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.”

June 11, 2010

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.

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Chris Whalen
Christopher Whalen is co-founder of Institutional Risk Analytics, provider of risk management tools and consulting services for auditors, regulators and financial professionals. Christopher leads IRA’s risk advisory practice and consults for global companies on a variety of financial and regulatory issues.  He is global risk editor of The International Economy magazine, has contributed to Insight on the News and Barron's. Christopher helped found The Herbert Gold Society, an informal group of current and former employees of the U.S. Treasury and the Federal Reserve System. In this interview Chris discusses the insolvent banking system,  the derivatives market, CDO’s, horrific recovery rates on certain bank assets, the possibility that the German government may overturn the bailout in Europe,  Goldman’s troubles and the fact that they are mishandling the current trouble they are encountering and much more.
For his interview click on this link: Chris Whalen