Saut:  “The Fed got out both barrels with QE1, QE2, QE3, and is now buying $85 billion each month in Treasuries and mortgage-backed securities.  The Japanese, with the new administration and the new head of the Bank of Japan, got out the bazooka, and are doing the same type of QE, except they are buying $75 billion each month, yet their economy is 1/3 the size of ours (the US).

You are going to see the excess liquidity that Japan is pumping into the system come back into Europe and the US in search of higher yields.  Also, the announcement that everybody seems to have missed was Draghi saying, ‘For the Southern European countries, a euro above $1.30 would be too high for their economy.  Among major central banks, the ECB has been the only bank that is not expanding its balance sheet.’

Draghi goes on to telegraph this, ‘But it will likely consider such a step.’....

Continue reading the Jeffrey Saut interview below...


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“So what he’s telegraphing to you is that the European Central Bank is going to pull out their guns as well, just like the QEs in the US and in Japan.  My guess is when they do this, some of that liquidity is going to find its way into our market as well.

So you’ve got tremendous liquidity out there from three huge central banks, and the world is profoundly underinvested in US equities.  So there is still room for the market to run to the upside here.”

Eric King:  “I know you’ve been a bull on gold since 2001.  Is there great value now in gold with all of this money printing and the discounted price?”

Saut:  “I actually told KWN that I was putting the intermediate top in gold in 2011 when our son graduated from college and he wanted to go to Europe.  I said to him, ‘I have been funding University of Michigan at $60,000 per year, I’m not paying for a two month sabbatical to Europe.’

So he said, ‘I will sell some of my gold coins that grandpa used to give me every Christmas.’  I said, ‘Don’t sell them to a dealer, sell them to me and I’ll put them in the lock box and you will eventually get them back.’  Then he asked me, ‘Are you going to pay me the bid or the offer?’  I thought that was just deserts for somebody in our business.

But I bought 10 one ounce gold coins with gold at $1,930 an ounce, and immediately told people I was putting in the short and intermediate-term top on gold, and I’ll be damned if that wasn’t it.  Now, that said I have not been that bullish on gold since then, but I do think that the gold market recently made a capitulation low.  That low caused a ‘capitulation alert’ on my work when gold traded down near $1,320 an ounce, and I think that’s the low water mark for gold in this cycle.”

Eric King:  “What do we look for in gold from here?”

Saut:  “I think it’s like a heart attack patient.  They don’t get right up off of the gurney and run the 100 yard dash.  Gold has seen a nice bounce off of the recent low, but I think you are going to have to have a period of months of basing.”

Eric King:  “After that basing period are we inside of a secular bull market as you see it, with gold eventually moving to new highs?”

Saut:  “I think so.  With per capita incomes rising, and the distrust in governments and the currencies in emerging and frontier markets, I do think that gold will trade higher longer-term.  But it may be some time before it gets back to its old high of $1,930 an ounce, unless there is some black swan event.”

© 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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