We Are About To Crush 15 Years Of Resistance In Gold & Silver

John Embry - King World News

November 26, 2012

Today John Embry told King World News that we are about to crush 15 years of resistance in gold and silver. Here is what Embry, who is chief investment strategist at Sprott Asset Management, had to say:“Friday was a solid day, but I could have bet my life that we would see exactly what’s transpired today. There has been no follow through whatsoever and that’s become the norm. Essentially, they don’t want people to get excited about this sector, so when it pops up in price they make sure there is no follow through.”

“But you have to understand the extent to which the gain on Friday was fought. There were explosions in open interest on the COMEX. Open interest in gold contracts increased over 14,000 contracts. Open interest increased almost 4,000 contracts in silver.

These are big numbers....

“Just to put the increase in open interest in silver in context, that’s almost 20 million ounces of silver being shorted. There are only 2.5 million ounces coming out of the ground in a given day. So make no mistake, this move upwards in gold and silver prices is being violently resisted.

This is all orchestrated so it’s not surprising. The good news is that it is minor because for so many years when you had this kind of increase in open interest it was just a setup to kill the small speculators. But now they are having more and more problems because the guys that are buying on the long side at this point know exactly what is going on and they have deep pockets.

There will ultimately only be one resolution to these games which are being played, and that is a massive explosion in the price of gold and silver. I’m never going to be happy until I see gold up $100 and silver up several dollars in one day because then I will know that the resistance which has constantly been there for 15 years has finally been overcome. We are now getting very close to seeing that event take place.”

Embry had this to say regarding the miners: “The action in the mining shares has been terrible. The trading in this space is not natural either. The hedge funds are all over the short side. On top of that, there is a collective desire on the part of the powers that be to keep people away from gold and silver.

They feel they have to keep them in paper instruments and out anything that deals with gold and silver. As a result they make the mining shares look infinitely less attractive than they should be. Not only are many quality mining shares incredibly cheap in terms of their imbedded capital, but they are enormously cheap in terms of their earnings potential, which will be realized in the next 12 to 18 months.

People have been beaten up so badly in these things that many of them are giving up. They are making a horrible mistake in my opinion.”

Embry also added: “I think the global economy is in great difficulty. It’s almost Murphy’s Law at work here, everything is just going wrong everywhere. Black Friday sales were a little disappointing. I don’t think the US public has all that much excess money to work with.

But I don’t see many sources of strength in the US economy at this time, even though the US economy is probably the strongest of the Western economies. Europe just goes from bad to worse. They were unable to agree to a budget for the European Union going forward.

We also saw the election in Spain over the weekend and the people that want to separate from Spain got a majority in the regional polls. So that’s going to be an issue going forward. The area of Spain which is looking to separate is the most vital in all of Spain.

I was also reading a great deal about Syria over the weekend and it just makes me physically ill what is going on over there. We have Morsi seizing more power in Egypt. There is also the tentative cease-fire between Hamas and Israel. I just see a world that is in utter turmoil, but if you look at the markets there is a complacency there which is not justified. I believe that complacency will be shaken badly before this is over.”

Embry also spoke about the new head of the Bank of England: “Mark Carney has just given up his post as the head of the Bank of Canada to take over as the head of the Bank of England. Well, he’s an ex-Goldman Sachs guy. So that puts Carney as the head of the Bank of England, Draghi as the head of the ECB, and Monti running Italy, even though he wasn’t elected. These are all ex-Goldman Sachs guys. This is scary stuff. Goldman is everywhere.”