We potentially have nothing but air to the upside in gold

The gold price up $20.39 to $1,745.21 per ounce Thursday morning after European policymakers announced a comprehensive bailout plan that involves increasing the European Financial Stability Fund (EFSF) to €1.4 trillion and a 50% haircut on Greek sovereign debt. While the price of gold moved modestly lower, the broader equity and commodity markets surged higher. The euro currency turned sharply higher as well, rallying by 1.6% to 1.4129 against the U.S. dollar

Long-time gold bull John Hathaway presented his outlook for the gold price yesterday in an interview with King World News. Hathaway, who runs the Tocqueville Gold Fund, characterized the recent gold price rebound by saying that “To me we have had our correction, shook out a lot of people and now there is sellers remorse. Now those people are not able to get back in except by paying a higher price, so this is classic bull market action.”

Hathaway went on to question the soundness of two of the world’s leading fiat currencies. “Who wants to hold euros? And if the US starts to intervene through some form of central bank asset purchases, lines of credit, whatever it is they use, nobody is going to want to hold the dollar either.”

Although Hathaway also did not provide a specific gold price target, he predicted that “We potentially have nothing but air to the upside in gold. We could see a big number on gold before the end of the year. Nobody is going to want these paper currencies going forward. That’s kind of where we are now, we’re close to a big breakout.”

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