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Stephen Leeb - Expect Gold Price to Double in Twelve Months

With gold and silver still consolidating, oil above $100 and stocks trying to hold on to recent gains, today King World News interviewed acclaimed money manager Stephen Leeb, Chairman & Chief Investment Officer of Leeb Capital Management. When asked about the action in gold, Leeb responded, “There are liquidity concerns right now. I think the world, and in particular Europe, really does have a liquidity problem. If Europe has a liquidity problem that obviously has the potential to affect everybody, especially the US. When you need liquidity gold is a natural source. It’s been a tremendous performer over the past decade.”

Stephen Leeb continues:

“Entities looking for liquidity that own gold may be selling it to raise capital. But you are in a period now where you are transitioning from liquidity needs, liquidity shortages, to printing more money. Evans, the central bank chief out of Chicago, has effectively said, ‘Let’s not be stupid about this. Let’s start printing money. We can’t take a chance because the system could implode.’

We did see a similar event back in 2008 where gold dropped on liquidity needs, but once central banks got their act together and once liquidity was flushed into the system, gold took off like a rocket ship. So you just have to expect this in the kind of world we are in.

This is the kind of world that is consistent with a very powerful and persistent bull market in gold and it will carry many, many times higher than the gold price is today. But those very conditions are going to be conditions that do lead, from time to time, to liquidity crises....

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Regarding Europe’s problems, Leeb stated, “I think eventually they will do the right thing. I think that if they don’t do the right thing we will. It’s a lot easier for the US to act as a single entity than it is for Europe to act.

People have to realize one thing, whenever I sit back and worry about Europe, I really can’t give you an exact recipe for how it’s going to play out. But I can say it’s so catastrophic for everybody if it doesn’t come together, that it has to come together.

When I say everybody, I mean Germany in particular. Just think if the euro were to splinter apart, all of the sudden the Deutsche mark would shoot up. It would be revalued dramatically higher. What’s that going to do to the driving force of their economy, German exports? They are not going to be able to export with a very expensive Deutsche mark.

In some ways, Germany, as much as anybody in the European Union, has been given a free ride because their currency is a lot cheaper than it otherwise would have been had there been no euro. That’s allowed them to really drive their economy forward with exports.

The Germans, who have been fighting so hard to avoid inflationary acts, would end up in a situation where they have no choice but to inflate, and inflate dramatically. One way or another there has to be money printing.

I can say this, right now is no time to back out of your gold position. I mean gold going down is telling you why it’s such a good investment. It’s is literally being used as liquidity because conditions are so dire.

Any way to correct these dire conditions is going involve massive amounts liquidity. So buy gold on these dips and say, ‘This is a gift that will reward me in the next twelve months by at least a double or more.’ Let me put it this way, it’s a rubber band, the further gold goes down now, the more it’s going to bounce back.”