Last night we reported that Eric Sprott is selling $30 million of PHYS and plowing the proceeds into silver.
Eric King interviewed Sprott today for further clarification of exactly why Sprott is exchanging gold for silver.
Sprott simplifies things down to the silver/gold ratio. Sprott believes silver should be trading at 16:1, and it is currently 45:1.
We believe Sprott’s forecast of a 16:1 ratio is ultraconservative, and we see the silver/gold ratio reaching a MINIMUM of 5:1.
We’ve put a notice in that we are going to sell two million shares of the Sprott Physical Trust, which would generate something like $32 million of proceeds, and it’s my intention to move that into (physical) silver. As you know I have opined very often that I think silver should trade at a 16/1 ratio to gold. That would imply a price today of something like $110 or $120, (and today) it’s $40.
You can almost sense that we are going to go back to a precious metals backed currency. Just think of the demand there would be if these two products (gold and silver) had to go into circulation and you need this physical commodity. So I have no doubt that these prices will continue to escalate.
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