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Eric King:  “Eric, we have the Fed decision coming up next week, and you and I are starting to believe they are not going to taper.  In that environment you (as the Fed) wouldn’t want to have gold launch from higher levels.  You would have to smash it (gold).  That’s exactly what we’ve seen.”

Sprott:  “I’ve always believed that the Fed is in a very difficult situation and the ‘taper’ was just talk.  And we’ll see whether they ‘walk the walk’ or just ‘talk the talk.’  As you know, Eric, yields have doubled over the last 12 months, and in particular with the reintroduction of the taper talk.

We know that there is massive selling of bonds, whether it’s the Chinese, or the Japanese, and I would imagine a lot of the emerging countries are now selling US bonds....

Continue reading the Eric Sprott interview below...


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“We’ve seen redemptions of bond funds.  I, for my life, can’t see how at this point in time the Fed pulls back on their bond buying because rates would just go crazy (to the upside).

The jobs numbers that came out in the last two months, you know we averaged about 130,000 (jobs) when they adjusted July down, and August was kind of so-so -- and you can drive a truck through the numbers anyway.  It’s my suspicion that there are a lot of the jobs are part-time jobs, and so I think we have a really weak economy here.

And if they do taper, and rates go higher, we already have a crushing situation in housing, where literally the cost of buying a house on a monthly basis, i.e. the interest rate cost, the principal cost, and the cost of the house has gone up 10% or 15%, is up (in total) 50% year-over-year.  And nobody’s income is up 50%.  I would be surprised if it’s up 2%.  In fact, it’s probably down with the increase in social security taxes.

So this housing market has got to fail.  The Fed knows this.  The charges against the US Treasury are rising as rates are rising, which means the deficit is going to go back up.  I wrote a paper, I guess it was about three or four months ago, asking, has the Fed lost control of the interest rate markets?  And I suspect they have.

And so this decision that will be made next week is going to be very critical as to where rates go.  And if it (the taper) is either really small, or it’s not done, then I think that the gold price will just move right back up here.  They had the excuse of the non-Middle East war to bash gold here, but the fact is the physical demand is every bit as strong as it’s ever been.  So, I think we will see prices go back up, and I’m still very confident that within the next year we will see record highs in the price of gold.”

IMPORTANT - The is the second in a series of incredibly powerful interviews with billionaire Eric Sprott.  Sprott discusses the gold and silver smash, what is happening behind the scenes in the ongoing war on gold, the remarkable moves he sees coming in gold and silver, as well as the coming financial collapse.  Eric Sprott’s powerful KWN audio interview 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 audio interviews with Andrew Maguire, Grant Williams, Stephen Leeb, Bill Fleckenstein, Pierre Lassonde, Dr. Paul Craig Roberts, Art Cashin, Egon von Greyerz, James Dines and Marc Faber are available now. Also, other outstanding recent KWN interviews include Jim Grant and Felix Zulauf to listen CLICKING HERE.

Eric King

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