ECU Silver Mining Inc. (TSE:ECU)

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Sprott's John Embry - Mining Shares Will Be Like Internet Stocks in the ’90’s

July 13, 2011

With gold hitting new all-time highs and silver up over $2 at one point and mining shares taking off to the upside, today King World News interviewed John Embry, Chief Investment Strategist at $9 billion strong Sprott Asset Management. When asked where he sees things right now Embry stated,

“What’s been fascinating, and what was unappreciated by me in the early stages, was the enormous number of derivatives that have been created in the financial system. Because of the derivatives they’ve been able to keep this thing going for infinitely longer than any rational mind would have thought possible.”

Embry continues:

“You’ve been able to create leverage to the extent that you’ve never seen before and this is why I think the bubbles were able to get stretched out and last as long as they did. Because the balloon was blown up so much, I just think the aftermath in its finale is going to be extraordinarily unpleasant.”

When asked about the action in gold Embry responded,

“I have been waiting for this move and it was interesting that it (gold) broke out a couple of days ago with real vengeance in the Euro. I suspected that the next shoe to drop with be in North America and now we’ve got new highs today in US dollars, which should get even bigger headlines. Gold is starting to make new highs against all currencies, and this is what we envisioned in an environment in which the fiat currency system is breaking down.”

When asked if London Whistleblower Maguire’s interview was contributing to this rally Embry said,

“I believe it is. He made very strong points. One of his key points was regarding the whole pricing mechanism in the gold market, and that is when the physical market takes over from the paper market in establishing the price, it will represent the end of paper manipulation....

When asked about Turk’s comment in his KWN interview that when silver closes above $38 that it would be in the mid 40’s in a heartbeat Embry remarked,

“I totally agree with James Turk. I think the thing (silver) has been abused on the downside and it’s just like a coiled spring ready to explode. I think silver will go back to those highs we saw before that May raid faster than most people can imagine.

We haven’t even really seen money start to significantly flow into hard assets, when that occurs and it will occur, it’s going to have an outsized impact on the price of these things. The gold price should be $2,000 within the next six months and I believe the gold/silver ratio will decline tremendously in that environment. I have no problem with $100 silver, none, and that might just be jacks for openers.”

When asked about the mining shares specifically Embry had this to say,

“Well they haven’t moved up a lot with gold and silver, I mean they’ve been sort of wallowing a bit. We’re not talking about a trillion dollars worth of paper (total value of all mining companies), and consequently if money decides it has to come into this space, it’s going to be like internet stocks in the ’90’s except they (mining stocks) are going to have real fundamentals.”

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/7/13_Embry_-_Mining_Shares_Will_Be_Like_Internet_Stocks_in_the_90s.html