With upside moves in gold and silver, today King World News interviewed John Embry Chief Investment Strategist at Sprott Asset Management. When asked about the action in gold and silver Embry stated, “Well my first thought is what took so long? We know what took so long, basically there has been a lot of activity by the bullion banks and their sponsors. But I mean to me it’s a very a simple equation, you can screw around with the paper market for a considerable period of time, but as the physical market gets tighter and tighter and this is really demonstrable in silver, I mean that is going to be what sets the price. What goes on in the physical market, when that takes over the prices are going much, much higher than they are today.”
John Embry continues:
“We are on our way to $40 in silver and then I’m sure they’ll fight around the round number for a bit, but I think the upside potential in silver is many, many tens of dollars higher from here.”
When asked if gold was finally ready to take off Embry replied, “Yeah I think it is, I think the next move will take us to $1,500 in the near-term. By and large I just think we are moving higher, the question is whether we are going to get a breakaway move, a really big move like hundreds of dollars?
I’m on record as saying there will come a day when the gold price will move over $100 in a day. To date the cartel has been very effective in keeping daily gains to no more than 1%. You can see it when the gold price is up 1%, the unseen hand comes in and a lot of selling shows up.
When that breaks, and it will break, then I think you are going to see moves that will shock the people who don’t understand the true nature of the market.”
When asked about mining shares Embry responded, “I’ve seen a target on the HUI (Gold Bugs Index) of 880. Based on where we are now that would be a move of just over 50%, I could easily see that. I can see that for a simple reason, when you look at the market cap of the big cap gold stocks and compare it to the amount of money around that’s invested in other things, it would take very little movement of money to have an outsized impact on the overall gold sector.
That will happen, it’s just a matter of whether it happens next week or next month or five months from now. It’s not a matter of whether it’s going to happen, it’s wether it’s going to be very quick or take a few months to unfold.
We haven’t seen inflows into gold funds, we are still seeing outflows from a lot of dedicated gold funds. So if you start to see the public moving money into these funds, I mean the funds have to invest so they are going to have to buy these stocks. It comes quickly when it happens, as Richard Russell says, there is no fever like gold fever.”
When asked about oil Embry remarked, “I happen to share Jim Sinclair’s view that some of the stuff that is going on in the Middle-East is extremely anti-west. And if that continues and I believe it will, I think the crude oil price is heading to $150 to $200. And if that happens I think the economic implications are pretty horrifying actually.”
John Embry has been in the business for 48 years. At the beginning of the secular bull market in gold, John was the only mainstream (RBC Capital at the time) institutional individual to proclaim the bull market in gold. RBC was saying that’s not the message of the bank, so John was taking a lot of heat for his stance. Fortunately for all of us Eric Sprott hired John out of the mainstream and the rest is history.