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Caesar Bryan continues:
“If you go back, the XAU has historically traded at its low end of the range when it was around 20% of the value of the gold price. Today it’s almost exactly 10%. This shows how preposterously undervalued the mining shares are at this point in the cycle.
Just to get back to the traditionally undervalued point for the mining shares, it would require a doubling of the value of the equities that comprise the XAU. The chart below shows the dramatic underperformance of the gold shares vs the gold price for the last 7+ years:
So there is still a great deal of upside for the mining shares. Now in terms of the gold price, September is going to be a very interesting month for gold because we have the constitutional court ruling in Germany which will determine whether the support for the ESM is constitutionally legal....
Continue reading the Caesar Bryan interview below...
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“On that same day there is an election in Holland. The week before that there is an ECB meeting. So September will be a good month for gold because there will be support from Europe, and likely more easing here in the United States.
Just looking at the global situation, clearly the recent news is one of weakness in China, Europe and the United States. The consequence of this will be more monetary easing in the fall, and it could even take place on a coordinated basis. I wouldn’t be surprised to see something out of China, Europe and the US, around the same general time frame. This would, of course, be very positive for the gold price.”
Caesar also added: “Certainly there will be an abundance of news coming out of Europe over the next few weeks. The backdrop is continued economic weakness. Also, deposit flight continues out of countries like Spain. In July, 74 billion euros of deposits fled Spain for places like Germany and Holland. This is something the authorities are really, really concerned about.
So we have these battle lines being drawn between those who are very nervous, such as the Bundesbank about bond buying being too close to state financing, and those in the other camp who believe the monetary mechanism in Europe has broken down. The second camp believes there needs to be significant bond buying by the ECB.
The second camp now has the momentum and this will be extremely positive for gold. It may actually be positive for the euro as well. One risk here for the euro is that they will do a half-hearted intervention. Meanwhile you have a situation where central banks continue to add to gold.
The Far-Eastern central banks and some of the emerging central banks are buying gold, and this is one occasion where private investors should join in and follow some of these emerging central banks. The upside action in gold is revealing that gold is sniffing what is coming down the road -- That is more central bank action, activity and interference, and that is all extremely constructive for the gold price.”
© 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.
The interviews with John Hathaway, 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 and Nigel Farage by CLICKING HERE.
Eric King
Continued Bank Runs In Europe, Battle Lines Drawn & Gold
Today 25 year veteran Caesar Bryan spoke with King World News about the ongoing bank runs, battle lines being drawn in Europe and gold. Bryan, from Gabelli & Company, also discussed the massive undervaluation of the mining shares. Here is what Caesar had to say: “It’s very interesting because gold closed yesterday at $1,666, and the XAU, index of gold equities, closed at 166. So the XAU is about 10% of the gold price. We’ve bounced off the lows for the gold shares, but I still think there’s plenty to go.”
© 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 28, 2012
