John Embry was interviewed recently on King World News and what John had to say was very interesting. Mr. Embry is Chief Investment Strategist with Sprott Asset Management, and has focus on the Precious Minerals Fund. John is an expert in the precious metals arena with 30 years of research in the field, and 48 years of experience in portfolio management.
John believes that we are currently in a depression and that we will not begin to see growth rates that will pull us out of it until the 1920’s. He says that most Americans do not want to believe this and tend to extrapolate from past experience. Therefore many of us will be hoping that things will turn around for quite some time. The reason that he claims we are still dealing with this, and the worst yet to come is due to the fact that we have not dealt with the underlying issues that got us here. The solution provided to us has been money printing.
The Federal Reserve under Bernanke has indicated that they will continue to print money until this problem is resolved. In fact announcements about quantitative easing round two should come out this week. QE to infinity seems to be the path we are on. Our debts and deficits are unsustainable, no one will argue that, but Mr. Embry believes that this is intentional. Money printing/inflation will make debt easier to handle, therefore QE to infinity. Mr. Embry states that if we continue on this path it will lead to hyperinflation. At that point it will be a race to hard assets.
Mr. Embry believes the US dollar will collapse, but not entirely, it will collapse against hard assets. Prices on land, oil, tangible asset stocks, gold and silver will rise dramatically. He believes that everyone’s portfolios should contain a combination of many hard assets. Gold and silver are the monetary side of those assets.
Another topic he touches on in the interview is the recent large institutional shorts that are currently being exposed, namely JP Morgan silver shorts. Mr. Embry believes that it is possible that the tremendous investment demand in the market today could force the shorts out of the market and force prices to rise dramatically. He did say that if this happens silver could shoot to $50 per ounce in the next few months.