Ahead of the two-day Fed meeting, today acclaimed money manager Stephen Leeb told King World News that massive demand will send silver soaring above $330 an ounce. Leeb also said the Chinese have just taken another major step to increase demand for gold in their country. Below is what Leeb had to say in his interview.
Eric King: “With the Fed meeting taking place over the next two days, Stephen, what are your thoughts ahead of that?”
Leeb: “Eric, I’m not sure what the Fed’s statement is going to be, but people are treating this quantitative easing as an all or nothing kind of thing. The Fed is not going to eliminate quantitative easing….
“At some point, and there may make hints of that, they may cut back a little bit, but the reality is the Fed has to continue to pour money into this economy. If you look at median incomes, they have plunged for the average family since the beginning of the century.
When you look at oil prices bordering on $100 a barrel, that $100 level is a much, much harder hit than it was 5 or 6 years ago because median incomes are so much lower. The only strong point we have in this economy is housing. Is the Fed going to pull the rug out and watch everything collapse again? No. So I think the Fed eliminating QE is a false worry.
When you look at something like the gold market, it’s just marking time right now. I don’t see any downside in gold at this point. Overnight there was some news that the Chinese are going forward and making progress with regards to introducing those ETF products that will hold gold in China. The Chinese are still accumulating massive amounts of gold.
So the flow of gold remains from West to East. The Chinese are very much on target for a reserve currency in which gold is going to play a major role. This means that things like oil, copper, etc, they are not going to be traded in US dollars forever.
The US is going to continue to print plenty of dollars. We’ve already printed $3.5 trillion. Who knows how many more trillions will be printed? At a certain point you are going to see the critical commodities of the world priced in gold or something that’s related to gold, like the Chinese yuan. So we are on a path where gold is headed many times higher that what it’s priced at today.
One quick point I would make: This setback in gold that we had this year, this was really the result of desperation on the part of the West. The BIS (Bank for International Settlements), the central bank of central banks, started the ball rolling at the beginning of the year when they refused to include gold as a liquidity buffer. You’ve heard a lot of negative comments about gold since then, but, again, this is just desperation.
Yes, there will be continued acts of desperation, and for a while they might work. This last desperate intervention created a sharp setback in the price of gold. Now we are in the process of recovering and forming a base. But the next move for gold is likely to be breathtaking. It will be the start of the next major leg of the bull market in gold.
I see these oil prices creeping up, despite all of this fracking, and it feels almost certain that the days for the US dollar are numbered. There is only one possible replacement and that has to be gold, Eric. That’s the bottom line. There is very little downside risk in this market, perhaps down to $1,320. When you look at the upside, you can multiply gold by ten and that’s probably the ultimate price for gold.”