Some notes from his audio interview:
Anyone with investments today uses clearing houses (this is not true of Scottrade, which does its own clearing), although many don’t realize it. But the MF Global collapse proves that clearing houses are not safe. Derivatives holders are protected and so the cash customer is not. MF Global broke the system.
Lehman Brothers took out Main Street. MF Global’s clearing house failure takes out the investor class.
Sinclair says that to protect oneself, the investor can use “direct registration” for stock ownership if the company provides this service. In direct registration securities are held in the owners name at the transfer agent. This avoids letting the brokerage hold securities for you in its own name through the use of a clearing house, but you don’t have to take possession of the certificates yourself.
(Using Scottrade, which is both privately held and does its own clearing is an easy way to get your assets a lot safer. Not as safe as direct registration, but a lot safer than the typical brokerage.)
Gold – physical gold, held by you – is cheap in the 1700s compared to clearing house paper (as of 2011/2012).