On the heels of the U.S. jobs release and the subsequent wild trading in key markets, today billionaire Eric Sprott spoke with King World News about Michael Belkin’s terrifying warning and the stunning reversal at the Comex.
Eric King: “Eric, on the heels of the jobs release in the U.S., we have gold surging more than $25, and this comes one day after the dollar and U.S. bond markets were hammered.”
Eric Sprott: “Obviously the jobs number looked good on the surface, although there are elements of it that are massively overstating strength, particularly when 311,000 people were added to the group of people who wanted a full-time job but got part-time jobs instead…
“This means that net, we really only picked up 100,000 part-time jobs. But I would be willing to bet that the total income for workers was flat. However, by reporting a gain of 211,000 jobs, it looks like the Fed will raise rates in December.
Positive For Gold
This will be positive for the gold market, which has suffered for 4 years because of the fear of a rate increase. Well, up to now that rate increase never happened. And in the meantime, the price of gold fell over $800.
When Chairman Yellen explained what the rate increase will be all about, she stated that one rate increase doesn’t necessarily mean another one is coming. Yellen also explained that the ‘normalized interest rate’ is way lower than the former model showed, so we have a pretty benign rate forecast in front of us.
Total Reversal On The Comex
And as KWN readers know, Eric, the Comex has seen a total reversal of positions, where the commercials have been huge net buyers over the last four weeks. I also suspect that this week’s report will show that the commercials have continued to remain on the buy side.
So I think that the paper markets are now set to run on the upside fairly aggressively because the physical market remains so strong and the fear of further rate increases is now very diminished.”
Eric King: “Eric, the global economic numbers are a disaster. Shipping has collapsed and the global economy has clearly rolled over. This was an ominous quote from one of the greats in the business:
Terrifying Warning
“If the Fed raises interest rates at the beginning of a recession they
could trigger a stock market crash and depression. Could they be that
stupid?” — Michael Belkin, the man who advises the most prominent sovereign wealth funds, hedge funds, and institutional funds in the world.
Eric King continues: “Is that what we are facing at this point, Eric?”
Eric Sprott: “I think the Fed wants to raise rates in order to pretend that they are being prudent, even though the last 15 years has clearly demonstrated that the Fed is reckless. The economy is incredibly weak. We see this in the Class A truck sales, which have collapsed 80 percent year-over-year.
We have also seen bellwether Caterpillar report 35 straight months of declining sales because global capital expenditures are in decline. Industrial production has turned down. Employment in the industrial sector, meaning real manufacturing jobs, is also negative.
So there is no economic recovery and we are not going to see any recovery. The Fed might be reckless enough for their own egotistical purposes to raise rates, but if the stock market starts to collapse, that rate increase will be reversed. And if the economy continues to act poorly, or gets even worse, that much-hyped rate increase will be off the table pretty fast. That’s how bad things are in the real world, and the situation…
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