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« Central Banks’ Gold Likely Gone-Eric Sprott | Main | SK OptionTrader – A good Move? »
Monday
Nov192012

Embry - $67 Trillion Shadow Banking System & $10,000 Gold

Today John Embry spoke with King World News about the the $67 trillion shadow banking system, $10,000 gold, and how this will all end.  Here is what Embry, who is chief investment strategist at Sprott Asset Management, had to say:  I’m a big admirer of Ketih Barron because I was big player in his company Aurelian.  I think he’s a very smart guy and he understands the business extremely well.  I agree with him that gold production is headed for a big decline going forward.”

Even though the price of gold has gone from $250 to $1,700, it’s still an uneconomic business.  We probably need $3,000 gold based on current costs to get a really robust rate of return.  Gold mining deserves a really robust rate of return because it’s an extremely hard and risky business. 

Please click here to read this interview in full.

Courtesy of Eric King who interviewed John for King World News

The part that grabs our attention is that the miners need a $3,000 gold price in order to generate a robust return. Well, as you know we have not been able to support the acquisition of gold miners for the last few years as the return wasn’t worth it. If it is an uneconomical business at $1,700 then we feel somewhat vindicated for not advocating such acquisitions.

As gold rallies the fortunes of these miners will change but we will need to see some evidence on that improvement before we will increase our exposure to this sector.

For now we will stick to holding physical gold and silver and utilizing the options market in an attempt to gain leverage to gold prices and boost our portfolios returns.

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