John Hathaway continues:

“We are making a very important bottom here.  This is rock bottom sentiment and a buying opportunity.  It’s tough to sell when they (mining shares) are making their highs and it’s tough to buy when they are making their lows.  I’m astonished (at the mining shares), but here they are and they have great values. 

Gold has made a higher low in my opinion.  It (gold) has not revisited the levels of last December and I think its setting up for a big move here.  That February 29th massacre, and who knows exactly what was behind it, but it was Bernanke saying no more quantitative easing....

Continue reading the John Hathaway interview below...


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“That was kind of like a body blow to gold but I think it has taken it quite well and it’s showing signs of regaining its footing.

The story line that people had been using was more quantitative easing.  I’m not talking about my story line, I’m talking about the CNBC frame of mind story line, which is very simple minded and shallow.  It was that QE was in the cards.  Now, since gold doesn’t have that prop, let’s see what’s beneath it.  

I’m very encouraged by the fact that gold has made what appears to be a higher low in the face of that bad news and in the face of what appears to be, on the surface, sort of grudging progress for the economy.  

Let’s forget about seasonal adjustments on the labor numbers because, in fact, there are 500,000 more people out of work than there were at the end of the year.  But seasonal adjustments say there are more people at work.  We know those games.  

So anyway, the backdrop for gold, at least superficially, is less friendly than it was.  Then you have rising interest rates.  You have to look at real rates which are still negative.  But you had the breakdown in the ten year bond with the yields moving up to over 2%.

So all of that headwind for gold, yet gold has taken it all very well.  So the question in my mind is, what is it the talking heads are not discounting?  What is it that is still ahead of us that could take gold to new highs? 

The two big things that come to mind, aside from ongoing money printing, would be rising interest rates creating serious concerns for the bond market.  For people who are huddled in Treasuries for safety, they will suddenly get their butts kicked.

Where are they going to go if rates start to move back up?  That’s certainly something that lies ahead of us.  The second thing is the slowdown in China...It means China is running a trade deficit and they are not going to be buying our Treasuries anymore.  That feeds back into the scenario of higher interest rates and pressure on the Fed and other central banks to keep printing.”

The KWN interview with John Hathaway is available now and you can listen to it by CLICKING 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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