Wednesday, January 5, 2011

John Embry - Gold Over $2,000, Silver Above $50 in 2011$2,000,_Silver_Above_$50_in_2011.html
With a sharp two day correction in gold and silver taking place, King World News today interviewed John Embry, Chief Investment Strategist at Sprott Asset Management. When asked about the quick decline Embry stated, “This may be the best opportunity you’re going to get at least from a price sense to buy gold and silver in the next few days. I think when this correction however long it will last is over, it will probably mark the lows for the year which will then be the liftoff to the eleventh consecutive year of higher gold prices.”

John Embry continues:

“The returns over the last 10 years, gold returned over 18% and silver close to 24% annually. These are spectacular returns and we haven’t seen anything yet, we’re not even close to the third leg which is the blowoff.

As you know we started the Sprott Phyiscal Silver Trust about about 3 months ago. We still haven’t got all of our silver in yet, we’re close, we’ve almost got every last bar. But it’s taken the better part of 2 1/2 months to get it in, so the suggestion that this physical market is tight probably isn’t a strong enough suggestion, it’s really tight!

You and I were buying this morning John personally, you probably bought for the fund as well, but I know we were personally buying. You have to have conviction in order to buy during these dips, and you have to know the companies...You had one company that was dipping 10%, you stepped in and were a buyer, it’s already recovered I think.

“Some of these things are very volatile. This is a very thin company...But an order hit the market, and I sometimes wonder is it stupidity or is it actually being engineered? But it doesn’t make any difference, the price goes down like a rock and those people that know what they are doing, they just step in and buy. This very same company believe it or not at the bottom of the market in 2008 basically sold for as low as 40 cents and it earned 30 cents in the next year. I mean the market can be absurd.”

When asked once again about tightness in the silver market Embry remarked, “There is infinitely more demand for physical silver than there is supply. I mean all of this stuff coming out of the ground is long since spoken for by traditional industrial and medical uses and what have you. And now with investor interest picking up, I just saw that on the 3rd of January there was 1.7 million silver coins sold in the United States which was equal to the amount that was sold in all of the month of December. So, investment demand for silver is going off the chart, this could only mean dramatically higher prices.”

When asked about his themes for 2011 Embry stated, “Basically I think we are going to see more of the same. I mean I don’t see how you could possibly shut off the paper spigot without causing a depression, the likes of which would make the 30’s look like a picnic. If that’s the case then you’ve got to continue to focus on hard assets, and when you get these violent’ve got to be in a position to buy them. The things that I would be avoiding like the plague are bonds, particularly long bonds.

...Things are sufficiently dire that I think we are going to have to recast the monetary system before this is over. And in such an undertaking I suspect that gold may be remonetized, and given the amount of paper there is in the world, I mean it will have to be remonetized at a price which would sort of stagger the doomsayers today on gold. There are still more people talking negative on gold today than there are positively believe it or not.”

When asked about price targets for 2011 Embry replied, “I’d be disappointed if it didn’t trade through $2,000 this year, in that event if gold were to make a run at that, silver is a layup for $50.”

There is a tremendous amount of high quality information from John Embry in this interview including two stock picks. The entire in-depth King World News segment with John Embry will be available shortly.

Eric King

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