My Blog
Embry - Maguire Correct, Gold/Silver Shorts Will be Destroyed
Yesterday London Whistleblower Andrew Maguire informed KWN that he believes the new gold and silver exchange opening in China will destroy the gold and silver shorts. Today King World News interviewed John Embry Chief Investment Strategist at Sprott Asset Management to get his take on Maguire’s comments.
When asked if this could create the upside explosion in gold and silver Maguire is looking for Embry responded, “First, I happen to agree with about 99% of what Andrew Maguire says most of the time and I certainly agree with this. It sort of encompasses two things. It’s been well documented, the Chinese interest in gold and silver is immense. They have a natural tendency towards it. They are getting wealthier and now they are setting up an opportunity where the public can get easier access to it, so to me that just cements the demand side of the equation.”
Embry continues:
“The other side that Andrew knows a lot about because of his vast experience is the paper short positions that are carried by the bullion banks. The fact is these things (short positions) are extremely vulnerable and they can be taken out by physical demand.
When the pricing mechanism changes from the paper market to the physical market, which is what Andrew is suggesting, this is the inflection point where the price of gold is going to go berserk. Silver even more so because of the tightness in the silver market and the fact that the short position is even more extreme.”
When asked where the silver will come from to supply the new exchange in China Embry replied, “Basically the only way you are going to draw it (silver) out is by dramatically higher prices. I think there’s a very distinct silver shortage, unlike gold where there is still some left in central bank vaults. In this recent takedown in gold that took place over the last several weeks, clearly they accessed some central bank gold to assist their paper takedown. But this is going to be harder and harder to do in silver because there just isn’t that inventory lying around that can meet a sharp increase in demand....
Continue reading the John Embry below...
Advertisement
To hear legendary company builder Rob McEwen, original Founder of
Goldcorp discuss which company he invested $50 million
of his own money in and why click on the logo:
“When asked about Maguire’s comment that for each ounce of physical gold and silver taken out of the market by the new exchange in China that there would be multiples of that covered in the paper market Embry stated, “Yes indeed and I’ve always believed that when push came to shove in this area that a lot of these silver contracts are going to be settled for paper because the silver isn’t available.
I’ve seen some staggering statistics about the little amount of silver underlying all of the paper silver that is floating around. My partner Eric Sprott and his associate Andrew Morris wrote a brilliant paper on it a couple of weeks ago. They indicated that the amount of silver that is trading on the various paper exchanges, and the amount of physical silver that is in inventory on these exchanges is preposterous! If anybody went in and asked for 5% of the silver it would be all gone.
What I’ve always said Eric is that the catalyst (to explode the metals markets) will probably be something that we didn’t foresee. Nobody was talking about this Chinese exchange until Andrew Maguire pointed it out. The market is amazing, sometimes it just kind of glides along and then all of the sudden something gets its attention and it changes the whole dynamic.”
© 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 7, 2011
