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Exchange Stabilization Fund (EFS) Runs Gold Community
Enraged One More time?
When will you just say - NO?
Plus answers to questions on Silver

James Sinclair, Feb 5/03

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It was crystal clear that the rally in the dollar during the Powell
presentation at the UN was artificially induced by the Exchange
Stabilization Fund, as was the intra-US-night top in the gold market at
$390.

Have you ever wondered what would happen if the Community just said "NO?"
If you stared down this ESF intervention manipulative nonsense as I do and,
in fact, sold them their last US dollar, or took both sides of their gold
play today to your advantage. I have.

Why are you allowing yourselves to be toyed with by such obvious ESF
intervention moves? Powell almost convinced Saddam Hussein to invade
himself as his presentation was so clear and he is respected as the dove
amongst hawks. It even took the talking heads a few minutes to figure out
how to explain a stock market rally and dollar rally. They announced the
stock market and dollar rally as the product of Powell's presentation to
the UN because it "took away uncertainty." Now that has to get the award
for spin city speak because in English it means; "Now we are certain the US
is going to Iraq, therefore, it is fine to buy equities and the dollar."
Huh?

I have pointed out to you what they look like when they play and how to
play them. Gold is going over $400 and looking back from the other side.
Until gold is over $400, it is my opinion that using TA and buying the dips
is as safe as gold can ever be. Selling any rise over $10 in one day is
simply good sense.

Conclusion: Gold is going over $400 on this leg of the long-term gold bull
market.

A Review of Silver
Q&A

Dear Mr. Sinclair:

Q: You have done a good job at covering the gold market, which I find of
enormous value, but I would like to know what you think of silver, because
you have such good insight, and I would like to ask you a few questions
too.

Given the developments you see unfolding with the "Five Fundamental
Elements" of a long-term Bull market in gold, the bullish gold implication of
remonetization via the Gold Dinar and potential reinstitution of gold in a
modernized, revitalized Gold Cover Clause controlling M3, what is the
impact on silver?

A: The answer is that the impact is clearly positive. However, just as
platinum is a separate issue, silver is a separate issue from gold. I do
not believe the extreme predictions being made for silver such as $100 have
merit at this time, nor should they be considered as a criterion for buying
silver now. It is my feeling, speaking as a Commercial Metal Dealer since I
have been one in my past career, that the figures being relied on to
compute the size of the short position are not correctly understood by the
most vocal silver bulls.

These figures are skewed by a tactic to take advantage of hedger margin
privilege and therefore may be leading some analysts astray in their honest
effort to report to their clients. That being said there is a significant
short interest in silver. That short interest is based on the industrial
ingredient of the silver price, which in a serious recession or depression
does silver no good. Silver is not money now and will not become money.
Silver's not poor man's gold but it does have a precious metals ingredient
to pricing.

Silver, therefore, now has a price objective of $5.50 along with gold over
$400 as silver's objective on this first Wave of the gold Long Term Bull
Market.

Q: Does silver tend to have more volatility than gold?

A: I assume you are referring to this time around. If now, my answer is NO.

Q: In light of the fact that silver is now entering its 13th year of supply
deficits, shouldn't this situation eventually lead to a dynamic bull
market.

A: My answer depends on what you call a dynamic bull market. My answer to
you is that silver is in a bullish phase that could turn into a bull market
once silver starts over $5.60. However, this is the first wave of the gold
bull market and gold's influence on silver here seems to me maximized at
$5.50. Why not take these things one step at a time? I do and that is one
reason for my success.

Q: If the economy begins to improve in June of 2004 as you have indicated,
possibly along with gold remonetization, would not growing demand from
industry for silver have an effect?

A: If the scenario unfolds with the revitalization of a modernized Federal
Reserve Gold Certificate Ratio aka Gold Cover Clause then I suspect gold
will trade in a range of $100 and silver would take the front running
position.

Q: Would you agree that with supply limited that a substantial shift must
take place in price in order for supply and demand to equalize?

A: That scenario is a top scenario for a commodity when under-supply meets
equilibrium with demand because of price in a perfect world. I would not
rely on deficit to equilibrium scenario in a commodity that has been in
bear market for many years while in supply deficit.

Q:What is the best scenario for silver?

A: That is simple. Gold being positive with an expanding economic
environment and modest inflation is the best case scenario, IMO, for
silver.In conclusion, I agree with you that silver is beginning a bull
phase but I disagree that a proven bull market exists in silver. Take a
look at a 30 year silver chart.

Q: Historically doesn't silver trade with gold as a precious metal,
therefore, does not a bull market in gold as it moves towards money also
move silver towards money?

A: Gold energizes silver in the same direction as gold but in answer to
your specific question, NO.

Best Regards,
Jim

Click on the following link to view full editorial including associated
chart: http://www.jsmineset.com/s/GeneralEditorial.asp

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