Monday, August 04, 2014

John Embry and Professor Laurence J. Kotlikoff

July 18, 2014

Featured Guests
John Embry & Professor Laurence J. Kotlikoff
(alphabetical order)

Boston University economics professor and author of the new bestseller The Clash of Generations, Dr. Kotlikoff says that every investor must own precious metals, given his finding that the official $17.6 trillion dollar national debt figure is laughable, merely a rounding error of the true figure. In fact, the actual national debt is nearly 13 times bigger, $225 trillion when unfunded liabilities are included. A few brave members of Congress have addressed the domestic Ponzi scheme (like Dr. Ron Paul) but subsequently watched their financial support evaporate making reelection prospects challenging. America is facing an employment crisis as well; underemployment remains a key stumbling block to prosperity and the American Dream. Dr. Kotlikoff insists that our officials can solve the dilemma by getting the fiscal house in order and by fixing the education system via reduction of class sizes to facilitate teaching through individualized learning. Due to malfeasance within the SIPC insurance program, no brokerage account is safe. Dr. Kotlikoff won't open a brokerage account because any funds withdrawn over the past six years are now liable to confiscation, putting every American investor at risk. Put simply, due in no small part to the Madoff scandal, any funds an investor unwittingly spends from a personal brokerage account is exposed to SIPC law suits for the next six years. Other than precious metals, the professor shares several ideal alternatives to domestic securities, for avoiding the duel threats of fiscal irresponsibility and confiscation.
The Chief Investment Strategist at Sprott Asset Management for over a decade, John Embry sees important signs that the precious metals market has bottomed, including the accelerating gold shortage, which will ultimately culminate with a disconnect between the paper and physical markets. The rumors are true, there's little to no available bullion available in sovereign vaults (unencumbered, not leased / swapped), the gold has been rehypothecated, as evidenced by the inability for the Bundesbank to repatriate even a tiny fraction of their reserves from Fort Knox. Canada's banking system is the envy of much of the Western world, nevertheless he draws the starling inference that the recent legislation putting savers at risk for financial shortfalls suggests that officials are bracing for a Noah's flood sized financial deluge. The preponderance of evidence / data suggest that the greatest risk facing North America is a currency crisis, where the US dollar suddenly loses it's reserve status and plunges below long-term support, further eroding purchasing power just when household budgets are already stretched beyond the breaking point, held together by credit card liquidity. He throws listeners a life preserver in the form of two of his favorite precious metals stock ticker symbols, including Lake Shore Gold: LSG (Disclosure: employees may own shares) with phenomenal prospects. But the exciting news is for silver investors - bears have shorted an entire year of silver mining output, a fact that could propel the price far beyond the 2011 peak of $50 and into the stratosphere, perhaps as high as the inflation adjusted price of $150 as billions of investors cogitate the ramifications of the imminent global currency reset. So how much gold / silver / shares is enough for the typical investor? Portfolios require a precious metals allocation of at least 20-25%.

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