Ben Davies continues:

“So they are left with an interminable situation where they print money to meet the shortfall of their financing for the country.  If they don’t they are going to engender a deflationary spiral.  And that has huge ramifications for the rest of the world.

So you are on that monetary edge where you fall down the deflationary route, which will really cause the rest of the world to ratchet up their printing presses....

Continue reading the Ben Davies interview below...


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“And if they (Japan) do it themselves, and if they do it badly, ironically, having not had inflation for such a long time, they could actually cause it (inflation) to ratchet up demonstrably.  And, yes, there is a non-negligible risk of hyperinflation. 

Now within that prism, clearly hard assets remain a very important part of one’s portfolio.  I suspect that Japanese pension funds, insurance companies, banks, although they have to buy government bonds as almost a public edict because they can’t place the bonds, but talking to managers, there are switches going into the precious metals market.  They are definitely buying up gold.  Pension funds are doing that (buying gold).  So there will be allocation shifts there. 

It’s interesting, of late people have been talking about China’s slowdown and how it’s been negative for demand in the last quarter.  I suspect that’s been the case.  Of course if we are going to argue that demand for gold is a demographic situation where middle-income individuals in China have savings and they put it into gold, well, sure, when the economy slows down, probably less money goes into gold.

But coming into next quarter we have the Chinese New Year and we are going to see demand pick up again.  So I think it’s far too early in terms of trying to call the end of Chinese demand.  Of course, more importantly the official demand is going to continue as they divest out of dollars.

Interestingly, this gentleman at one of the Indian banks said that the auspicious wedding season is going to be in full swing next year in India.  So we are going to see a pickup of 25% (in terms of) demand, which would be welcome indeed.  Obviously the Indians have been on the back foot a little bit because with gold at all-time highs in rupee terms, there have been less buyers.  But like all of these markets, when you get used to a certain price, eventually buyers come back in. 

So I really think that the market feels very quiet at the moment, but I think the complacency is very much apparent in the pricing of volatility.  I maintain that we will be knocking on $2,000 by the end of the year into January time.  That’s the thought process.

I suspect the way the option market is priced is very conducive to an upside move.  Historically when we’ve seen these levels of low implied volatility relative to historical vol., the move tends to be a trajectory higher.”

© 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.

This was a tremendous interview with Davies.  In this segment Davies gives specific price projections in both the short and intermediate-term for gold.  He puts KWN listeners ahead of the curve on what to expect in the new buyer in the gold market, as well as the macro-picture.  The interview with Ben Davies is available now and you can listen to it by CLICKING HERE. 

The interviews with Ben Davies, Art Cashin (UBS $612 billion), MEP Nigel Farage, Bill Fleckenstein, Rob Arnott ($100 billion),  and Gerald Celente are available now.  Also, be sure to listen to other recent KWN interviews which included John Hathaway, John Embry, Stephen Leeb, and Don Coxe (BMO $538 billion) by CLICKING HERE.

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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