Today a 50-year market veteran spoke with King World News about the best antidote to the chaos that is happening behind the scenes.
John Embry: “Eric, this is probably the most concerted attack on the precious metals space. And after 40+ years of following the metals, I have seen a lot of them…
Continue reading the John Embry interview below…
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“The ferocity of this attack is well-illustrated in Jason Goepfert’s excellent work that KWN published, which noted that this is the first time on record that gold has closed lower in 14 out of 16 trading days.
However, I could make the case that the attack on silver may be even more relentless, as silver has been driven to levels that make virtually every pure silver producer uneconomic. But with more than 50 percent of silver coming as a byproduct from base metal production, that source hasn’t been impaired yet.
Expect A Myriad Of Mine Shutdowns
But what is transpiring in the base metals business suggests that there will be a myriad of mine shutdowns in the future, and this will take a significant toll on silver production. With roughly 75 percent of mined silver required in various medical and industrial uses, this isn’t going to leave much left over for investors at the very time that they are going to need to own it.
There is a story floating around that someone has come up with a process that replaces silver with aluminum in solar panels. This tends to be the type of misinformation that is floated around at times when the silver price is being taken to the woodshed. So I remain very skeptical on that issue.
As we discussed last week, this attack on the precious metals was triggered by Fed Chairman Yellen’s alleged hawkish attitude towards an interest rate hike before year-end. That might have been somewhat credible had the stock market not gone up on the same news as gold and silver were clobbered.
Stocks Now Most Overpriced In My 52 Years In The Business
Make no mistake, if they are really serious about rate hikes, the stock market is extremely vulnerable because it is about as overpriced as I’ve seen it in my 52+ years in the business. Volume and breadth are atrocious and there is far too much unwarranted optimism.
However, the true insult to intelligence came last Friday with the announcement by the BLS that 271,000 jobs were created in October. This was 80,000 over the highest estimate. The fact that over half the jobs came from the completely discredited Birth/Death model, which estimates job creation in the small business sector, tells you all you need to know. But there has been nothing in the microeconomic data in October that would validate anything close to that figure.
What Is Really Going On Behind The Scenes?
Regardless, this facilitated another violent takedown of gold and silver on the Comex because people assumed that this ensured a rate hike in December. But this begs the question: What is really going on behind the scenes that has the central planners acting like this? There was an explosion in the reverse-repos by the Fed a couple of months ago that exceeded anything seen in the 2008 crisis, suggesting that something had gone terribly wrong behind the curtain.
In the wake of that, global stock markets have been propped up with considerable central bank support, while gold and silver have been under pressure following an initial rally. There is also the issue of the overvalued and over-owned U.S. dollar in the face of increased antagonism on the part of large U.S. Treasury holders — several of whom have announced they have been selling large amounts of Treasuries recently.
People must remember that gold and silver are the U.S. dollar’s worst enemy because they represent real money. This goes against the U.S. dollar, the world’s reserve currency that is issued by a country becoming more and more bankrupt with each passing day.
The Best Antidote To The Chaos
The next few months are going to be very interesting, but in my opinion a large exposure of physical gold and silver held in a safe place is the best antidote to what is coming.” ***ALSO JUST RELEASED: New Signs Of Liquidity Stress, A Major Warning And A Surprise In China CLICK HERE.
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