Embry:  “Gold had a wonderful day on Friday and was challenging $1,400.  In any normal market, based on everything that has transpired up to this point, gold would have blasted through $1,400 today and been off to the races.  But the reality is that the BIS intervened and capped the price.  This doesn’t surprise me because I think the BIS has been involved in a lot of the strange movements in the gold price over the past year.

But this is just delaying the inevitable....

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“Gold is going materially higher over the next 12 months, and the price will most likely explode higher in the next 5 months.  I think the West, including the BIS, is running out of ammunition (physical gold) to cap the market, and the fact that they continue to do this just reveals how truly desperate the situation has become for the West.

All of this frenzied activity on the part of the West is clearly an indication to me that there are enormous problems in the system.  Western central planners know that a massive surge in the price of gold would reveal the true nature of the rot that is taking place in the financial system.  So they are now clearly fighting a losing battle in the gold market, and this will be seen as just another delaying action over time as they ultimately retreat in defeat.”

Eric King:  “Andrew Maguire was the first to bring up the BIS involvement in the gold market quite some time ago.  What do you make of the repeated interventions in the gold market by the BIS?”

Embry:  “As you know the BIS is the ‘central bank of central banks.’  The BIS has a massive gold trading operation and I’ve always believed they were very active in the gold market, but this is just one of those times where I’m sure they were greatly concerned about the tremendous upside action in gold, and so they moved to halt the advance.

But the attempt by the BIS to maintain the viability of the fiat currency system will ultimately fail.  The obvious alternative to the fiat currency system is gold, and so I totally accept Andrew Maguire’s observation that the BIS’s hand is consistently active in the gold market, sometimes more than others.”

Eric King:  “In your last interview last week you brought up the fact that there was an emergency meeting taking place at the White House because the surge in interest rates had already seriously destabilized the entire financial system.  This is due to the underlying derivatives exposure.  You pointed out that the meeting was attended by the head of every significant financial agency in the United States, as well as the Fed and the Comptroller of the Currency.  I couldn’t help but notice that since the day of that meeting (last Tuesday) bonds have been rallying.”

Embry:  “Well, that doesn’t surprise me.  That’s what the meeting was about.  I strongly believe that had the 10-Year bond roared through a 3% yield, that really would have unleashed chaos in the derivatives market.  Once there is an explosion in the derivatives markets, it becomes a cascading series of blowups and it completely destabilizes the entire financial system.

So there was clearly an intervention in bonds, and that has delayed the inevitable, at least in the short-term.  This was entirely predictable, but does it make any difference in the long-term?  No.  At some point there is going to be a collective realization that the money is being destroyed, and that interest rates are materially too low.  The bottom line here is that Western central planners don’t have a plan that works, and the longer-term ramifications of their interventions will prove to be even more disastrous.”

Eric King:  “We have interventions in taking place in bonds, and now the gold market, John.  What do you make of this?”

Embry:  “I think gold is one of their lesser problems now.  But at the same time, gold can’t be seen to be on a tear to the upside.  The rising interest rates is the real catastrophe.  But even as all of these interventions are taking place, we are also seeing currency flight in the BRIC nations right now. 

There is major currency flight in countries such as Brazil and India.  Brazil stepped forward with a $60 billion program in a desperate attempt to stabilize their currency.  As rates rise in the United States, this is vacuuming money out of these other countries and creating a whole new set of problems.  So the problems are just escalating.  Meanwhile, as all of this chaos is unfolding, Western central planners are desperately trying to avoid the inevitable collapse that is coming.”

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