Commentaries by Richard Russell and Jay Taylor at Gold-Eagle

Japanese Authorities May Cease Yen-Selling Interventions

By Jim Sinclair
Saturday, March 20, 2004
a href=http://www.jsmineset.com/http://www.jsmineset.com//a

Informed discussions in Japan concerning the possibility
that the Bank of Japan might cease intervention in the
yen is being seen in the currency trading fraternity as a
possible trap for the dollar bears.

But reports of these discussions lend credence to my
sources who argue that the Federal Reserve is scared
to death of a potential inflationary price explosion
caused by Japanese market intervention.

The real purpose for that intervention is nothing less
than keeping the world's equity markets intact by
flooding them with liquidity via the purchase of all the
dollars raised in this process under the management
of the New York Federal Reserve Bank.

I do not believe that the Bank of Japan can simply walk
away from intervention, so my feeling is there will be
some technically timed intervention by the BOJ in the
dollar/yen equation. Nonetheless, the use of this
dangerous quot;made in Japanquot; Bernanke electronic money
printing press has run its course. The damage has been
done. It will take generations to set this right.

A deceleration in the use of this Japanese monetary
experiment at the request of the Federal Reserve now
places the world's equity and bond markets in jeopardy,
setting up the probability of stagflation and the inclusion
of inflation in the weak dollar equation.

So I am changing my strategy in gold and suggesting you
do the same. Having bought correctly and made some
sales into strength, I will now hold the balance of my
position, adding to it on any price weakness but not
making further sells at these levels.

If gold chops down in this breakout phase, I will simply
go to a full long position according to my means and
risk acceptance. I might consider a quot;Texas spreadquot; in
gold if the price is right over the next week.

The impact of running up historically huge dollar amounts
of intervention and splashing them willy-nilly into the bond
market to maintain a false interest rate and then falling
away hard from that volume will push gold to significantly
higher prices, in my opinion.

We will still buy weakness and sell strength but the major
change is that we want a better price on the sells.

I'll keep you posted.

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