Monday, December 30, 2013

Cashin Warns About West’s Disappearing Gold Hoard

"Today 50-year veteran Art Cashin warned King World News about the West’s disappearing gold hoard.  Cashin, who is Director of Floor Operations at UBS ($650 billion under management), also discussed what surprises him the most regarding the West’s loss of gold.

Eric King:  “Art, I wanted to discuss a Bloomberg story where they talked about gold literally disappearing from the vaults in London.  An individual interviewed in that piece said the vaults were full two years ago, and now they are virtually empty.  This transfer of gold from the West to the East, does it worry you, Art?”

Cashin:  “It is concerning ... China has stepped up to be a pretty big buyer of gold.  So we will keep an eye on where these transfers go.  These people (in the East) are concerned about their own currencies and the ability of their own governments to control things.  They look for the safety of gold, something hard that has stood them well (in terms of wealth preservation) over the decades.”

Eric King:  “Art, obviously the listeners (and readers) know by now that you traded gold during your half a century (long career), and you know the old saying, ‘So goes the gold, so goes the power.’  The fact that the West is just letting its gold go, ‘We don’t need this anymore, just let it go to China,’ that has people worried.  Is that legitimate?”

Cashin:  “I think people should be concerned.  You will recall that over the years the European and Western central banks have been somewhat dismissive of gold.  The UK called it ‘a barbarous relic,’ echoing Keynes, and they (England) sold off their gold at somewhat ridiculously cheap prices.

I am always amazed that the citizenry has not called for an investigation of the central bankers who effectively gave away their gold at prices far below even the levels we are seeing today.  So I think that people will be very concerned about what happens (going forward).”

Eric King:  “With sentiment at historically negative extremes on gold, do you think that metal might surprise investors in 2014?”

Cashin:  “I think it well could.  We should find out early.  I think some of the late pressure may have been tax-related selling.  This may have given us this December down-spike that we’ve seen.  We’ll know that rather quickly.  If the selling does continue into next year, then we will have to take another strategic look at where you want to go.  If in fact it is tax-selling, it should abate and gold should begin to firm up early into the (new) year.” 

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