Banks holding gold bullion to skyrocket prices

(October 29, 2012) - Many of today's investors will remember or have learned through their studies of history that Jim Sinclair who went by the nickname 'Mr. Gold,’ has recently come out to state that banks holding gold bullion will be playing a big role in the future of the yellow metal's prices. The financial guru has stated publicly that he believes the price of gold will see a rise to levels previously only envisioned by a handful of analysts in the market: between $3,500 to over $12,000 an ounce. For those involved in today's gold market this is serious news. Peter Cooper reported in his Goldseek column just days ago that a coming change in the money system like Sinclair predicts could change the way the market functions. These are big predictions of course, but Sinclair has a wealth of experience under his belt and is widely respected by many who have chosen to invest in gold, silver and other hard assets. Under Sinclair's forecast, the central banks which have been buying up gold bullion in startlingly large quantities for quite a while now will be the ones who end up altering the market's landscape. The gold market has seen incredible growth recently and Sinclair is not alone in saying a further bull run will be here, but the difference is in why he sees this. He believes that when the price of gold dips next, many will shed their short term holdings and switch to long term positioning as a way to prepare for the future, central banks included. Mr. Sinclair built his reputation by making smart moves in the precious metals market, helping the Hunts Brothers whom he provided financial advice to, corner the silver market. He also instituted changes in spread management during that time to capture the profits when gold shot like a rocket from $400 an ounce to over $880 an ounce - prices that seem almost comical today when gold is around $1,700 per ounce. What Sinclair believes is that bullion banks are going to use this same strategy with their assets and use spread management to end up setting prices for the rest of the market. Sinclair shocked many by telling the press, "Soon all that is required is a change in spread management by the gold banks and you will have whatever price the gold banks want from $3,500 to $12,400." This is because Mr. Sinclair sees a new global currency system coming soon that will be closely tied to gold. If this were to end up being the case, those who did hold gold would likely get far more for it in the future than they get today. It would certainly be a total change from the fiat currencies we have seen for so long now all around the globe. Many argue that it would lead to greater economic stability around the world too, which is an advantage that would be difficult to argue against. Whether or not investors take to heart what Mr. Sinclair has to say remains to be seen, but it is always a smart idea to at least consider multiple point of views. That is the way many investors formulate their strategies.