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Embry: The Upside for Gold and Silver will Knock Your Socks Off
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Archive for August, 2011

Embry: The Upside for Gold and Silver will Knock Your Socks Off

With no easy solutions to the globe’s debt problems visible, Sprott Asset Management’s John Embry expects gold and silver to be significant beneficiaries but the road ahead will not be easy.

For many commentators, gold is considered not only a constant store of value but, also, a barometer for the health of the global economic system and the currencies that pump through its veins.

For, John Embry, chief investment strategist at Sprott Asset Management, the current parabolic rise in prices, which have beat even his optimistic performance expectations this summer, is indicative of the unsustainable debt situation in which the world now finds itself.

Speaking on Mineweb.com’s Gold Weekly podcast, Embry explains, “We’ve reached a stage in the debt cycle where it doesn’t appear we can move forward and on that basis you need more and more debt creation to generate the same dollar real GDP growth – and I don’t think we can get that kind of debt growth.  So to keep these systems stuck together they [governments] are going to have employ quantitative easing in massive quantities, and if they don’t, the current softness in the economy is going to turn into a rout.”

Given the current levels of growth, Embry says, any halt in the funds propping up the banking system will result in significant deflation in “fairly short order” because the deflationary pressures within the West are huge.

But, he says, it is not just the West that is likely to suffer. “The Chinese miracle is grinding to a halt, they’ve dined out in the West for years and they paid for it by taking back our crappy paper but the fact is that they kept their economy going at breakneck pace and I would also say it is probably one of the most unbalanced economies I have ever seen.

“They have depended so heavily on exports and capital spending and now the export markets are weakening at the same time they have massive over capacity.  So those two engines are coming to a halt and the hope is that they can do lateral arabesque into consumer demand to keep the thing going.  I think that will be a hard act in the short run and consequently China faces some fairly difficult economic problems going forward.

What this means for prices?

While this rather bleak scenario does not bode well for the financial system as a whole, gold’s performance over time [as well as that of silver] is likely to “knock your socks off”, Embry says. But, he adds, especially after this latest move, he would prefer to see a correction in prices before that happens.

“I don’t want to see this thing just scream away and become out of control and conceivably if you got a strong effective action in either Europe or the United States – that might be the catalyst for a significant correction of a couple of hundred bucks – but having said that I don’t see the easy solution.”

Embry points out that it is also important to note that, “It’s not gold and silver that are doing anything.  There have been constant stores of value for centuries.  It’s the value of the paper money that they are being denominated in that is at risk here and you know every attempt in history, fiat paper currency has always ended in tears and this one has been going for 40 years since Nixon closed the gold window and it’s probably in its terminal stages.”

Indeed, he is of the belief that the world will ultimately see a return to some kind of a gold standard.

“When we do have to recast the currency system, just to restore confidence there will have to be some backing that maintains discipline – and gold has traditionally filled that role.  So I can see gold being introduced as a maybe fractional reserve like there was before 1971 in the United States.  but to do that given the amount of paper out there and the limited amount of gold, they would have to mark the gold price up dramatically.”

And, while he cannot put any kind of timing on such an event, he does think that gold could move as high as $2,500 within the next twelve months.

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Bob Chapman Interview: $8,000 Gold & $500 Silver, MINIMUM

Great interview with Bob Chapman explaining  the case for $8,000 Gold & $500 Silver, MINIMUM.

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Silver Bullion Bars: Investing Explained

Silver Bullion Bars: Investing Explained StaightSilver.com has over 30 years experience in assisting to Investing In Silver Bullion Bars online.

Investing In Silver Bullion Bars

With silver prices nearly reaching all time highs, there is no better time than the present to start investing by buying silver bullion bars. The savvy investor who buys silver makes an excellent purchase for their portfolio of assets. In tough economic times like the present, one of the best performing assets to have in an investment portfolio is silver and it offers a number of unforeseen benefits.

One of the main advantages of owning silver bullion bars is that they offer a way to protect assets with anonymity that many other investments do not offer. In an age of growing power by government bureaucrats who are seeking to tax as much wealth as they can get their hands on, silver offers the investor an opportunity to privately hold assets away from the prying eyes of government. This advantage is not seen in investments such as bonds, stocks, and real estate. By purchasing silver with cash money through a reputable dealer, an investor can maintain the privacy of their assets.

