Eric Sprott: "Paper Markets Are a Joke. Prepare for Bullion Prices to go Supernova

Following up on Sprott’s latest: The Screaming Fundamentals for Owning Gold and Silver, Chris Martenson interviewed the silver billionaire and provided a must read (or listen) interview.

COMEX is a joke and I think all the paper markets are a joke. As you are probably aware, we trade a billion ounces of silver a day. A billion ounces. The world produces 900 million a year.

The raid that took place on May 1st was a joke. We are just in the process of analyzing it now and there was no way that speculators and the long sides could maintain their position when you wake up on a Monday morning and you are already down $6.00 an ounce which would have basically would have gotten rid of all your margins already. And then they bang on four subsequent margin rate increases. It was a perfectly orchestrated raid by the people who were short but I think it indicates that there was a real physical problem in the silver market. I expect that to manifest itself as we move into the latter part of this year.
Well I think Chris, when you realize how much money these shorts were losing. I mean we had silver rally from $18.00 to $50.00 or $49.50. I mean the losses would have been monumental. They were being forced to deal with the short position. It was a perfect night for a raid because as you mentioned, China was closed that day, the UK was closed, nobody was really up when this decline took place and I gather it took place on very, very few contracts. So it is a typical tactic in the precious metals market. We have seen it all along in gold. I mean I cannot tell you how many raids we have seen from the gold price over the last eleven years but they occur with great regularity. But ultimately they fail and again I refer to James Turk and he describes the gold price as a measured retreat by the central banks and the bullion shorts. They just know that there is a shortage of physical gold and I would like to use analogy: imagine if in the world, everything was the same today save one thing. Let us say the silver price was still $5.00. Imagine the amount of money that is going into silver today and how much silver you would buy at $5.00. You would be buying ten times more than you would have imagined. But the supply was relatively the same so they have to let the price go up to decrease the physicalness of the market. That the money wanting to go in, can buy fewer and fewer ounces as the price goes up.

Click here for the transcript of the Sprott-Martenson interview

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