JP Morgan Massive Short Position Causing Silver Spike

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.

The KWN interview with John Embry will be released shortly and you can listen to it by CLICKING HERE.

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