Hathaway:  “You get these attacks (on gold) surrounding these data releases, like this morning’s employment report, and there were 90 tons of synthetic supply dropped on the market, met by a lot of physical buying....

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“So you have all of this commotion on the Comex following a news release like we had this morning, and at the end of the day what happens is the Chinese and the Indians just buy more.  I don’t know when this paper tug-of-war between the paper gold market and the physical gold market gets resolved, but right now it’s basically the paper gold traders, these macro-guys, that have the upper hand.

Whereas the Asians, who are long-term buyers and typically not traders, are just putting this stuff away.  It’s going to get resolved at some point with a major re-pricing of physical gold, but we just sort of have to live through this in the meantime.

In my experience investing in various markets for many, many years (over 42 years), when something is treated this badly that is a high quality asset, which we know that gold is, it’s a time to be a buyer.  The only other thing we can do is just speculate on what the headlines will be when gold is trading $2,500 or $3,000 an ounce.  But when they are knocking it around like this, and having just a fabulous time doing it, I gladly take the other side of that trade.” 

Hathaway added:  “I just want to come back to this idea that what you see going on in the paper market is an unregulated playpen for macro-investors.  Paper gold has enormous capacity to absorb these trades, and it doesn’t really tell the story of what’s taking place in the physical market.  So there is a disconnect between the two, and as I say, it’s going to get resolved.

You are already seeing gold bypassing the LBMA, which is a ‘Dark Pool’ in London, where nobody understands what’s going on except the bullion banks, and miners are dealing directly with China and not clearing that metal through London.  And once London loses its grip on the flow of physical gold, which I think is starting to happen, the game will be much tougher for paper gold players.  The same thing is true of Comex.  That’s the direction we are going in.”

UPDATE - The information above is only a small portion of what Hathaway had to say in his extraordinary audio interview.  The KWN audio interview with John Hathaway discussing the “LBMA Dark Pool,” the stunning 90 tons of paper gold selling used to create today’s smash in the gold market and more will be available shortly and you can listen to it by CLICKING HERE. 

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