Embry on gold, silver.With gold and silver consolidating recent gains, today King World News interviewed John Embry, Chief Investment Strategist at the $9 billion strong Sprott Asset Management. Embry had this to say about the world’s present situation, “We all know the problems in Europe and in the United States, but there was apparently a failed Chinese auction due to the problem with the local debt over there. There has been so much local debt issued in the last few years as part of this expansion and I guess investors are getting a little indigestion. I think that just brings home the point even more strongly that debt will ultimately bring down the fiat currency system because there is far too much of it and we can’t service it anymore. The idea of repaying it has long since been forgotten.”
“Clearly they’ve opted in my opinion to go with printing whatever amount of money is necessary to keep this afloat, which will in the end lead to hyperinflation. At that point the debt will be cleaned out in the aftermath. The alternative would be to let it go now by imposing austerity plans in all of the various countries and that would lead to a depression very quickly. I don’t think anybody wants that to happen on their watch, so hyperinflation here we come.”
When asked about Sprott’s new issuance on its Physical Gold Trust Embry said, “Basically it was priced very well, it was priced almost right on the market instead of at a huge discount. It went very well, it was a $266 million issue and if the overage is exercised it will be $305 million, which will buy roughly 190,000 ounces (roughly 6 tons) of gold. In this market that is a lot of physical gold, but I think from every aspect we are very happy with the deal and we are very pleased that the public chose to participate.”
When asked about sentiment in the gold and silver markets Embry replied, “I still think it’s extremely constrained, the average person is still ignoring it. The driving force in the gold market right now is the unbelievable chaos in the world’s financial situation...This is what’s driving the bus right now in the gold market and it doesn’t make any difference what time of year it is, this is reality....
When asked about silver specifically Embry stated, “It’s very easy to foresee triple digit silver, I don’t consider that the least bit outrageous and it might be high triple digits before it’s over.”
When asked about Eric Sprott’s call for a move to 840 on the HUI (gold stocks index) Embry remarked, “I would think that’s a minimum expectation. I think that if gold goes to $2,000, which is an easy prediction over the next 6 to 12 months, I see no reason why the HUI couldn’t double (to 1,200). People just can’t grasp that when the time has come for a specific asset class, it’s going to go infinitely further than anybody thinks at the time.”