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John Hathaway continues:
“The market began to think that was it for Operation Twist. Then, lo-and-behold, at the end of June they decided to extend Operation Twist, which is neutral in terms of the Fed balance sheet, but is really designed to put a cap on long-term interest rates. As the summer progressed, the numbers for the economy were lackluster at best.
Here we are going into Jackson Hole, where all of the central bankers get together for a few days in Wyoming, and they are now talking up QE. And this time you are hearing them talk about open-ended bond buying by the Fed....
Continue reading the John Hathaway interview below...
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“The day after Bernanke speaks, then Draghi speaks, and it may just be a scenario of coordinated quantitative easing in Europe and in the US.
So here is a huge turnabout in terms of the story line that’s been plaguing gold for the last year. Really, what’s most interesting to me is the credibility of the Fed. I have a friend who’s a Fed watcher, and I’ve known him for many years, and he’s just completely dismayed.
He said, ‘The Fed basically has three tools. It has a very strong ability to influence short-term rates. That still holds. They have some ability to influence long-term rates. And then they have their word, their pronouncements, their credibility.’
Here’s a guy who’s been watching the Fed since 1970, maybe longer, and he said, ‘They are in danger of losing their credibility.’ When you think about it, the dollar, as Jim Grant has always put it, is a ‘faith-based currency.’ The credibility of the Fed is integral to that confidence the world has in the dollar, and the dollar’s value.
So if that credibility, which I think is shot, once that veil of confidence is removed, you just don’t know what the market reactions could be. I think that’s a very important shift in the story line for gold over the last year.
Obviously we have to wait for whatever they are going to say in the next week at Jackson Hole, but I think that (lost confidence in the Fed) is very, very important to where we are headed.”
Hathaway had this to say regarding gold: “It’s characteristic of bull markets that when they enter their most dynamic reversals or breakouts, nobody is on board. And it almost has to be that way because who is going to buy at the top? It’s going to be the guy’s who sold at the low.
We could revisit last year’s high around $1,900, and you will still have a lot of the market saying we are just forming a double top. So I think gold probably has to go through $1,900, print $2,000, and look like it’s going higher to get people excited. But I think we are going to see that.”
This was a tremendous interview with Hathaway. He discussed gold, silver, the mining shares, central planners and a loss of confidence in the system. 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.
There was a delay in publishing both the Michael Pento piece, and the Eric Sprott audio interview, due to internet problems within the US, but both have now been posted. You may have to clear your cookies/cache in order for the audio to show up in the broadcast section.
The interviews with Eric Sprott, Jean-Marie Eveillard, John Mauldin, Gerald Celente and Ben Davies are available now. Also, be sure to listen to last week’s line-up of other KWN interviews which included Rick Rule, Egon von Greyerz, Bill Fleckenstein, Dr. Keith Barron, Nigel Farage, Peter Schiff and John Embry by CLICKING HERE.
Eric King
Gold, Jim Grant, Bernanke, Draghi & A Collapse In Confidence
Today four-decade veteran John Hathaway spoke with King World News about what a prominent Fed watcher, and friend of his, warned him about: “Here’s a guy who’s been watching the Fed since 1970, maybe longer, and he said, ‘They are in danger of losing their credibility.’ When you think about it, the dollar, as Jim Grant has always put it, is a ‘faith-based currency.’ The credibility of the Fed is integral to that confidence the world has in the dollar, and the dollar’s value.”
The prolific manager of the Tocqueville Gold Fund also said, “So if that credibility, which I think is shot, once that veil of confidence is removed, you just don’t know what the market reactions could be.” Hathaway also discussed the recent action in gold: “It’s characteristic of bull markets that when they enter their most dynamic reversals or breakouts, nobody is on board. And it almost has to be that way because who is going to buy at the top?”
Here is what Hathaway had to say: “Back in February, he (Bernanke) gave testimony before Congress that said, ‘Further QE is off the table.’ That was a very significant moment because gold got hammered once he made that statement. Since then, there were several other occasions where, either through the Fed minutes or in Congressional testimony, he said, ‘No more QE.’”
© 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.
August 27, 2012
