John Embry is chief investment strategist at Sprott Asset Management and always worth listening to when it comes to gold bullion. The following are excerpts from his recent article published in Investor’s Digest of Canada (courtesy of GATA).
“Gold moved to several new all time highs in the month of June despite the absence of any overt enthusiasm for the yellow metal amongst the general public. Sentiment is remarkably negative when one considers the fact that were it any other asset class making new highs in a powerful multi-year bull market, the mainstream press would be trumpeting the news and the public would be falling all over themselves to buy.
“Why is gold different in this instance? Very simply, the public is being bombarded with misinformation and propaganda as the monetary authorities try to sustain a doomed currency system. In addition, the anti-gold cartel is creating excessive volatility in the new paper-gold market that unnerves the average investor.
“Fed Chairman Ben Bernanke got into the act recently when he was confronted with a question about gold while testifying at a session of the House Budget Committee and his lame response was: “Gold is out there doing something different from the rest of the commodity group. I don’t fully understand the movements in the gold price, but I do think that there’s a great deal of uncertainty and anxiety in financial markets right now. Some people believe that holding gold will be a hedge against the fact that they view many other assets as being risky and hard to predict at this time.”
“Mr Bernanke was correct in acknowledging that other assets might be risky (they most assuredly are) but, in my mind, he was totally disingenuous in stating that he didn’t fully understand the movements in the price. He knows full well that it is his monetary policy, featuring zero-based interest rates for the world’s reserve currency, and the profligacy of his own government which are fuelling the desire to own gold. To keep his job, he also knows that he could never publicly acknowledge these facts.
“We are on the cusp of a parabolic move in the price of gold underwritten by physical shortages. Central banks can no longer supply the amount needed to balance supply and demand while mine production continues to stagnate at best.
“It is imperative that investors ignore the volatility created by the anti-gold cartel and use every opportunity that is created by them to purchase more physical gold.”
Click here for the full article.
Source: John Embry, Investor’s Digest of Canada, July 23, 2010.
