Embry – The Powers That Be Would Love to See Gold Collapse
April 9, 2012
With gold near the $1,650 level and silver close to $32, today King World News interviewed John Embry, Chief Investment Strategist of the $10 billion strong Sprott Asset Management. Embry told KWN there will be a massive selloff in the stock market, but, over time, quality stocks will represent stores of value because of the Weimar effect. He also discussed gold, silver and the mining shares. But first, here is what Embry had to say about stocks selling off and the bigger picture as he sees it:“I have a very strong view on this. Ultimately, as we go through QE to infinity and inflation really starts to accelerate, stocks will wind up being a repository of savings, just as they were in the Weimar Republic.”
John Embry continues:
“In most instances, the quality shares represent real assets. But having said that, I think a lot of stock markets are severely overbought. This is happening because of the misplaced optimism regarding a sustainable economic recovery. When that false hope is punctured, there will be a violent correction. After a big leg down, stocks would probably be a good buy at that point.
In reality, I think we are continuing to slowly unravel here. Egon von Greyerz summed it up beautifully in a KWN interview last week. The problem is infinitely too much debt. When you talk about debt ratios of 350% of private and public debt versus GDP, that is totally unsustainable.
Basically, the economy cannot grow anymore because it needs debt creation to grow, and we can’t even come close to supporting the existing debt. This is like watching a train wreck, in slow motion.
The reality is the powers that be would love to see gold collapse here….