Global Chaos Signals World Currency System Will Be Recast

What’s going on right now in gold and silver is preposterous.  The gold price has been driven down roughly $600 from its peak in August of 2011.  But if you really examine what’s unfolded in that ensuing period, there isn’t anything that would justify the gold price going down to any extent, let alone $600.

This has been a wonderfully orchestrated maneuver by the bullion banks, the Western governments, and their respective central banks.  And it’s destroyed the psychology of most people that don’t understand the gold market extremely well….

But what goes unremarked is that when gold was at its peak they used to talk about gold being in a bubble.  That was ridiculous because if you looked at returns for capital that gold mining companies were getting, they were adequate at best.  If you have a real bubble, the people that are benefitting from it will be making a fortune, but the gold companies most assuredly weren’t.

Now when you’ve got gold at $1,285 and everybody is bearish, the mining companies are being slaughtered.  If this continues much longer some of them won’t exist.  You see the write-downs that many large companies are taking in the billions of dollars, and Barrick laying off massive amounts of staff, it just illustrates this is clearly unsustainable.

So I think people should just relax and start buying because gold, silver and the quality mining shares are incredibly cheap.”

Embry also added:  “The thing that is evident, and it’s been evident for a considerable period of time, is that QE has been non-stop virtually throughout the entire world.  They keep coming out with this propaganda that they are going to be tapering it or cutting back, and yet they can’t.

You see more and more examples of this propaganda.  Today we had the Chinese stock market in a state of collapse, so the Chinese had to come out and assure everybody they were going to provide enough liquidity to shore up their market.

If we look at Japan, the whole Japanese experiment is a joke.  Their embedded debt is 250% of GDP, and they’ve got an aging and shrinking population.  And they are talking about printing their way out of their deflationary environment, but it won’t work.  It’s going to lead to a complete destruction of that entire society.

Over in Europe I see today that Italy is in deep trouble again.  That’s not a surprise because really the entire periphery in Europe is in trouble and they are just doing this dance to buy time and pretend they will come up with some solution.  But the reality once again is there is no solution.

Then, in the United States, which is the lynchpin of the Western world, you read all of the propaganda that things are getting better, but if you get inside the economic numbers, things aren’t getting materially better.  And if they weren’t printing the $85 billion a month things would be getting much worse.  So the idea you are going to have any significant tapering going on any time soon is preposterous.  If they taper we will move into a debt deflation that will make the 1930s look like a picnic.”

Eric King:  “What is going to be the spark to turn the metals around here, John?”

Embry:  “I think there are two things going on right now.  As you know, the bullion banks are as aware as anybody about what is coming.  They have been massively short for the better part of two decades.  They have been effecting the suppression of the gold price.

Now the bullion banks know the jig is up and they are moving rapidly from being massively short, to getting long the metals.  At the same time the Chinese, Russians, and others accumulating physical gold don’t have any great necessity to see the price rise in the short-term if they can acquire gold from the West at these bargain prices.

But when you get the bullion banks correctly positioned from their perspective, and the Indians, Russians, and the Chinese realizing they can’t get any more gold from the West at these prices, then I think you are going to see a dramatic markup in the gold price.

KWN readers around the world have to understand that as global chaos increases, such as we have seen recently, it is a sign we are going to have to recast the entire world currency system.  And when that time comes I suspect it will be a basket of currencies, and so the US will lose its reserve currency status.

The new system will be backed by hard assets, one of which most assuredly will be gold, and the gold price could well be revalued overnight in that process.  The timing of all of this is imprecise, but it’s inevitable.  So as much as the short-term price action might have people frustrated, it shouldn’t disturb their long-term view in the least.”