The value of gold is likely to experience a substantial correction in the near future, resulting in massive gains for precious metal investors, according to one industry specialist.

Asset management expert John Embry claimed gold prices are being artificially suppressed, but this can only continue for so long, particularly as physical bullion production dwindles.

Mr Embry, speaking to King World News, said “the powers that be” are trying to avoid an upswing in precious metals by selling off large quantities of paper gold. However, he argued that as supply tightens and negative sentiment begins to unwind, there could be “serious fireworks” in the industry.

“I’m not just talking about a $100 move – I’m talking hundreds and hundreds of dollars to the upside in the gold market in a fairly short period of time,” Mr Embry explained.

“So, I’m very optimistic about gold and silver but it’s very difficult to time the upside explosion because of the desperate actions of the central banks.”

The US dollar and gold

Traditionally, the US dollar and gold have an inverse relationship; if one performs well, the other slumps. The reason this occurs is because precious metals provide stability in a portfolio, hedging against the risk of financial market collapses and currency failures.

Appetite for gold and silver therefore often increases when currencies falter – and vice versa. However, according to Mr Embry, relying on the US dollar in today’s economic environment could be a mistake.

“I have to laugh when I see mainstream commentary saying that gold is weaker because the US dollar is firmer,” he stated.

“If the best they can do in the currency world is move into the vastly over-owned currency of an essentially bankrupt nation, then people can’t own enough gold and silver as far as I’m concerned.”

Countries worldwide already appear to be turning away from the dollar, with many setting up bilateral agreements with neighbouring nations to bypass the currency when trading.

Repatriation and confiscation

Mr Embry also highlighted odd gold policies arising in countries across the world, indicating that central banks are struggling to maintain price suppression.

For example, Ukraine’s central bank recently admitted that there is no gold being held domestically. The institution claimed moving its holdings abroad optimises the structure of international reserves.

However, industry commentators claimed this amounts to simply selling the gold to the US in exchange for dollars – at a time when the American currency has surged to new heights.

Elsewhere, the Netherlands has repatriated 20 per cent of its gold from the US, while Germany made similar efforts before last year stating that its bullion was supposedly in safe hands stateside.

“Now we have Deutsche Bank saying they are recommending that central banks should purchase gold from citizens since it is an unwanted remnant of crisis-driven investments from five years ago,” Mr Embry stated.

He argued that this is a “remarkable” statement considering the German government is essentially providing “life support” to keep Deutsche Bank afloat.