Today
a 42-year market veteran who predicted the spike in gold ahead of time
spoke with King World News about the explosive action in gold. Now that
the rally he predicted is unfolding, John Hathaway, who is one of the
most respected institutional minds in the world today when it comes to
gold, and whose
fund was awarded a coveted 5-star rating, also said investors need to
strap themselves in for a COMEX default and a surge in the gold price.
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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