"I don't see any reason not to be in gold
at this point, even from a relatively short-term basis."
"Long term, the case is so powerful it's . . you know . . it's crazy," Leeb added. "Gold, gold junior miners, you know, you're not going to believe what it gets to in five years. I mean this is a gift—all these prices at this point, all of them."
Leeb goes on to say the eurozone is seriously flawed, as the Maastricht Treaty of 1992 didn't account for the problems that may arise considering the disparate economic models between member nations. As an example, Germany's culture of production and stable fiscal and monetary policy starkly contrasts with Spain's culture of collectivism leanings and zestful social lifestyle.
"The euro is not going to last . . . Spain right now has about 25 percent unemployment, Leeb explained. "They're being forced to be austere to satisfy the needs of the euro, and that's just not going to fly. It's no going to fly."
Unlike some economies, such as the United States of post WWII, massive debt and deficits incurred by Spain cannot be grown into, according to Leeb. U.S. production capacity and global position relative to its competitors after the devastation of Europe during WWII allowed U.S. deficits approaching 30 percent of GDP to quickly shrink to a surplus within several short years. In contrast to the example of Spain, its model and position on the world stage cannot achieve anywhere near similar results. Ditto for Greece, Portugal and other European nations.
"What does Spain produce? I'm not even sure what Spain produces . . . They're not a country that can really grow their way out of the kind of mess that they're in right now. And if that's the case, soon or later something is going to break.
"And curiously enough, Eric, that is what's holding gold; that's the difference between gold being $1,600 today and gold being at maybe $2,500."
Leeb continued by telling investors that the price of gold today already reflects the expectation of another plunge in the gold price in sympathy with a collapse in the euro, similar to the drop in gold following the surprise collapse of Lehman Brothers and the immediate liquidity a sold gold position provided the global financial system during that crisis in 2008.
Is FX Concept's John Taylor wrong about gold's probable fall to the $1,000-$1,200 level before retracing to new highs? And for the time frame of his prediction, Taylor said in a Bloomberg interview in the summer of 2011 that sometime in April or May (of 2012) gold would become a super bargain.
Leeb says, probably not so.
" . . .