(JOHN EMBRY, SPROTT GOLD) > As I said earlier, we are truly in the end game now. We are coming up to the fiscal cliff in the United States, there are no solutions in Europe, China’s economy is imploding faster than anybody wants to acknowledge, and Japan is a train wreck. These are all signs that we have now entered into the end game.
The money printing is
absolutely essential to keep the end game from occurring yesterday.
There are two aspects to this. The banking system is for all intents
and purposes bankrupt. But more importantly, if you superimpose the
virtual banking system on top of the already bankrupt banking system,
there is no other option but for central planners to print money into
the hereafter to try to keep the system from totally collapsing.
Remember the virtual
banking system is monopolized by the stunning quadrillion dollars worth
of notional derivatives, many of which are not worth the paper they are
printed on. This is astoundingly bullish for precious metals, but
incredibly bearish for virtually the entire rest of the world.”
Eric King:
“John you mentioned the massive shorting that is taking place in both
the gold and silver markets. Obviously there could be a spasm higher,
but at some point the commercials are going to try to harvest that money
by smashing the price of both gold and silver.”
Embry:
“Absolutely. That’s a very good point, Eric, because I’m always
nervous when the COMEX open interest blows out by almost 100,000
contracts like it has over the past three or four months in gold. That
has always been a condition in which players become fearful about what
is going to happen to the gold price in the short to intermediate-term.
But on the other hand,
there is always this possibility of a commercial signal failure, where
the commercials get overrun. This time there is so much interest in
physical buying, around the world, that any attempt to smash the price
and eliminate the paper longs out of the market is going to be used as
an opportunity for the physical buyers to step in and accumulate.
This does limit the
downside. But having said that, I am always uncomfortable when the open
interest has gone up as much as it has. In the fullness of time, this
price suppression scheme will be seen as one of the stupidest things the
West has ever done.”
Eric King: “Is the West destroying itself with this gold price suppression policy?”
Embry:
“I’d like to say no, but I’m afraid I can’t really, in all honesty, say
that. There’s an old adage that ‘gold goes where the wealth is being
created.’ And the wealth is not being created in the West anymore.
We’re consuming ourselves into bankruptcy.
The money and the wealth
are being created in the East, and that’s where the gold is going. This
is very historic what’s happening here. The West is losing more and
more of their gold reserves to the East. We are about to publish a
piece here at Sprott titled, ‘Do Western Central Banks have any gold
left?’ I wonder how little they have left?
People believe there are
30,000 or so tons of gold in the Western central bank vaults. I don’t
think there is even a fraction of that left.”
