Loading ...John Hathaway issues imminent gold explosion warning number 178=
It’s not fun but this is the kind of thing that explosive moves come out of. What I really like is that the rest of the global equity markets are starting to show some weakness.
I think the biggest headwind gold has had has been this perception that investors can make money in the stock market, and the averages keep going higher so they don’t wan to miss out on the gains. So if we can break that spell, which would mean a hard correction in the global stock markets, this would remind people of the risk in the markets at these lofty levels, and that would give the gold market a pretty solid bid.
Of course we know that there is an enormous amount of short interest in the gold market, mainly speculative short interest, and that will provide the fuel for a major move higher.”
Hathaway added: “Something else that’s interesting to me here is that the gold/silver ratio is breaking out. The ratio gold/silver ratio is now over 69 and pushing 70. I think that’s interesting because that’s usually a coincident indicator, if not a precursor indicator, of economic weakness. I believe the economy is much less robust than the consensus has it. This is even before we see interest rates move higher.
But before we join the celebrating and victory laps they are doing on CNBC and Bloomberg, the durable goods number was bad today. A lot of the housing numbers are bad. Also, yesterday the Dutch equivalent of FedEx talked about having to rethink its forecast for the rest of this year by adjusting estimates sharply lower. To me those are signs of economic weakness.
This also confirms to me that not only is the economy soft but it’s also continuing to weaken. This will put the kibosh on the people who think the Fed can withdraw monetary stimulus and will be successful in doing so.”
Hathaway continued: “The Ned Davis research index of gold sentiment is the lowest it’s been in 30 years of data. They have data going back to December 30, 1994. Their chart of sentiment right now is basically at zero. Well, when that index is below a reading of 35, and of course it’s at zero right now, the average level of gains on trades is about 17 percent.
The other thing worth mentioning is that Mark Hulbert’s gold sentiment index is now at the second-lowest level ever. Hulbert said, ‘There has only been one time in the last 30 years when the HGNSI got any lower than it is today. That came in June 2013 when it fell to minus 56. Today it’s at minus 46.9.’ A couple of weeks after the June 2013 reading a rally began that by the end of August had tacked on more than $200 to the price of gold.
So this is the kind of thing that Bill Haynes’ $40 million gold buyer is seeing. It’s just extreme pessimism regarding gold. And if you put that together with a huge short interest and the fact that the global stock markets are now cracking, that’s a very, very powerful cocktail for a massive rally in gold.”