This forecast was made by John Embry, the chief investment strategist of Sprott Asset Management, a $10 billion fund.
“I do think there is a strong probability that the end of 2011 marked the bottom for gold and silver and that may be the lows that will ever be seen. That’s a strong statement, but the reality is gold and silver may never trade lower than that again.”
“When gold broke through $1,000, I said it would never trade below $1,000 again and it hasn’t. I now think that, unless we have a complete and total financial collapse in the world, I would be surprised if gold ever traded below $1,500 ever again.
That is a risky statement. We do not know how severe the next recession could be. But it’s his business to be right.
I had an amazing conversation this morning with a long-time friend of mine, who’s always been gold friendly, and he said, ‘I’ve been reading a lot on the weekend and I got the impression gold is going to be weak in the next few months.’ He asked, ‘Should I sell half of my gold position with the idea of buying it back in the third quarter?’
I said, ‘Are you out of your mind? I don’t know what you were reading, but I would be very surprised, unless the whole world melts down, if gold would be weak at all in the next six months. In fact I would say it’s going to go up $400 or $500 an ounce in the next six months.’ But that’s the kind of sentiment that’s out there and this was from a guy who has been a player in gold for years.
He is concerned about a crisis in the Straits of Hormuz.
“Crude oil is probably the most interesting commodity out there in the sense that if you looked at it strictly from an economic perspective, given what is happening with the world economies slowing, you could make a case for much lower prices. But the chart right now is breaking out to the upside, which would suggest the geopolitical considerations are coming to the fore. Under a bad geopolitical outcome, the crude price could easily rise to $150 to $200.
The Straits of Hormuz could be blocked and an altercation between Iran and Western countries and Israel might take place. So, I think this thing is fraught with peril and put it this way, if I had to be either long or short of crude oil, I would be long because I believe the geopolitical considerations are going to outweigh the economic ones, at least for the time being.”
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