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This Is Exactly What Will Move Key Markets Going Forward

On the heels of a significant rally in stocks, along with gains in gold, silver and oil, today King World News interviewed acclaimed money manager Stephen Leeb, Chairman & Chief Investment Officer of Leeb Capital Management. Leeb told KWN what factor will be moving key markets going forward. But first, here is what Leeb had to say about the situation in Europe: “Spanish bond yields hit record highs, at least since the euro was formed. Investors gave a big thumbs down to this way of bailing out banks or even individual countries. The market still wants a broad based bailout, and the major roadblock there remains Germany.”

Stephen Leeb continues:

“Until the Germans relent a little bit, I think we are going to be stuck with a lot of turbulence in gold and equity markets. That said, there is one piece of very interesting news today -- The German bonds have actually slumped fairly significantly. German yields are up about eleven or twelve basis points.

So investors are no longer looking toward German bunds as a safe haven. That may send a big message to the Germans....

Continue reading the Stephen Leeb interview below...

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“Germany is not an island. If Spain starts to go under, and other countries start to go under, Germany is going to be stuck holding a lot of worthless sovereign debt. That would be very bad news for the German economy.

If Germany wakes up and realizes that, Eric, those headwinds we’re seeing now in gold and even the stock market will dissipate. Today, both of those markets are responding positively to stimulus that people believe will be coming not only from the Fed, but also from Germany.

That is what the markets need. If you see any indication of a change in sentiment from Chancellor Merkel, I think you are going to see explosive rallies in both stocks and gold, especially in gold.

You know the junior gold miners, I don’t know when they are going to turn, but that is a market that you clearly want to be in. That’s where you are going to make the most money. You will see a massive bull market in precious metals and in particular, the junior mining stocks.

The bottom line is if Germany doesn’t opt for monetary stimulation, it will get turbulent again. If you look at hyperinflation, it’s horrible. There are massive dislocations. I mean the bankers, the people that can buy land, they get as rich as Midas.

The other people get stuck holding less than an empty bag. It’s terrible, it horrible, but it is not as bad as the alternative. The Weimar Republic survived the hyperinflation in Germany during the 1920s. The second half of the 1920s was really a strong period for Germany. They had low inflation and strong growth.

So the Weimar Republic survived through the hyperinflation and was swimming. Germany finally ran into trouble when the world went into a depression in the 1930s. That’s what led to World War II, that’s what led to Hitler.

The Germans kind of have to wake up to this and realize they are not looking at hyperinflation. Second, they have to avoid letting their fear of hyperinflation get in the way of what needs to be done and that is to inflate.

If they don’t get on board, we are looking at a worldwide depression. Ironically, in the end, that would lead to hyperinflation, the very thing they fear the most. The fact that Moody’s recently downgraded some German banks might be a sign that Germany cannot go through this in an isolated manner.

Although their economy is doing just fine now, that could change overnight. The sooner the Germans realize that, the sooner we get that obstacle out of the way, and the sooner we can break out the champagne as far as gold and junior gold stocks go.”

The interviews with John Embry and Bill Fleckenstein are available now. Also, be sure to listen to this week’s line-up of other KWN interviews which include Egon von Greyerz, Nigel Farage, Michael Pento, Dr. Stephen Leeb, Don Coxe ($538 billion BMO), Art Cashin ($612 billion UBS) and Rob Arnott (oversees $100 billion) by CLICKING HERE.