Today an acclaimed money manager told King World News that we are very close to seeing one of the most dramatic reversals in any market in history.  Stephen Leeb also spoke about China, Russia, and the West, and said the next leg of the bull market in gold will take the price above $10,000.

Leeb:  “I find it fascinating that we are seeing continued weakness in the price of oil.  What’s interesting is that Saudi Arabia is clearly in favor of lower oil prices.  Saudi Arabia’s production levels are close to all-time highs.  And the Saudi’s are driving the price of oil lower in the face of enormous turmoil in the Middle East, including violence in six Saudi cities….

Continue reading the Stephen Leeb interview below…

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“Obviously the Saudis are sending a message by taking the oil market to unsustainably low levels.  This is going to kill the fracking industry in the United States if prices remain at these depressed levels.  There will be bankruptcies in this space and it will also hinder financing for future projects.

I believe that all of this comes back to China.  The Chinese used to have the second largest economy in the world but I believe that today the Chinese economy is the largest in the world in terms of purchasing power parity.  So the Chinese have a lot going for them.  The slowdown we have seen in China is partly related to their crackdown on corruption.  As an example, they are purging corruption in their energy sector.  The Chinese don’t fool around with this kind of thing and they are arresting anybody who is part of the corruption.  The other day investigators found the equivalent of $33 million in cash in one energy official’s home.

So we have China continuing to crackdown on corruption, even in the face of a slowing economy.  India is doing the right things as well.  Right now per capita oil consumption in India is rising.  So the demand for oil is clearly there in the market, but the biggest buyer of oil during this collapse in price has been China.

I believe that we will begin to see oil priced in currencies other than the dollar.  When that happens, the game is over.  China knows that the United States has printed over $4 trillion.  The U.S. has the reserve currency so they can get away with that.  So the question is:  How can China compete in the global resource wars we are seeing against a country like the U.S., which can just print money and buy what they want?  The answer is they have to dislodge the U.S. dollar as the world’s reserve currency.

If the Chinese fail to end U.S. world domination, they won’t have control of their own fate.  What I think you are seeing right now with the price of oil is part of China’s master plan.  China is winning on all fronts because the U.S. fracking industry will go up in flames if prices remain depressed, and it is also putting pressure on China’s strategic partner — Russia.  So this is helping China to sign these historic agreements with Russia on very favorable terms.

But all of this is part of China’s master plan to create a new world reserve currency that revolves around the yuan and gold.  Russia is already conducting its energy trade with China in yuan.  The next step for China is to begin conducting its energy transactions with Saudi Arabia and others in yuan.  That is what the world is moving toward.  I’ve been saying this for some time now and KWN readers have been watching this unfold.

When the yuan and gold become the dominant currencies, it will dramatically change the world.  We are also heading toward a world of resource scarcity.  This is why the Chinese and the Russians are accumulating as much physical gold as they can.  For China, they know they will need to have their currency be the most attractive in the world with a gold backing in order to compete aggressively as the global resource wars accelerate.

This is why the West will be out of luck.  We are in the process of dishoarding all of our gold by selling it to countries like China and Russia.  This is another reason why the world will demand another reserve currency.  The West is clearly in decline.  For investors, even though gold has been weak, it has been money for thousands of years and it will be the big winner before this is over.  For holders of gold, despite the recent weakness, we are very close to seeing one of the most dramatic reversals in any market in world history, and the next leg of this bull market with take the price of gold over $10,000 an ounce.”

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