Stephen Leeb - China Will Send Gold & Silver to the Moon

With gold, silver, commodities and stocks moving sharply to the upside, today King World News interviewed acclaimed money manager Stephen Leeb, Chairman & Chief Investment Officer of Leeb Capital Management.  When asked about the action in commodities, Leeb responded, “Commodity prices, it’s true, are below their all-time high.  But when you step back and look at it from a yearly perspective, the vast majority of commodities are averaging all-time high prices in 2011.”

Stephen Leeb continues:

“As an example the average price for oil, copper, corn, silver and gold will be the highest prices ever on average for 2011.  That is not consistent with a lot of weakness in China.  China, in my opinion, seems to be doing pretty well.  We all know that China had an inflation problem, but it appears they have gotten that under control.

This is the thing that worries me, everyone talks about inflation and China coming apart, Eric, but no one seems to be talking about the fact that China is planning to spend half a trillion a year on new energy.  This includes hydro, wind, nuclear, you name it.

China has well over 50% of the solar industry and no doubt, as part of that strategy, has been accumulating massive amounts of silver and they will continue to do that.  This is one reason that silver is certainly headed to three digits. 

Another thing about China is they have no tax on gold bullion.  There is a tax on jewelry and numismatics but China does not tax gold bullion.  This means gold is already a de-facto currency in China....

“The implication for gold, given that it is becoming currency in China, given the fact that the Chinese government is doing everything they can to encourage their populace to own it, given that it is the only currency that has a chance of appreciating along with materials over the next three to five years, gold is just something that you’ve got to own.    

Gold is certainly going to be part of any future reserve currency basket, that and the Yuan.  I don’t think the dollar is going to make it (in the basket).  China remains an extraordinarily strong competitor.

We’re fighting a war with China and they are armed with bazookas, tanks and everything else and we have a rubber knife, that’s the situation.  Someone in our government has to wake up before it’s too late, if it’s not too late already.

As these commodities run up in price it’s going to be become ever more inflationary.  Commodities are going to become an even larger part of the economy as a whole.  Energy is already about 9% of the US economy.

We are already seeing inflation running close to 4%.  Producer prices, the last print there, was over 6%.  The trend going forward for inflation is going to be dramatically upward.  It’s deflationary for the economy because it’s taking money out of the pocket of the consumer.”