“The de-basing of currencies is fundamentally bullish for gold, long term. As long as real interest rates remain negative, the fundamentals for gold remain supportive.”

The above comment is from a recent interview by FusionMarketSite with Felix Zulauf, a noted hedge fund manager and long-time gold bull.  He has been President of Zulauf Asset Management since 1990 and a long-standing member of Barron’s Roundtable.

When asked about the recent weakness in gold prices, Zulauf stated that “Right now, gold isn’t trading well, as it’s consolidating. Iran is selling oil for gold, which in turn is dumped on the market. It should be range-bound, $1,500-1800.”

Looking forward, he contended that “It needs to break $1,800, and then it will run to $2,200, and new highs. The first positive sign will come once we break above $ 1750.”

As for how the Federal Reserve can attempt to further stimulate the economy, Zulauf noted that “The Fed can buy stocks, or buy commodities … they can buy anything. Yet once you get to the point where central banks are financing 30-40% of government expenditures and the interest carry on that government debt increases, then you have a huge crisis. At that time, we will be forced to either clean out the debt, restructure or we end up like the Weimar Republic. But we are not there yet and it may take many more years until that point is hit.”

Zulauf’s interview can be read in its entirety at http://www.fusionmarketsite.com/?p=2212

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