Embry:  “What really caught my attention was the brilliant interview you did with Egon von Greyerz yesterday.  He addressed a point that is missed by a lot of people.  Everybody seems to think that with all of the problems in the West that the Chinese economy will save us because of the growth phenomenon that’s been going on over there for the past 20 years....

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“But as Egon pointed out, China probably has as big or even a bigger credit bubble than the West ever had.  Since the financial crisis hit in 2008, China has gone to money printing hand-over-fist, with increased debt growth, in order to keep their economy moving forward.  China has a political imperative to do this because the public is not terribly happy with the situation.

But the leaders placate the public with economic growth and job opportunities.  This is unsustainable, and it’s incredibly important to realize this because without China’s growth, if it were to recede at some point in the future, when you superimpose that over the mess in the West, we could be headed for a worldwide depression of epic proportions.

But I’m also focused on the gold market, which is the most counterintuitive market I’ve ever seen.  Silver is the same way, but I want to talk about gold.  All I see is currency debasement everywhere as the money supply around the world is going parabolic, which should be extremely bullish for gold.

At the same time, physical inventories are clearly falling.  The amount of gold going into China is virtually taking up the entire world annual production.  But the Chinese are not the only entities buying gold.  This is why you know there is a great deal of Western gold flooding the market through various leasing mechanisms.

As a result you have this remarkably negative sentiment which has developed because the gold price has been crushed by the paper market.  The thing that has me most concerned here is the leverage in the fractional reserve paper market.  When you look at how many claims there are on each ounce of gold that exists in places like the LBMA and the Comex they are staggering.  There are about 70 claims for each ounce of gold.

At some point this will become the real story.  When the fundamentals finally assert themselves, and entities who think they have gold are disabused of that fact and realize all they really have is a paper replication of gold, I think it will all be settled for cash at the very time these entities won’t want cash because it is being debased at an ever-greater clip.

So gold and silver are setting up for probably the greatest bull market in anything.  But until it happens, everybody is negative and being influenced by the action in the paper gold market.  I’ve never seen anything like this.  It’s not just the gold and silver markets that are being influenced, as Michael Pento brilliantly pointed out in his KWN interview, you have interest rates being driven down to a level that reflects neither the inflation or the credit risks.  So it’s unsustainable.

The only reason the economy and the financial system is remaining afloat is because of these ridiculously unsustainable low interest rates.  So we’re headed for a major crisis, it’s just a question of when?  The combination of derivatives, QE and algorithmic trading have allowed all of these markets to be manipulated and falsified for far longer than the rational mind would have expected.  But it’s solving nothing, and the end game just gets worse with each passing day.”

Embry added:  “People who have been big believers in gold and silver have been giving up recently.  The only thing I can say in response to that is this is the best opportunity to buy this stuff in history.  Don’t give in because this is what the central planners want you to do.  Central planners in the West want people to throw in the towel because they want your metal.

In the midst of all of this we have Western governments falsifying economic data by overstating the growth numbers.  They are doing this in a desperate attempt to maintain confidence in the system.  My greatest fear is that if I’m right and the Western financial system and global economy implodes, I think we will see the most frightening level of social unrest in history.”

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The audio interviews with Egon von Greyerz, Dr. Paul Craig Roberts, William Kaye, Michael Pento, Andrew Maguire, Gerald Celente, David Stockman, Art Cashin, John Hathaway, James Turk, Eric Sprott and Jim Grant are available now. Other recent KWN interviews include Marc Faber and Felix Zulauf -- to listen CLICK HERE.

Eric King

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