Williams:  “Eric, we’ve seen a lot of capitulation in recent days, and not just in the gold market.  Hugh Hendry, who is a guy I have tremendous respect for, has thrown the towel in on being bearish and he’s turned bullish.  In his own words he said, ‘This is probably the top of the market, but I just can’t sit by and watch all these other people make all this money anymore.’  And that’s a really dangerous place for the market to be, when people are buying stuff because it’s going up and because other people are making money.  That’s what happened in 1999....

Continue reading the Grant Williams interview below...


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“So we’re getting to extremes here, and there are a lot of smart people saying, ‘You need to be very, very careful here.  You need to be out of these markets, or ready to get out at a moment’s notice.’ 

And I think the opposite of that applies to the gold market, where people have sold the gold market down.  People are already out and others are recently trying to push gold lower to make a little bit more money.  But if you are shorting gold down here, you need to be ready to cover your position and get long in a hurry because when it turns, there just isn’t any physical gold around.  So if you are short gold and you are trying to chase it, you are going to have to chase it a lot higher.”

Eric King:  “Grant, the paper claims on gold have now hit new all-time highs.”

Williams:  “It’s an extraordinary phenomena.  There are 69 people with a claim on every ounce of gold on the Comex warehouse (see chart below).  But if you think about what it means, if you think about a coming time where, like the Bundesbank said, ‘We want our gold back,’ we are not talking about 3 or 4 entities coming in with claims on every ounce of gold, instead we are talking about (roughly) 70 people.

When this thing (the fractional reserve gold system) breaks, it’s not as though they (central planners) can scurry around and find gold and keep a few entities happy.  This is an astonishing 70 entities with claims to every ounce of gold.  That’s why I say once this thing  breaks and people say, ‘Dammit, I need my gold in my possession, somewhere where I have control of it,’ when that happens, the only solution to this is going to be to reset the price of gold much, much higher in order to attract enough selling to fill those gaps.

At that point who knows what the high price of gold is going to be?  Right now everybody appears to want to sell gold, so if you are buying gold you have been getting crushed.  But if you flip that scenario around, Eric, and you get to the point where everybody wants to buy it, well, I’m telling you that the people who are hoarding it are not going to want to sell gold.  They’ve been through the pain, they will be seeing the panic, and they are going to hold on to their gold at that point until we see astronomical levels.”

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