Right on Khaki!

From King World News (KWN) today

Embry - This Gold Smash Will Pass, the Case for Fiat is Zero

With near panic in the gold and silver markets, 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 and the mining shares headed. When asked about the action in gold, Embry said, “You’re always surprised at the viciousness of a decline like this. I mean this all started in the wake of the failed European Summit. At one point, after the initial communique, gold shot up to $1,760 and now it’s roughly $200 lower. The reality has barely changed, but the perception of the reality appears to have swung dramatically.”

“People are now fussing about deflation and Europe is going to go down. If you actually think about that for more than two minutes, you realize it’s just going to lead to massive amounts of papering over because there is no other alternative. They (central planners) are not going to voluntarily accept a 1930s style deflationary collapse of the economy. The only antidote to that is immense amounts of money creation and that’s what’s going to happen.

Right now people are sort of looking the other way (towards deflation) and they are wrong. I had been on KWN earlier saying sentiment was very negative, which I took as a strong positive for an eventual rise in the market. But now it’s gone from negative to literally being suicidal. I just can’t believe people’s attitudes.

This goes back to one of my long held beliefs; reality moves very little, but perception swings wildly. Perception has swung from the idea that we were going to skate through this with more money printing, to being deathly afraid the thing is going to collapse.

A collapse of the system would actually be very good for gold for the simple reason gold would be required to back up the new currency. In that environment, it would be disinflationary, the gold shares would be spectacular like they were in the 1930s.... “The other thing I’ve always said is you can’t have leverage in the gold space because it’s so rigged and they are always going to get you. What seems to be the right action, at any point in time, can be reversed in a heartbeat by another attack from the anti-gold cartel.

Investors should be buying these beaten up gold and silver stocks. This is one of the great trades that you could possibly make. The algorithm trading has pushed a lot of legitimate holders to the edge by the price action, which has created forced margin selling. It’s creating remarkably cheap stocks.”

When asked about silver specifically, Embry stated, “The physical silver market is as tight as can be. The people who are short the paper market (in silver) are bankrupt, almost to a man. Consequently, their actions are not those of rational men, they are those of desperate men. JP Morgan is trying to protect their short positions and so this move down has a very finite life.

So you are going to have days like this and I still say silver will be $60 within the next three to six months. As much as I love the gold story, the silver story is much stronger because of the lack of above ground supply. In the future, there won’t be enough silver to fill the demand for investment purposes and the price is going to go berserk to the upside.”

When asked what he would say to calm the nerves of gold and silver investors globally, Embry remarked, “As I’ve said all along, if you don’t like gold and silver, you like the prospects for fiat paper currency. With a world that’s tens of trillions of dollars in deficit and can’t service the existing debt, the case for fiat paper currency is zero. You can’t make a case for it.

So on that basis gold and silver, which is the real money, can only do one thing in the future and that is move higher. I’ve been through this so many times with these guys (the cartel) who can take the gold market apart and scare the life out of most humans, and it’s just noise. It’s gone on over and over and over again. In the end this will pass like they all have and gold will move on to new highs.”