The Bet: Gold=$1,650 by 2011; The Wager $1M

My S. African pal Prieur du Plessis informs us of this interesting wager from Jim Sinclair:  A $1 million wager for the price of gold over the next 3 years.

Assuming this is more than a marketing stunt, here are Sinclair’s terms:

My position on timing and price is that Gold will trade at USD $1650 before the second week of January 2011.

I am offering a $1,000,000USD wager to a financially
qualified party that this will occur within the stated timeframe. Any party on
Bloomberg, CNBC or CNN-Business stating an opposite opinion on the price of gold
should be informed of this challenge.

Please communicate to ANY vocal bearish so-called
gold expert that I challenge them to put their money on their views.

Any commentator unable to financially meet this
challenge should not be opining. If they really knew the gold and currency
market they could easily meet the challenge.

The technical procedure of a serious wager

  1. Prove you can in fact wage the challenge by an
    attorney’s letter.

  2. Segregate the funds in cash or near cash kind in the
    hands of your attorney.
  3. Execute an agreed upon binding contract stating the
    terms of the wager.

I have been a bull on commodities and Gold for quite some time. But there are plenty of Gold Bears out there. Will any of them rise to the bait?


UPDATE: April 3, 2008 6:43am

Neal informs us this is not a marketing ploy for several reasons:

1.   Jim Sinclair is the CEO of TRE
2.   His website  is a free website
3.   He has been bullish on gold since the upper $200’s
4.   He has been dead on with his accuracy of where gold is going.
5.   He is tired of the top callers of gold anytime gold has a correction
6.   He is one of the country’s top gold traders.


A $1 million wager for gold bears
Prieur du Plessis
Investment Postcards from Cape Town, April 2, 2008

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What's been said:

Discussions found on the web:
  1. Stuart commented on Apr 2

    Not unless they would like to depart with their $1M. Sinclair should have them take out $1M in gold futures and DELIVER those ozs as payment instead of $1M in cash as the NPV only be $750K by then.

  2. michael schumacher commented on Apr 2

    In dollars?? How about betting that the purchasing power of that million will be alot less in one year let alone three??

    Admire his balls though……


  3. Estragon commented on Apr 2

    What’s to stop a publicity seeking pundit from taking the bet and hedging it?

  4. wnsrfr commented on Apr 2

    This actually looks like a good entry point for GLD both short and long term…at least it looks that way to me and I would love to be told YES or NO on that :)

  5. Ross commented on Apr 2

    Just buy 600 oz of Jan 2011 way out of the money calls. Good odds.

  6. 2and20 commented on Apr 2

    what an idiot. as estragon says, just hedge it.

    i’ll take that bet with him. i’ll then just buy $1mm of gold at current prices and sit on it til 2011.

    between approx current and zero price, i lose less than $1mm on that but get paid $1mm by him.

    if it goes up between current price and his level (but not quite there), i make on my position and get $1mm from him.

    if it goes past his level, i make over $1mm on my trade and only pay him $1mm.

    win/win/win. give him my email.

  7. Soros commented on Apr 2

    Um, just take him up on it, and sell puts on gold futures no?

  8. Jonathan commented on Apr 2

    Will someone loan me a million bucks to take him up on the offer?

    I can use my dog as collateral!

  9. Stuart commented on Apr 2

    Likely no hedging. It’s going to be punitive.

  10. keith commented on Apr 2


    You would lose money in that situation if gold went between $1650 and whatever the price of gold is now times 2 (I think it’s $1900)

    That being said this guy can hedge too…

  11. blin commented on Apr 2

    That’s a ballsy bet.

    Gold has to keep it steep uptrend intact for the next 3 yrs for his target to be hit.

    It tells you where he thinks the dollar will be as well.

    I’ll have to make a mental note of this bet.

  12. Jordan commented on Apr 2

    I’ve got to think you could arbitrage this bet in the market. Right? At even money thats what it seems like to me. I haven’t priced it up but it may be worth looking at.

  13. tbapple commented on Apr 2

    This should be posed to Paulson every time he says the US is for the strong dollar.

  14. Mike R commented on Apr 2

    If you hedge dude, whose ur counterparty? What if you owe Mr Sinclair segregated funds and your counterparty falls off the face of the earth? Nah! No risk of that out there.


  15. Sebastian Good commented on Apr 2

    Gosh, why doesn’t Prieur just buy some futures contracts and publicize it? The markets have already invented this particular game! :-)

  16. blin commented on Apr 2

    Good point Sebastian,

    He is obviously putting his reputation on the line. In this case, it’s not about the money, but about being right!


