Embry:  “I am becoming far more comfortable with the gold and silver markets after what can only be construed as an extraordinarily ugly few months.  These violent takedowns in the paper market, which bore no relation to what was going on fundamentally, have discouraged so many people.

I guess price action is the thing that drives them crazy because people then start to doubt the fundamentals.  But what I see now is very promising....

Continue reading the John Embry interview below...


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“I see falling gold inventories almost everywhere.  We have seen how much gold has come out of the ETFs, and how much the COMEX inventories have shrunk.  And the gold that JP Morgan holds for its customers in its own accounts has also dwindled.  All of this is a precursor to a much higher move in the gold price. 

At the same time I am getting extremely excited about silver.  Eric Sprott’s revelation about all of the silver going into India because of the difficulty in that country obtaining gold due to official impediments, I think it’s a classic case of unintended consequences on the part of the Indians.  The last thing the silver market needs is a huge new demand source in terms of trying to keep the price under control.

I am also seeing that JP Morgan is feverishly trying to acquire as much physical silver at the same time they are reducing their paper short position.  So I don’t think we have much longer to wait for a real explosion in silver prices.  And if I’m right on both gold and silver, this will be seen as the single finest buying opportunity in the entire bull market which is now in its 13th year.”

Embry also added:  “On the flip side of that, I look at what’s happening in the U.S. stock market, and that market is rising on terrible volume, while true market fundamentals continue to deteriorate underneath it.  To me this is a very dangerous bubble that is forming.

At some point there will be a violent correction and I think it will be resisted by the powers that be because the Dow Jones is considered one of the underpinnings of the confidence of the public in the United States.  If the stock market begins to confirm the problems that exist in the United States I think they will have a huge problem with the consumer psychology.

I am also really fascinated by the fact that anyone gives Ben Bernanke any credence today.  My attitude is that what he says is becoming increasingly irrelevant, but what he does is the important issue.  As far as I can see, what he does is just keep printing money and buying debt instruments, and I suspect this will remain the order of the day, and it will probably accelerate in the future because the alternative is too much for him to contemplate. 

The alternative is much higher interest rates and the financial and economic chaos that will result from it.  So I don’t see any real change in course because I don’t think they can do it without a seriously adverse outcome.”

Embry also discussed trouble in China:  “The other thing I’ve been looking at is this whole Chinese situation.  With great furor they reported 7.5% growth in the most recent quarter.  But I just look at their situation and I see a massive housing bubble which may be the largest in world history when you compare the prices to the underlying incomes.

I also see excessive debt everywhere in the Chinese financial system.  There is also the problem of vast overcapacity with regards to manufacturing, as a result of weakening exports, and to me I just don’t think that’s a healthy situation.

I don’t know what their true GDP growth number is, but it most certainly isn’t the 7.5% they just reported.  The Chinese have been the engine of world growth post the world financial crisis, and I just don’t see them as being able to carry the load much longer. 

As a result, where is the engine of growth?  The Western world is highly indebted, so there is no real vitality there.  So if China gets into difficulty, I think things will get pretty messy, and it will just serve to reiterate why I’m so bullish on gold and silver.  All of this economic weakness will just lead to more and more money creation and that’s the best possible environment, ultimately, for gold and silver prices.”

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