Homework Assignment from Jim Sinclair

The great Jim Sinclair gave his readers a homework assignment today. Since I have followed this very intelligent and generous man daily since 2005, I decided I needed to do some homework!

Here is his post on JSMineset.com:

May 26, 2011, at 12:32 pm
by Jim Sinclair

Dear CIGAs,

Little by little, I am passing on ALL that I have learned from Jesse through Bert and Bert’s knowledge to those that read here, every day, in thanks for your support of me and mine.
–JEBS (James Edwin Bertram Sinclair)


Because gold is held by many central banks, once as a reserve currency but now as an inventory currency, it functions as a swing asset to balance the International Balance sheet of the US.

Central banks are sellers of dollars but still hold, by default, large dollar inventories.

China has hedged its dollar position 50% through commitments to long term dollar commercial agreements, pay in, mineral, and energy deals internationally. That is an act of pure genius.

We can assume other central banks still hold 90% of their reported dollar positions, on average unhedged by commercial obligation positions.

In crisis times, the US dollar price of gold ALWAYS seeks to balance the International Balance Sheet of the USA.


Take 90% of international US dollar debt less China and then add 50% of the US debt owned by China. Then divide that number by the ounces supposed to be owned by the US Treasury. The result is where gold wants to go.

In 1974 this gave me $900 gold. Now you do your homework, and submit your analysis to me. Do this, and I will give you Angels going to that price by a little known technique of Jesse Livermore that only works on gold after it has broken to a new high above all resistance.

Little by little I am passing on all that I have learned from Jesse through Bert to those that read every day in thanks for your support of me and mine.


So, my email including my assignment was as follows:

Dear Jim,
I have been reading you daily since 2004. God bless you sir! You have helped me attain the initiative and tools to save my life and the lives of my family. You have not fed me fish, you have made me a fisherman.
I hope my homework pleases:
US Gold Holdings = 8133.5 tonnes, or 260,272,000 ounces
US Debt outstanding = 14,350 billion USD
US Debt held by China = 1144.9 billion USD
Unhedged US Debt held by China (50%) = 572.45 billion USD
US Debt Outstanding – US Debt held by China = 14,350 – 1144.9 = 13,205.1 billion USD
90% (US debt – US Debt held by China) = 11,884.59 billion USD
90%(US Debt – US Debt held by China) + Unhedged US Debt held by China = 11,884.59 + 572.45 = 12,457.04 billion USD
Gold must absorb 12,457.04 billion USD in debt to balance our commitments.
Price of gold = 12,457,040,000,000 USD / 260,272,000 oz = 47,862 USD per ounce
$47,862 per ounce in gold sounds familiar. Oh yeah, a guy named FOFOA throws out a similar number. Martin Armstrong also likes the big number!
I tell everyone I know to sell the rhino horn and buy the waterfall! Best to you and your family Jim!
Yours truly,
CIGA Ron Mullis
Gold is going much much higher.
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