John Hathaway continues:

“The Fed had said all year long that they weren’t going to resort to more quantitative easing, and here they are on the doorstep of doing it again.  I’ve thought all along that the gold market was sold out and it was just a matter of what was going to be the spark to take it out of this consolidating pattern.  I think a few more days have to go by to confirm (we are breaking out), but this is very good action.

Gold is very well held, so I wouldn’t be surprised if out of this action we see a very substantial move higher over the next several weeks.  Another thing is to look at the sentiment.  I read yesterday, I think it was on the GATA website, that the Hulbert Sentiment Index had a record one day drop into unchartered territory.

When you see that kind of thing, this kind of extreme ‘Get me out of this stuff,’ you see that at turning points....

Continue reading the John Hathaway interview below...


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“So gold doesn’t have a lot of friends except for the few of us who have held on to it and believed that the next big move would be higher.  A lot of money has exited (gold) and it’s not going to get back in easily.”

When asked about the London Trader comments, where the source stated that the Chinese have acquired many times the reported 315 tons of gold in the first five months, Hathaway responded, “That’s probably true.  I’m sure they would rather keep it quiet.  The gold is being accumulated and as I say, when money wants to get back in (to gold), it’s going to be a very tight squeeze to get in, and you are going to see it (reflected) in the price.”

Hathaway also added:  “Their (China’s) ability to produce (gold) at current levels is suspect.  A lot of my friends in the mining industry think that their rate of production could fall off a cliff without warning.  As far as Chinese designs on whether or not the renminbi will become a reserve currency, I think that’s certainly in their goals.  How do they get there?  Part of that would be having substantially more gold backing than they have right now.

So it really all comes back to gold.  The issues for paper currencies are not isolated to the euro or the dollar, it’s the whole system that’s based on unanchored paper currencies.  We are at the end game for all of that, and over the next three or four years I think we will see gold reintroduced in an official monetary role.  That can only be done at substantially higher valuations in terms of paper currency.”

Hathaway also had this prediction:  “This year long consolidation is in its final stages, and I don’t think gold is going to creep higher when that gets resolved.  I think gold is going to move very explosively and not give all of the people who sold it a chance to get back in.  Once you have that (turn in the gold price), I think the mining stocks are going to be terrific.

If gold went from $1,600, where it is today, to $2,000, that’s a 25% move.  That to me is not a very big deal.  It would confirm the next leg is going, but I don’t think the next leg will start off meekly.  It will start off with a bang.  So could we see gold over $2,000 by year end?  I wouldn’t be surprised.”

© 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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Eric King

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