Here Is What Will Break The Massive Silver Short Positions
kingworldnews.com
Today John Embry spoke with King World News about the recent action in gold and silver, and what will overcome the massive paper short positions in the silver market. Here is what Embry, who is chief investment strategist at Sprott Asset Management, had to say: “I was struck by a comment from Tim Geithner that the US is going to be phasing out pennies and nickels in early 2013. The reason he gave was that it costs a great deal more to make them than they are technically worth.”
“A penny is a penny but it costs almost a nickel to make it. Similarly, a nickel is a nickel but it costs over 15 cents make a nickel. So naturally they are being done away with. This is a perfect example of the insidious inflation in the whole post-war era.
Now I’m old enough to remember when I could buy a chocolate bar for a nickel, and now there aren’t going to be any more nickels….
“I think this is indicative of where we are headed and the immense inflation which has been building in the system. This inflation will just intensify because of the monetary debasement that’s picking up speed.”
Embry also added: “You could drive a truck through the position of some politicians on the fiscal cliff issue. The most indicative statement about the whole thing was from Geithner, who suggested that they abolish the debt ceiling limit. What does that tell you? It tells you they know they can’t deal with this issue.
They can’t possibly get rid of this budget deficit because the economy in the US is barely inching along right now with the $1.25 trillion budget deficit, as well as zero interest rates. If they reduced any stimulus, either monetarily or fiscally, the economy would just start to plunge.
So the idea that this can be dealt with in a way that would be traditionally be seen as the correct way to do it, which is austerity, is a non-starter. They will simply reach some compromise where they will kick the can down the road and they will make it look better than it is. So we will continue to print money and inflate away.”
Embry had this to say about gold and silver: “How many times have I seen the type of action we witnessed last week in the last 15 years? You can set your watch by this type of action. We had big open interest and then they attack it. So down gold and silver go as they clean out the weak hands.
The metals will rebuild themselves, and one of these times it won’t happen that way. The physical market will overpower these paper players. It didn’t happen this time, but at some point it will.
I was reading a fascinating article in the Financial Times. I think it’s a worthwhile paper, but you have to understand their editorial bias, one of which is they don’t care for gold at all. They had an article in there over the weekend describing the recent action of the gold market titled, ‘Gold wobbles after mid-week selloff unsettles investors.’
They did acknowledge that when the week started, a lot of people were looking for gold to break through the key $1,800 level. Then, all of the sudden on Wednesday the yellow metal dropped sharply on large sell orders. What they didn’t comment on was, who were these large sell orders?
I would bet my life that they were the same suspects which have been pulling this stunt for the last 15 years. So the price managers pounded the gold price down and they tried to come up with some reasons for it. But how does that explain silver getting crushed?
This was the same type of action where the same people knock down gold and silver to try to give the impression that this is not a good place to invest, but is the only place to be in my opinion. At some point the market is going to collectively going to realize this, but that day hasn’t arrived yet.”
Embry added: “I was fascinated by Egon von Greyerz’s interview. He dealt with something that I was flabbergasted with and that is this Hollande situation with the Arcelor Mittal steel company over in France.
Mittal is looking to close some blast furnaces up in the north part of France. So Hollande and the French government responded by literally saying they were going to nationalize them and take them away from the company. What in God’s name is going on? This is happening France but it sounds like a third world banana republic.
So I just see economic weakness everywhere. They are trying to cover it up with fraudulent statistics and I don’t see an easy solution to this because the problem is excess debt. The only way to deal with this is to somehow have a debt clean-out, which implies a very long, ugly economic period. Then you would start up again.
Nobody wants to do this and so we will simply keep printing more and more money and debt, which won’t work, and it conceivably will lead to some form of hyperinflation. I am absolutely opposed to this but I am not running the show.
In closing here I would just like to add here that I am extremely bullish on silver. I just think the picture for silver is exceptional. There are still limitations and physical tightness in the silver market. In the end, that will overcome these massive paper short positions which have been dominating the market for years.”
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2012-12-06 19:21:16
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