Another benefit of silver is that it has never been worthless. Even now as the electronics and computer industries are expanding worldwide, silver is enjoying a growth in its value because there are new uses for the metal being discovered. However, over the history of man, silver has always been considered a valuable asset to hold. In times of great economic and political turmoil, investors have experienced a complete loss of value in their paper investments but precious metals like silver have never been worth zero.

Taking these benefits into account, there are a few things to keep in mind when you are buying silver. The first thing to keep in mind is to stick with holding reputable brand names of bullion bars when you purchase silver. These are the easiest ones to purchase and sell on any market around the world. The most respected brands of silver bullion are the ingots minted by Engelhard, Wall Street Mint, Academy, and Johnson Matthey. Another thing to keep in mind when purchasing silver is to realize that bullion is available in bars from as small as 1 gram to as much as 1000 troy ounces. The larger bars are usually very heavy and difficult to move so it can be advantageous to hold silver in smaller bullion bars that can be easily concealed and transported. This allows the investor to maintain the privacy of their investment and to easily store the silver bullion in a variety of places. A final thing to keep in mind when purchasing silver is that there is always a small price charged over the price of silver that is called the premium. The premium is what silver bullion brokers charge to investors to cover their costs of operating in the silver exchange market. This should be taken into account when an investor decides on the amount of money they want to invest in silver. Failing to do this can result in an investor not getting exactly what they want from their investment.

By keeping in mind the advantages of owning silver bullion bars and keeping the tips mentioned above in mind, an investor will be well prepared when the time comes to buy silver. Overall there is no better investment to make than to buy precious metals. The prices and new uses that are being found for silver make it one of the best investments that any investor could make. To put things simply, silver is an indispensable asset that any savvy investor should own.

Gold & Silver: Full Spectrum Dominance

Written By: Jim Willie

Gold and Silver have emerged in the last 12 months as the dominant asset group. They led the entire 2000 decade, still gathering disrespect. They do not require respect from the Wall Street and London crowd. They serve as effective protection during the slow motion crumbling process to the global monetary system. The sovereign bond crisis has circled the peripheral nations, rendered its wreckage, and is working toward the center where the USTBond and UKGilt reside (worried). Italy and Spain are squarely in the crosshairs for financial assaults, but France and the United States lie closer to the core of Western nation sacred debt territory, soon to become sacred burial grounds. That must sound drastic and melodramatic, but just wait. Other calls of an insolvent US banking system, calls of a chronic housing bear market also once sounded extreme. They came true. So did $1000 gold and Canadian Dollar parity calls made in 2005. Again they came true. Dismissal of Green Shoots, Jobless Recovery, Exit Strategy, and No QE sounded bombastic and pedagogical, but they were also correct calls. In fact, very easy calls. The ruin of the USTreasury Bond debt security is a long drawn out process like a cancer victim. Weakness is followed by emaciation, then organ damage, circulatory problems, finally a bedridden state, and lastly the inevitable death. Analogies to each can be made with USTBonds nowadays, like the foreign central banks withdrawing from the process evident in low Indirect Bids, like dependence upon debt monetization.

INTEREST RATE SWAP DEVICE

A preamble is necessary. The Wall Street market makers (manipulators) have succeeded in leading the investment community to believe that the long maturity USTreasury market has contradicted the Standard & Poors rating downgrade of USGovt debt. The bond rally with accompanying fall in the TNX bond yield to near 2.15% as a low led a gaggle of analysts and news anchors to conclude the S&P downgrade can be ignored, as the swimming pool water is safe. Keep in mind the powerful effect of the Interest Rate Swap mechanism. After contemplating some of its traits, you decide if the bond rally is legitimate. The Interest Rate Swap accomplishes the following:

