In the aftermath of the gold and silver plunge,
today billionaire Eric Sprott spoke with King World News about the
ongoing war in the gold market. He also issued a very big warning to
Western central planners, and in particular the Fed. Below is what
Sprott, Chairman of Sprott Asset Management, had to say in part II of
this remarkably powerful interview series.
We
know that there is massive selling of bonds, whether it’s the Chinese,
or the Japanese, and I would imagine a lot of the emerging countries are
now selling US bonds.
So
this housing market has got to fail. The Fed knows this. The charges
against the US Treasury are rising as rates are rising, which means the
deficit is going to go back up. I wrote a paper, I guess it was about
three or four months ago, asking, has the Fed lost control of the
interest rate markets? And I suspect they have.
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Eric King:
“Eric, we have the Fed decision coming up next week, and you and I are
starting to believe they are not going to taper. In that environment
you (as the Fed) wouldn’t want to have gold launch from higher levels.
You would have to smash it (gold). That’s exactly what we’ve seen.”
Sprott: “I’ve
always believed that the Fed is in a very difficult situation and the
‘taper’ was just talk. And we’ll see whether they ‘walk the walk’ or
just ‘talk the talk.’ As you know, Eric, yields have doubled over the
last 12 months, and in particular with the reintroduction of the taper
talk.
“We’ve seen
redemptions of bond funds. I, for my life, can’t see how at this point
in time the Fed pulls back on their bond buying because rates would just
go crazy (to the upside).
The
jobs numbers that came out in the last two months, you know we averaged
about 130,000 (jobs) when they adjusted July down, and August was kind
of so-so -- and you can drive a truck through the numbers anyway. It’s
my suspicion that there are a lot of the jobs are part-time jobs, and so
I think we have a really weak economy here.
And
if they do taper, and rates go higher, we already have a crushing
situation in housing, where literally the cost of buying a house on a
monthly basis, i.e. the interest rate cost, the principle cost, and the
cost of the house has gone up 10% or 15%, is up (in total) 50%
year-over-year. And nobody’s income is up 50%. I would be surprised if
it’s up 2%. In fact, it’s probably down with the increase in social
security taxes.
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