With gold nearing $1,600,silver making its way back towards the $40 level, Europe in turmoil and serious concerns about the United States, today King World News interviewed one of the greats, Felix Zulauf of Zulauf Asset Management. When asked if he was surprised about gold breaking out to new highs during the summer period Zulauf stated, “Well it was a little bit surprising because the technicals were pointing to some further correction and the correction was essentially a sideways affair, but the fundamentals are still very bullish.
I mean we have negative real interest rates in virtually all of the major currencies and that is historically a very bullish underpinning of the gold market and that’s why it is not so surprising. It’s just that it didn’t really react to the overextended technicals leading to some downside reaction, it was more a sideways affair and this really shows you how strong the (gold) market really is.”
When asked about where the financial world is headed Zulauf had this to say, “I really don’t know because we have never seen, me in my lifetime I have never seen anything like this, and I think not even in the last 100 years has anything like this happened. We have had several countries that were indebted and went down the drain in the emerging world, and those emerging economies and governments, they have always eventually done the right thing.
They have let market participants go bankrupt, they have reformed the currency, they have cut the debt down to a new operational level, but it was very, very painful and a lot of people lost all of their money. Because they did that, they have always come back strongly. For instance Brazil today is a very strong economy, but fifteen years ago it was bankrupt. It (Brazil) cut out the debt, it created a new currency and started all over again.
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