From King World News
When asked about a possible breakout in gold Ben stated, “The reasons why I believe there is potential for gold to catch up on the upside is that $1,440 level that we have talked about so many times on the show, I mean it’s amazing how that has capped the market, and I said we have to get through $1,440. Once we are through that level on a weekly closing basis we’re going to get discovery which in my opinion can easily take the gold market up $400.
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And that’s the kind of price appreciation that I’m looking for. Part of my macro thought process for why that is happening despite all of the talk about exit strategies which I think is to some extent, yes they could raise rates or certainly have some asset sales, but personally I think the increase in rates would have a huge impact on servicing of debt.
People can’t afford to pay that coupon, I think that would be an exit. I think they (the Fed) are posturing so I’m not completely convinced that rates are going up or that there is going to be any asset sales. I’m more in the QE3 camp...because the events in the Middle-East and North Africa, these are, they are definitely seminal events.
We had the Iranian revolution in ’79, we had Yom Kippur in ’73, we had the Iraq invasion in 1980, we had the Iraq invasion of Kuwait in 1990, all of those events are nowhere near as significant as what we are seeing now and gold did tremendously well. In fact in ’79 when the gold price was actually quite high we had a very good year after that revolution. So for me gold prices will remain high and will go higher and I think it will be coupled with higher, but volatile oil prices.”
