Today John Embry told King World News, “We are literally witnessing a war between the physical buyers (Eastern central banks), and the paper manipulators (commercials or bullion banks), and that is why there is such a fierce battle being waged in gold between $1,735 and $1,800.” Embry also stated, “If the commercials run into trouble (with their massive short positions), KWN readers will see a move in gold that will leave them breathless.”
Here is what Embry, who is Chief Investment Strategist at Sprott Asset Management, had to say: “This
is one of those moments in the gold market where there is a distinct
possibility that we will see a commercial signal failure. A commercial
signal failure is an extremely rare event, but we could well be setting
up for just such an occurrence right now.”
John Embry continues:
“The
commercials are massively short gold at the moment, and each time they
try attempt to drive the price of gold lower, there is a solid wall of
physical buying they are running into. I just don’t think they
anticipated this. Meanwhile, the Eastern buyers, such as China, are
delighted the commercials keep trying to push gold lower.
But
now we are getting to the point where there is a distinct possibility
that the bullion banks may run into some serious trouble with their
enormous short positions....
“If the commercials run into trouble (with
their massive short positions), KWN readers will see a move in gold
that will leave them breathless. But you have to remember that this is
a rare event, and it hasn’t happened yet.
When
you look at what the IMF just stated about European banks having to
deleverage $4.5 trillion of assets, who is going to buy that? It will
be the ECB, and they will have to print money to accomplish that. The
IMF has already raised this $4.5 trillion once already, and you can be
sure the final figure will be even higher than what they are stating
now.
This
means there will be enormous money printing going forward. People in
Europe can’t even begin to imagine the scale we are talking about. The
ECB will do this printing in stages, in order to decrease the shock on
the populace. There are too many people in the North, particularly in
Germany, that are worried about a currency collapse. So this
situation, like so many others, has to be managed very carefully.
People
have talked about a $2 trillion bazooka in Europe, but the printing
won’t stop at $2 trillion. Egon von Greyerz has talked about tens of
trillions of dollars that will need to be printed. I just don’t think
people fully understand what the corresponding move in gold will be as
the money printing really begins to accelerate.
Jim
Sinclair correctly identified that there would be ‘QE to infinity,’ and
he has talked about this, but I still don’t think people truly grasp
the horror of the destruction that will take place, in terms of the
loss of purchasing power in the various fiat paper currencies as the
printing presses are really heated up.
Circling
back to gold, what this means is the demand for physical gold is only
going to increase. This is why the price rise will steepen over time.
The bottom line is the physical market is already tight with the
current demand. As the demand increases, it will be very costly at
that point to acquire physical gold.
If
you bring this back around to my earlier comments about the possibility
of a commercial signal failure, the countries in Asia have figured out
the devaluation game and they are buying very large quantities of
physical gold. So as I mentioned, they are the ‘wall‘ of buying the
commercials are running into in the mid $1,700s.
We
are literally witnessing a war between the physical buyers (Eastern
central banks), and the paper manipulators (commercials or bullion
banks), and that is why there is such a fierce battle being waged
between $1,735 and $1,800. It will be fascinating, Eric, to see how
this is resolved in the gold market.”
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