Price Destruction In Gold & Silver Will Be A Distant Memory

Price Destruction In Gold & Silver Will Be A Distant Memory

On the heels of the surge in gold and silver, today acclaimed money manager Stephen Leeb told King World News the price destruction we have seen in gold and silver will soon be a distant memory.  Leeb also spoke with KWN about the desperation by the West to suppress the price of gold and how it is about to fail.  

Leeb:  “My thoughts are that Bernanke surprised me last night.  He came across as very dovish, and this is a man that knows exactly what he is doing.  He doesn’t speak without thinking about what he is saying and what affect it will have.  So you have to ask yourself, why was he so concerned about getting across a message that the Fed is still quite dovish, and highly likely to continue for quite some time with QE?....

“There are a couple of reasons:  One is the economy is not nearly as strong as what has been painted in the press.  So the economy is still in recession.  The other concern Bernanke has is that the U.S. dollar has been very strong.  Any suggestion of cutting back has seen the dollar surge and that is not what the Fed wants.  So the Fed is trying to talk the dollar down.

In that environment, how can investors not be bullish on real stores of value?  Whenever a country’s currency strengthens, they immediately do whatever they can to bring the value of their currency down.  So gold and silver are starting to surge once again.

I have to tell you that I don’t think the West has given up yet on trying to hold gold down.  But right now you have backwardation in gold and that’s rarely ever seen.  This is only seen when there is a shortage of gold.  Where is that shortage of gold?  In the West.

So I definitely think this rally in gold has some legs, but the West may still put up a fight.  The will try to talk the dollar down and still keep gold prices under control.  But I think it’s a question of months before they capitulate on both gold and silver.  There is a continued flow of gold from West to East, and now you have three countries in Europe fighting to be major hubs of yuan trading.  We also just recently saw another huge Chinese accumulation of gold.  That’s why the West is short of physical gold here.

So it’s getting tougher and tougher for the West, and I believe that gold has made a bottom.  When you saw that one day when gold trade under $1,200, and then reversed and came back up, that’s the bottom.  The only question now is when does this next leg higher in the secular bull market really begin to take off?  When the price of gold really starts to surge there are so many shorts that need to be covered.  
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