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Gold Flow East & Silver Squeeze To Create Surge In Metals

Today acclaimed money manager Stephen Leeb told King World News there is an investment and industrial squeeze taking place in the silver market. Leeb stated, “The coming move in gold and silver will mark a major turning point in what will probably be the greatest bull market people will ever see in their lifetimes.” Here is what Leeb had to say: “I think the key to this market is understanding when commodities are going to breakout and how high they will go. Investors need to understand that once commodities breakout, the higher prices will be a constraint on growth going forward.”

Stephen Leeb continues:

“Higher commodities also cement gold as the go to currency. In fact, gold will be the only meaningful currency once commodities become truly scarce. Countries are going to be less likely to want to take paper money going forward because there is a race to the bottom in all currencies.

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“And we have seen oil continue to rise recently. But circling back to gold, we have really seen a classic trading range that has been going on for a long period of time. When you get one of these trading ranges, what you are seeing is gold moving from weak hands to strong hands.

It’s taking the Fed 7 years to send only 300 tons of gold back to Germany. But China is importing 700 to 800 tons of gold through Hong Kong in a single year. So gold is flowing from the West to the East. Meanwhile, Germany is pleading with the Fed, ‘Can we get some of our gold back?’

But as commodities prices start to breakout to the upside, then you will start the real move in gold. If you look at the ratio of gold reserves to money reserves, there has been very little change since the beginning of the century. In other words this whole move we’ve had in gold from $250 to around $1,700, this has all been predicated on buying enough gold to keep up with money creation. That ratio is going to start rising, and rising rapidly once it becomes clear the fiat money will not be good for anything.

I hate saying this because I’m American, my kids are American, but the West is going to be left holding the bag. This flow of gold from West to East is going to continue. At some point the world will hold gold-backed or partially gold-backed yuan rather than dollars. The Chinese Central Bank has said, ‘We want a reserve currency. We are going to continue to accumulate gold.’ Meaning, they are going to get as much gold into their country from international sources as they possibly can. At a certain point they will have enough.

Now, can I tell you gold is going to take off in the next 6 minutes, the next 6 hours, or the next 6 days? No. But when gold does take off, the world will really see an acceleration of the gold bull market at that piont.”

Leeb had this to say regarding silver: “Silver is a little bit different because it has suddenly dawned on a bunch of people that China is serious about photovoltaics, and they need a tremendous amount of silver. So silver may outperform gold.

In fact, silver may very well take out its $50 high before gold takes out its $1,925 high because of the industrial and investment squeeze which is taking place in silver. You are seeing the last period of accumulation before the price explodes. The coming move in gold and silver will mark a major turning point in what will probably be the greatest bull market people will ever see in their lifetimes.”

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”

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Eric King

KingWorldNews.com

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