If Gold Shorts Miscalculate “There Is Going To Be Hell To Pay”
Today one of the most highly respected fund managers in Singapore told King World News that the gold bears are in serious trouble at this point in the gold market. Grant Williams, who is portfolio manager of the Vulpes Precious Metals Fund, also warned that if the shorts miscalculate, “there is going to be hell to pay.” Below is what Williams had to say this powerful interview.
Williams: “We have seen some real weakness (in stock markets) in Asia. We have a lot of the smaller markets in Asia really getting pounded. So far this year, the Bombay indices are down almost 30% in currency-adjusted terms, with the fall in the rupee.
We also have the Indonesian stock market down 24%, and Thailand down 14%. In dollar terms we are seeing some real plunges. Thailand has fallen 20% in the last month. This is all capital flight out of Asia. And there are some drastic measures being put in place by governments to try to stem this, including the ban of imports of gold coins in India.
“Asians governments are very, very concerned about this. This is how the Asian currency crisis started in 1998. Unless they can get a handle on this fairly quickly, these 2% falls will become 5% plunges, and then 8% nosedives. Pretty soon they will have a real crisis on their hands.
As we approach the September Fed meeting, and this taper that everybody has been talking about -- there are more and more reasons for them not to do it now. But, of course having talked tough and already said they were going to ‘do it,’ if they do back down, and the weakness in these Asian markets certainly could be a valid reason to back off, along with some of the weaker data we have seen in housing and durable goods in the United States, I think what’s left of the Fed’s credibility is probably shredded at that stage.
So my concern for a while now has been, what happens if the Fed doesn’t taper and the markets fall anyway? I think that’s a very real possibility, and if it happens it’s going to be fairly explosive to watch.”
Eric King: “Tom Fitzpatrick, Ron Rosen, Eric Sprott, and others on KWN, have been discussing the idea that global stock markets may now experience a major decline, but they believe gold and silver would skyrocket in the face of plunging markets. As the Asian markets were tumbling overnight, I noticed that gold and silver were showing signs of strength. Fitzpatrick was also pointing out that in the 1976 to 1980 time frame, stocks really struggled and yet gold and silver skyrocketed in the midst of that market weakness. Are these guys right that we could see plunging stock markets, but a massive move higher in the metals like we saw in the late 1970s?”
Williams: “Yes, that’s not a crazy idea by any stretch of the imagination, particularly with the added problems in the Middle-East right now. If you look at the S&P, that market is very near all-time highs, but if you look here in Asia, since May, which is when the taper talk started, a lot of these markets are already down 25% in dollar-adjusted terms, and even 30% in some cases.
So equities have already had big falls, but we just haven’t seen it yet in the headline markets such as the FTSE, the Dow, the Nasdaq or the S&P. But markets here in Asia are certainly sounding a warning about where major markets are headed. All of this seems to point to one thing and one thing only, and that’s more printed money.
This is why I don’t think the case for gold has ever been stronger than it is today. Even when gold was up at $1,900, I don’t think the case for gold was as strong as it is now. And the fact that gold is now $500 lower just strengthens that case even more.
With what has gone on in the last few months in gold, the fact that the physical backing for these futures contracts is in such short supply, this adds a whole new dimension to the bullish case for gold. If we do see people really starting to sell paper gold on the COMEX exchange once again, readers should remember that this has done nothing to decrease demand for physical gold.
Read More
Today one of the most highly respected fund managers in Singapore told King World News that the gold bears are in serious trouble at this point in the gold market. Grant Williams, who is portfolio manager of the Vulpes Precious Metals Fund, also warned that if the shorts miscalculate, “there is going to be hell to pay.” Below is what Williams had to say this powerful interview.
Williams: “We have seen some real weakness (in stock markets) in Asia. We have a lot of the smaller markets in Asia really getting pounded. So far this year, the Bombay indices are down almost 30% in currency-adjusted terms, with the fall in the rupee.
We also have the Indonesian stock market down 24%, and Thailand down 14%. In dollar terms we are seeing some real plunges. Thailand has fallen 20% in the last month. This is all capital flight out of Asia. And there are some drastic measures being put in place by governments to try to stem this, including the ban of imports of gold coins in India.
“Asians governments are very, very concerned about this. This is how the Asian currency crisis started in 1998. Unless they can get a handle on this fairly quickly, these 2% falls will become 5% plunges, and then 8% nosedives. Pretty soon they will have a real crisis on their hands.
As we approach the September Fed meeting, and this taper that everybody has been talking about -- there are more and more reasons for them not to do it now. But, of course having talked tough and already said they were going to ‘do it,’ if they do back down, and the weakness in these Asian markets certainly could be a valid reason to back off, along with some of the weaker data we have seen in housing and durable goods in the United States, I think what’s left of the Fed’s credibility is probably shredded at that stage.
So my concern for a while now has been, what happens if the Fed doesn’t taper and the markets fall anyway? I think that’s a very real possibility, and if it happens it’s going to be fairly explosive to watch.”
Eric King: “Tom Fitzpatrick, Ron Rosen, Eric Sprott, and others on KWN, have been discussing the idea that global stock markets may now experience a major decline, but they believe gold and silver would skyrocket in the face of plunging markets. As the Asian markets were tumbling overnight, I noticed that gold and silver were showing signs of strength. Fitzpatrick was also pointing out that in the 1976 to 1980 time frame, stocks really struggled and yet gold and silver skyrocketed in the midst of that market weakness. Are these guys right that we could see plunging stock markets, but a massive move higher in the metals like we saw in the late 1970s?”
Williams: “Yes, that’s not a crazy idea by any stretch of the imagination, particularly with the added problems in the Middle-East right now. If you look at the S&P, that market is very near all-time highs, but if you look here in Asia, since May, which is when the taper talk started, a lot of these markets are already down 25% in dollar-adjusted terms, and even 30% in some cases.
So equities have already had big falls, but we just haven’t seen it yet in the headline markets such as the FTSE, the Dow, the Nasdaq or the S&P. But markets here in Asia are certainly sounding a warning about where major markets are headed. All of this seems to point to one thing and one thing only, and that’s more printed money.
This is why I don’t think the case for gold has ever been stronger than it is today. Even when gold was up at $1,900, I don’t think the case for gold was as strong as it is now. And the fact that gold is now $500 lower just strengthens that case even more.
With what has gone on in the last few months in gold, the fact that the physical backing for these futures contracts is in such short supply, this adds a whole new dimension to the bullish case for gold. If we do see people really starting to sell paper gold on the COMEX exchange once again, readers should remember that this has done nothing to decrease demand for physical gold.
Read More