Kaye - Expect A Massive Silver Short Squeeze
Today acclaimed hedge fund manager William Kaye told King World News that the case for an upside explosion and short squeeze in silver is even more staggering than it is for gold. Kaye, who 23 years ago worked for Goldman Sachs in mergers and acquisitions and who is the founder of Pacific Group in Hong Kong, also believes that countries are in danger of losing their claims on gold which is supposed to be safely stored in London and at the Fed. Below is the third and final of a three part series of written interviews which was released today with the outspoken hedge fund manager from Hong Kong.
Eric King: “Bill, I’m going to take a little bit of a trip back in time with you to the Drexel Burnham failure. We interviewed Keith Barron about this. He spoke about the fact that Drexel had 17 tons of Portugal’s gold under lease. They (Drexel) had control of it. They failed. Portugal lost all 17 tons of that gold.
Their (Portugal’s) claim on that paper (gold) vanished when Drexel went under. These countries have to realize there is a danger that they could literally lose their claim on their gold that’s held at the Bank of England, at the Fed, if they are doing business with these bullion banks (through leasing), and they fail. Their claim is gone, it evaporates.”
Kaye: “That’s right. People (and countries) have to evaluate and be comfortable, themselves, with the condition of the global financial system. We know we were on the cusp of what could have been and probably should have been a systemic global financial meltdown just a few years ago....
“What caused that hasn’t gone away. The main problem with the global financial system is there is far too much debt. And because of the excessive debts that couldn’t be serviced, we almost had a systemic breakdown just a few years ago.
The total debt levels around the world have not shrunk since that time, in fact they have increased. What has happened is a very minor amount of private sector debt contraction has been far more than offset by the sovereign sector. It’s the governments that have been levering up over the last 4 to 5 years.
But the total debt in the system that has to get serviced has not shrunk. Therefore, the problems that almost caused a total meltdown have not gone away. They’ve (actually) gotten worse. So exactly as you are saying, Eric, a prudent investor should not be at risk and should not have his gold at risk in the global financial system. It is not safe.
It (the financial system) is over-levered, and there is not enough high quality asset-backing as collateral to sustain it. So there are any number of triggers, but we think prudent investors will seek to do what we are already doing (by taking physical possession of our gold).”
Eric King: “Bill, for the silver bulls that our out there, can you talk about some of the things you believe are going to happen in the silver market?”
Kaye: “Anyone who does the math can make a more compelling case for silver than gold ... The amount of claims on silver that exist relative to the known amount of silver above ground, those numbers are even more staggering than they are for gold ... It (silver) could easily go up ten times. We’re also bullish on silver. We own silver.”