Precious metals alert from Jim Sinclair

Link: http://www.jsmineset.com/

Posted On: Friday, May 16, 2008, 10:48:00 PM EST

A Heads Up From Jim

Author: Jim Sinclair

Dear CIGAs,
50 years of trading markets and building companies combined with outrageous good fortune has given me a reliable sense of timing and value.

I suggest that you cancel all sell orders at any price in precious metals immediately so that no orders exist when Asia opens.

Sometimes Bert and Jesse trusted their years of experience to guide them free of any tools at major points of change.

The hairs on the back of my neck are standing up at attention. Not a pretty sight.
That is what happened at $400 in the 70s and $600 recently.

Ed

Were this alert from anyone other than Mr. Sinclair I would not bother
posting this. Jim is one to take very seriously.

Ed

That's it? No explanation? I am assuming it means a big upswing coming but it would be nice to know the reasons behind it.

The metals have been on a bit of a run the last couple days...

Jim

I caught this same article on "Wall Street Bear". http://wallstreetbear.com/board/view.php?topic=48331&post=156389

There is no detailed explanation as to why we are not to sell our gold. why does Jim want no orders to exist when Asia opens? This ought to get interesting. I wonder how many people he has reached and how many people will follow his directions.

It would be exciting to see Gold go back up again.

He's talking to TRADERS, not people who own gold as insurance. If you aren't trading, don't worry about it 8^). Just hold on for the ride, it ain't over yet.

dd

I have no idea what it means, but I believe that volatility in the silver markets has gone up dramatically in the last eleven weeks. To me it looks like quite a battle has been going on with silver trending lower, but with the amount of recent volatility that could quickly change in either direction.

Since the beginning of 2005 I've been tracking greater-than-ten-cent daily movements in the price of silver using Kitco closing numbers (this all started when a friend claimed that X was the best day to sell silver and I had to do the analysis for myself ... he was wrong). I try to break the data out into different periods where each period appears to behave differently from the other periods. That takes considerable hindsight, so this is a major lagging indicator kind of analysis. Yesterday I finally broke the timeframe from 2007/12/17 into two separate periods (new period starting 2008/03/03) after I finally realized that volatility has dramatically risen for silver. In the period from 2008/03/03 to today, there have been an average of 4.4 greater-than-ten-cent daily movement events per week, but in the period before that it was only averaging 2.9 events per week. A period with more than four events per week has only happened once before since I started tracking this stuff (with 417 weeks worth of data), but unfortunately I can make nothing out of what that means for the future.

Anyway, that's my useless contribution to the thread ... volatility has gone way up but I have no idea what to make of it! Hopefully this JPEG will give the general idea of what I've said.

This JPEG is more useful in showing how gold and silver have been doing the last few years. It's current up to Friday's closing numbers.

Volatility should be expressed as a percentage. As the price of silver has risen it's no surprise that $0.10 up or down days would become more frequent. 10 cents is now a small fraction of silver's price. When silver was $5, 10 cents was 2 percent. When silver is $16, 10 cents is only 0.6 percent.

It would make more sense to track percent volatility. You might find that volatility has declined depending on how you measure it.

Jazzdad - You're right.

When I started my tracking, 67 weeks went by where there were a grand total of just THREE greater-than-ten-cent events (in either direction). Then the following period consisted of 96 weeks with only 33 events (and only two of those were greater-than-twenty-cent events). Those three periods covered 163 weeks (or more than three years, from 2000/06/05 - 2003/07/18), so at the time ten cent moves seemed like a reasonable thing to track. I'm not at all sure I want to spend the time to modify 1,245 lines in Excel just to convert everything to percentages.

Here's another aspect of my tracking effort (we're now in period #23):

I have to assume that Jim because of who he is has better inside
sources than any of us. I suspect he is somewhat fearful of saying
what things may may cause gold to go bananas Monday.

By the way gold was up $15-20 Thursday and $20.60 Friday.

Ed

I suggest that you cancel all sell orders at any price in precious metals immediately so that no orders exist when Asia opens.

Markets run on supply and demand. No sell orders open when the markets open means no supply available to sell. No supply in the face of rising demand means higher prices. IMHO he's encouraging traders not to take profits right now, mainly because he thinks a rapid price rise in gold is coming, and traders who sell out just before a violent price rise takes place miss out on profits. But also because- no sell orders equals no supply equals higher prices.

JMHO, could be wrong, YMMV.

dd