Gold Price “Close to a Breakout,” John Hathaway

As the gold price smashed past through technical resistance at $1,680 on Tuesday, King World News’ usual suspects came out this week feeling confident that another big rally in gold is underway.  The gold cartel shorts are covered and sentiment in the gold market is terrible, a set up, he said, is “really what you want” before taking a position in the metal.

Speaking with KWN, Tocqueville Gold Fund manager John Hathaway told Eric King the gold manipulation cartel may be losing grip on the powerful forces of the golden bull.  He likens the situation to the problems faced by the infamous London Gold Pool of the 1960s.

“The central banks are losing to the extent that they are failing to keep the gold price down,” said Hathaway.  “You know whoever is fighting this battle is fighting a losing battle.  So I just don’t think there is going to be much courage left on the central bank side.  If this latest ‘London Gold Pool’ style manipulation fails and at the same time you see more of this disgust with paper currencies, that’s where you will get nothing but air to the upside.”

Hathaway’s point brings back memories of James Turk’s famous ‘Gold’s Infallible Indicator’ article of 2007, a clever qualitative indicator which came about as a result of his observation that each time the UK business publication The Economist published a ‘negative’ outlook for the gold price, the complete opposite happened.

Turk’s notations from his original article, posted on Kitco.com:

Date Article is Published

Gold Price
On Date of Publication

Low Gold Price After Date of Publication

Number of Days Low Is Reached After Publication

Subsequent High in the Gold Price

Date of Subsequent High in the Gold Price

% Gain from Publication Price to High Price

23 Jan 1993

$328.60

$326.30

32

$407.00

30 Jul 1993

23.9%

11 Sep 2003

$379.70

$369.20

20

$426.40

9 Jan 2004

12.3%

1 Dec 2005

$502.50

$493.00

14

$719.80

11 May 2007

43.2%

8 Apr 2007

$674.20

$651.90*

34*

$1,032.00*

03/19/08*

53.10%*

ñ     Updated chart from original publication

Not included in the Turk’s chart is a May 13, 2010, article published by the The Economist, entitled, Gold to Fall Below $1,000 By End of Year: Economist.

The article’s publication, proving once again that Turk’s ‘Infallible Gold Indicator’ is, indeed, infallible, the gold price of the date of the article’s release was $1,229.20.  Subsequently, the yellow metal rallied, dropped, then drifted to as low as $1,158.00 on Jul. 27.  But by the close of the year, instead of trading at $1,000 as predicted by The Economist, the gold price achieved a print of $1,421.40—a gain of 15.6% from $1,229.20.

It should be noted that the May 13 article was published in a nick of time for the start of gold’s seasonal soft period range of mid-May and the last trading day before Labor Day (first week of September).

“How can The Economist get it so wrong?  Or in other words, why is this indicator so reliable?” Turk asked in his May 7, 2007, article.

He added, “While The Economist pretends to offer serious analysis of gold, in reality it doesn’t.  It has another objective – anti-gold propaganda.  It is an apologist for the Bank of England and the other central banks that want to keep the gold price low.”

But tell that to CPM Group’s Jeffrey Christian, the apologist for the Fed.  GATA right again.  In fact, any time someone accuses you of being a ‘tin-foil hat’ guy for suggesting the gold market is manipulated, just tell ‘em to Google ‘GATA right again‘.  The raft of links to article of GATA’s fine detective work on the subject of gold cartel manipulation scheme is so overwhelming that even a judge, if presented with so much circumstantial evidence surrounding a murder of a Catholic Calcutta lad, would send Mother Teresa to the gas chamber.

Then, appeal to the naysayer’s greed by sending the ‘useful idiot’ to Turk’s May 7 article.

Even the Financial Times of London has found the time between initiating rumors of the European debacle (see here . . . here . . . and here) to report that, maybe, just maybe, further investigative work by FT might lead to subsequent article, entitled, ‘GATA right again’.

Back to the KWN Hathaway interview:

“To the extent that this is a rigged game, the game is now over,” he said of the gold cartel’s diminished capacity to stem the avalanche of physical gold buying.  “We are not quite at stampede levels yet, but we will be.  Who wants to hold euros? And if the U.S. 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.”

He continued, “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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