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Ing: “Gold has gone through the resistance area at $1,330.  Now it looks like there is at least another $100 to this upside move in gold.  So, now we have gold moving to 4-week highs, and the dollar has continued to struggle as we expected....

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“But people need to keep in mind that we have another options expiry on the Comex coming up on October 28th.  This can sometimes tighten the gold market.  I would say that it’s pretty obvious with this rally in gold that the sellers have retreated to the sidelines. 

My expectation is that we will see a replay of the debt debacle once again in the January and February time frame.  In fact, very recently in a one day period America’s debt increased by $330 billion.  At that astounding rate the debt ceiling could be around $22 trillion (laughter ensues).  It’s pretty obvious that’s not going to happen, but, nonetheless, this escalation suggests QE will continue into 2014, and this will add significant fuel for much higher gold prices.

I have told you for some time that we have seen the lows in gold, and I will say it again, the lows are behind us.  People need to get rid of their bearish mentality and understand that we have now entered another bullish phase inside of this secular bull market in gold.

What is also of extreme importance here is the ongoing decline in the US dollar.  The bottom line is foreign nations are no longer comfortable with how the United States is handling its financial affairs.  They have therefore taken matters into their own hands and they are aggressively cutting dollar holdings.

I fully expect the dollar decline to accelerate as we get into November because of some of the horrendous economic numbers which will be released in the US.  So, even though the dollar is oversold and could get a small bounce, after that bounce we will see a big slide in the dollar.

We now live in a China-centric world.  We have the renminbi which is rapidly moving toward becoming the world’s reserve currency.  But more important is what the Chinese are doing with gold.  China is currently the largest producer of gold at 440+ tons each year.  None of this gold makes it to the international market as China consumes this gold in its entirety. 

But not only does China consume its own massive gold production, it has also imported a staggering 1,700 tons year-to-date, Eric.  At that rate, the Chinese have sopped up virtually the entire world’s gold production.  If you add in another 1,000 tons of gold being imported into India, you are now talking well above the entire world’s annual production of gold.  So, while everyone has focused on the cyclical bear market in gold, which is over, they are not looking at the enormous gold consumption taking place in the Far-East.

These Eastern nations are consuming gold at a rate that is almost unimaginable.  Right now, inflation in China is running at 3%, and in India it’s running at 7%.  People need to understand that the citizens of both of these countries are incredibly savvy when it comes to protecting their capital during inflation, and this is precisely why they are turning so aggressively to physical gold.  All of this simply means that international investors are protecting their assets, and why not?”

Eric King:  “The KWN interview with Keith Barron discussed a panic by the elite into fine art and other hard assets.  Barron pointed out that we are literally seeing technical hyperinflation in the fine art market.”

Ing: “He makes a very valid point, and we are seeing that type of action in certain hard assets.  But when you look at the price of gold expressed in euros, renminbi, they’re making new highs.  So, my view, again, is that international investors are diversifying aggressively into gold and other hard assets. 

The question is, what is going to happen go the price of gold in US dollar terms?  My view is that with the big slide coming in the US dollar, this is when we will start seeing a large move in both gold and silver.  We are already seeing a big move in gold in other currencies -- it’s just a matter of time before we see that type of strong action in gold in dollar terms.”

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© 2013 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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