Sunday, June 13, 2010

United States is beyond point of no return financially - John Embry

Several multiples higher for gold.


Silver would be potentially several plus.







John Embry - Reasons To Own Gold



Tip of the hat to Jim Sinclair. John Embry's latest piece titled Reasons To Own Gold is nothing short of outstanding. From his piece, "The U.S. dollar is the world's reserve currency and thus anchors the world's monetary system. Unfortunately, by virtually any measurement we look at, the United States is beyond the point of no return with respect to its financial position."



John goes on to say, "Imbedded federal government debt of nearly $13 trillion, unfunded future liabilities in medicare, social security, etc. well in excess of $50 trillion and a current budget deficit of over 10% of GDP virtually ensures ongoing massive monetary debasement. When the near bankruptcy of the majority of the fifty states in the union is factored in, the situation looks ever more dire."


John goes on to warn about the possibility of hyperinflation, "To combat the massive deficits that inevitably resulted, widespread quantitative  easing was undertaken. That policy is here to stay and the fiscal deficits in many countries have now reached percentages of GDP that have almost always resulted in  eventual currency collapse."


He also warns about paper gold investments, "Investors should also have strong reservations about gold ETF's, gold pooled accounts and gold certificates where the gold is unallocated and thus not specifically accounted for."


Regarding central bank price suppression, "The western central banks, who have supplied massive quantities of gold to the market over the past fifteen years, both to meet burgeoning demand and to suppress the price, are running dangerously short."


Credit given to GATA, "The work of the Gold Anti-Trust Action Committee (GATA), which has been remarkably accurate over the past ten years, is finally receiving belated acknowledgment following years of being studiously ignored. The extent of the suppression has been so great that it virtually guarantees a far greater upward explosion in the gold price than would otherwise have occurred."


John puts things in perspective, "All the gold mined since the beginning of time is worth less than $6 trillion currently and the total capitalization of all the world's gold stocks barely exceeds that of Walmart. This pales in comparison to the amount of paper money that could seek refuge in the world's eternal money...I expect gold to trade at several multiples of the current price before this bull market breathes its last breath."


To read the entire piece by John Embry CLICK HERE.


Eric King


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