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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Chispas who wrote (102090)	3/11/2009 7:24:27 PM
From: Chispas	Read Replies (1) \| Respond to of 110194

Transcription - Interview, Andrew Mickey with John Embry - ...................................................................................................................................... Andrew Mickey: Precious metals have been getting a lot of attention lately. But it seems like there has been a divergence between gold and silver. We’ve been watching the gold to silver ratio (the number of ounces of silver which can be bought for an ounce of gold) get wider and wider. Gold to platinum too. Do you see the divergence tied to the industrial aspect of metals like platinum and silver, gold is the supreme precious metal, or is there something else going on behind the scenes? John Embry: No – it’s a very strong manipulative aspect at work. If you go to the COMEX and look at the trading patterns and the short positions and such, clearly the prices are being messed around with. Silver is a smaller market and can be messed around with more easily. I think silver probably has a bit more upside potential because the price is so far behind where it should be. Andrew Mickey: So do you see silver as one of the bright spots? John Embry: Oh yeah, it’s an extreme bright spot. I could easily see it three times where it is now in the not-that-distant future. Andrew Mickey: As far as gold supply, there is one period in the world gold supply where gold production kind of crested around 2007 or 2008. Are we facing a “Peak Gold” kind of situation? John Embry: Yeah, we have most assuredly crested in terms of mine supply without question. Andrew Mickey: So, when you look at five, ten years out…let’s say in a world where gold is $2000 or $3000 or higher, how much more gold can realistically be produced in a year? John Embry: Zero, I think. In fact, I think you probably need a lot more lead time - maybe five to ten years. Just look at what happened in the ‘70s. The gold price went from $35 to $800 and, believe it or not, gold production was at a lower level worldwide after that 10-year period. Now, the big question is what will happen this time? Number one, a lot of the existing mines are being depleted quite rapidly. Number two, when the gold price goes up a lot, mines generally tend to sort of drop the grade they mine because they can make a lot of money with lower grade and they can keep the good stuff for the bad times. So by definition, they will be mining in the same number of tons but they will be taking the gold grade out of it, so collectively they will be mining less gold. They will make more money because the price is up but they will be mining less. The other problem is that so many of the new interesting deposits that may or may not be developed in the future are located in these God-awful third world countries. They are having a real battle now with the governments, getting permitting, deciding who makes the money out of the mine, environmental issues etc. The gold deposits are all over the place and the governments are going to delay projects. Say you find an ore body today. It would probably take a minimum of five years before the gold hits the market with all the attendant problems there are getting it into production. So all that’s already baked in the cake. The gold price could be doing anything it wanted for the next four or five years…gold production isn’t going to increase much – if any - at all. Andrew Mickey: Amazing, gold production declining in the last great bull market for gold. So what does this mean for gold stocks, from your perspective? Where should we focus our investments across the whole range - from explorers all the way up to the majors? John Embry: Right now, I think... ......................................................................................................................................................... q1publishing.com