Speaking with Eric King of King World News, James Turk is back with another prediction. Silver and gold will move decisively higher by the end of June, with silver breaking back above $40 and gold breaching $1,550 per Troy ounce in a mere two weeks, he told KWN.
For now, Turk believes the bottom is in for the two metals, and expects the rally to begin now. And not many traders will be expecting a rally in precious metals during the traditionally weak summer months of June, July and August.
“The sharp rally that occurred today off of those support zones suggests to me that the correction is over,” said Turk. “In other words, we are going to see silver back above $40 and gold above $1,550 within the next couple of weeks. Everything is all set for new record high prices in both metals this summer, which is going to surprise a lot of people.”
Turk reminded investors that sometimes investment demand trumps seasonality for gold and silver, as was the case in the early 80s during Mexico’s currency crisis. Record high interest rates toppled the Mexican government’s ability to remain solvent following a U.S. tight monetary policy induced recession and resulting falling crude prices (Mexico’s largest export). Several brutal devaluations of the peso took place during the crisis. Gold prices soared.
“I just think that people don’t really understand what can happen this summer,” Turk continued. “We’ve spoken before about the summer of 1982 when the gold price rose 50% from June to September, propelled back then by the Mexican debt default.”
According to Turk, today’s financial crisis dwarfs the scare in 1982, in that the bond market has priced in 17%, 11% and 10% 10-year bond rates for Greece, Ireland and Portugal, respectively, according to Bloomberg this morning.
“There are so many potential debt defaults going on today it is hard to figure out which one will be the tipping point,” Turk warned. “But whether it is Greece or Ireland or someone else, it doesn’t really matter Eric, it will be a clear sign that today’s fragile monetary system of fiat currencies backed by nothing is imploding.”
The 2008 collapse, which took down all asset classes but sovereign debt securities, won’t be repeated for the precious metals during the coming currency crisis, according to Turk. What was a liquidity crisis in 2008 has turn into a solvency crisis, leaving few choices for investors other than the precious metals to run to for safety as the world wonders which currency will collapse next.
“This summer you could see a move higher in gold and silver that literally shakes the world, more than it was shaken when Lehman Brothers collapsed,” said Turk.
Turk concludes, “A lot of people ask if we get another Lehman style collapse, will gold and silver fall like they did in 2008? I say no they won’t. The reason is back in 2008 the primary driver after Lehman collapsed was a rush by investors, hedge funds and everyone else for liquidity. Most people learned a very valuable lesson from that event. Consequently, this time around you are not going to see a rush for liquidity, you are going to see a rush for safety. The safest haven of them all is physical gold and physical silver.”