I Believe Global Silver Stockpiles Are Now Exhausted

Today John Embry told King World News that “... when silver truly surges it will leave market participants speechless.”  But first, here is what Embry, who is chief investment strategist at Sprott Asset Management, had to say regarding the US debt and gold:  “Something that caught my eye over the weekend was the temporary removal of the debt limit in the United States.  In the month of February the US federal debt increased $254 billion.  That’s in just one month.”

“Now if you go back to when Ronal Reagan was elected President 32 years ago, the fact is there was less than $1 trillion worth of debt accumulated in the previous 190 years.  So in one month the US chalked up 25% of what it took 187 years to accumulate....

“I think the US debt problem is staggering.  Bernanke is throwing $85 billion each month into the market to buy both Treasuries and distressed mortgage securities from banks.  This is just complete debasement of the currency.  People can’t seem to grasp the reality of this situation, but this is going to end in disaster.

I totally agreed with some of the comments that Jim Sinclair made in the KWN audio interview.  People are going to see moves in gold that will shock them.  Some the advances will be spectacular, but right now people are focused on short-term weakness so they are missing the big picture.

So, you have some people demoralized, but the real buyers, the Chinese, they don’t want to see the price go up.  They want to accumulate as much gold as possible at these levels.  We will have to see a change in sentiment to get the gold price reversed to the upside here.

The sentiment is about as negative as I can ever remember seeing it.  Considering the long-term fundamentals, this situation is almost surrealistic.”

Embry had this to say regarding silver:  “It’s astounding that the price of silver has fallen from $35 to $28 with the nature of the tight physical market.  I think silver is in enormously short supply.

The combination of the industrial and medical uses, in combination with silver’s monetary attributes, is going to lead to the demand overwhelming available mine supply.  We also have the massive short positions in silver and there is very little inventory available.  The JP Morgan silver short position is the primary reason why the silver price continues to be held at levels that are unrealistically low.

Once gold and silver begin their next move higher you are going to see silver move a lot faster, and the gold/silver ratio will collapse.  That ratio may plunge to 10/1.  If you believe as I do that the gold price will go up multiples from here, just think about what the silver price is going to do.

Virtually all of the available above ground silver is gone as I believe they have now chewed through the 129.8 million ounces of silver they forced out of Warren Buffett’s hands.  Not only is the silver they extorted out of Buffett’s hands gone, but the US and Chinese stockpiles have been exhausted as well.  So all hell is going to break loose in the silver market as some point. 

The reality that virtually all of the available supplies have now been exhausted just points to the fact that demand has been outstripping supply for years, and this is definitely going to intensify going forward.”

Eric King:  “How do the manipulators deal with that for the rest of this bull market because that’s an Achilles heel?”

Embry: “This is why people that understand this market know that the physical market is going to take over and the paper market is headed to the dustbin of history.  The paper market has been in charge now for 25 years, but the paper markets for both gold and silver are coming to a close because physical demand for gold and silver are outstripping supplies.

As that transition takes place, this is when the pricing mechanism will change completely.  Once silver clears $35 the sentiment will change.  And because the market is so tiny and there is this massive short position in silver it will move very violently to the upside. 

This is why the gold/silver ratio is going to plunge because once silver gets going there will be nothing to stop it.  The reality is that it will be easy for the industrial and medical fields to absorb a higher price because it is a sufficiently small portion of the costs in both sectors.  I’m surprised the manipulators have been able to hold back the price of silver this long, but when silver truly surges it will leave market participants speechless.”