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Judge tells Barrick and Morgan to discuss settlement with Blanchard
11:23p ET Monday, March 14, 2005
Dear Friend of GATA and Gold:
Thanks to GATA supporter Mark Webber for transcribing
the interview with Sprott Asset Management's John
Embry on ROB-TV's "Night Cap" program in Canada last
Thursday, March 10. The transcript, with a little
editing, is appended here.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
ROB-TV's "Night Cap" with Kim Parlee,
substituting for Howard Green.
Thursday, March 10, 2005
Kim Parlee: Joining me on "Night Cap" tonight is John Embry. He is
chief investment strategist at Sprott Asset Management. John, it's
nice to see you.
John Embry: Nice to be here.
Kim Parlee: Let's start off with the selloff that we're seeing right
now in all of the base-metal stocks, the energy stocks right now.
I'm serious. Do you, would you see the similar thing happening with
gold?
John Embry: Well, no. Gold's already done that. We saw that sort of
thing starting in December. First we went through a couple of ugly
months with gold. And gold is so far behind the other commodities
that have been going up steadily that if you look at virtually any
metric that I do, whether it's the CRB or oil prices, gold is
severely undervalued compared to those. So no, I would be surprised
if there was any significant selloff in gold.
Kim Parlee: Is it also the fact that it's linked to a currency? I
mean, there is so much happening with that, that you're not going to
see the same kind of volatility because it has that stability, I
guess?
John Embry: That's an actually interesting observation because gold
is starting to reassert itself as a currency and that's why it is
attractive. It's attractive I guess as a commodity because there's a
lot more demand than there is supply coming out of the ground. But
the real thing that's going to drive gold going forward is it sort
of reasserts itself as the hard currency of choice.
Kim Parlee: That's interesting because we're hearing a lot of
central bankers talk more about diversifying out of U.S. dollars.
You know, not talking about diversifying into gold specifically, but
just that say getting out of U.S. dollars, making gold more
attractive.
John Embry: I think so. Definitely, they are going to be
diversifying out of U.S. dollars. Why they say it ahead of time, you
know? That is, tell people what they are going to do and they jolt
the market. I think they are sending a message to the U.S.: "Guys,
get your act together." And then they keep coming out and denying
that they're going to do anything. But it is sort of an ongoing
process so I think it is significant. I think the foreigners
recognize that the U.S.'s reckless path could put everybody in
difficulty.
Kim Parlee: Reckless path on the budget deficit side?
John Embry: Budget deficit and allowing the current account deficit
just to blow out to epic proportions. I mean, you're talking like
close to $700 billion a year. And now the U.S. is $3 trillion in the
hole vis-a-vis the rest of the world. And it wasn't that long ago
that they were actually a creditor nation. Now they're a debtor
nation the likes of which have never been seen.
Kim Parlee: It's interesting because it's not just the foreign
central bankers who are giving their warnings. Greenspan is actually
just coming out right now and warning that budget deficits, right
now, are a bigger threat than the trade imbalance. Now the trade
numbers are coming out tomorrow as well. Do you agree with that?
John Embry: I think they're related. It's funny because Alan
Greenspan basically endorsed Bush's tax cuts and what have you. And
now that we have the serious budget deficit problem, which you could
have predicted, he's coming out and saying they've got
to do something about the budget deficit. So he's talking, to some
extent, out of both sides of his mouth.
Kim Parlee: What's the next catalyst for gold? Is it still in the
U.S. dollar?
John Embry: Initially, I think, it is going to be the U.S. dollar.
Now but I believe it will go far beyond that. Because eventually the
U.S. dollar just can't fall to nothing, which a lot of people seem
to think. But one of the things that won't restrain it from falling
is that the other countries will be forced to debase their
currencies by printing more money to keep their currencies from
rising too much against the U.S. dollar. We've seen it in Canada.
Don Coxe is a friend of mine and I saw Don a couple of times in the
last couple of weeks. He is convinced that the Canadian dollar is
going to par. I don't think the Canadian government has any
intention of allowing it to go to par because our commodity business
would be fine but Ontario and Quebec would be wiped out.
Kim Parlee: Our manufacturing base?
John Embry: Our manufacturing base would be murdered. So we're all
alone. They talk about the euro going to 1.60, 1.70? Europe's not
that competitive with the United States at even 1.40. So I don't buy
the idea. The currencies that are severely undervalued are clearly
the Asian currencies. And they are the ones that will ultimately
rise a lot against the U.S. dollar.
Kim Parlee: But if you're a Canadian central banker, what do you do
with so much interest in commodities, oil, energy? How do you
dissuade people from buying Canadian dollars?
John Embry: That's a good question because I think David Dodge gave
a speech in Vancouver several weeks ago in which he said, "If it was
a legitimate rise in the Canadian dollar because terms of trade were
improving, because commodity prices were rising," etc., he would
probably not intervene to a great extent. But if it's driven by hot
money, which will be the second step, you'll see it rising and then
all the hot money sloshing around the world will come pouring into
the Canadian dollar. The only way you can combat that is by dropping
interest rates sharply and try to make it as unattractive as
possible. It's not beyond the realm of possibility that you can go
to par. But it would be so devasting for the Canadian economy,
particularly the central part of the country, that I don't think it
would stay there long because the country would be going to hell in
a handcart.
Kim Parlee: I think we're going to leave it there for the moment.
Good note to finish off on.
John Embry: OK.
Kim Parlee: That's John Embry, chief investment strategist at Sprott
Asset Management.
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