Eric King:  “Tom, what do things look like in the aftermath of the recent turmoil in gold and silver?”

Fitzpatrick:  “We were tracking a very nice base at around $1,525 on gold, and as you know we went through that base.  We went through that major support with a great deal of speed and that has created a very big clear out in the gold market....

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“If gold is moving off of a double-top, the target could be slightly lower than the recent area.  This would represent a move down to the $1,260 zone, which is very close to what we saw at the recent lows (roughly 5% lower).

If gold hits that target it would give you a high-to-low move of just over 34%.  This would coincide almost perfectly with the depth of the correction that we saw in 2008.  You have to remember at that time the gold market hit a low and bounced, but then proceeded to set another marginal new low shortly thereafter.

That turned out to be the bottom and the ultimate platform for a massive advance in the gold market.  So our feeling is to be a little bit cautious short-term.  There might be a little bit more turbulence, followed by a marginal new low. 

But even if we see that take place in the gold market, we should remember what happened after gold hit that low in 2008.  Over the following three years the gold price virtually tripled in value.  We also believe that the gold price will eventually hit $3,500 an ounce.  If we were to hit a new low followed by a near triple in the price of gold, that would take you to the $3,500 target.

So as painful as this has been, we still view this correction as healthy in the overall context of a secular bull market which should continue for many years.”

Fitzpatrick had this to say regarding silver:  “If you look at the move we had down in silver during the 2008/2009 time frame, in percentage terms we haven’t quite equalled that move.  I think the correction is nearing the end, but could we have a bit more pressure where silver breaks to a new low?  That’s definitely possible, particularly if we do have the danger of seeing the $1,260 level in the gold price.

But the reality is there is strong support between the zone just below $20 on silver and just above $21 as well.  That area would be consistent with the type of bottoming pattern we put in during 2008.  In the event silver does trade just below $20, that should be a platform to see silver push higher and most likely advance to new all-time highs.  There is, however, the danger that we may see this one more push to the downside.”

Eric King:  “Where do we go from here, Tom, because I know you are looking longer-term at gold in the thousands of dollars and silver in the triple digits?”

Fitzpatrick:  “Obviously triple digits (over $100) would be quite a move in silver, but it’s not inconceivable that we could see that kind of advance over time.  We’re much more focused right now on the gold price and that would be a feedback loop into silver.

We still follow the same view that central banks around the world are expanding their printing activities across the globe with the idea of reflating and inflating.  Despite the recent pressures we have seen in both the gold and silver markets, our belief is still that this is a setup which is going to be very positive for gold, and subsequently for silver as well.

We have a long-term target on gold to get in the region of $3,400 to $3,500.  We see no reason at all to change that target.  We still believe over the course of the next couple of years we could see a move of that magnitude.  This would obviously mean new all-time highs for silver.  We will just have to wait and see if that means a silver price in the triple digits.  It would mean at least $70 to $75 silver and it’s not inconceivable that silver will in fact trade in the triple digits.”

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