Wednesday, September 19, 2012

End Game of Printing Unlimited Money

(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.”

No comments:

Post a Comment