Gold Skying Because of Bernanke Desperation

kingworldnews.com

Stephen Leeb:

With gold surging roughly $40, now trading above $1,825 and silver over $41, today King World News interviewed acclaimed money manager Stephen Leeb to get his thoughts on where things are headed. When asked about the reason for the big move in gold Leeb replied, “I think that there is no doubt that the strong move in gold is the anticipation of more Fed action. More Fed action means more dollars, means more currency out there. Gold is really in the early innings right now. When inflation in this country hits 8%, 10%, 12%, then you might say gold is in a later inning. Maybe then it will be in the 6th or 7th inning, I know this sounds crazy, but it’s true.”

Stephen Leeb continues:

“I mean gold right now, it’s really in the early innings and until you start to see inflation take off, it will still be no more than the mid innings. This is a bull market that I think is destined to go much, much higher, ditto with silver. Any of the monetary metals are probably going to be the only game in town for the foreseeable future.

Bernanke, I don’t want to use the word desperate, but I think he wants to get a consensus on what else he can do to help the economy. When push comes to shove, the only real tool he has is to print more money and indeed that’s what he wants to do. I think at the last meeting it was tough to get a positive vote on that and this meeting he wants to have a fuller discussion, he wants to bring people around to his way of thinking.

I think that initially the read on Bernanke’s statement was negative because he didn’t specify anything, but when people realized an extra day (for the September Fed meeting), that’s a very, very big deal. The markets right now are picking up on that.

The reaction in the gold market has been appropriately positive because bear in mind Eric, we can print all of the dollars we want, but the Europeans are not going to stand by. I mean they want to export too. Everyone else wants to do the same....

So the printing presses are going to be turned on in the US as Bernanke feels he has no other choice. This is what his studies of the (Great) Depression tells him. This is what the second day of the Fed meeting is all about. But the US is not the only country in the world, most other non-resource based economies are going to be trying the same thing. In other words, it’s a race to the bottom. It relates to gold because the more paper currency you print the more valuable gold becomes.”

When asked about silver specifically Leeb had this to say, “Well silver and copper are both starting to trade very well. The Chinese are starting to take a very big stake in silver and they will continue to buy silver. They (the Chinese) basically control the solar manufacturing market right now and they want to apply those manufacturing skills. So far they’ve been applying them abroad, but they are going to start applying them to China themselves and that means they’re going to have to start accumulating a lot of silver.

I think we are on the airport runway as far as the silver market goes and people are going to be very surprised when silver fairly easily goes through $50. People think of $50 as this incredible brick-like resistance, no way. It’s going past $50 and it’s going to continue to go up. It’s got two massive drivers, its monetary value and its criticality in many, many industrial applications, ranging from solar to the computer keyboard on your desk Eric.”