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We will not be surprised if gold revisits the high of last year ($1,900) or pushes
through to new all- time highs by year end….and gold stocks should respond very favorably to the perception of a directional change in bullion. We believe that the ten month decline in the gold price has been the major headwind for gold mining stocks….but if gold were to trade at $2000/oz. later this year, and should the ratio of gold mining shares (XAU basis) return to the mid -point of its range since the launch of GLD in 2004, or roughly 15% versus the current level roughly 10%, mining stocks could double on a 25% increase in the gold price.
So says John Hathaway in edited excerpts from his most recent interview with Eric King of King World News brought to you by Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!).
Hathaway concludes his interview by saying,
“We believe that gold remains under owned and misunderstood notwithstanding a thirteen year bull market. It is considered a fringe strategy to most, a little bit exotic and slightly risqué to the mainstream investor.
While policy makers attempt to buy time by inventing solutions that are incomprehensible to most, the dream of mainstream investors for robust growth amidst stable economic conditions remains alive. Faith in half-baked policy improvisations that are nothing more than repackaging bad debt in the envelope of sovereign credit, along with hope that ever increasing quantities of sovereign debt will generate growth is, in our opinion, delusional. It is a smoke screen that obscures reality and will most likely result in further misdirection of capital.
When adverse outcomes become obvious, gold will seem pricey. In the current confusion of misplaced faith, it seems to us downright reasonable.”
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