Here Comes The Next Major Leg Of Gold Demand

Leeb:  “I think the biggest news longer-term for gold and silver investors is China’s recent approval of two ETF products.  This is yet another sign that China is very intent on accumulating as much gold as they possibly can.

You have to view this in conjunction with the fact that gold is down, but you also have to understand that when the market turns, the turn will be dramatic.  At the same time, I don’t think there is any downside in gold.  But what is very interesting to me, and typical of the Chinese, is that they waited until they knew there was very little downside in gold and silver to start their two ETF’s….

Once they have satisfied their demand for gold the Chinese will come out and say, ‘We have a currency that is backed by gold.’  But the whole world is going to become more dependent on gold as a currency.  That’s the way it’s going to be.  This is the way things are unfolding right now.

After all of this money printing in the West, we are not getting any traction in the economy.  The Chinese are watching us and thinking, ‘The West needs a sensible policy.’  One of the sensible policies we will have to do with energy.

When you take a look at energy prices in the last decade, minus the price spikes, you find that energy prices today are not much more than 5% below their highs.  What’s going on here?  We have production way up, and we have also seen a 17% plunge in per capita demand for energy during that same period of time.  Despite all of this, energy prices haven’t really reacted at all.

What that tells me is that the kind of energy policy we are pursuing are energy intensive projects.  These are projects that require a lot of water and other resources.  One of the major figures in the energy world is betting big on energy prices going higher in the future.  But as energy prices become more expensive, the need for gold will become that much greater.  The Chinese see this.

The Chinese have to be smiling and laughing at what we are doing in the US.  Within the next 3 or 4 years you are going to see substantially higher energy prices.  In my opinion that is going to lead to a cry for stable money and a gold standard.

The BIS should take note about what China is doing here and get the West back on the right path.  But I’m exceedingly bullish on gold and silver long-term.  Investors just need to be patient.  Follow the Chinese example, they are patient.

Gold and silver investors will have their day.  We may not see an immediate surge in gold and silver prices, but I do think when the surge starts that people will be blown away at how high and how fast the price spike will be.  The bottom line is that every day that passes right now we are getting closer and closer to that launch point for gold and silver.”