  • initiates a bond rally with heavy leverage, using essentially free short-term debt to fund long-term USTreasury Notes (10-year) and Bonds (30-year)
  • contributes toward giving an ALL CLEAR sign to a toxic swimming pool, of which the USTreasurys are considered the safest in the Sovereign Bond Summer Camp
  • manages a concentrated USTreasury Carry Trade, whereby Wall Street firms recapitalize from easy profits in an orchestrated managed USFed bond rally assured by two more years of accommodation
  • enforces the distortion of the capital cost, near 0%, which actually destroys capital and distorts the price of all assets (see the effect on housing market)
  • leads the investors to believe the erosion in asset value from price inflation is tame, when the actual CPI is much higher than 5%, and recently closer to 10% annually
  • provides end demand for long-term USTreasurys using hidden funding sources like the USFed debt monetization vat or the USDept Treasury standby device, the Printing Pre$$
  • provides the required demand to conceal $1 trillion in Wall Street firm naked shorting of USTreasurys (called innocuously Failures to Deliver) which generates desperate liquidity at a time when investment banking has dried up, essentially closing the loop on USTBond counterfeit.

The net effect of the intensive Interest Rate Swap activity is to destroy capital, to drain capital from the USEconomy, and to crowd out the corporate bond market. The United States is becoming 1990 Japan, but without the trade surplus. With ignorance, the financial media has been displaying the “Turning Japanese” rock music song by The Vapors from the 1980s. Little do they realize that the expression means coming to climax during the sexual experience, with a facial expression straining to resemble the Asian countenance. How strange!! Ironically, the effect of the IRSwap usage has kept interest rates artificially low. That is the sentinel signal for the Gold Bull Market, powered by cheap money, in the quest for true safe haven in the strong storm and deep distortions. The prevailing interest rate is far below the rate of price inflation. So the Gold market will remain steadily stuck in powerful bull market mode.

GOLD & SILVER DOMINANT

The banker index is finally under stress. They have benefited greatly from the fantasy of phony accounting practices. They have also benefited from a staged controlled USTreasury Carry Trade. But their losses continue to mount in great volume. Their exposure to Europe sovereign debt, the US housing market, and mortgage bond investor lawsuits combine to make renewed risk. These insolvent zombies are due for a death experience, if only the markets were fair.

gold bkx ratio

METALS BEATS PAPER

Mining stocks are not keeping pace with the bullion metal. The ultimate problem is paper securities and the trust held in them. Persistent stories about well supplied hedge funds shorting mining stocks, stories of naked shorting of small mining stocks (see Alpha Group), and other sponsored spread trades to support bullion metal over the mining stocks have all contributed to the decline in shares. The distrust in all things paper, as in financial securities, at a time when trust in sovereign debt is on the wane, when financial sector insolvency is argued, when bond fraud has gone unprosecuted, has created a hostile climate for investments. The shortage of credit and capital to anything except USTreasury debt has exacerbated the condition. The HUI index of mining stocks has not done well versus the basic precious metal, the gold bullion, since the spring months. The threat of USEconomic recession will only make the situation worse, certain to lead to more whacks to the equity markets. Gold bullion has no counter-party risk, no paper dependence. Stay clear of the fraudulent custodians and their GLD & SLV fraud-strewn funds for lazy investors who do no research. They will be separated from their metal claims, handed cash in redemption, and sent away. One point of fraud proof is that GLD & SLV have a discount to the metal, while legitimate funds like the Sprott Trust and Central Exchange Fund include a premium price to the metal. That is because the big cartel banks, as custodians, are shorting shares of GLD & SLV, sending the metal inventory to the COMEX to satisfy delivery needs.

hui gold ratio

SILVER STILL STANDS OUT

Independent analyst Dan Norcini does stellar outstanding work. Once gain, he exposed an excellent factor, this regarding Silver. He points out how the Continuous Commodity Index (CCI) has averaged one big drop per month for the past five months. Silver has done well relative to the commodities, as he highlights. In fact, the Silver price is due to rebound. The process has begun, with Silver back above $40/oz. Each CCI drop has lasted from 4 to 7 trading days and has been followed by a rather significant rally. In the past couple weeks, the current decline seems to have run its course. The next 2 to 4 week rally in all of the commodities is underway, like a cycle. To be sure, copper, crude and the grains are going to rally. Norcini surmised (correctly) that Silver was not going much lower, if at all. He posted a reasonable target for Silver at $44 with timing before Labor Day in early September. Adding to the ammunition are the promising Open Interest numbers in silver futures contracts. Even the Large Commercials are covering their shorts in Gold, a good sign generally for precious metals. See the Norcini weblog where he argues how the USDollar will be sacrificed for the greater good .

