Today John Embry stunned King World News when he warned, “We are moving toward a fundamental shortage of gold, and I believe it may start as soon as next month.” Embry also cautioned, “The problem now is that the global economy is contracting at a time when the debt levels are catastrophically high.”
Embry, who is Chief Investment Strategist of the $10 billion strong Sprott Asset Management, also discussed Europe, but first, here is what Embry had to say about the drought and inflation: “I am very concerned about this drought that is happening, particularly in the United States. You look at a weather map in the Midwestern United States, the temperatures are just staggeringly hot and there’s no moisture.”
“Already the corn crop has been reduced dramatically. Aside from the fact that it will have a big impact down the road in the economy, because food prices will move up sharply, on a basic level this is the difference between starvation and survival for people in certain parts of the world.
There are already food shortages in some of those areas, and now we are going to see the prices rising on top of that....
“This is a potential catastrophe and I’m very worried about it.”
Embry had this warning regarding Europe: “If you look at the news coming out of Europe, it’s almost like can it get much worse? And it gets worse. The Spanish stock market has been down 12% in a few days. That’s the equivalent of 1,500 points in the Dow.
The Spanish market is now at levels last seen in 2003. Their interest rates just surged to news highs over 7.50% on the 10-Year. I also see six Spanish regions are asking for bailouts, and where’s the money going to come from? The Spanish government hasn’t got any money. The European nations are trying to recapitalize Spain, but they don’t really have any money. So in the end it’s going to have to be created out of thin air.
I really appreciated the fact that an insider came out from the IMF, that resigned, and wrote this scathing public letter about all of the failures of the IMF. It’s all true. I mean to me the IMF has been a massive failure and they are part of this troika that’s attempting to deal with the Greek situation, which to me looks hopeless.
I see the Greek Prime Minister just said they are in a massive depression. The idea that they can take much more austerity to meet the terms which allows them to access more funds is a non-starter. In the meantime we are now being told the world is prepared for a Greek departure. I don’t believe that’s true. I think it would be incredibly traumatic if that were to happen.
The problem now is that the global economy is contracting at a time when the debt levels are catastrophically high. The only thing propping up the system, at this point, is the fact that there is still this move into the bonds of the perceived ‘safe’ countries.
There have been a number of times in history where investors have gone nuts and participated in ridiculous manias like the South Sea Bubble, the Dutch Tulip Mania, and Japanese real estate in the 80s. I think when the bond bubble is looked at in the fullness of time, sovereign debt trading at the levels it is right now as its proliferating everywhere, will be seen as ones of those bubbles.”
Embry also added: “Right now you are very hard-pressed to put your finger on any place in the world where the economy is improving. China is really weakening. They are essentially decelerating. The only way they can ramp things up in China is to jam more paper loans into the system, but I think the problem is that will have a very inflationary impact.
There’s no easy out on this thing and what was seen as the engine of the world is now sputtering.”
When asked about gold, Embry responded, “We are moving toward a fundamental shortage of gold, and I believe it may start as soon as next month. I think the bottom is being put in right now. You see once again with the stock market trading lower, they just turn the algorithms on and grind the price down.
But this action is all just building a massive base in gold. I think the big issue going forward is this growing shortage of available physical gold. I strongly believe one of the reasons for the shortage is a lot of it is headed East. The last four or five months of the year gold should challenge and easily take out its all-time high.
For what it’s worth, there is an enormous amount of interference in the gold and silver share market. I think that will end as soon as gold and silver break their highs. When that happens, I think it’s going to unleash a rally in these stocks that is absolutely going to stun people. People will be shocked that don’t understand the full extent of the manipulation and how cheap these stocks have become as a result of it.”
