Keith Barron continues:

“The ECB better not try to get it from Germany because Germany is going to balk.  Last week the Greek Parliament adopted new austerity measures, and we saw lots of Molotov cocktails being tossed at the Parliament buildings by students, unemployed, and others who were protesting.  This took place on the evening of the announcements.

Greece is on the verge of a total breakdown....

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“We have seen the emergence of the right-wing fascists in Greece, which use a symbol that is very close to the Nazi swastika.  Some really scary stuff is starting to develop.  In the end, I believe Greece will voluntarily pull out of the euro.

In Spain, things are getting more and more dire by the day.  We are literally seeing people in Spain committing suicide by jumping from the balconies of their units as the police are breaking into their homes to evict them.  This is resonating right across Spain now. 

So we are seeing marches for reform, but what is really taking place right now is tragic.  Words can’t even describe it because these troubled countries are literally on the verge of collapse.”

Barron had this to say regarding gold:  “Of course we saw a real lift in gold when the open-ended QE3 was announced.  Since then gold has consolidated recent gains.  We also see that Ben Bernanke is going to stay in place.  Bernanke sees himself as championing the money printing, which he believes will stave off deflation.  So you can expect to see more QE from Bernanke, and a much higher gold price as a result.

I would just like to add that the Barrick CEO just discussed how difficult it is to go out and find gold deposits right now.  I have actually given a couple of speeches about this recently.  Maybe some of my remarks filtered back to him.  I’ve been addressing something I like to call ‘Peak Gold.’ 

I think we are just about at ‘Peak Gold’ right now.  This is basically the point at which the rate of new gold discovery will start to diminish from here on out.  The Western gold companies have not been producing the gold discoveries, but the emergence of China as a producer has temporarily saved the day. 

Over the last five years, China has been the number one producer.  But if you take China out of the equation, you will see that global gold production is poised to fall off a cliff.  This is a situation that is getting to be very dire.  We are seeing the major companies fail to replace their reserves.  The major companies eliminated much of their exploration staffs, in favor of letting the juniors do that work, and the juniors haven’t been able to get the job done.

As you know, I founded Aurelian Resources before it was bought out, and the discovery I was involved with was a 13.7 million ounce discovery of 8 grams per ton gold.  That’s a large discovery and a really robust grade.  You can compare that to the average grade being mined by the industry right now, which is about 1 gram.

You can’t go much further below 1 gram without having nothing, so the margins are getting awfully thin for the gold companies.  This is why you are seeing major companies miss their overall production targets, costs, and earnings in the last two quarters. 

They have also changed their guidance going forward and admitted they are not going to be producing as many ounces of gold in the future.  The bottom line here is a higher gold price is needed to help the industry build itself out of this hole.

This is one of the primary reasons why the gold bears are wrong when they predict that the gold price will collapse.  Gold is headed much higher in coming years, or the only thing that will collapse is gold production.  But I expect a sharp plunge in gold production regardless, and this will only serve to fuel the explosion higher in the gold price over time.”

I would just add to what Keith Barron has said here by saying that I have known him for over a decade.  He became one of the richest men in the space when he electrified the gold world with that roughly 14 million ounce discovery.  I take him very seriously when he warns there is a coming collapse in gold production.

The central planners and their gold price managers had better be made aware of this tenuous situation.  If they continue to keep a lid on the gold price, there will be dire consequences in terms of global production.  This will only mean that more gold will have to be liquidated out of already depleted Western central bank vaults in order to keep this scheme going.  For KWN readers, please be aware that time is on the side of the bulls in this scenario.

© 2012 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.

The interviews with Nigel Farage, Bill Fleckenstein, Rob Arnott ($100 billion), Gerald Celente, John Hathaway, John Embry, Stephen Leeb and Don Coxe (BMO $538 billion) are available now.  Also, be sure to listen to other recent KWN interviews which included Rick Rule, James Turk, and Egon von Greyerz by CLICKING HERE.

Eric King

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