John Hathaway continues:

“I think the market is testing their fortitude, that’s what I see right now.  The bigger picture continues to be monetary debasement and that’s the big driver of higher gold and silver prices.  But in the short run, I think we’re just seeing a classic short squeeze.  It could get very ugly for the shorts. 

What I like here is it looks like you put in a low here of some significance.  I think the next time around the shorts are going to be a little more timid.  Let’s see when the shorts cry, ‘Uncle.’  I think that’s what we are going to see over the next several weeks.”

When asked about Louise Yamada’s 30-year XAU vs gold chart, which showed gold shares being dramatically undervalued, Hathaway responded, “I’ve noticed that the universe of investors for gold stocks is slowly expanding.  Those (value investors) are people who are coming into the gold space that are basically agnostic about the future course of paper money versus gold.  They’re saying, ‘Boy these stocks are cheap, got to own them.’  So there’s a new bid for gold stocks, completely different that what we saw over the last five or six years.....

Continue reading the John Hathaway interview below...


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When asked about his upcoming letter, Hathaway stated, “The macro picture is it’s a world in which governments are substituting sovereign debt for private credits that have gone bad.  Just changing the wrapping paper doesn’t change the contents.  They are just papering over bad assets with government paper, which, ultimately, is going to make government paper go bad.

In terms of what is going on in the gold sector, and I appended a number of charts I look at all of the time, but I thought it would be good to share them.  One of the things that stood out to me was the fact that central banks have turned into net buyers of gold.  I don’t think that’s a trend that’s going to go away any time soon, particularly in a world of zero interest rates.

The other thing in the gold section of those charts was how rock bottom sentiment was.  I’ve been saying for some time that when things look this bleak, in terms of market action, it was a good sign of a bottom.  I’m not in the business of calling market turns, but I’ve been through a bunch of bottoms and when I see sentiment like this, I’m pretty sure there isn’t a whole lot of downside.

Lastly, the (mining) stocks themselves are as cheap as they’ve been relative to bullion prices in the 12 years I’ve been doing this.  There wasn’t a kind word anywhere for gold stocks.  Most people would say, ‘Bullion is okay, but those companies are just terrible.’  People forget that in a better market for gold bullion, which I think we’re going to see, the stocks tend to outperform.

That’s kind of a summation of what’s is in the upcoming letter.  A lot of charts to back up what I just said.”

To learn more about John Hathaway and his management services CLICK HERE.

© 2012 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

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© 2012 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.

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