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Leeb - Silver to Break $100 This Year & Gold Bull on the Move

With gold and silver off to an incredibly strong start for 2012, today King World News interviewed acclaimed money manager Stephen Leeb, Chairman & Chief Investment Officer of Leeb Capital Management. Leeb surprised KWN by predicting that silver will hit $100 this year. But first, here is what Leeb had to say about Bill Fleckenstein’s comments on KWN earlier today about the public coming into the gold market: “I think (Bill) Fleckenstein is totally correct. The kind of environment he’s talking about is the one I alluded to a little bit earlier, namely the 1970s, where we did have this kind of stagflation. In the mid 70s we had very high inflation, a recession, etc., yeah, that’s exactly the kind of environment we are headed for.”

Stephen Leeb continues:

“The implications are that gold, if you look at the 70s, could easily go up eight fold from here. That’s where you get your targets in excess of $10,000. That’s what the 70s say to us. That’s what I believe Fleckenstein’s analogy best refers to, namely the 1970s stagflation. The results of that kind of environment are dramatically higher gold prices.

The driving force right now has been and will continue to be commodities. Anyone looking at this is going to say, my gosh, gasoline prices are up, food prices are up. I can’t stock up on food or gasoline and sooner or later it is going to dawn on people they need to buy gold and silver. When you see that happen you will see a whole new source of massive demand.

Where else can people turn? The stock market is down over the past decade....

Continue reading the Stephen Leeb interview below...

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“Gold is the only thing left for investors and they will want that protection against what they see as ever rising gasoline prices, food prices and so on.

It’s an eleven year bull market and people still need reassurance every time gold and silver dip a little bit, especially in the case of gold. When people no longer need reassurance, it won’t necessarily be the end of the bull market, but it will certainly be a sign the market is much more mature than it is today.

The big takeaway is this is not even a mature bull market. We are still just an inch or so off the tarmac. I think with the Fed’s recent announcement they are considering QE3, and probably will institute it, the second leg of the bull market has begun.

The Chinese have been buying gold at a record pace. They are very likely already the largest consumer of gold, and they are going to use gold to eventually back their yuan. There should be a message there for other countries, but instead other countries are engaged in a race to the bottom. They are printing as much as they can.

Under those circumstances all you are ever likely to see in gold are reactions (corrections) of probably less than 20%. Regarding the upside, there is no way of knowing how high gold will go. The second leg of the gold bull has begun and it will be a humdinger.”

When asked about silver specifically, Leeb stated, “I don’t want to sound like a nut, but I think its pretty hard to be too bullish on silver right now. One major reason is China. To give you an update, we have seen China continue to ratchet up their goals for solar energy. Instead of looking for 20 gigawatts by the year 2020, now they are looking for 50 gigawatts.

And where there is solar there is going to be big demand for silver. We’ve seen a drawdown in inventories of silver and production growth has definitely slowed. I think the outlook for silver, both as an industrial metal and certainly as a monetary metal, is as bright as it can possibly be.

I’m sticking with my target of at least $100, but I tell you, Eric, it will happen this year. We are definitely headed for triple digit silver in the not too distant future.”