John Embry - Expect $70 Silver Within Months

With gold trading at $1,800 and silver above $35, today King World News interviewed John Embry, Chief Investment Strategist of the $10 billion strong Sprott Asset Management to get his take on where he sees gold, silver, the US dollar and the mining shares headed.  When asked about the action in gold and silver, Embry responded, “The recent low on gold (at $1,530) was contrived.  If I would have asked you two months ago on the 8th of September, when gold was making an all-time high and silver was busting through $40 again, if you knew what was going to happen in the next two months in Europe and the world in general, where would you have estimated gold and silver would be trading?”

John Embry continues:

“I think a rational mind would have said they both would have been trading higher and that’s not the case.  I mean gold is still trading $130 below the high from two months ago and silver is $5 or $6 lower during that time frame.  So the idea they are getting stronger now, they should be, they should be a heck of a lot stronger than they are now.

If you look at silver there is no bullish sentiment.  The reason for this is up until now there has been a wall of paper selling that’s keeping silver trading below $35, and silver has been subject to a couple of vicious attacks recently.  So I think people are uncomfortable, but at the same time people who buy physical silver, that’s all I buy, we’re delighted.

I mean it’s hard to get silver and you have to pay premiums for it.  The real price of silver is in the physical market.  This paper market is a complete and utter sham and when the paper market it broken, and I think we’re close to that happening, silver will double overnight into the $60 to $70 area and that could happen within months.”  

When asked about the mining shares, Embry stated, “There is still a lot of shorting activity in these things.  I follow a guy who watches the trading daily on the precious metals stocks and he points out enormous amounts of shorting.  

There have only been a couple of other times when the shares have been this cheap historically.  Anybody who is shorting these things with what’s coming in the gold price, they don’t have a profit maximizing motive.... 

“These shares will go crazy to the upside when this thing breaks away in gold and silver over the next few months.

The reason the government sponsors the shorting is to keep the shares down because they know they are going to have to print so much money and they have to keep up appearances.  They have to maintain this myth that there is no inflation and gold and silver are not signaling anything bad on that front.

The bullion price advances will have to backstop the move in the mining shares.  But once they get into high gear you have cheap mining shares, massive short positions, the sector is under-owned in a huge way and the sector is extremely small compared to all the other financial assets out there. 

It’s all going to come together in a perfect confluence of events with a huge flow of capital.  That’s what will drive the prices of the mining shares to levels that investors today would find unimaginable.”

When asked about the US dollar, Embry replied, “I think the US dollar is stuck in a trading range right now.  One might imagine the dollar would be trading much higher than it is right now, particularly because of the difficulties over in Europe.  

But I don’t think authorities want a higher currency, that’s a really deflationary event and they have enough deflationary problems with all of the debt riddling in the system.  So if I had to bet, when it breaks out of this trading range, which on the trade weighted dollar is between 73 and 80, I think it goes out the bottom.”