King World News interview with Stephen Leeb, Chairman & Chief Investment Officer of Leeb Capital Management regarding the Gold Standard that will as he sees it eventually come. His comments come after a bad sell off this week following the fallout from the Greek and French elections.
Many independent analysts including James Rickard, Max Keiser, Peter Schiff and even Ron Paul have called for a Gold standard, but only time will tell if its inevitable as some claim. Certainly the arguments for are quite compelling.
“Gold is reacting to what’s going on in Europe. It’s the last resort of liquidity for a lot of people. It’s been the best performing major asset over the last 12 years. You have a lot of chaos in Europe an no one knows what’s happening, so there has been a lot of reflex selling of gold.”
“Gold has been a bit stronger than I thought it would be considering the danger of a euro breakup is accelerating. I don’t think there’s any chance the euro holds together under its current form. Unemployment among the young in Greece is about 50%. That can’t stand, it just can’t.
These politicians can’t do this forever. People are not going to tolerate starvation. Sooner or later the politicians are going to have to respond. This means less austerity and more growth, and the end of German hegemony in Europe.
This looks similar to the end of World War I. Once the euro goes, it will be very much like the end of the war….
“You are going to have a lot of currency devaluation. You are also going to see massive inflation. Everybody knows what that means for gold.
So you are in the last hours of turbulence for the gold market (to the downside). Once this correction ends, you are going to have a barnburner to the upside. Gold will just vault. I don’t think investors will even remember these frustrating days. I had been warning we could see this drop in gold because of the problems in Europe, but investors should take advantage of it.
The key to all this appears to be China. Leeb backs up James Rickards opinion that China will move towards a gold back yuan.
Look at what China is doing. China is buying gold hand over fist right now. They are going to move the yuan forward as the world’s reserve currency and it’s going to be partially backed by gold. The world can also expect to see a gold standard imposed on Europe in the next 12 to 18 months.
As for Gold stocks, it depends on what they have left in the ground.
The junior gold stocks, the ones with honest to goodness reserves which have not been developed, they will see one of the greatest, if not the greatest bull market of all-time.
But many of the big stocks have become like dinosaurs. Stocks like Newmont and Barrick don’t have enough gold in the ground. So what’s bad for Newmont and Barrick, is incredibly good for gold. We are sitting on the cusp of what may be the greatest bull market we’ve ever seen in our lifetimes.”
Soon we will have QE3 which will lead to inflation.
Leeb also added: “Prospects for QE3 are rising. I think the stock market will make some sort of eventual top and just be range bound. This is what happens when you have inflation taking hold. We saw this in the 70s when stocks went nowhere for that entire decade, but gold and silver had massive gains.
The only place to be is going to be hard assets and commodities. Incidentally, both Glencore and Mitsubishi, two of the largest commodity companies in the world, have come out in the last day or so and stated that “commodity markets are tight.” Once this is liquidation is over, commodities will go crazy.”