May 26, 2011
Original Source:

Stephen Leeb - Silver Should Be $150 Today  

With so much volatility in the gold and silver markets, today King World News interviewed one of the top ranked money managers in the country, Dr. Stephen Leeb, Founder of Leeb Capital Management. Dr. Leeb's comments surprised KWN in many ways, here is how he started the interview, "I think the United States has been asleep at the switch for a long time, and I think the Chinese in contrast have been wide awake to an emerging problem in the world and it's one called resource scarcity. We've heard a lot about resource scarcity and mostly the reaction in the US is just to shrug their shoulders, we'll figure out a way around it. Well, there really is not a way around certain kinds of scarcities."

Stephen Leeb continues:

"For instance rare earths are something that has been all over the press. What people seem to fail to realize is that most of the rare earths we can produce outside of China don't do us any good in the kinds of applications we are going to need rare earths for, namely high temperature magnets, magnets that run in high temperature environments that is.

...Another critical metal, silver, which the Chinese have been accumulating is vital. Vital for building out anything resembling solar energy. You really cannot produce solar without silver really becomes a critical metal. What are we doing with silver? We raise margin requirements on the commodity exchanges and we think we've solved the silver requirement.

...We are stuck in a world of resource scarcity and unless we figure out a way around this we won't even be able to build out renewable resources...and if we are not careful, sooner or later the Chinese will control most of the silver."

When asked about the seriousness of the silver situation Leeb stated, "I think it's desperate, literally. I'm using that word in a well-measured way. I think when you look at Japan right now in the wake of that horrible nuclear accident, Japan is on record as saying that they are going two ways with their energy situation. They are going to try to conserve, and that leaves renewables. Well we know they are very limited in terms of wind, why? Because of the rare earth situation, they can't get those high temperature rare earths from China.

That leaves solar and in order to really build out solar in any meaningful way you need silver, and silver becomes a very, very critical metal. Yes it is, silver is an extremely special metal as you said Eric...You need it across the board in military applications, in electronic applications and especially in my view of the world, building out renewable energy."

When asked where silver is headed in terms of price Leeb responded, "I could just look at it from a monetary point of view, forget about all of the industrial applications. The ratio of silver to gold in the world is about ten to one, maybe seven and a half to one, above and below ground if you look at reserves. So as a monetary metal you could make a case that silver should already be no more than a ten to one ratio with gold."

When asked with the ten one ratio putting silver $150, is that an outrageous price for silver today Leeb responded, "No it isn't, it's not at all outrageous. Silver at $150 is in no way outrageous. I'm not counting the critical applications in the industrial and renewable areas."

When asked about gold specifically and where it is headed Leeb said, "Much, much higher...We have in this country been on a treadmill to hell for at least the last decade. We continue to print money, money money...and sooner or later you are going to have a lot of inflation. The gold market is right now anticipating is going to go higher, and probably much higher."


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