With gold trading above $1,700 and silver over $32, today King World News interviewed John Embry, Chief Investment Strategist of the $10 billion strong Sprott Asset Management to get his take on where he sees gold, silver and the mining shares headed. When asked about the action in gold and silver, Embry responded, “Well I think we are continuing this lengthy consolidation that’s sort of after the takedown, post Labor Day. We’re rebuilding the market and we are getting close to the next major upleg. I’m actually encouraged in this belief by the fact the sentiment is quite negative.”
“I talk to a lot of people who understand the fundamentals, but who are really beaten down by the price action and are contemplating selling. I said, ‘Guys, get a grip, think about the fundamentals.’ I remember back in 1981 after those huge interest rates, a lot of smart guys positioned themselves in the futures market for a big move in the bond market. Just before it started there was a violent counter-trend rise, a further rise in rates that wiped them out.
And I’ve seen that so often in stocks. Very often people have figured out we are going to have a major move, but before that move takes place there is a huge counter-trend move down and it gets rid of all but the true believers. That’s actually extraordinarily healthy because when it goes, it goes really clean to the upside...
When asked about silver specifically, Embry remarked, “I’m just wildly excited about silver. I think it’s been consolidating here between $30 and $35, after having seen $50, and the fundamentals are impeccable. I have no problem with silver doubling in a reasonably short period of time.”
When asked about the mining shares, Embry stated, “Well, the mining shares have been almost tragic. I mean I’m shocked to the degree with which they’ve been beaten down. I have to believe there is a lot of nefarious activity going on, shorting and what have you, undeclared shorting.
But the fact is that I have never, ever seen a number of these good quality juniors as cheap, relative to the price of gold and silver, as they are now. If I’m correct and the gold and silver prices are on the cusp of major up-moves here, I think the potential in these stocks is staggering.
Basically, it’s just a matter of patience and no leverage because if you’ve been levered here, you’ve been one of the sellers. People are conditioned by their most recent experience and their most recent experience has been terrible. So naturally they are all bearish and can’t see the potential.
That’s the opportunity. The person that recognizes that the fundamentals are there and they are just waiting for the trigger to unleash them is going to be the winner and the people that are losing their nerve here are going to be the losers.”
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