Gold and Silver Stocks' Wild Ride Ahead: Greg McCoach

The Gold Report: You last spoke with The Gold Report in October 2010. A lot of things have happened since then. You were predicting that the Fed would start printing money to pay its debts, thereby creating a Ponzi scheme, which it had, sort of, been doing all along. So, have things played out the way you thought they would? And, what are you expecting is going to happen in the rest of 2012?

Greg McCoach: I think we've been very accurate in that we'd see additional quantitative easing (QE) events. I remember saying when QE1 came out that they'd be doing QE2 and QE3. Of course the Fed denied that and the media said that's not going to happen. Well, it has and we are now at QE3. I believe we're going to see QE events indefinitely until the whole system implodes. So, on that part I feel we've been very accurate. But, on other parts we haven't been so accurate.

Follow us

The junior mining share market certainly hasn't participated with the higher metals prices that we hit last year at $1,900/ounce (oz) gold and $49/oz silver. The juniors performed very poorly relative to those metals prices, particularly into the latter part of 2011 when the market really tanked. Tax-loss selling varies from year to year but last year was brutal, and even the best-of-class companies took a hit. But, I'm bullish for the long term.

Short-term debacles are a great buying opportunity for me. I believe this secular bull market in precious metals is going to continue for many years to come. My mantra is to buy on dips. I do believe we're going to see a great influx into the junior mining shares at some point. Right now the precious metal prices seem to be leading the equation, which isn't always the case. But, I expect these junior miners to catch up and do very, very well when the fiat currency scam finally comes to an end.

TGR: You've been pretty bullish all along on the prospects for gold. And, you've talked in the past about an eventual target price around $6,500/oz. So, where do you think we are relative to that at this point?

GM: I think in the immediate term it's very difficult to predict, but before year-end we're going to run to the next new highs in gold and silver. I would expect gold to be well above the $2,100/oz level in this next run with silver pushing toward $70/oz. The driver for this will be QE3 and the stoppage of the manipulation game in New York on the Comex. That game has been played for a long time now, over 15 years in my opinion, but will soon be vacated by the shorts due to horrendous losses as other big players-Russia and China-fight against them.

In the longer term, the end game for all this debt and fiat currency insanity will take gold to a minimum of $6,500/oz. In reality, it will probably go much higher than that as governments topple and civil unrest unfolds. As an example, if you took all the current debts known to the world in the system right now and had to cover those debts with gold, it would take a price of $19,500/oz to do so! Of course, this is just one methodology of trying to figure out just how high gold could go, but I think you get the picture. What I am trying to say is that my $6,500/oz number is probably very conservative. How long is it going to take to get there? I don't have a crystal ball. Those prices would happen as the world financial system hits systemic collapse.

In this next run higher for this year, gold could easily hit $2,500/oz to $3,000/oz, depending on how much QE3 is injected into the system. The more QE3 that is done, the higher the precious metals prices would go. Also, the vacating short situation on the Comex could be a big swing factor. Silver could easily see $70, $75, even $80/oz if these events occur this year as I expect. That's also going to lift our junior mining shares and get them going once again.

With that being said in the short term, however, we need to be aware of extreme volatility in either direction in short bursts. We may experience a violent downdraft in precious metals prices based on some supposed or concocted solution to the problems that ail the world. This, of course, would be total hogwash, but we should expect to hear a lot of this type of nonsense that could affect us to the downside in a very short-term situation. These would be your key buying moments if they happen. Have absolutely no fear that fiscal responsibility will take hold and all the financial problems of the world can be solved. That simply cannot happen based on the absolutely ridiculous levels of debt that must now be dealt with. Buy the precious metals on any dips with great confidence.

TGR: Last time you also talked about having a substantial position in silver. Are you still that bullish on silver?

GM: Yes! I've owned AmeriGold.com for 14 years and we have zero clients who are not in the money. I own both gold and silver. But, I believe that silver is going to far outperform gold, even though I think gold's going to $6,000-10,000/oz. From where we are right now, gold performance will pale in comparison to what silver's going to do. Eventually, I think silver could be priced at maybe $400-500/oz. If gold goes to $10,000/oz and we're at a 15:1 or 10:1 ratio, silver could be $700, $800, or even $900/oz.