The Doc sat down with gold and silver expert and billionaire fund manager Eric Sprott Wednesday for the first of a series of interviews regarding the markets.
Eric warned The Doc prior to the interview that the KWN and USAWatchdog sites were maliciously attacked the day they published interviews with Sprott. There appear to be powerful interests that would prefer to keep Eric’s thoughts on precious metals out of the public at the present, as SD also sustained a confirmed co-ordinated Apache flood DOS attack during the recording of the interview.
With gold smashed nearly to $1550 and silver nearly to $28 Wednesday, Eric discussed the latest paper raid in the face of epic physical demand, and stated that the demand for coins has been stunning!
Sprott also stated that there is an absolute shortage in platinum and palladium, and although he still believes silver is the investment of the decade, there is no telling how high platinum and palladium could go.
With silver trading back under $30, Eric states that silver should be $100 today, that he expects it to massively outperform gold, and that he conservatively expects the metal to reach $200/oz. Eric states that $200 shouldn’t be considered the top however, and that All we know is that the price should be up massively. Anyone who’s been a student of the market sees these ridiculous trades, but some day these guys will be brought to their knees by people just taking delivery.
The first of Eric Sprott’s MUST READ interviews with The Doc is below:
When asked whether the current gold and silver correction is the beginning of a 2008 like collapse, or as Jim Sinclair has suggested, the last major shake-out prior to major bull moves for gold and silver, Sprott responded:
It’s getting chaotic out there in the financial world. We have a worldwide economic recession, we have governments which have hugely over borrowed, and we have so much printing of money it’s surreal.
Interestingly, this whole time the price of gold and silver has gown down, which I find incredibly unusual because all of the data that you and I and other people in the precious metals business look to on a physical basis is so strong. I’ve always surmised that because it’s so chaotic, and because Paul Volcker stated back in 1980 that the mistake we made was not getting control of the gold price (of course the gold price at that time had gone from $35 in 1971 to $850 a mere 9 years later) and we ended up with double digit inflation. I certainly believe that precious metals are the tell on the irresponsibility of the central planners.
And I think that the central planners would know that these are massively unusual and irresponsible, but it’s the only thing they can do. They have to keep interest rates down because any uptick and all governments will face almost immediate bankruptcy because they wouldn’t be able to afford the interest.
We’re living in very unusual times, we see incredible volumes on the paper markets of silver and gold, which obviously bear no relationship with what’s going on in the real world.
When you trade 1 year’s silver production in a day- matter of fact I think we traded one year’s worth of gold production yesterday, which is absolutely ridiculous!
They just trade the paper like it’s the real thing but as you and your readers know, it’s not the real thing, and there’s a whole other market out there which ultimately will determine the price.
The Doc asked Eric his thoughts on the massive physical silver demand in 2013:
As we all know there is the paper market and the physical market. As you’ve pointed out the demand for coins has been stunning. I think the important thing to point out for a silver owner is to look at the US Mint’s statistics and to look at how much silver is sold and how much gold is sold. For 2011, 12, and so far in 2013, the US Mint sells 50 times as much silver as they sell gold.
We know that the amount of silver produced in the world is only about 11 times greater than the amount of gold each year. We also know that there is 150 x more dollars of gold in inventory than there are dollars of silver in inventory.
So when people are buying at a rate of 50 to 1 (and I can also use the example of our gold and silver trusts, in the last traunche we sold 50 times more silver than gold)- these are people choosing to buy silver- we don’t force people to buy our trust, no one forces them to buy from the Mint, but that’s the relationship that they’re buying gold and silver at!
When I talk to bullion dealers, my favorite question is what percentage of your business is in gold and what percentage is in silver in dollars, and almost to a man, the answer is 50/50!
So how long can people continue to buy 50 times more silver than gold? Because for investment purposes it’s really only available on a 3 to 1 basis, because most silver is used for industrial uses, whereas most gold is used for investment.
Sprott also states that silver should be trading at $100 currently!
With a debt of $60 trillion and a GDP of $16 trillion, bonds will not be paid back. You have to own physical things- silver and gold being the primary ones. Gold is by far the bigger market and has more money go into it, but I think silver has a chance of massively outperform gold, simply because of those ratios we talked about. It’s only available in a 9 to 1 ratio, the inventories are a ratio of 150 times more of gold in terms of silver, and yet we see people spending the same amounts of money on gold and silver.
Silver should go back to that 16 to 1 ratio, so gold at $1600 should be at $100. I certainly imagine that gold goes much, much higher here. If for example it went to $3,200, the price of silver would be $200.
That’s the sort of move I expect, but you know you can’t pick a top on these things, and we have so much money printing, so fast, that it’s impossible to calculate where it should be because we don’t know in the future what these government’s will do.
All we know is that the price should be up massively. Anyone who’s been a student of the market sees these ridiculous trades, but some day these guys will be brought to their knees by people just taking delivery, and I hope it happens sooner rather than later.
When you look at for example the February month, every day so far we keep getting new people standing for delivery!