Wednesday, August 4, 2010

John Embry Says Gold On Verge Of Parabolic Rise

In a wide-ranging interview with Mineweb, Embry said that gold has some way to go and could hit $1,500-$2,000 in the next 18 months.
GEOFF CANDY: In your latest letter you talk about gold being on the cusp of a parabolic rise - is that for these reasons - where are we now or when are we likely to see that sort of rise coming through?

JOHN EMBRY: Once we get through this very dull summer period where gold is generally kind of soggy - particularly into early August anyway, they're going to start to see manifestations of this move probably by September if not earlier. I would expect the last few months of the year to be quite robust which in a seasonal sense is often the case, but this time I think it's going to be more robust than usual.

GEOFF CANDY: You mentioned earlier the moves by the Chinese, and there was an announcement out today that they're going to look to allow banks to hedge bullion positions in overseas markets and things like that. Also perhaps look at more actively increasing the number of Yuan denominated gold derivative products. What sort of impact is that likely to have?

JOHN EMBRY: Anything the Chinese do in the gold market, based on the fact that they're just holding an excess of US Dollars - they're going to have to be very careful on how they spend it, but they're going to be buying more and more gold as an alternative. They'll be buying other things as well as an alternative to US Dollars, so irrespective of what they say, just look at what they do. The fact is that what they're doing is going to add dramatically to gold demand in the upcoming period and I just don't think the physical supply is there to meet the kind of demand that is being marshalled - the investment demand all over the world and particularly this physical demand that's building in the Far East....
Embry also said that jewelery demand, which is elastic, is being compensated for by investment demand, which is inelastic.

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