Today John Embry told King World News Chinese demand for silver has skyrocketed. He also spoke about what to expect in 2013 for gold, silver and the global economy. Here is what Embry, who is chief investment strategist at Sprott Asset Management, had to say: “They are still mumbling about the fiscal cliff and there seems to be limited progress on that front. I suspect they will get something cobbled together instead of letting this get to an extreme point because if they let this thing go over the cliff it would be disastrous.”
John Embry continues:
“Removing that much stimulus from the US economy right now would be unfathomable considering how weak it is. Up until a decision is finalized, they are holding gold under $1,700 and silver below $33, but if you just stop and look at the fundamentals for silver, it’s preposterous silver is trading where it is….
US NIC report extremely positive for gold and silver
Two weeks to go before the U.S. falls off the ‘fiscal cliff’. Nerves are being tensioned now as politicians do what politicians do. “Don’t solve a problem, rescue your people from a crisis.” Cynical, no, dominant realities!
As the year draws to an end it is good to look forward to what lies ahead. While hope springs eternal, we are bound by the forces we see that are shaping tomorrow. What are they?
A report recently released by the U.S. National Intelligence Council gave us sobering thoughts that are extremely positive for gold and silver. We will just touch on that report and highlight the four “megatrends” they mention:
1. The end of U.S. global dominance.
2. The rising power of individuals against states.
3. A rising middle class whose demands challenge governments.
4. A Gordian knot of water, food and energy shortages.
Silver is money too
Gold is money. Everything else is credit”
JP Morgan, testifying before Congress, 1912
The world’s most powerful banker understood that gold sits at the bottom of the inverted “liquidity pyramid”. The graphic below (courtesy of Demonocracy) shows multiple stacks of $100 bills totaling some one-quadrillion dollars, representing the notional value of what lies in the top portion of this pyramid: over-the-counter derivatives held by the world’s nine largest banks. Bear in mind that this represents just one-fifth of the world’s derivative market.
As we discovered with the Long Term Capital Management implosion in 1998 and the Bear Stearns, AIG and WaMu failures a decade later, no bank or insurer can withstand the chain reaction of margin calls that occur when the unexpected happens in markets on which these derivative contracts are based. No government – least of all the US one – has the funds to bailout the system. This means in the event of another banking crisis, they will rely on central banks to print more imaginary money, that is – to quote Gerald Celente – “not worth the paper it is not printed on.”
The ensuing debate about the nature of money will renew people’s interest in gold’s use as money. Many will not be able to afford gold, and will instead look to silver as an alternate. But is silver also “money”?
“Silver was the primary commercial money for most of the world’s people from earliest recorded history until the past century.” – David Morgan
This week’s Fed announcement means that this QE flow will double from a $500bn pace currently to $1tr. Coupled with a projection of a lower government deficit next year, to around 6% of GDP, this means that QE will offset almost all of next year’s government deficit.
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