  17. Marcus Aurelius commented on Apr 2

    I can use my dog as collateral!

    Posted by: Jonathan | Apr 2, 2008 2:25:54 PM


    What kind of dog? The Fed might be interested.

  18. Stuart commented on Apr 2

    Golden Retriever. sorry.

  19. Kuds commented on Apr 2

    Is this a sign of a top in gold? Tempted to say.

  20. Mikael commented on Apr 2

    Ive sent him an E-mail to take him on. Lets see if hes serious. I am.

  21. Stuart commented on Apr 2

    If it was, then it would also have to be a sign in a bottom in the dollar, which means it would also have to be a bottom in the financial stress, which means it would also have to be a bottom in real estate price deflation as well as a worsening federal fiscal deficit. So I’m thinking no, not a top.

  22. MarkC commented on Apr 2

    Per keith’s comment above, using phyiscal gold to hedge, you’d have to buy $1.2mm worth of gold (at today’s price of abt $900/oz) to have $1mm of gains at a $1650 price. The hedge would still be imperfect, but gold would have to drop below $150/oz before you lose any money. I say we pool funds and accept the bet!

  23. Max commented on Apr 2

    Mr. Sinclair is making his bet from the position of a man who has already made his fortune trading gold.

    On the other hand, we have Bill Cara, some Canadian guy, who thinks Mr. Sinclair is a “clown.” Considering Mr. Sinclair’s record, that should at least be a respectful Mr. Clown.

  24. DonKei commented on Apr 2

    Like others observed…why does he need to bet anyone except the market? If he believes it so strongly, buy some gold.

    It seems he wants to show how smart he is more than he wants, or even believes, his prediction will come true. If he truly believed gold would be $1650, he’d just quietly buy enough (about 1,500 oz) to yield himself a cool mil in 2011, discounted for time value, of course, and shut his mouth.

  25. rickrude commented on Apr 2

    i love it, Jim sinclair, way to go.
    How anti-american, anti-Bernanke, anti-cnbc, anti-Kudlow
    can you get ??

    do anyone one of those turkeys want to wager ?? no balls ??

  26. rickrude commented on Apr 2

    Like others observed…why does he need to bet anyone except the market? If he believes it so strongly, buy some gold.

    It seems he wants to show how smart he is more than he wants, or even believes, his prediction will come true. If he truly believed gold would be $1650, he’d just quietly buy enough (about 1,500 oz) to yield himself a cool mil in 2011, discounted for time value, of course, and shut his mouth.

    Posted by: DonKei | Apr 2, 2008 5:31:49 PM
    Donkey, your dumb logic is dumb, kneel to the man, he has balls, he has already made some heavy bets on gold,,, Have you bet against the golds ?? you have balls like him ??

  27. Francois commented on Apr 2

    One can hedge all the hell he/she wants, but if losing the bet, there’s still a million bucks going Sinclair’s way…likewise for him too.

    I would not be tempted to bet on gold against Sinclair. The man has kahunas and knows his stuff.

  28. PW commented on Apr 2

    Classic gambler mentality. This sounds like a desperate move from a gambler who just lost money as gold dropped from a $1000 oz to $900 oz. He has to increase the size of his bets to make up for his losses.

  29. gorobei commented on Apr 2

    Why try to hedge yourself on the exchanges?

    Call up your local IB metals desk and ask for an OTC structure:

    +1m one-touch GLD/USD, struck at 1650, ex-date = Jan XX 2011, cash settled, settle on hit.
    -1m no-touch, 1650, Jan XX 2001, cash settled.

    If the desk offers to pay you money for it, take the bet and hedge, otherwise don’t.

    Sheesh, and people complain that exotic derivatives have no reason to exist in finance.

  30. Rodrigo commented on Apr 2

    His letter was posted on April 1. Most likely it’s an April Fool’s joke…

  31. Stuart commented on Apr 2

    Many people are missing the point with his offer. It’s a “put up or shut up” challenge to high profile perennial gold bashers and newsletter writers and other well known market commentators that know jack shit about bullion but claim to be experts. He is targeting this challenge and those to whom it is meant for, know it. Few people understand the gold market, let alone at the level Sinclair does. If a certain handful of people do not reply, we will hear who they are in due time.

