Williams:  “As always I am watching the gold price like a hawk.  I think we are now at a very interesting juncture. The last rally was capped right around the $1,340 level.  Now we have seen some sharp selloffs and we are hovering near the crucial $1,300 mark....

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“This is a big week for news after a very quiet option expiration on Monday at the Comex.  We have GDP coming out for the United States.  I have seen forecasts for everything from 5.3 percent to zero in terms of GDP growth.  My guess is that it might surprise to the downside.

But having two big downside surprises in a row would be a shock, so maybe this release will be more muted.  Then we have the Fed minutes coming out today and payrolls on Friday.  So there is a lot of news that affects the gold price this week.

It will be interesting to see if the gold price can break decisively above the $1,300 level in this environment.  It’s extremely important for investors to be patient at this point.  Long term, anyone who watches the gold price should be convinced of the case for prices to move significantly higher.”

Eric King:  “What do you expect in the back half of this year?”

Williams:  “I think the gold market is getting more winds behind it with the tremendous geopolitical uncertainty we are seeing around the world.  The Middle East is a tinderbox.  We have the incredible pressure now being applied to Russia over Ukraine with sanctions ramping up.

So there are an awful lot of reasons to be nervous, and yet complacency is still the biggest bubble.  If you look at the VIX, it’s creeping higher.  The VIX is up 8 or 9 percent this month.  This is happening even as the possibility for a severe miscalculation somewhere is ratcheting up every day.

If we do see a serious miscalculation, that would send the price of gold sharply higher.  Right now we see plenty of catalysts for the gold price to move higher, but this has not helped gold, so I think this just adds fuel to the already dangerous levels of complacency.  If we get something that comes out of left field, then all bets will be off.

Almost a hundred years ago to this day the world witnessed a random assassination that triggered a horrific world war. Nobody saw that coming.  At that time there were market participants who were buying the dip and thinking everything would just blow over.  Of course it didn’t and those investors paid dearly. So the real danger is the complacency in major markets.  This almost assures that a catalyst will trigger selling and that the selling will engulf the market.”

Eric King:  “You seem to be hinting that a surprise will be seen in the back half of this year that will unwind this complacency.”

Williams:  “Yes.  The number of possible black swans is increasing with every new and unstable situation developing across the world.  We have the ISIS situation, the Israel situation, the Ukraine situation.  These all could escalate into a major crisis because someone makes a bad mistake.

So a situation may start off as a mistake, but who knows how quickly things could spin out of control?  This extends way past gold and into the equity markets, which are making new highs in the face of all this.  So the potential for a miscalculation is growing every day.  Yet none of this is being reflected in general markets, and I think that’s very dangerous.  At some point the music is going to stop, and when that happens people will be unprepared for the potentially catastrophic fallout.”

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