John Embry is the Chief Investment Strategist of Sprott Asset Management, a position he’s held for nearly a decade. Having studied precious metals for over thirty years, John knows all there is to know about gold. He’s invested in precious metals through both crushing bear markets and raging bulls, giving him unique insight into where gold may be going next.
In short, John Embry’s opinions on gold are worth paying attention to… and he has some very strong opinions about where gold prices are going in the next twelve months.
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I am really fascinated with the gold and silver markets for a simple reason: I believe that the fundamentals that should be driving the price couldn’t be better. At the same time, because the price of both gold and silver have been driven down relentlessly—going on two and a half years now for gold—the degree of undervaluation against any method that I look at is approaching historic records.
As a result of this counterintuitive price action that we’ve seen in both metals, the sentiment in the market is horrible. I don’t think I’ve actually ever seen people so negative and disinterested in the subject, which I think represents one of the greatest buying opportunities in history.
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The Germans asked for their gold, that was being held at the Fed, to be returned a year ago. We’re told, remarkably, that they’ll only get the 300 tons back over seven years. Quite frankly, if the gold were actually there, they could put it on a couple of cargo planes and get it back to Germany in a week.
It begs the question: Is the gold there?
It turns out that a year later, they’ve returned about 37 tons. If they’re stretching it out evenly over seven years, then they should have delivered substantially more than that. It also turns out that the gold has been re-refined! I think that one of the great scandals that’s going to emerge when all this is over is that this gold, which is allegedly in official hands, has been lent and hypothecated, and it just isn’t there anymore. When that comes to widespread attention, I think that the impact on the price of gold—and by extension, silver—is going to be enormous. And I think we are dealing with a time frame on the order of 12 months for this to happen.