This article contains highlights from an interview with John Embry, chief investment strategist at Sprott Asset Management who is working alongside Rick Rule and Eric Sprott.
What gold and silver investors should look at:
Well, I’m looking at the reality of the picture. First of all, the world economies are not what they are made out to be. Without exception, pretty much, they are weakening, and they are struggling. It’s very simple: there’s far too much debt in the world, in virtually every country at every level. If you believe in the tenets of Austrian economics to the extent that I do, when you get an excess debt situation in the world, you cannot create enough new debt to get the economy to grow. I think that’s what we’re up against. Consequently, I don’t see the economy bailing out the bulls at this point. As things get worse and worse in the economy, I think that gold and silver become a worthwhile alternative. What goes unremarked is how small these markets really are. If you looked at every ounce of gold that’s been mined since the beginning of time, that’s only 170,000 tonnes—more or less. That’s only worth a little over $7 trillion. So you think about how little gold there is—silver is a fraction of that. If money decides they want an outlet in these two metals, it’s going to have an outsized impact on the price. I think as things get more and more difficult in the real world, people will seek outlets in gold and silver, and the impact will be outsized.
The Canadian and European currencies vs the US dollar:
Rather than criticize the US specifically, I would be more critical of the Western world in general. We’ve lived a pretty good life after the Second World War and in the ensuing 70 or so years. And if we run up an awful lot of debt, it’s going to take some real doing to get back on the right track. In the intermediate, as we’re dealing with all these issues, money might be debased just to keep all of these things afloat. That’s one of the reasons I am so bullish on gold and silver. These are constants in an ever-changing world, and I think they are cheap now—very cheap. I don’t think people own enough of it, and when they finally get that this is happening, there’s not going to be enough to go around. So my advice to people is to get all the gold and silver you can at these prices. And better than that—if you really want leverage—buy the shares that mine the stuff. If you have the right shares, I think you’re going to make a fortune. So I’m a huge bull on the gold and silver shares; the only caveat is that you’ve got to be very selective. There have been a lot of bad stocks promoted through the years. And if you’re buying into this space, you’ve got to be real sure that they’ve got the goods—they’ve got a real ore body or they’re in production. Or they’re very close to production so you’ve got some kind of certainty that it’s real. Those kinds of stocks are going to do spectacularly well when this market starts to rock and roll.
This gold and silver issue is a huge deal; and I don’t think most investors understand the playing field that we’re on.
Stay strong, own gold and silver, and wait. I want to reiterate that there is so much bad press out there that most people just avoid the sector, and it seems like in the fullness of time it will turn out to have been a terrible mistake not to have had the protection of gold and silver and some related shares in your portfolio.
Source Gold Silver Worlds