Panic In The Gold Market Creating Problems For Shorts

On the heels of Jim Sinclair telling KWN that a full-blown panic has developed in the financial world with people wanting to know where their gold is, today John Embry spoke with King World News about this explosive situation and how he believes it will unfold. Below is what Embry, who is chief investment strategist at Sprott Asset Management, had to say in his interview:

Embry: “There was a fascinating study done by Kenneth Rogoff and Carmen Reinhart which stated that once an economy gets to 90% government funded debt as a percentage of GDP, its growth rate slows dramatically. This was one of the underpinnings of the austerity movement.

Well, now they’ve come out and done an about face and said that model was all wrong. This is indicative of the fact they (central planners) realize if that if they don’t go to the printing press immediately, this whole thing is going to collapse….

“I think that is wildly bullish for gold. It’s just another signal that the central planners realize the only way to sustain this is by coming up with some theory that says it is OK to have more debt and print more money.

Logic dictates that if you get beyond a certain percentage of debt in your system, you’ve got a problem with growth going forward. I don’t think it’s important whether that level is 90% debt/GDP or 95%. But I think Rogoff and Reinhart’s theory is totally accurate, and the fact that they are trying to dispute it is just proof positive that they are desperate to end any talk of austerity and really get the serious money printing going.”


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