Stephen Leeb continues:

“I think scarcity in oil is a dramatic tailwind for gold.  Politicians will inflate.  They don’t want oil to bring down the economy like it did in 2008.  Remember, this inflation will take place with commodity prices already high.  So this will create significant inflation.

This means higher gold and silver.  Gold at $3,000 by the end of the year, easy.  Silver $60, $70, easy.  What else do you buy?  What currency do you buy?  Do you buy the euro or the dollar when we are inflating?  You can’t buy the Chinese yuan because it’s not freely traded.

Do you buy the yen with the Japanese pumping money into their economy?  There are no other answers.  Gold right now is the de facto reserve currency in the world....

Continue reading the Stephen Leeb interview below...  


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“Governments from China to India, to most all governments, except those in the Western world, want to assure they have enough gold on hand.  It’s just that simple.”

When asked about the move in oil, Leeb replied, “We’re sitting here in this country saying fracking is a solution.  Fracking is no solution.  Fracking buys us maybe a year or a year and a half.  The amount of reserves we have in these shale deposits are smaller than we had at Prudhoe Bay.  They are also much harder to cultivate.

If you look at the production profile of the US over the past 40 years, you see a little blip associated with Prudhoe Bay.  It barely even makes a dent.  Even with Iran still exporting their 2.2 million barrels per day, the OECD right now is at sixteen year lows.  

Now some of that is because Saudi Arabia doesn’t have it.  There is no doubt in my mind that China sees the writing on the wall and they are socking away a lot of this oil.

Right now this country is lost.  What we are likely to see here in the US is the Obama administration, politics being what it is, will probably release oil from the strategic reserve.  We have already heard a little bit of talk about this.  This, in my mind, is as dumb as it possibly can be.

The reserve should only be used if there is armed conflict with Iran and subsequent turmoil in Saudi Arabia.  Then you really need that oil.  This oil should not be used to get somebody elected.  Improper usage of this oil would be a terrible mistake.

Oil, left to its own devices, without any talk of the strategic reserve, could go anywhere on the upside.  Oil could easily go up to $130, $140, $150.  If the Saudi oil fields are shut down temporarily, there goes 9 1/2 million barrels per day.  How do we make that up?

If we do see oil dip because of a release from the strategic oil reserve, buy it.  Buy oil and buy gold on that kind of news because it is so short-sighted.  If we release from the reserve do you know who will be buying it?  China.  We will be giving a gift to China.”

Leeb also added:  “China is also going to increase their consumption of copper.  China’s copper consumption has been growing at about 3% to 4% per year.  It should grow 6% to 7% per year over the next five to ten years.  It’s not about economic growth in China.  What China is doing is spending massive amounts of money on smart grids and alternative energies.

I also believe the Chinese are going to start accumulating massive amounts of silver again.  They will stockpile silver the same way they are aggressors in the copper market.  The other plus for silver is the ‘monetary’ plus.  More and more investors are beginning to recognize silver, once again, as a monetary metal.”

Dr. Stephen Leeb: Chairman & Chief Investment Officer of Leeb Capital Management and the

author of “Red Alert: How China's Growing Prosperity Threatens the American Way of Life”

Just released, to order from Amazon CLICK HERE.

© 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.

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