Fed Disaster To Destabilize Markets & Send Gold Soaring

On the heels of the historic Fed decision not to taper QE, today 42-year market veteran John Hathaway warned King World News this would destabilize financial markets and continue to send gold soaring.  Hathaway also discussed the dire situation the Fed and Western central planners face, as well as how this will impact the gold market in the long-run.  Hathaway, of Tocqueville Asset Management L.P., is one of the most respected institutional minds in the world today regarding gold, and his fund was awarded a coveted 5-star rating.

Eric King:  “John, your thoughts in the aftermath of this event (the Fed decision) which has shocked everybody.”

Hathaway:  “It shows you that they (the Fed) don’t know what they are doing.  This also shows how off-base mainstream media is on their commentary.  I was watching financial television today and they gave this virtually no chance of taking place.

“I know KWN readers had today’s events telegraphed to them ahead of time in the Greyerz interview, but the mental anxiety you have to go through to take a stand, where you can see that ‘black is black,’ but everybody else thinks ‘black is white,’ it’s pretty tough to do.

It’s tough for investors, and it’s (also) just sort of tough mentally to go against the grain.  But it’s been clear to me for some time that the economy stinks.  It may not be falling but it certainly isn’t robust.  So the Fed is scared to death that if they tweak it with any kind of tightening, the risks are very much to the downside.

I think what we’ve done here from gold’s point of view is it has been a great test.  Gold rallied off that low back at the end of June.  This last three or four weeks was a retest of that low, and it has now clearly held and we are set for a solid move higher.  The Fed and other central planner policy makers are incompetent, and one thing is certain -- this will not end well. 

In this chaotic environment, any thinking person needs exposure to gold and gold mining stocks as a way to protect against monetary debasement.  If anyone thinks the Fed and other policy makers have the recipe to getting this economy back on track so that we can get interest levels to a point where people don’t need to own gold, they are smoking something funny.

It seems to me that the position we are in today is the same trap we are going to be in 2 or 3 years from now, and maybe even worse.  Again, I know it was hard for investors to take this stance against the prevailing mainstream media, as well as all of the brokerage-side commentary, but here we are -- the Fed has chickened out.  But I do think what it means is that gold has been put to the test, it has stood the test, and we are now well positioned for a major move higher.”

Eric King:  “Is the Fed in danger of losing credibility here, John?”

Hathaway:  “Absolutely.  I don’t understand how they have credibility in the first place.  The mainstream media worships these people at the Fed, but if you look at their record on forecasting, I don’t understand it.  As more and more people start to understand the reality of the Fed’s true track record, that will send gold to new all-time highs. Read More