Leeb - Bernanke, Europe, China & The Surge In Gold & Silver

kingworldnews

Today acclaimed money manager Stephen Leeb told King World News that he expects the Fed will in fact ease at their September meeting.  Leeb also discussed the strong move in gold and silver, but first, here is what Leeb had to say regarding Bernanke and the Fed: “I think what investors clearly wanted to hear from Bernanke is that he’s ready to ease on monetary policy, and that he’s ready to open the floodgates again.  That, combined with a much more docile Merkel, and news today that China’s copper demand might be a lot stronger than people think, and you really had a trifecta here today.”

Stephen Leeb continues:

“The Bernanke story is right in front of us.  What he said, and he made this crystal clear, is the economy is very disappointing to him.  He also used a very strong adjective to describe unemployment, and he stated he’s going to do whatever he can about it.  The language he used, the adjectives he used, suggested he’s ready to do something, Eric.

That something is pumping up and putting more money into the system.  So I think it’s clear, from Bernanke’s statement, that he probably will ease in September....

“The politics of this cuts both ways here, Eric, in the sense that if he were not to ease in September, and then start getting crummy economic data thereafter, he would be forced to ease maybe on the eve of the election.  Unless we get unbelievably good economic data, I think he will ease in September.

Obviously if he doesn’t, then there will be a disappointment in the gold market.  But if you look at both gold and silver today, they have surged higher on this news.  I still believe that, regardless, Germany is going to ease, and I think China is starting to grow, and I think the odds are extremely high that the Fed will ease.

Let’s face it, the guy’s (Bernanke’s) job is on the line.  So I think there is a lot of pressure on him to ease, especially given what he said today.  He’s saying the onus is on the economy to show its growing much stronger than it has been, or else he will ease in September.

We will see an employment report, and if it’s a barnburner where 300,000 to 400,000 jobs are created, he probably won’t ease.  But if it’s anything like the reports we have seen recently, yes, he’s going to ease.”

Leeb also added:  “At the same time Europe is ready to buy bonds, otherwise known as quantitative easing.  China has also been easing, but it isn’t apparent this has had any real effect.  The number of bulls on China has dropped to nearly zero recently, and then all of the sudden a story appears this morning that China’s copper demand is a lot more robust than anyone thought.

One thing you can count on China to do is not let the world know how things are going.  You put this together and you have a very strong and powerful trifecta.  Far more than 50% of the world’s economy are the three blocs of China, Europe and the US, and the way this is shaping up is so bullish for gold.

China’s has the willingness, and almost desperate desire to acquire gold.  They know they are going to need a hard currency.  And Bernanke’s remarks this morning, that’s going to push them even harder to do something about this.”

Leeb had this to say regarding silver: “Silver is also a monetary metal and people who can’t afford to go out and buy an ounce of gold can go out and buy silver coins.  So silver should continue to be a strong performer going forward as well.”