Here is what Zulauf had to say: “I think the world economy is still having difficulties.  Some leading indicators are picking up a little bit, and the world is getting very optimistic that we have passed the crisis, we have solved the problem, and sentiment is very optimistic.  Actually it is as optimistic in the stock market as it was in 2007.

We have entered a very dangerous territory, and I think the world economy will not deliver what people expect.  You just saw the numbers coming out about the eurozone GDP in the fourth quarter, it was quite a bit weaker than expected and still in negative territory....

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“While general consensus is expecting maybe a mild recession of .5% or so this year, I see -2% in eurozone GDP for this year.  So we are not out of the woods yet and the market is very euphoric.  That creates a very dangerous combination.”

Despite the long consolidation in gold, Zulauf is bullish on the metal: “The first step, it will be important (for gold) to break $1,700.  Now you have to also look at the gold price in other currencies.  When a country pursues aggressive devaluation of its currency, the price of gold expressed in that currency goes up dramatically.

So the Japanese citizens that are holding their savings in yen, obviously they won’t buy any JGB’s (Japanese Government Bonds) anymore.  They will probably buy stocks, which will come in my view, and they will buy gold to protect their savings.

Moreover, there are new buyers around the block and they are central banks.  Over the past few years you saw steady buying by central banks.  Think about all of the surplus countries in terms of current accounts.  Where do they put their surpluses?  In what currency should they store their surpluses?

Should they do it in the dollar where they are printing $85 billion new dollars every month without any work behind it?  Should they put it into the euro, which is a misconstructed monetary union?  Should they put it into pound sterling where they are printing even more money than the US on a relative basis? 

Should they put it in the yen where the central bank is going on a major money printing exercise?  Eventually, these guys, like the Middle-Eastern guys, like the Asian surplus nations, like Russia, etc., they buy more gold.  They say in the long-run, ‘I’m better off with gold.’  So I’m quite constructive on gold.

There has been a lot of money printed by the central banks.  I’m counting 38 countries around the world that are pursuing zero interest rate policies, or negative real rate policies.  You can go back in history as far as you can and you won’t find anything like this.  So this is money printing history.  They have printed over $10 trillion dollars of new money in different currencies, and they have used that to buy bonds.  That tells you how distorted the bond market is today.

The fundamentals for gold are quite bullish.  The technicals have improved quite a bit.  I think as soon as we break $1,700 that is a good signal for the next up-cycle within this secular bull market that is ongoing.  I would expect to see new, historic highs in the price of gold this year.  The important thing is every investor should have part of his savings (25%) invested in gold ... It’s very hard to imagine the world will solve its problems in a conventional way.  More likely we will see more government controls on capital flows as things get out of control over time.”

In his audio interview, Felix Zulauf goes into great detail about what investors should expect as the system implodes and, more importantly, how they can protect themselves.  The legendary money manager and two decade Barron’s Roundtable panelist also discusses central planners, systemic collapse, what investors should be doing with their money right now, gold, gold repatriation and much more.  The extraordinary KWN audio interview with Felix Zulauf is available now and you can listen to it by CLICKING HERE. 

© 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.

The interviews with Egon von Greyerz, Felix Zulauf, John Hathaway, Gerald Celente and Eric Sprott are available now.  Also, be sure to listen to the other recent KWN interviews which included Art Cashin, Michael Pento, MEP Nigel Farage, Michael Belkin, James Dines, William Kaye, John Embry, Rick Rule by CLICKING HERE.

Eric King

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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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