John Embry: Silver Could Go Anywhere On the Upside at This Point

April 20, 2011 By 2 Comments

John Embry correctly recommends against picking tops in the silver market currently, stating that “it could go anywhere on the upside at this point”.  With the increasing likelihood that May will bring severe physical shortages and possibly the long awaited short squeeze of JP Morgue and HSB.S. this is one train you don’t want to step in front of currently.

From King World News:

With gold hitting new all-time highs and silver new multi-decade highs and the dollar breaking to new recent lows, today King World News interviewed John Embry, Chief Investment Strategist of Sprott Asset Management.  When asked about gold clearing $1,500 Embry remarked,
“It’s interesting you ask because I would have thought there would have been a real battle.  An individual who I have an enormous regard for as you know, Jim Sinclair, said that he did not think there would be much of a battle at $1,500.  He thought it would go through clear and probably make a run at $1,650 which is from his perspective a bigger resistance point.” 

“So I’m not terribly surprised, the fundamentals are so powerful.  I mean there are just so many things coming out that are supportive of higher gold prices, the latest by the University of Texas, they took a $1 billion worth of gold bullion off the market.  I thought that was extraordinarily significant and I think that might be contributing to the action.”

When asked about the relentless climb in silver Embry stated, “Well there are three factors I think.  We’ve talked in the past about this massive short position that is held by JP Morgan Chase in particular.  I mean this is becoming I think a huge millstone around their neck and if you don’t understand that I don’t think you can appreciate the upside thrust in this.

Now you superimpose that on the fact that the investment demand and the industrial demand are robust and are outrunning the available supply, so you’ve got a great supply/demand situation.  And then you put that against the backdrop of monetary debasement which I think is probably ongoing and probably intensifying and you’ve got the perfect storm.  I mean these people that are trying to pick tops for silver I think are making a mistake, I think it could go anywhere on the upside at this point.”

When asked about the continued decline in the US dollar Embry replied, “The dollar is seriously over-owned.  They’ve just sent so many dollars out into the world and because they were the reserve currency people accepted them.  And suddenly now, particularly with the S&P coming out and suggesting they are going to put the US on credit watch, maybe it isn’t the safe haven that people have always believed it was.

In that case there is an awful lot of dollars that may be looking for the exit so that is why it could plunge at some moment.”    
The liquidation risk is present at all times on the US dollar.  It is not in the best interest of those holding the dollar to have panic selling, but it could emerge regardless if a country or region breaks ranks.

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Comments

  1. Bugs says:
    April 21, 2011 at 12:20 AM

    When everyone is saying it's not a top in the metal market…thats when a top is in place. I recommend start taking profits at this point. Bulls when money…bears when money…pigs get slaughtered!

  2. SilverDoctors says:
    April 21, 2011 at 12:29 AM

    Start taking profits in mining shares, yes…we started taking profits at $40 silver in the miners. We aren't letting go of any physical in the hand silver until MUCH higher prices, coming correction or not. Because one day, the dollar will really roll over, and you don't want to be sitting in paper US dollars at that point. We need to see a correction here soon though- silver is up ~ 160% in 13 months now, a correction here would be healthy. Doesn't look likely we'll get one before $50 though.

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