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Ing:  “Technically we have now seen a double-bottom off of that $1,180 low.  So yesterday’s bounce was surprising to some, but we expected it.  Most important is not that gold has turned the corner, but that gold is now setting itself up for some key upside targets....

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“The first target for gold is $1,320, and this is followed by the $1,380 level.  After that gold will target the $1,500 area.  So we are talking about a significant move in gold. 

My sense is the catalyst has always been there, which is a lower US dollar.  We are also seeing interest rates edging higher.  The talk of tapering is always around us but I think what we are going to look forward to in 2014 is a rebranding exercise -- we’ll have tapering in a different form.

The reason why I am focusing on the US dollar and Treasuries is that more and more investors are realizing that tapering not only hasn’t worked, but tapering is just another way of putting a lot of money into the system.  It also benefits Wall Street, but Main Street definitely has not seen the benefits.

In fact, on Black Friday we saw retail sales were down year-over-year.  So there is a growing realization that all of this money printing has not worked.  When you produce as much money as the US has, and foreigners are telling me this every day, this is making foreigners search for alternatives.  This has caused a pickup in physical gold purchases. 

As an example, there is a tremendous amount of evidence that China keeps on accumulating enormous amounts of physical gold.  There has to be a reason for that.  On the Shanghai Gold Exchange they are delivering an awful lot of gold, Eric.  Also, the bar premiums continue to remain in place because of the tightness in the gold market.  China is running a very high inflation rate and gold has been a very good investment in renminbi for the Chinese.  This is why the Chinese continue to accumulate.”

Eric King:  “Assuming the cyclical bear phase for gold is now finished, what will be the big driver for gold in 2014?”

Ing:  “There is no question that it will be a further drop in the US dollar.  The US dollar has been hanging by its fingertips.  So we will see at least a 10% drop in the value of the US dollar, and this will be more than enough to break gold out of this trading range and into much higher price levels. 

I see 2014 as a continuation of the secular bull market in gold.  In the fullness of time, 2013 will simply be seen as an interruption of a very long bull market cycle for gold.”

Eric King:  “Dr. Marc Faber just told King World News that his contrarian play for 2014 is the mining shares.  He said it’s the most hated sector out there.”

Ing:  “Well, they never ring the bell at the bottom, Eric.  We know the shares are 50% off.  Even at Christmas time this looks quite attractive.  But more and more we are seeing that the companies themselves realize how cheap their companies are.

Barrick, which is very hated, is trading at 8 times next year’s earnings.  That’s pretty cheap.  The bottom line is you are supposed to buy cheap stocks and sell expensive stocks, and right now the high quality mining shares are incredibly cheap.

Almost everyone across the board has a very low weighting toward the gold miners.  But the majors have definitely gotten their act together.  As an example, Agnico Eagle is having a record 3rd quarter.  My sense is that investors are not looking at the fundamentals, instead they are just saying, ‘I hate these stocks.’  But the reality is that some of these companies are throwing off excess cash flow, and pretty soon I expect this to trickle down into the intermediates.”

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