Today a legend who was recently asked by the Chinese government to give a speech to government officials in China spoke with King World News about the end of the gold bear market as well as stunning facts about China and Russia. John Ing, who has been in the business for 43 years, also spoke about why available supply to the gold market is about to be substantially reduced.
Ing: “It’s auspicious that it’s a trick-or-treat market. The trick is that the collapse in gold and silver, particularly gold — having retested the $1,180 chart point three times, it violated it today. Second is that the S&P and Dow Jones are making new highs. All of this is coming after the Fed’s announcement that quantitative easing is over….
Continue reading the KWN piece below…
“And there is a terrific correlation between the S&P and quantitative easing, with the S&P being up roughly 40 percent as quantitative easing injected something like $4 trillion. So we know where that money went. At the same time, the GDP numbers came out and all this contributed to the strength in the U.S. dollar.
The ‘treat’ for gold investors is that physical buying remains very strong. Evidence coming out of China suggests that they have already bought somewhere around 1,500 tons of gold and they will probably buy at least another 200 tons before the end of the year. So they continue to buy at better than 100 tons each month. This evidence comes from the drawdowns on the Shanghai futures exchange, where in one week alone they withdrew 68 tons of gold. The Chinese have been buying the gold that we are selling in the West.
The other big buyer of course has been Russia. Russia has been buying gold as a hedge against the dollar. We know that Russia has well over 1,000 tons of gold now. So when you add together China, Russia, and let’s not forget India, you have incredibly strong physical demand for gold.
But we also have gold stocks coming out with their earnings in this third quarter. And other than Barrick, we have seen that a lot of the gold companies' problems in the past are now coming home to roost. Barrick is trading at a 22-year low even after reporting profits. Yamana Gold had to take a billion-dollar writedown. Goldcorp is also having problems at a major project. B2Gold also disappointed.
What this tells me is that at the current price of gold it’s very difficult for the gold miners to produce an ounce of gold. This will put a further crimp on supplies to the market when the market is experiencing incredibly robust physical demand. But we have never seen the mining stocks as technically cheap as they are today.
Finally, my portfolio manager out of Paris has done some very fine work looking at Comex gold dating back to 2011. He looked at the bullion short position and since June 2013 we had four peaks in terms of short interest. After each peak in the non-commercial short interest there has been a dramatic run-up in the price of gold as high as 40 percent on the turnaround.
I believe we have peaked in the last week or so in terms of the non-commercial gold shorts. So I think we are within days of this turnaround in gold. The U.S. dollar is incredibly overbought and the technical evidence shows that gold is very oversold. This situation should reverse itself shortly and gold should begin a rather lengthy and large move to the upside. This also means the gold bear market is finally coming to an end.”
IMPORTANT – KWN has many more interviews being released today.
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