Hathaway:  “Right now the price action in gold and silver is telling the story.  One thing that has surprised me is that the equity markets have seemed to hold together with all of the bad economic news....

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“But we have the gold market breaking its downtrend, and I don’t think too many of the shorts have been covering yet.  We are seeing some movement of gold into GLD, but it’s early days in terms of this move as far as I’m concerned.”

Eric King:  ‘What is truly remarkable to me, John, is that sentiment on gold today is still more bearish than it was at the bottom of the 2008/2009 collapse, and, incredibly, gold is $600 higher.”

Hathaway:  “This just reinforces the fact that these are early days and there is still a great deal more to come in terms of gains for the price of gold.  I think we will see a solid run up to around the $1,500 level, where gold broke down in April of last year.

We will probably do some backing and filling along the way, but that’s where gold is headed, and then there will be a big battle to get back above that break down, which was a line of support that has lasted quite a long time.

We knew the gold market was loaded with short positions.  I think this first upside swing was basically short covering in the paper market.  We still haven’t seen what lies ahead, which is some sort of default by the COMEX, in terms of their ability to deliver gold.  But as I said, that still lies ahead.

What also lies ahead will be poor returns in the stock market because what we are witnessing right now is more than a weather-related phenomenon.  Meaning, we are going to see some pretty lousy earnings, and that will be a major headwind facing the stock market.

The second headwind will be the obvious dilemma of monetary policy, which is not only can they not exit QE, but they are going to have to reverse the direction of the taper, and they are going to start ramping up QE to much higher levels.  I think all of that still lies ahead.  So I strongly believe that gold and silver investors are in a good position here, and I would just strap yourself in (for the ride).”

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