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John Embry - Gold is the Cure to Epic Monetary Debasement

With gold holding on to gains above the $1,650 level, today King World News interviewed John Embry, Chief Investment Strategist of the $10 billion strong Sprott Asset Management, to get his take on where he sees gold headed from here. Embry told KWN that we are witnessing monetary debasement of epic proportions. Here is what Embry had to say about the situation: “My attitude is very simple. If you don’t understand the dynamics of this market and what is really going on, your chance of making any money in the gold and silver markets is zero. The influence of the paper markets is maligned. If you want to trade in those markets against the boys on the other side, you really are putting your net worth at risk.”

John Embry continues:

“Like all moves to the upside, the move is being resisted as we have seen the open interest blow out fairly significantly in the last couple of weeks. At the same time, I think the buying is really steady. I’ve been told from several sources the physical buying has really picked up since the beginning of the year.

I believe the reason for that is the price was driven far too low, in the paper market, in the last four months of last year. There was no justification in terms of basic fundamentals as to why the price should have fallen $400 off the highs.

This market is not having any real pullbacks of significance and so the sideline money, which is looking to enter, has been frustrated. I was having a chat with a good friend of mine who is a broker and he said, “I’ve got a lot of clients who want to buy some gold on the pullback.’ Well guess what? This is so often what happens, you don’t get a significant pullback and many times people never get in.

This market is being underpinned by very strong physical demand and it is still being resisted in the paper market, but hopefully this is the first stages of the physical market taking over....

Continue reading the John Embry interview below...

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“There has been a flow of gold out of Western central bank vaults. There were stories about negative lease rates in gold late last year. What that effectively says is the central banks were giving the bullion banks a real incentive to borrow gold because they were paying them to take it.

When the bullion banks take the gold it is for a financial transaction and it’s sold. I believe they also have access to gold held in ETF’s and when they really need some they just go and take it. But I think the violence of the takedown in the last four months, and what’s happened in the first 3 weeks of this year, would suggest we are well on our way to the 12th consecutive year of higher gold.

Because they manipulated it too low last year, to me, we are set up for the biggest year over year gain in the bull market to date. The highest so far, in terms of an annual gain, has been roughly 35%. We should exceed that gain in 2012. At this point, the manipulators are playing a losing hand, but this is going to take some time to play out.

I have to give a speech in a couple of weeks so I’ve been pondering what to discuss. I’m thinking it’s the excessive debt in the world that is really starting to bother me. I’ve been looking at some numbers regarding debt and they are quite shocking.

When Ronald Reagan became President of the United States, the gross total debt was $907 billion. The US is adding that much every six months now. 200 years of the republic and the US has $907 billion of debt and now we add that much every six months, this is insane. This is monetary debasement of epic proportions and ultimately it will be reflected in a huge way in the gold price.

Regarding mining shares Embry stated: “I still think they are horrifically undervalued. There is a maligning influence in the market, meaning there is far more shorting (naked) than people realize. It shocks me anyone is shorting here given my belief on where gold is headed because the leverage is in the stocks.

Let’s just say we hit $2,500 in gold this year, the cost issue for miners will be offset. The leverage in the earnings would be extraordinary.”

To read Embry’s previous KWN interview “Gold to Rapidly Triple in Price on This Move” CLICK HERE.

Eric King

KingWorldNews.com

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