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Weldon - ECB Forced to Print, Gold’s Lowest Target $3,000
With gold and silver finishing the week higher, King World News interviewed Greg Weldon, Head of Weldon Financial. Weldon has a global following of some of the wealthiest investors in the world including individuals, institutions and financial firms. When asked about his take on the ongoing crisis, Weldon stated, “The contagion is still raging and it’s too soon to celebrate. This is the problem I have with thinking any of these solutions they are going to come up with are really solutions at all because 25 of the 27 nations (in Europe) are in violation of the rules on debt and deficits. So how are these nations going to bail each other out? They are all in the same boat.”
© 2011 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
October 15, 2011
Greg Weldon continues:
“This is highly problematic unless the ECB is willing to print new money. This is probably, ultimately, where this is going to be forced. My thought process is that a central banker, when pushed to the precipice of debt deflation, will choose to reflate every time, that’s why this could be very bullish for gold.
If you look at the open interest, if you look at the COT in gold, speculative positions are very, very low historically. Open interest dropped to levels we haven’t seen since gold was below $1,000, and the commercial short positions heavily liquidated. So speculators were selling, commercials were buying.
It also tells you that to some degree the latest run-up in gold to $1,900, the last $150 to $200 of that rally wasn’t driven by speculators. I think that was fairly interesting, it was more hard core metals accumulation by portfolio positioning or it’s an unofficial central bank that was buying gold. Remember, this market (gold) will err to the upside because there is more predisposition for entities to be a buyer of gold all around the world.”
When asked if we were finally going to see more institutional participation in gold, Weldon responded, “Yeah, absolutely. You’ve hit on a very important point. From that perspective gold is not in a bubble, from the perspective of what the underlying demand could be....
Continue reading the Greg Weldon interview below...
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“I remember sitting around the bullion desk at Prudential discussing this in the early 90’s and asking, ‘What would happen to gold if just a small percentage of portfolios wanted to be in gold as a normal case of allocating portfolios like stocks or bonds?’ The answer is gold would take off because it’s not a deep enough market to handle that level of demand as the quantity of demand would be enormous.
You haven’t reached that level of demand yet. You certainly have generated more demand than we have ever seen, no doubt about it. But to get gold to a level where it represents any significant part of a global portfolio in terms of all of the investment capital out there, you have not seen the meat of that move yet.
Then when you start to compare gold to money supplies around the world, that’s when things get really interesting. You can peg gold at various levels on the upside based on money supply or sovereign debt. Depending on what you want to compare it to, dollar for dollar, the lowest level doesn’t even come until gold reaches $3000 an ounce. So if the ECB were to come into play it would be a major story and I think that would be something that would be very bullish for gold obviously.”
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© 2011 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
Eric King