silver cci

SILVER MORE THAN INDUSTRIAL METAL

The consolidation phase for Silver has given compromised critics and lousy analysts an opportunity to denigrate the white metal, claiming it is exposed for its vulnerability as an industrial metal. While some significant portion of Silver demand comes from industrial processes, it is not replaceable. Besides, its investment demand has been equal in US$ volume as Gold demand, a remarkable fact pointed out by sector leaders Eric Sprott and James Turk. They argue that the Silver price will move higher and reduce the Gold / Silver ratio in the process naturally. The true industrial metal indicator is copper, not silver. Copper has earned the title of having a PhD in Economics. Notice how silver has outpaced the copper price in the last 18 months. Even post-May when the COMEX ambush occurred with successive margin requirement hikes, the Silver / Copper ratio has risen steadily. Sorry, the industrial argument is a weak angle that does not bear weight or scrutiny. The Silver investment demand is due to a big important recognition that Silver is in the process of resuming and reclaiming its monetary role. The Chinese lead in that parade, adding silver to their reserves in management of their $3.2 trillion reserves booty.

silver copper ratio

The gold market breakout has made history, exceeding the $1800 level before the usual games were played. The higher COMEX margin requirement is a tired card at a tilted table. Look for gold profits to move toward silver positions, lifting its price toward $50 in the coming several weeks. Lastly, one must wonder why the USTreasury Bond futures contract does not have to endure margin requirement increases. It is clearly the biggest asset bubble in existence. However, it is the standard bearer of the fiat paper charade. Its low yield is proof positive of being broken, just like Greece with its high yield. The USTreasury Bond complex would be in big trouble if not for the Interest Rate Swap and the US$ Printing Press both. Prepare to protect your personal wealth during the grandest transfer of wealth in modern history, from toxic paper to reliable hard metal with no counter-party risk. Money is in the process of being invalidated and redefined. The Paradigm Shift continues at work.

The Value of Silver Coins

StaightSilver.com has over 30 years experience in selling silver coins and bars online. Please make sure to visit our Bullion Store at your convenience.

Doug Casey: Gold, US Dollar And The Greater Depression

Excellent Interview with Doug Casey. This only reinforces why Silver and Gold are the only “Honest Money” available in today’s world.

John Embry interview with James Turk at Gold Rush 2011

They talk about how the price of gold will react in another market meltdown, similar to 2008, and whether there will be a sell-off. They conclude that this time the flight to safety will be more important than the rush for liquidity and that gold is uniquely placed to act as a safe haven, especially with T-bills and other traditional safe assets discredited by US debt issues.

John and James explain how important it is to own tangible asset that are free of counterparty risk. They also talk about some relatively safer currencies like the CAD, AUD and CHF, and conclude that, although better than the US dollar, they also have their flaws.

Sprott and Turk: Bullish on Metals Bearish on Fiat!

Well respected Eric Sprott and James Turk, talk about precious metals and the flaws of fiat currencies.

Must Watch Interview With Jim Sinclair – BE YOUR? OWN CENTRAL BANK

Jim Sinclair is interviewed about his successful gold price predictions, US debt problems, how to ride the trend and the second phase of the gold bull. It’s a gear change from arithmetic to exponential growth as public perceptions about the safety of the US dollar changes. The debt ceiling debate is a wake up call for people all over the world. The video was recorded on August 5 2011 at the GATA conference in London.

Full Version Documentary – The Secret of Oz

Those of you that remember “The Money Masters” – we were able to get the updated Full Version called “The Secret of OZ.”   Once you view this documentary you’ll know more than 99% of the public when it comes to money. Please make sure to share this with family and friends and as always protect yourself through “Honest Money” – Silver