Will Chinese Exchange “Destroy” Gold/Silver Shorts?

The new gold and silver exchange opening in China will “destroy” those with large short positions in precious metals, according to John Embry, Chief Investment Strategist at Sprott Asset Management. In an interview with King World News this week, Embry said that he agrees with the claim made by Andrew Maguire – the London-based metals trader who served as a whistleblower when earlier this year he accused J.P. Morgan and HSBC of manipulating the gold and silver markets. “First, I happen to agree with about 99% of what Andrew Maguire says most of the time and I certainly agree with this,” Embry stated.  ”It sort of encompasses two things. It’s been well documented, the Chinese interest in gold and silver is immense.  They have a natural tendency towards it.  They are getting wealthier and now they are setting up an opportunity where the public can get easier access to it, so to me that just cements the demand side of the equation.”

Embry continued: “The other side that Andrew knows a lot about because of his vast experience is the paper short positions that are carried by the bullion banks.  The fact is these things (short positions) are extremely vulnerable and they can be taken out by physical demand.” “When the pricing mechanism changes from the paper market to the physical market, which is what Andrew is suggesting, this is the inflection point where the price of gold is going to go berserk. Silver even more so because of the tightness in the silver market and the fact that the short position is even more extreme.”

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