This Financial System Is Now In Its Final Stages

Today four-decade veteran John Hathaway told King World News, “We’re in the final years of what’s been happening since the 1930s.” The prolific manager of the Tocqueville Gold Fund also said, “Needless to say, the mainstream media has no clue about it.”  Hathaway also warned the current system is “... now in its final stages.” 

Here is what Hathaway had to say:  “I continue to believe that gold is at the end of its year long correction, and nobody gets it.  From my point of view the setup couldn’t be any better than that.  There is absolutely no volume in the mining shares, and yet gold already made a low in December of last year.  Gold has held that low and the gold shares made their low in the middle of May.”

“The XAU bottomed around 140 and we are at 160 now.  If you take that time interval, from the middle of May until now, gold is up 5%, but the mining shares are up about 15%.  So gold stocks are beginning to outperform the metal.  In my experience this has always been a very bullish configuration.

You read something every day about QE....

“Will they or won’t they (launch more QE)?  I don’t know the answer to that.  If they do have another round of QE, that would certainly be constructive for the gold price, but I don’t think that’s the main story.

I don’t think the story line for gold depends on QE.  These conventions we’ve had since the New Deal (from the 1930s), which expanded the role of government in society, that practice is really existentially challenged.  We could be at the end of that process.  The end may be directly in front of us, or it may take another few years.

Citizens may force the change, or the markets may crush all sovereign debt because the whole thing doesn’t work.  But either way, QE is like trying to bail out a leaking boat, when the bigger picture is the boat is leaking like crazy.  If it’s not QE, it will be something equally wacky and ineffective.

That’s the bigger picture, that this whole system of entitlements, both here and in Europe, it’s just not working.  I think the markets will say ‘enough.’  We’re in the final years of what’s been happening since the 1930s.  Needless to say, the mainstream media has no clue about it.

Those changes, whether they are market-driven or otherwise, are going to be very, very difficult to negotiate in terms of social stability, economic stability and political stability.  All of these things are going to be extremely challenging going forward. 

If you look at it from that perspective, you’ve got to have gold exposure because what has ‘greased’ the ‘machine’ has been paper money.  And paper money is intrinsic to this system, which is now in its final stages.  You don’t want to have your assets too heavily skewed to paper money. 

So where else can you be?  You’ve got to have gold as a core asset.  For others who believe this is where we are headed, and want to profit from it, then gold bullion is a way to save money.  But if you really want to score on this, you have to have exposure to the mining stocks.”