$1,500 Gold

How another cruel summer for stocks could set the stage of $1,500 gold…

CHIEF INVESTMENT STRATEGIST at Sprott Asset Management, John Embry sees both good and bad news in the weeks, months and years ahead, starting with “another ugly summer” for stock markets worldwide plus $1,500 gold before the year-end.

Here John Embry tells the Gold Report why he’s bearish on world economies for the next few years and how he’s looking for “numerous 5- and 10-baggers” among small-cap Gold Mining producers and explorers…

The Gold Report: Quite a bit’s happened since the last time we spoke with you back in September of ’08. Gold was $874 at that point, and then dropped considerably in Q4. It has come back in ’09, trading in the range of $850 to $950. Is gold still tethered to the Dollar?

John Embry: I don’t know that it’s tethered to the Dollar per se. Basically, there’s a major problem with the Dollar. I believe it is absolutely fated to fall dramatically against everything, but more against real assets than against other currencies. When I look at the other currencies, they don’t look very good either, particularly the Euro and the Japanese Yen.

They’re trying to create the impression that paper currency is still good; so they go out of their way to try to pound gold at every opportunity. A week ago, clearly gold was tethered to the Dollar on the downside, but on the other hand, for the prior few weeks when the Dollar was under enormous pressure, there was still restraint in the Gold Price. It went up, but it should have gone up a lot more. They put pressure on to keep it from going up too much, and with an opportunity for a stronger Dollar, they knock gold down. It’s been the same format for a long time. But we’re getting close to the end of that.

TGR: Why’s that? What’s going to push it over?

John Embry: There’s no question what’s going to push it – the realization that the US is broke.

TGR: Who doesn’t realize that already?

John Embry: Well, 90% of the people don’t. Ask the average citizen. They don’t have a clue what’s going on.

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