My Dear Extended Family,

I join Monty and Dan is sending you comforting wishes as we navigate through upcoming economic conditions where no Western man has ever gone.

Keep in mind that the fundamental reason for gold’s normal violent reaction was the euro coming off the $1.60 level, seen by some as a top. It is NOT!

If you took a glance at the 35-year synthetic chart my dog Mia could have told you that. As the major un-dollar and with Europe and China having experienced both currencies evaporating to zip, it is unlikely that the ECB will join the Fed in the race to 0%

Considering inflation even at the manufactured rate the PPI and CPI show, the Fed is giving away money in exchange for garbage paper at ZERO percent.

I dare to say the bottom in gold has occurred this week.

Gold will take out $1024 on the third try. Now the magnet is at $980 to $985.

Gold will rise, kicking and gouging its way to at least $1650.

Gold shares will, as they did in 1979-1980, outperform gold as they will return to asset based situations in a hard asset demand environment.

While the shorts play their game and the consolidators lick their limp, international capital is all over the exploration companies. Just go back to the Reuters article printed here about the major recourse firm in China and read for yourselves.

Black boxes have no brain so they do not factor in that the reason for the fall was the incorrect belief that the ECB would drop rates quickly, often and significantly.

The article below states the exact opposite, saying that politicians recognize in Euroland the great risk perceived by the public is inflation, not slow business and therefore support the ECG in not wishing to drop rates to satisfy political demands for a better economic condition.

The bottom is in and the market for gold will have to repair the damage done by the black boxes.

Again review the article posted below. Look at how it is truthful but presented backwards to confuse. It denies that the ECB will cut aggressively and often, as did the Fed. It removes the fundamental reason for gold’s decline and the infinitesimal dollar improvement that is being declared as the beginning of a dollar bull and therefore the beginning of a euro bear.

Jim Sinclair’s Commentary

According to the talking heads, the ECB is going into a race with the US Fed for lower rates. This has been the spin basis for the gold decline based on the spin of lower interest rates in Euroland to produce a euro decline.

(Originally Posted May 4th)

1. Whatever the gold price was to do on the downside will end by the first week of May.
2. The US dollar is going to trade at .5200.
3. The euro will trade at a minimum of USD$2
4. The gold price will trade at $1650 on or BEFORE January 14th, 2011.
5. $1024 was the first price block on the first move above $1000.
6. My job is bottom identification, not tops, because there is no top to the gold price for a long time to come. I gave you $1024, but that is as close as I will come to calling any top before the top.
7. Even the article below is written backwards to confuse. If you can't spin it, confuse it. What it says forward is that the ECB will not get into a race with the US Fed on lowering rates.

Europe's Price Surge Persuades Politicians to Back ECB on Rates
By Ben Sills and Gabi Thesing

May 5 (Bloomberg) -- The European Central Bank is winning Europe's political leaders over to its policy of focusing on fighting inflation even as economic growth slows.

Politicians from France, Belgium and Luxembourg, who previously complained that the ECB paid too little attention to economic growth, have signaled increasing concern that inflation is eating away at voters' incomes.

``There isn't much appetite for having these inflation levels, whether you're the monetary authority or government,'' Robert Barrie, chief European economist at Credit Suisse Group in London, said. ``There's a recognition that inflation is too high and broader-based support for the ECB to do something about it.''