John Embry, Chief Investment Strategist for Sprott Asset Management, believes the long awaited commercial signal failure in gold and silver may be at hand: “...demonstrated by an explosion in open interest on the Comex as the usual suspects shorted aggressively in an attempt to mitigate the relentless buying that was occurring. This, I suspect, will result in either another correction, which should be short and shallow, or more probably, the long-awaited commercial signal failure in which the shorts are overrun and forced to cover in a rising market.”

John Embry continues:

“With the economic outlook deteriorating, more quantitative easing on the horizon globally, currency unrest mounting everywhere and physical supplies of gold and silver dwindling, the powers-that-be have their work cut out for them if they hope to keep the prices of gold and silver in check.

The suggestion that gold is in a bubble phase is the latest tactic of the anti-gold crowd, whose predictions, incidentally, for the price of gold and silver have now been consistently wrong for 10 years.

Jimmy Rogers, who is one of the world’s leading authorities on commodities, dealt with the bubble issue recently by recounting an interesting anecdote. While addressing a group of high-end money managers, he inquired as to how many of them held gold or silver in their accounts and, remarkably, 75 percent replied that they had never owned either precious metal.

As far as I’m concerned, that put to rest any idea that we are even remotely close to a bubble in gold or silver. When gold is trading at several multiples of the current price at some point in the future, you can be assured that every single person at a similar gathering would be long and then discussion of a bubble might be legitimate. In my considered opinion, we are many years and thousands of dollars in price away from that debate.”

Investors should continue to use weakness in gold and silver to accumulate both metals. Buy gold & silver and take delivery of the physical, do not use paper instruments. These monetary instruments will have you outside of the system, which will in all likelihood collapse at some point.

Eric King

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