers you? “
Brady: No. What I questioned was the erroneous reasons you gave for wanting to get smaller.
Jim: “As far as being cracked, on that you could be right because anyone who spends 5 hours a day, seven days a week educating and commenting for free, sends gold coins to readers as an incentive to do their homework, not to mention the six figure cost of this operation which I personally pay, must be severely cracked.”
Brady: Your gift for hyperbole - while often times amusing - should nonetheless be cleared up now. Unless you are burning fiat to keep the furnace on you do not spend six figures running JSMineset. As for giving away gold, that is your choice. In short, stop whining about how giving you are: Charity isn’t charity if you talk about it.
Jim: “Brady, you probably weren't even around when the Hunt Brothers ran silver”
Brady: My Mother informs me that I was coping with a bladder problem at the time. Thus, as COMEX was running silver into the toilet I was running...you get it.
Jim: “You say that their [Hunts] play turned out badly but you fail to say why.”
Brady: Investors don’t need me to tell them why the Hunt brothers failed -- they have you! Beyond the obvious Jim – that the game was rigged to attack the Hunts – why else do you think they failed miserably at corning the market? Did it have anything to do with the fact that investing in something with money you do not have can be dangerous?
Jim: “Bunker and Herbert Hunt are both great men and real patriots who did all gold and silver investors a great service. So please be respectful of these men and do not speak about them in a pedantic manner.”
Brady: I am not sure where you are going on this one. For starters, I am not America. Next, my shinny silver bars are worth about 6 bucks an ounce today. I fail to see why someone that tried to corner the market 20 years ago did me a service. Would these great patriots have done me this service if they knew it would bust them?
Jim: “… you know or should know that all derivatives stand on a foundation of the underlying asset…In the case of gold, the size of the total derivative market versus the size of the cash gold market makes it the highest risk derivative of all. It is the largest amount of derivatives standing on the tiny, illiquid cash. That is simple fact, Sir.”
Brady: Actually Jim, if you had done your homework you would know that silver is riskier.
Jim: “Should the producers of gold at the insistence of their shareholders decide to stop taking a market price and move to making a market price they can do this easily by restricting their deliveries which will due to the mechanics of the gold market restrict the size of the derivative market by orders of magnitude. Paper gold is how your pals at COT raid gold.”
Brady: I am not sure why you are singing me this lullaby. Take a trip down memory lane. I have a half dozen others if you like.
Silver a Sell, Unless The Jig is Up
http://www.fallstreet.com/apr704.php
The Great Gold Conspiracy Has No End Game
http://www.fallstreet.com/jul0802/jul0802.htm
As for ‘my pals at the COT’…laugh -- I should be so lucky.
Jim: “It is not me that COT is after. It is the more than 300,000 readers of this page that might follow my technical reading that COT is after.”
Brady: Wrong! COT is after profits, period. For the love of god man, wake up! Your commentaries – which didn’t arrive on the scene until 2003 – have done absolutely nothing to impact the investment decisions of COT. To be sure, speculative long interest is lower today than it was in the pre-Sinclair web era. Couldn’t you convince any of these 300,000 individuals (?) to stay long with your cocksure predictions?
Jim: “I go smaller and restrict my technical comments, not my fundamental comments, as of August 15th.”
Brady: Did you not previously say that if gold did not go to $480 by August 15 that you would close up shop? Are you not a man of your word?
Jim: “You question my integrity by saying we shall see. OK, wait and watch as you shall see.”
Brady: No, I questioned whether or not you are a man of your word. To be sure, when you were gambling on gold derivatives in April you said that JSMineset would cease to exist if gold did not follow your predictions. At the time you did not mention anything about a ‘log-in’ site. Are the following quotes not accurate?
“I will here and now stake my hard-earned 45-year reputation on my position that we are in the low price territory of gold prior to a move to and above $480…Here is my pledge. If I am wrong and gold is not in the low territory and isn't preparing to take out $430.30 on the upside in a move toward $480, I will close this web site down…I have huge responsibilities and infinitely more profitable (this is my brand of community service) opportunities elsewhere and doing both is a killing experience. If I do not know what I am talking about why in the world would I keep talking?...So here it is. I am right or I am History!...The latest date for gold to trade at $480 is August 15th, 2004 or COT wins.”
Did you mean that you would close your current web site down to open up another one under a different name? If so, you are as wily as the COT, aren’t you?
Jim: “What is size to me other than a risk to the Community. Do you think I charge for this?”
Brady: I don’t know if you make money on JSMineset. And although I really don’t care, perhaps you could tell your readership why the traffic you send to Harry Shultz’s site is tracked, and state whether or not you get commissions per sales/traffic you send him.
Jim: “By the way, what are your credentials?”
Brady: I am a private investor, owner of FallStreet.com, and co-editor of the Wall Street Wish List. Also, and most importantly, I am a gold investor with an opinion.
Conclusions: ’Educating and commenting for free’?
I discovered a long time ago that some investors will follow investment recommendations on a whim. Thus, I believe that analysts should be honest about their investment outlook/positions, and warn investors about potential dangers. I have read your site from time to time and have found that you do not issue many warnings. Instead, you make extremely bold claims about the direction of gold, and rant and rave about your derivatives bets. If I am mistaken on this, please let me know.
As a quick example, please explain to me how these statements help any investor?
“Life without risk to me is wasted. Security is an illusion. The only sin is to lack courage. The only virtue is to have it. Courage does not mean being without fear. Courage means being afraid sometimes but acting anyway. You write'em and I buy'em!” JS
An informative esoteric dialogue is one thing. However, “You write’em and I buy’em” is a mantra that you have elicited to investors many times this year, and I have failed to find one instance when you issued what I think is proper warning along with it. Not every investor is completely aware of how dangerous buying gold calls can be. You Sir, did little to inform them of the dangers.
Quite frankly, I think that your attitude on gold investing is harmful, not helpful, to many investors. Moreover, I would hold this opinion regardless of what the price of gold does tomorrow. And while it is true that every investor is ultimately responsible for their own investment decisions, if you can blame COT why can’t the investor blame you?
I do not believe that the Hunt Brothers suffered the greatest injustice of all time. Rather, what I do believe is that every semi-knowledgeable precious metals investor - including the Hunt Brothers and yourself - knows the rules of the game going in. If anyone elects to gamble more than they are willing to lose that is their choice.
One final suggestion: As I am sure you are aware Jim, one of the greatest investors of all time, Warren Buffett, has increased his bet against the US dollar this year. This is potentially bullish news for gold! That said, Buffett doesn’t believe you can successfully time the markets, he doesn’t believe that you can time economic cycles, and he usually ensures that his investments do not have set timeframes (i.e. he has never been a big derivatives player). Perhaps an in-depth study of Buffett instead of Hunt would permit you to offer a more rounded tutorial to the information starved gold crowd?
Best of luck with whatever you decide to do in the future.
Brady
“The latest date for gold to trade at $480 is August 15th, 2004 or COT wins.”
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