  32. Pat G. commented on Apr 2

    I think alot of things happen in 2010 so maybe gold hits $1650 then. But I wouldn’t make the wager even if I had that kind of money. I’d put it where my mouth was and keep that shut regardless of the outcome.

  33. Agoracom commented on Apr 2

    It’s called PYMWYMI – Put Your Money Where Your Mouth Is. Gotta love it!


  34. patrick commented on Apr 2

    for those who don’t know–sinclair was the largest gold trader in the last bull, went long and made a ton, sold everthying at the top (litterly. To the day), and called the hold bottom in , what, 1999?

    Oh yeah and he was appointed by the fed to handle the Hunt silver liquidation.

    This guy is a traders trader and knows more about these markets than basically any of you. I suggest you know the basics of these markets before you start calling bs, top signs, etc

  35. BDG123 commented on Apr 2

    There is zero historical precedence for an uninterrupted gold bull market lasting 13 years. Gold may hit 1600. It may hit 2500. But, we are likely to see at least a 50% retracement from peak to trough at some point.

    If gold is at 1600 in 3-4 years, we are likely going to see a global depression or global conflict. Current fundamentals will likely halt the rise of gold. Even if the dollar falls. Which, is less and less likely. A more likely outcome could be a rise in the dollar and of gold. If either depression or conflict arises, there is a plausible chance the Federal government will again confiscate gold. Which, might be the only way of restoring confidence in the currency. Thus interrupting any run.

    Gold bulls are awfully confident without really understanding why. It is far from a guarantee.

  36. Stuart commented on Apr 2

    Every Indian and Chinese holder would be preying that the Fed confiscates gold, not to mention every Cdn citizens, every Brit, every Brazilian, every Kuwaiti, every Indonesian, every Swede, every Aussie, every Mexican… you get the point. Pretty global. $51 trillion in unfunded liabilities coming due and now via installments needs funding at a time when the budget deficits are blowing out the walls. Tell me, how would end up for you if you had to take out other credit cards just to pay the interest on current credit cards as those are tapped out, all the while you’re living on a line of credit, no money in the bank, live in a nice house but mortgaged in excess of 100% and your Mom and Dad are about to move in so you have to cover their costs now too and they’re bring millions of dollars of annual costs.. A guarantee is…..bucky is RIP.

  37. rickrude commented on Apr 2

    Alot of noobs here totally ignorant about
    what Jim Sinclair has done before in the gold market. If you dunces don’t know anything, get your facts strait before making accusations.

  38. charles chambers commented on Apr 2

    I think his probably made his million back already in publicity.

  39. steve jenings commented on Apr 2

    China is the new giant in the world’s economy and they love gold, so I’m sure it will move in an upward direction as there economy develops.

  40. daveNYC commented on Apr 3

    Segregate the funds in cash or near cash kind in the hands of your attorney.

    I hope he has a real tight definition of what he means by ‘near cash’.

  41. Andy commented on Apr 3

    He also thinks “The US dollar will be fortunate if it can halt a decline at .5200 on the USDX.”

    To get through the financial crisis that eventually hits prime, home equity, consumer credit and commercial loan the Fed will not cease to flood the market will newly printed dollars. The dollar will continue on its downward trend and gold will continue its way up. Everything the Fed has said and done reiterates their reaction to this likely outcome.

  42. Mike commented on Apr 3

    “If gold is at 1600 in 3-4 years, we are likely going to see a global depression or global conflict.”

    So gold has basically averaged about 20% per year since 2001, I think. Close enough, anyway. Now tacking on 20% from 900 gets us to ~1100 in 2009 and tacking on another 20% takes us to ~1300 or so in 2010 and tacking on another 20% gets us to 1550 in 2011. And no depression or world war yet.

    So all he’s saying is that the current trend of 20% per year need only hold for the next three years to be in the ballpark of his target? What’s so outrageous about that, especially given that the rate of change is actually increasing over that time frame?

    I agree with JS and put about 1/3 of my assets in gold at $380/oz in 2003 after reading his analysis, FWIW. His simple advice has been the single best piece of investment advice anyone has ever given to me.

  43. PureGuesswork commented on Apr 3

    What a piker! A million bucks? What kind of bet is that today? Anyone who is not prepared to lose 8 or 9 billion in today’s markets is not a player!

  44. druce commented on Apr 3

    Hmmh… this seems straightforward to analyze in terms of volatility, right?

    At the money forward price is what (wild-ass guess at least 10% higher, given 3-yr Treasury and cost of storing physical)?

