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John Hathaway continues:


“I think it’s games being played and you can always play games in thin markets.  The bigger picture is, first of all, we are in a bottoming process for the stocks and the metal.  Sentiment is rock bottom.  I think we are seeing a number of different things that are indicative of a bottom.


Traders commitments are indicative of a bottom, sentiment is indicative of a bottom and market action is indicative of a bottom.  I’d suspect we will see a couple more scary days in terms of probing the downside, but I don’t think it’s sustainable.


Then you look at the big picture and we have a sovereign debt crisis, the mother of all sovereign debt crises in Europe, and they are just pouring gasoline on the fire.  Everything to me points to a continuation of this European crisis into next year....


Continue reading the John Hathaway interview below...




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“We see the Fed is now providing dollar swap lines and all of this is indicative of some sort of funding crisis.  To my way of thinking this is a larger-scale replay of what we saw in 2008.  Basically what we’ve done since 2008 is substitute sovereign credit for private-sector credit, to buy time, and basically they are running out of time -- that’s what the markets are saying.


So I look for next year to be turbulent financial markets that will be contentious on the political front.  Probably anemic economic activity and it looks to me like Europe and Japan are heading into recession.  You wonder what kind of feedback that will have for the US.  All of this will end up with mobs of people screaming for money printing and I think that’s going to be the flash point for gold.


Obviously the gold price has to make a stand at some point, but I do think we are seeing panic liquidation.  I think we’re at the point where you’re going to see central banks start dumping dollars for gold.  The dollar really isn’t strong, it’s just relatively strong to the euro, but ultimately the dollar is caught up in the same mess.


I think the ones that will start driving the price of gold substantially higher will be central banks who start worrying about all of their dollar reserve assets that are being overtly debased.”


© 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 This material may not be published, broadcast, rewritten, or redistributed.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

KingWorldNews.com

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