With gold and silver under continued attack from the mainstream media, today John Hathaway warned King World News that we are at the point where global investors will be shocked as gold is quickly repriced a jaw-dropping $1,000 higher, taking gold to new all-time highs. Hathaway also cautioned that global markets are rapidly approaching a loss of confidence in central banks which will cause tremendous turmoil in the paper currency markets. Hathaway, of Tocqueville Asset Management L.P., is one of the most respected institutional minds in the world today regarding gold, and his fund was awarded a coveted 5-star rating.
“Right now I am focused on some very key markets. Japan obviously is making the headlines, but the U.S. stock market is also giving all of the appearances of being at the beginning stages of a substantial correction.
When you think about what’s been a headwind for gold, it’s been the attitude of, ‘Who needs it? We’re making money hand-over-fist in stocks.’ But I believe we are at the end of that phase now. So right now I’m watching with the expectation that we are in the midst of substantial and adverse corrections in what have been competing assets for gold….
“If I’m right about that thesis then I think we will see gold ignite in the second half of this year if not sooner. The bigger picture is that we are at crunch time for this notion that QE is benign and that the Fed and other central banks will be able to tweak it so expertly. The whole idea of tapering makes me laugh because all it means is that the rate of increase will slow somewhat, which I think is also a myth.
But I firmly believe we are reaching the point at which this notion that the central banks have everything under control, that the economies of the world are on the mend, and that the bond market will tolerate the withdrawal of liquidity in a very sanguine way, I think all of this is going to be severely challenged as we go into the second half of this year. I believe it will boil down to a loss of confidence in the policies which have been in place since the credit meltdown of 2008.
Ultimately, this will lead to a loss of confidence in central banking, and that will translate into a loss of confidence in paper currencies. I don’t think this will happen slowly. My belief is this will happen much more quickly than anyone guesses.”
Hathaway also added: “It could be a grind in gold for a bit more time as rallies will be met with (paper) supply from people who still want to get out. That’s one scenario. I suppose for those of us who are committed to this view and to this strategy, I would be prepared for a grind.
But on the other hand, let’s not be surprised if this thing turns on a dime. That’s why when I read all of this technical stuff I firmly believe that it’s a big mistake to make investment decisions based on that. Trying to market time an event which is ‘transformational’ in the capital markets, and almost inherently unpredictable on a timing basis, means to me that technical analysis is really not the way to view things.
You really have to focus on the big picture and think deeply about whether this enormous liquidity that’s been placed into the system is there on a permanent basis, or whether these central bankers can actually start withdrawing it. My firm answer is no when it comes to their (central banks) ability to gracefully exit QE. In fact I just wonder if they can ever exit.
But right now the markets don’t see it that way. The markets have built into them a lot of hope, wishful thinking, and a lot of people drinking the Kool-Aid. When that music stops, investors won’t have a chance to get into gold. At this point many gold investors have become very weary of the pain of this extended correction, but the idea that a person can wait for just the right moment for the markets to perceive that these public policies are bankrupt and hopeless, that’s a flash point that I don’t think anybody can predict on a momentary basis.
The bottom line, and my message, is that investors have to be positioned, despite the pain, in order to capture the repricing of gold, which could be very, very sudden. And I’m not talking about $100. I’m talking about another $1,000 on the upside.”
Hathaway also discussed sentiment in gold and silver as well as what to expect going forward: “One thing that gold and silver have going for them in spades is contrarian thinking. We launched our gold fund in 1998 when gold was considered to be a joke. But this is the most negative sentiment has been on gold since we started the fund in 1998.
That was basically right near the beginning of a 13 year bull market. So from a contrarian point of view, the setup is perfect for the commencement of a huge upward leg that will take gold and silver to all-time highs.”
Source : KWN