On the heels of the IMF warning the U.S. about the danger of ending QE prematurely, Egon von Greyerz told King World News that silver is now ready for a major upside explosion in price. Greyerz also discussed the possibliity of a collapse in China as well as what is happening with gold and inflation. Below is what Greyerz, who is founder of Matterhorn Asset Management out of Switzerland and board member of Goldbroker.com, had to say in this exclusive interview :
“In the short-term, Eric, European interbank loans are collapsing which means the system is under great strain. And the major part of the Fed’s money is going to foreign banks.
There is also a massive liquidity shortage in China. It (the liquidity shortage) is now at an all-time high. The Bank of China wants to drain liquidity, but they can’t since that would mean a collapse of the financial system…
So China’s financial system is a bubble, Eric, and that could lead to major problems. In the U.S. long interest rates have risen. The 10-Year bond is up from 1.4% last year, to 2.1% now. The 30-Year is up almost 1%, from 2.4% to 3.3%.
Inflation is increasing and the PPI that came out today is a sign of that. We know that real inflation is much higher than published. Any person buying food can testify to that. And eventually (interest) rates will reach the teens at least. Gold and silver did react positively to the PPI today, and I still believe we’ve seen the bottom in the metals. Technically one more decline is possible, but it’s becoming less likely, Eric. So we are not far from a major up-move in the metals.
Looking at the gold/silver ratio, it looks like silver will have a major move and will be leading the move (higher) in the metals. The gold/silver ratio is extremely overbought. A fall of the gold/silver ratio, which is currently at 63:1, means that silver will go up a lot faster than gold. So there is a great potential in silver now. Short-term I could see silver move very fast (to the upside).”
Source : KWN