    Volatility is what? 100% high-low range around ATM forward (say 825-1650) higher in the next three years translates to <30%-ish volatility, right?

    Goldman writes exotic options (bullet?) like this all day. I could be wrong but I'm guessing cost is higher than 50%. Even money would be a losing bet.

    Publicity stunt/sucker bet?

  45. The Stalwart commented on Apr 3

    A $1 Million Gold Bet: I Sort Of Rise To The Challenge

    Again via Barry, apparently some longtime gold bull (gold bug) is willing to bet anyone $1 million that the price of gold will hit $1,650 by 2011 and he says that if you’re not willing to bet him on this

  46. DonKei commented on Apr 3

    Rickrude…thanks, but I kneel to no man.

    Is English a second language for you? Or did you just fail to learn it correctly as a first one?

  47. IB commented on Apr 3

    Aw c’mon guys this is easier than that… One there is a place called Comex that allows you not to worry about the counterparty. then you need to figure out how many calls at what strike makes a million dollars (3 year out calls.. should trade that far out) than you see if the premium to buy is less than a mil (probably).
    whoever said sell puts, needs a book.
    what i described above should leave you with a free call spd that if you go above $1650 makes you even more…
    Now I have to go surfing… First place i ever traded was gold option pit in nyc, where once upon a time i was the biggest local, so i might understand this just a bit. Once again.. going surfing..

  48. Mikael commented on Apr 3

    I sent him a mail to take him on…no reply. I was planning on hedging with a digital option. Prob of gold touching 1650 is 14% (price of digital is 14% of notional, if gold touches I get 1 Mio, if it doesnt, I lose my premium of 14%.) To even out the premium + money made i would pay approx 163,000, this would cover me for 1,163,000. Thus is if touches I get 1.163 mio (that allows me to pay Jim and cover my option premium). If it doesnt touch, I lose my option premium but make 1 Mio from my new friend Jim. Easy money.

  49. druce commented on Apr 3

    Mikael, what volatility are you using?

    What volatility would you need to make the digital option an even bet?

    14% seems low, even for a 65% increase over three years, but I bow to the math.

    always remembering that option pricing models are an aid to thinking, not a substitute for it.

  50. rickrude commented on Apr 4

    Rickrude…thanks, but I kneel to no man.

    Is English a second language for you? Or did you just fail to learn it correctly as a first one?

    Posted by: DonKei | Apr 3, 2008 10:29:38 AM
    Donkey, I don’t have the time to waste typing proper grammar to you… of low intellect.
    I am university educated in the health professions, university physics, chemistry, physiology, etc. My last post to you, do some reading before posting dumb posts.

  51. Gordo commented on Apr 5

    – in a world full of greed and hustlers, Jim Sinclair provides one of the last havens of professional guidance for free
    – Jim has a proven track record and long history of successful trading, netting over $15 million in personal profits during the gold boom in the 80’s
    – I have followed Jim’s website for many years (and profited greatly) and come to realize that the person has a genuine interest in teaching and helping the average investor
    – I have worked in the mining industry for 32 years, visited 36 countries in my lifetime and have not met an equal to Jim Sinclair during this time
    Thanks Jim, CIGA Gordo

  52. Antonio Gaspar commented on Apr 12

    Mr. Sinclair is a genius, I have been reading his comments on since 2002..

  53. Rialcnis Mij commented on May 2

    Some think that the challenge is a show off … it is NOT.

    Look at the evidence:
    1. he and his friends provided analysis and advice for years for free
    2. he is constantly ridiculed and constantly put down by fund managers who bet NOT with their own monies but with their clients’ monies
    3. he has a track record and he never needs to boast about it … those helped by him do it for him
    4. the Presidential candidates have no clue and no plan; choosing one of them is like digging for gold in your bathtub
    5. so it’s also a Hobson’s choice for whether to stay put or emigrate – we know what the other Jim (Rogers) did – and for the record, he didn’t emigrate to China (you mean you didn’t know that?!)
    6. Ben doesn’t know what to do next – but he does have the ability and backing to make a bigger sound that the other Ben – Big Ben the clock – which btw should be Gold-plated
    7. The most evidence of all – Gold is going to reach and exceed USD1650(and possibly more zeroes) by 2010. If you knew that the sun is going to rise in the East tomorrow, and you bet 1 million on it … it wouldn’t really be arrogant would it? Coz whoever takes up the bet, will be able to escape paying in the courts by declaring insanity.

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