In commentary posted at King World News, the Tocqueville Gold Fund's John Hathaway makes a comprehensive case for higher gold prices.
"No mining company management in its right mind would commit to a program of mine construction at current prices," Hathaway writes. "Therefore, we believe that mine supply will shrink in the years ahead, especially after 2015. Given the lead times involved in new mine construction and even with a moderately rising trend in gold prices, supply could be constrained through the end of the current decade. The demand picture, especially from Asian consumers and possible central banks, looks robust.
"The flow of gold into China continues to set records and the all-important consumption by the Indian subcontinent remains solid. The Chinese government, acutely aware to the downside risks of its $4 trillion exposure to the U.S. currency, has almost certainly been surreptitiously accumulating physical gold as a hedge. There has been no update from official sources on central bank holdings since 2009, and if China is still in an accumulation mode, one can be certain that they have taken full advantage of the two year price decline and that their future intentions remain a well-guarded secret."
Hathaway covers market manipulation as well: "We believe that the architecture of the gold market is set to undergo significant change in the current year and that these changes, which have little to do with macroeconomic considerations, will result in attracting capital flows. These changes begin with inquiries by regulatory authorities in Germany and the United Kingdom into possible price manipulation by bullion banks in connection with the London fix mechanism for gold. These inquiries have been followed by lawsuits seeking damages for plaintiffs possibly injured by price manipulation. We believe many other lawsuits could follow."
Hathaway's commentary is posted at KWN here:
http://kingworldnews.com/kingworldnews/KWN_Da...2014/4/12_Re...
