Leeb:  “I’m focused on watching how gold and silver are trading right now.  Silver has started to outperform gold recently and I view this as very positive.  This suggests to me that demand for commodities is increasing.  Copper, as an example, has been a strong performer recently. 

But when looking at silver, it really is considered a strategic resource....

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“We have talked about China building out their energy infrastructure, the use of photovoltaics, and the enormous amounts of physical silver that will be required for this massive energy infrastructure.  So all of this goes back to China being the key.  And for at least the last two months the mainstream media has been unrelenting in terms of how they were describing the demise of China.  Krugman even did an article on how China was falling apart.

Now, all of the sudden, it appears that China is not falling apart.  You got a statement from Vale, one of the largest global mining companies, that things look pretty good in China.  So we are starting to see this pop in the price of commodities.  Gold has just been bouncing around a bit here, but gold will follow to the upside. 

Make no mistake about it, you cannot find any significant move in commodities in which gold does not eventually end up leading.  As commodities head higher in price there is a natural gravitation toward gold, and this will cause the gold market to experience some major upside breakouts in terms of key technical levels.  The Chinese continue to buy as much gold as they can get their hands on.  The flow of gold from West to East is enormous. 

The Chinese know that their demand for commodities is massive and it’s going to stay massive.  When you try to urbanize 250 million people, that’s going to take a lot of copper and other commodities.  As they continue to convert to renewable energies, that means an enormous push for photovoltaics and physical silver. 

The push for renewable energies also means more demand for heavy rare earths, none of which we have.  So I don’t think gold is going to go any lower, and certainly gold has already made its bottom.  Despite the kind of volatility we are seeing today, the bigger question is, when does gold begin to move dramatically higher? 

But, regardless, my advice for investors right now is to focus a little bit more on silver because of the enormous demand for silver because of photovoltaics that will come from both China and Japan.  Silver investors have to keep in mind that this is going to increase dramatically in coming years.  So right now in the precious metals world I would focus more on silver.

But at the end of the day, gold investors can sit comfortably with the knowledge that gold will wind up being the critical reserve currency metal.  The bottom line is that there has been a very, very favorable turn in the gold and silver markets, and, despite pullbacks, higher prices should be expected in the future.”

Leeb also spoke about Europe’s role:  “I just want to add that if you look at commodities in general, it’s no coincidence that commodities peaked almost simultaneously with the peak in the economy in Europe.  Europe is the biggest economic region in the world.  Now you are getting a move up in commodities as you see some signs of life in Europe. 

The European situation could have only gone so far before they were risking upheaval across entire societies.   So I think you are getting clear signs of a European recovery, complimented with China’s news, and so commodities are quite likely to go higher from current levels.”

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