Today an outspoken hedge fund manager out of Hong Kong warned King World News that the world is now set up for what he called “the mother of all Great Depressions.” William Kaye, who 25 years ago worked for Goldman Sachs in mergers and acquisitions, also discussed the physical markets for both gold and silver as well as what investors should expect going forward in those key markets.
Kaye: “The key to the precious metals markets right now is silver. The market in physical gold may seem, for the time being, to be in balance, but this is not the case in the silver market which seems to be broken.
Eric King: “Bill, in periods when the secular bull market in the metals is headed higher, silver does tend to lead and we see that compression in the gold/silver ratio. It sounds like you expect the gold/silver ratio to compress.”
Kaye: “The ratio should compress. It’s out of line. There has been a lot of discussion about the size of the shorts on the Comex that have kept a lid on the price of silver. Like gold, the paper dog wags the physical tail. It’s the same story we’ve talked about with respect to gold, but it’s probably more acute as it relates to silver.
JP Morgan, in particular, appears to have an enormous market-cornering short position in silver. I guess they can get away with it because silver is so cheap. It doesn’t take a lot of capital to take a very large position, short or long, in something that trades at about $20 an ounce. But at some point we expect a moonshot in both metals as the price suppression scheme ultimately begins to lose its grip. So people who are positioned in both gold and silver should do very well.”
Source King World News
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