Escalating Fear Accelerating Massive Run On Physical Gold

"With some wild trading in the gold and silver markets, today John Hathaway spoke with King World News about what is happening in the war on gold and silver.  Hathaway also spoke about the mining shares and the massive leverage in the fractional reserve gold system.  Hathaway, of Tocqueville Asset Management L.P., is one of the most respected institutional minds in the world today, and his fund was awarded a coveted 5-star rating. 

 

With some wild trading in the gold and silver markets, today John Hathaway spoke with King World News about what is happening in the war on gold and silver.  Hathaway also spoke about the mining shares and the massive leverage in the fractional reserve gold system.  Hathaway, of Tocqueville Asset Management L.P., is one of the most respected institutional minds in the world today, and his fund was awarded a coveted 5-star rating. 

 

“You look at the shrinking COMEX warehouse inventories, and a similar story out of London, and it’s obvious that there is a shortage of physical gold. 

You and I have been saying this for the last 3 or 4 months -- talking about the disconnect between paper and physical gold.  The question was, how would this disconnect be resolved?  We have massive demand from China and India, and this is despite the Indian government’s attempts to stifle imports.  But we are still seeing an increase in gold demand from India.

So investors, particularly in Asia, want physical gold.  We are also seeing that same activity with investors here in the United States.  The idea that having GLD, which is a terrific tracking index, actually gives you physical gold exposure is incorrect.  It may track gold but it isn’t the same thing as physical gold.  I think more and more investors in the West are starting to recognize that, and so consequently they want their hands on the real thing.”

Eric King:  “People being interviewed on KWN have been bringing up the escalating fear around the world about the breakdown of the Western fractional reserve gold system.  We had a fantastic piece from Grant Williams illustrating paper claims hitting all-time highs.  There is this mad dash for entities to get their hands on physical gold because of the massive imbalance between real gold vs paper claims on gold.”

Hathaway: “Exactly.  I think Grant is correct.  The leverage on physical is at least 100 to 1 if you look at the pyramid of paper claims surrounding it.  Some of this is in the form of derivatives, options, etc, but that really is a house of cards and it will be toppled by people asking for physical gold..."

 

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