John Embry: Why gold will keep going up

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Below is the link to a recent speech by John Embry, Chief Investment Strategist of Sprott Asset Management, on the outlook for gold bullion (courtesy of GATA).

Embry concludes his address as follows:

“I now firmly believe the chances of gold ever trading below $1,000 per ounce are remote. The only caveat I would offer is that if the world suffered a catastrophic deflationary collapse, gold could briefly be swept under but would then re-emerge with even greater relative strength as the only true safe haven. However, in a world of pure fiat currency, I think a near-term deflationary outcome is highly unlikely. In fact, I strongly suspect gold is going to stage a parabolic rise from current levels in the not-too-distant future, a development that will come as a shock to the many detractors of the world’s only real money.

“Gold is the only real money because it isn’t someone else’s liability.

“This remains one of the best supply-demand imbalance stories I have encountered in my long career and it will only be enhanced by the existence of massive short positions that will be impossible to cover amid myriad paper claims on gold that dwarf the physical supply, which, by the way, is a subject for another day.”

Click here to read Embry’s interesting and educational speech.

Source: GATA, February 29, 2010.

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1 comment to John Embry: Why gold will keep going up

  • Prieur, thanks for the post — I had not seen Embry’s comments before this.

    Gun to head I think gold is more likely to go up over time than down, but the “real money” argument is nothing more than a tautology. Gold is no more or less real than it was when it traded at $255 per oz. That it is a hard commodity, tangible, and of limited supply is beyond question. But that says nothing of its price.

    The short covering argument is more compelling, especially from one as connected as Embry who would have good insights into the off-exchange derivatives (and forwards) on the mining companies books. But isn’t a monumental short squeeze what GATA predicted when Barrick unwound its forward sales? Isn’t this also what silver bulls have claimed for years, only to see silver underperform gold?

    Embry brings up relevant points, and I look forward to seeing how they play out. However, the future prospects of gold are never as cut and dried as Embry and other gold bugs make it out to be. The $1000 mark could easily fall without even changing the long term trend.

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