Leeb:  “We are seeing the usual takedown in gold and silver ahead of the FOMC statement, but I’m still focused on China because it’s the elephant in the room.  What China is doing is clearly accumulating a great deal of gold.  The Indians are also continuing to accumulate gold, it’s just being done through increased smuggling....

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“So what I am really focused on is the ongoing flow of gold from the West to the East.  There is also this question of whether the economic activity in places like Europe and the United States is going to be sustainable. 

One of the things that has greatly helped the U.S. has been the increase in oil production in this country.  This increase has obviously been due to fracking.  But one of the things about fracking is that it requires a tremendous amount of water, and it also requires a tremendous amount of energy.

At some point in the next 6 to 18 months I think we will have seen the peak in fracking production.  When that occurs we are going to see gold really take off.  You will see all of the commodities take off, but in particular gold.  The reason gold will get a boost from this is because the price of natural gas and oil will both start to rise once fracking production runs into trouble.

Oil is still over $100 a barrel, but the price of oil is not rising rapidly.  This is because there is still not the perception of a scarcity of oil.  As oil production from fracking begins to roll over in the next 6 to 18 months, then you will really see the price of oil start rising rapidly once again.

This increase in the price of oil will accelerate the inflation making its way into the system.  If you look at China, they have been scrambling for years to lock up oil production around the globe.  The Chinese have been making deals on several continents to secure oil.

I keep telling you, Eric, that the Chinese are also going to require tremendous amounts of silver for their increased solar energy production.  So the Chinese get it.  They know oil is going to become more scarce, and so is water.  They know that if you don’t have enough water around then you aren’t going to be doing fracking.  That leaves solar and wind.

Anybody investing in physical silver is getting the added benefit of looking at the future energy needs of the world and understanding that it is going to require a great deal of silver.  As fracking production declines, it is going to put a hole in the U.S. economy because we are going to have to start to pay through the nose once again for oil. 

This will mark an inflection point that really starts the ball moving for oil, gold, and silver.  Silver might not need as much help because there will already be significantly increased demand from China.  Right behind the Chinese are the Japanese and the Indians.  So the East gets it.  They understand there is a water shortage.  The Germans also see this trend toward solar as well. 

But when you see U.S. oil production flattening out, you will know that you have one of the biggest buy signals in the history of gold and silver.  When it comes to silver, we may already be reaching that point of inflection because of the drastic energy needs of China and Japan. 

The reality is we are going to see a move in silver that will dwarf the move in gold, even though gold is going to see one of the greatest bull markets in the history of any metal.  But silver will really explode in price because it is a monetary metal, and it’s a critical energy and industrial metal as well.

So the weakness we are seeing in both gold and silver today has nothing to do with the long-term fundamentals which remain incredibly bullish.”

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