Hathaway:  “This lawsuit I mentioned has nothing to do with macro considerations about inflation/deflation and geopolitical risks, and all of the other things.  But I do think that it’s a game-changer for the gold market....

Continue reading the John Hathaway interview below...


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“So I commend the lawsuit filed by Quinn Emanuel as required reading for anybody interested in this kind of thing.”

Eric King:  “John, are there any developments that you have been following with regards to this case?”

Hathaway:  “This woman, Rosa Abrantes-Metz, is the same person that did the statistical work on LIBOR, so she is very, very competent.  I know that all of the apologists who want to defend the status quo will say that she doesn’t understand the gold market.

But the fact is you can read the evidence in black and white.  You can see the charts, and you can also see that there is anomalous price behavior around the fix.  The lawsuit also quite properly points out that those with access to the chat rooms during the fix have privileged information.

And because many of those people on the phone line are most likely either bullion banks or their high frequency trading clients, and we know that nanoseconds are all that you need in the world of high frequency trading, that’s a real issue in terms of how these markets work.  And it may well just be that this is an antiquated mechanism for setting a price in the gold market, whose time has come and gone and it needs to be modernized.  Or it might just be that there is a lot of cheating by those who have access to the call (discussing the fix).

It may be that the fix itself is a method used by the bullion banks to drive the gold price one direction or another, depending on what is best for their books.  Who knows?  I’m just talking about the possibilities.  But the old saying that ‘sunlight is the best disinfectant’ holds true for the gold market. 

The light of day is going to change the way this gold market works, and I think the end result will be that supply and demand of physical gold will have a much larger influence on the direction of the price than it’s had over the last year.  We know that in the past year there has been a huge migration of physical gold to the Far-East -- more than annual production -- and yet the gold price is going down.

We know that there has been de-stocking of gold bars from financial centers like London, and maybe also New York, and the obvious movements out of the gold ETF, and yet the gold price went down precipitously during the last eight months of 2013.  But this is not the real world, it’s synthetic gold or the casino known as COMEX.  So I think it’s incredibly healthy that regulators and litigators are sticking their noses into this, and I just can’t wait to see the results.”

IMPORTANT - KWN has many more interviews being released today.

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The audio interviews with Rick Rule, Ben Davies, Rob Arnott, Dr. Paul Craig Roberts, Andrew Maguire, Art Cashin, Gerald Celente, Egon von Greyerz, Eric Sprott, Bill Fleckenstein, John Mauldin and Dr. Marc Faber are available now. Other recent KWN interviews include Jim Grant and Felix Zulauf -- to listen CLICK HERE.

Eric King

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