With continued uncertainty in global markets, John Embry spoke with King World News about the real reason for today’s takedown in gold and silver.
The Initial Stages Of Accelerating Inflation
February 20 (King World News) – John Embry: “Eric, it’s been a bit since we last spoke and upon my return and I have noted little change since I left. Inflation is on the move globally and is just in its initial stages of acceleration. Interest rates do not reflect this reality in the least, and as a result, financial markets remain at historically overpriced levels…
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The Last Decade Of Central Banker Recklessness
John Embry continues: “In my mind the debate isn’t about what is going to happen. The outcome is assured by the global central banks’ recklessness over the past 10 years in the wake of the global financial crisis of 2008. It is rather, when it is going to happen, and whether the inevitable debt deflation, which will exceed anything seen in history, will be preceded by an unprecedented global hyperinflation?
We might have gotten a clue recently when the US Federal Reserve made an initial attempt to shrink their bloated $4 trillion balance sheet and markets tanked in response. This led to a short-term reversal in this plan, and not surprisingly markets recovered. This would suggest that when push comes to shove they will inflate to put off the inevitable, and this will lead to ever greater inflation.
Interest rates globally don’t come close to reflecting the current inflation rate, which incidentally is significantly understated due to hedonic adjustments, changes in the composition of the basket being measured, and other slight of hand meant to hoodwink the unsuspecting public. Thus, a more meaningful outburst of inflation is going to drive interest rates higher, despite the central banks best efforts to combat it, and the impact on financial markets will be devastating. We got an early taste of it recently and the central banks’ response was predictable — prop up markets at all costs. However, this solves nothing and makes the endgame worse as a vastly over indebted economy and seriously over-levered financial markets become even more indebted and over-levered.
Real Assets Will Prevail
In order to continue this charade, the gold and silver markets must be suppressed even more blatantly. The action in these markets the past several days has been indicative of this. There was a sharp rally in the gold price last week in the wake of a higher than expected inflation number in the United States, but the usual suspects triggered a totally unwarranted correction almost immediately. However, this is all just a holding action by the powers that be as they try to postpone what will be seen in retrospect as the largest wealth transfer in human history. Real assets will prevail and monetary assets will come under enormous pressure, most particularly debt instruments. A wise investor would be positioning for that inevitable outcome at this time.”
***KWN has just released the timely audio interview discussing the action in the gold, silver and mining share markets as well as the action in the stock markets and much more and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
ALSO RELEASED: Greyerz – Pandora’s Box And Disastrous Worldwide Consequences CLICK HERE TO READ.
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