A few wise words from veteran John Embry on a day when the CFTC's Enforcement Division continues to look for clues on silver price manipulation.

Regards - VHF

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Embry - Gold & Silver Smash Temporary, Oil to Super-Spike

King World News

February 29, 2012

With gold at one point trading over $75 lower and silver down over $3, today John Embry told King World News this is nothing more than a temporary smash and he expects both metals to come roaring right back. Embry, Chief Investment Strategist at Sprott Asset Management, also said oil may quickly spike to a number that will literally cripple the global economy. But first, here is what Embry had this to say about silver: “This relates to the massive blowout in open interest in both gold and silver over the last few weeks. The market is always vulnerable short-term in that situation. Central planners can’t announce they are going to have constant and massive QE or everything would go to the moon. So the idea is floated around that QE3 is off the table.”

John Embry continues:

“The market is so volatile and you’ve had Jim Sinclair on, who I worship when it comes to this stuff, and he was discussing this volatility. He said, ‘Be ready for volatility that’s going to make you feel like your hair’s on fire.’ This is just one example of it.

Does this mean anything in the long-run? Absolutely nothing. It’s just another great buying opportunity. I think the price will come back within days. This is just one of these momentary smashes where the speculators get cleaned out every time....

“If gold and silver are going to head a lot higher from here, this is what you would expect the manipulators to do ahead of that move to make sure as few people as possible are on the long side.

This morning silver was over $37 and these guys just now had it as low as $33.68 spot. It’s embarrassing what these bullion banks do in these markets, I’m embarrassed for them. The silver market has been a paper fiasco, primarily led by JP Morgan and a lot of the other traders go with them for the ride.

With paper they have really been able to kick silver around, but there is a limited shelf life for that activity. This is primarily because the supply/demand fundamentals for silver are literally off the charts. This is going to lead to an explosion higher in the price of silver before this is over.

As I mentioned earlier, the open interest has been blowing out and the usual suspects have been trying to hold back silver. We may struggle briefly as they flush out the speculators. Having said that, one of these times one of these moves, and this may be the one, when it does get out it’s going to get beyond a certain level and the shorts are going to panic.

You interviewed Dan Norcini yesterday, who I have an enormous respect for and he was talking in that vain (shorts panicking). Well, today the shorts are trying to get things under control again. The bottom line here is we will see a big move to the upside in short order because you have a tight physical market and that’s going to cause the price to explode higher.”

When asked about gold, Embry responded, “We are going to see the same thing happen in the gold market. Even though they smashed the price down over $75 at one point to $1,706 spot this morning, it doesn’t mean anything. So they clean out some speculators and then the advance continues.”

Embry also added this regarding crude oil: “There are two aspects. Obviously the geopolitical issue is huge. I hear from quite well informed sources that Israel will attack Iran. If that happens who knows where the oil price will go.

There is another aspect to the oil price and that is the debasement of money. Many savvy players are looking at what is going on with these LTRO’s and the hopeless situation in the United States and they know that will underwrite a much higher oil price.

When you throw the geopolitics in and I don’t have a problem with $150 to $200 oil, under the right circumstances, in the fairly near future. It is worth noting the negative impact that would have on the global economy would be astounding.”