Unbelievable investor letters like this are why people think gold bugs are stupid

Here’s an excerpt from the Q2 letter to investors from John Hathaway, of Tocqueville Asset Management’s Gold Strategy Fund. All you really need to read is the first paragraph.

7/3 John Hathaway – Tocqueville Gold Strategy Investor Letter, Second Quarter 2013

Tocqueville Gold Strategy Investor Letter

Second Quarter 2013

John Hathaway

In light of the dramatic developments of the past six months, this letter addresses seven key investor concerns:

What is happening to gold?

In our opinion, the severe pressure on gold prices since April 16, 2013 has been caused by a coordinated bear raid orchestrated by large bank trading desks and hedge funds. The method used was naked shorting of gold contracts on the futures exchange (Comex), which means that physical gold was never sold, only paper. Gold was rarely, if ever, delivered to a buyer. Trades were settled in cash. The notional amounts of the transactions on many days exceeded annual mine production, absurd on the face of it. The motive was most likely to break the gold price for profit. The result is that short positions of these traders are higher than at the bottom in 2008 (chart below), after which gold rallied 167% and mining shares 256% (basis XAU).