Kingworldnews.com | Jul. 17, 2012

Today Stephen Leeb told King World News that the gold market now boils down to a “war between establishment and the non-establishment.”  Leeb, who is Chairman of Leeb Capital Management, also said, “When the banks finally get scared that they are short too much gold, you will see a major explosion in price.”

The acclaimed money manager also stated, “The banks continue to charge the customers for holding their gold as ‘allocated,’ even though the gold has gone out the door to aid in the gold price suppression scheme.  This is fraud, plain and simple, but this fraud is being encouraged by the establishment.”

Here is what Leeb had to say about the war in gold, who the players are, and how it will end:  “I’ve been reading through your past interviews, Eric, and it’s becoming more and more apparent to me that the gold market is really at the center of what is the major divide in this world, and that’s the establishment vs non-establishment.”

Stephen Leeb continues:

“The establishment believes the dollar should be currency.  I’m just saying they have a vested interest, a very, very strong interest in making sure the dollar maintains its status as a reserve currency.  The problem is that it is becoming clear to virtually all savvy investors that gold is a better currency to own.

Gold has gone up almost six and a half fold since the beginning of this century....

“Gold has also outperformed almost every other major commodity.  Warren Buffett, as well as other establishment figures, constantly mock gold and holders of gold, but the reality is that gold has gone up a staggering 50 fold vs the dollar since the early 1970s.

This fact has not gone unnoticed by the ‘super wealthy’ around the world, and more and more of them are turning to gold for wealth preservation, and away from currencies and other paper instruments, including the dollar.

So the world is becoming rapidly divided between those who represent the establishment, such as Warren Buffett and Jamie Dimon, and those who represent the anti-establishment, such as Ron Paul and others who understand that gold is the ultimate wealth preservation mechanism. 

In a very strange twist, you now have countries such as China, Russia and other Eastern nations that have joined in the hunt to accumulate more gold reserves.  The bottom line here is the gold market is going to continue in a bull market.  It will continue going much higher as the establishment is fighting what amounts to a losing battle.  Don’t get me wrong, the establishment is going to do everything they can to hold gold down. 

I spoke to you last time about how the establishment has banks taking in customer’s gold and turning right around and leasing it to the bullion banks in order to suppress the price of gold.  The banks continue to charge the customers for holding their gold as ‘allocated,’ even though the gold has gone out the door to aid in the gold price suppression scheme.

This is fraud plain and simple, but this fraud is being encouraged by the establishment.  I would say I’ve never really believed in conspiracies, but for the first time I am saying that if you want to have gold, you have to have the physical gold.  This can be accomplished by owning something like the Sprott Gold Trust.  But I’m getting nervous about the ETF GLD.  You cannot accept GLD as being safe anymore. 

So you really have the makings of a war between establishment and the non-establishment.  And what makes this so intriguing is that on the non-establishment side you have a very, very big partner in China.  In China, let’s say you have a $10 million account and you go into a bank and say you want $500,000 of gold, they’ll give it to you. 

Contrast that to the Western banks which are leasing out the gold that customers have entrusted to them.  The Chinese want their citizenry to own gold.  The total amount of gold in China has to be enormous and growing.

All of the factors I’m discussing with you today are precisely the reasons why I no longer believe gold has major downside risk.  At one point I was telling KWN readers that if Europe cracked we could see some major selling of gold and a bout of weakness.  I no longer believe that to be the case.

Gold has very, very strong buyers near the recent lows, and I know this sounds strange to say, but I don’t think there is any meaningful upside resistance on gold, none whatsoever.  When the banks finally get scared that they are short too much gold, you will see a major explosion in price.  

I would just like to add that silver is going to explode higher as well, and everyone should be accumulating physical silver at these discounted prices.  Just buy it and put it away.  It’s been money for thousands of years, it’s like having a silver bank account.”