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Embry - Massive Shortage of Available Physical Gold & Silver
With gold remaining strong above $1,600, silver over $40 and the US dollar weakening, today King World News interviewed John Embry, Chief Investment Strategist at the $10 billion strong Sprott Asset Management. When asked about weakness in the US dollar Embry remarked, “To me the only thing I watch is how gold, which is the real money today, acts against all currencies. I think we’ve moved into a situation where if somebody says, ‘Oh look, the dollar is strong and that’s bad for gold’, that’s the most ludicrous comment of all because if the dollar is strong and representing the strongest currency in the world at that moment, that’s the best reason I can think of for owning gold because the dollar is a mess.
Without question the gold market has moved to the next stage. I think there has been even more suppression to maintain some sort of order in the gold market, but that’s going to end fairly shortly and I would envision an upside explosion. But there is no question that we have moved into a different phase, that the currency rallies in the dollar do not have the impact that they used to have, which gave them the opportunity to just crush gold.”
When asked about the action in gold Embry replied, “I would have thought that they would have moved heaven and earth to try to have the gold price comfortably under $1,600 with a lot of open calls and what have you. The fact that they haven’t been able to do it attests to the inherent strength of the market.
So on that basis it is very probable that we could have some significant upside action once we get though this window (options expiry). Without question there is a growing shortage of physical gold and the guys that are buying it in China and India, they know that.
What’s not widely appreciated because it has been obfuscated so well by the authorities is that there has been a massive quantity of central bank gold that has been dumped into the market primarily through leasing. But in these transactions the gold has gotten sold, it’s gone, somebody’s short, but the gold is gone, they can’t get it back. I mean it’s hanging from Indian women’s necks, it’s in Saudi Arabian vaults and all over the place.
So they are out and now you’ve got eastern central banks which are loaded with US dollars just dying to get more gold....
Continue reading the John Embry interview below...
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“So central banks which were supplying between 500 and 1,000 tons per year in a 4,000 ton market back at the height of the suppression, now central banks are net buyers of 400 or 500 tons per year. That to me is the huge swing factor and when people fully realize the significance of that the price is going to go nuts.”
When asked about silver specifically Embry said, “I think it will be really exciting when it clears $50 because then it will be in absolutely new ground. There is without question major physical shortages of physical silver and demand is robust. Once it (silver) gets rolling it is going to levels that people cannot imagine.”
When asked about a deal on the debt ceiling Embry stated, “I think that there will be an agreement or if there isn’t there will be a short extension, then there will be an agreement. The problem isn’t the agreement itself, it’s the fact that it doesn’t solve anything. I suspect they are going to have a lift in the debt limit of $2.5 trillion and there will be some amount of $3 to $4 trillion of spending cuts, probably minimal if any tax increases.
It (the cuts) will be backloaded with the idea that they won’t be affecting the economy in the short-run with lots of spending cuts, and the impact in my opinion will be zero. I mean it’s doing nothing to solve a problem in which the economy has up to a trillion and a half dollars of budget deficits and in which interest rates are dramatically too low. They (interest rates) are going to rise very shortly, I think people have just about had it with US Treasuries and when the interest rate goes up about 200 or 300 basis points, it’s going to drown the US in deficit.”
Roughly a decade ago, back when he was at RBC, John Embry was the only major analyst in the world that stated people needed to protect themselves by owning gold, that central banks were suppressing the gold price and that it would end in catastrophe. Here we are a decade later and the world is witnessing the destruction of confidence in fiat currencies. This has increasingly led to the recognition that the only true currencies in the world are gold and silver.
© 2011 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
Eric King
© 2011 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
July 26, 2011
