The Gold Report has released an excellent interview with our friend Eric Sprott of Sprott Asset Management.
Sprott states it is time to “Fear the financial system.” and that it’s time for people to take matters into their own hands by purchasing physical gold and silver.
Sprott discusses the massive 2,500 ton demand change for gold over the past 12 years, in a 4,000 ton/year gold market, and states ‘you have to ask yourself where all that gold is coming from!
Sprott believes (likely correctly) that I can only conclude that acting in concert, the G6 central banks are supplying that gold from their reserves by leasing the central bank gold into the gold market.

Sprott also states that if they were not manipulated, the price of gold today would be over $3,200, and silver would be north of $200/oz.

The Gold Report: You’ve stated before that the price of gold should be above $3,200/ounce (oz) and the price of silver above $200/oz but market manipulation keeps both metals artificially low. Who is manipulating it?

Eric Sprott: I suspect the G6 central banks have a hand in subverting the gold price because as the canary in the coal mine, high gold prices might tip everyone off to the severity of the ongoing financial crisis. I don’t think anyone can doubt that we’re in the middle of a financial crisis, primarily in the banking system, when month after month one program after another is rolled out to save somebody, whether it’s Long-Term Refinancing Operations (LTROs), quantitative easings (QEs), bank bailouts in Spain or rollovers of debt in Greece.

TGR: Are you saying that the gold price manipulation is a new phenomenon?

ES: In the 1960s, the London Gold Pool was trying to suppress the price of gold but lost that battle, and the price rocketed up. My own analysis of the physical supply and demand for gold suggests a dramatic increase in demand over the last 12 years—a 2,500 ton net change at a minimum. This is in the 4,000 ton/year gold market, which hasn’t increased in the past 12 years. The supply has basically been static. Yet we have exchange traded funds and central banks buying. You have to ask yourself where all the gold’s coming from with all these new sources of demand, because mine supply over that period is negligible.

I can only conclude that acting in concert, the G6 central banks are supplying that gold from their reserves by leasing the central bank gold into the gold market. Of course, they pretend they still own it, because the item on their balance sheet is now called “gold and gold receivables.” The receivable is what they’ve loaned to a bullion bank, but it’s actually been sold into the market and consumed and won’t be coming back again. To buy it back physically would drive the price absolutely crazy.

That’s why I think the price of gold should be considerably higher than it is, and why I believe, much as anyone in the Gold Anti-Trust Action (GATA) organization, that there’s been continual pressure from the central banks in cooperation with bullion banks to keep the price down.

TGR: Does the fact that the silver market is so much smaller than the gold market make it easier to manipulate?
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  1. The only reason the game is still playing is because the public just doesn’t understand the concept of money and many cannot do the math.  I personally think the end game is much closer than we guessing.  It’s all running on fumes and somebody is going to wake up and say — What in the hell is going on???

  2. i am flabbergasted at how clueless my friends and family are!   it is such a simple concept, especially if one is as old as i am … i remember looking at the silver coins in my pocket as a kid, the dates on the mercury dimes, the quarters, sometimes i would see dates from the 1800’s on these coins!    one of my friends just refuses to buy silver, she likes her big bank account .   another friend puts up her hand in a STOP motion and says, ‘i don’t engage in financial speculation!’  my own son has threatened me with a psychological evaluation!   it is a lonely pkace, knowing what is happening.   

    • Tell your friends, and son, not to come to you looking for something to eat after the SHTF since they will not heed your advise now to buy silver to preserve their assets.

    • @lynnebee  I have discussed this with my very educated friends and they just simply refuse to believe.  My own family thinks I’m nuts — they say the system could never fail.  They refuse to believe that the entire financial system is corrupt.  I am almost to the point that I want to rub their noses in it.  It is the most frustrating situation I’ve been in a long time.  Sit tight and reap the rewards is all I can say to myself.  Take care

  3. I keep reminding people about the purchasing power of the last silver coins we had a regular currency. 
    For one guilder, you could buy a warm snack on the street. A pretty fine snacks with something on the side. The year was 1967. 

    Today, 1 guilder has become €0,45. It doesn’t even buy the mayonaise on your fries. The silver guilder however, has €3,70 worth of silver in it. And you know what, that still buys you something warm to eat on the streets, with a nice side snack or a can of branded soda. The guy in 1967 who skipped lunch, and kept the guilder for 2012, STILL has a saved lunch.
    In 1967 also nickel guilders were minted, and those are worthless now. You need to pay the recycler to take it off your hands. 

  4. Interesting points we all make on this situation.    It’s fun to have the real silver coins and it’s good to know  they have not only kept up with the inflation of the last 50 years but can actually buy a little more than the things they used to buy back in those days.    
     If I could make a suggestion and its something you can do on the cheap.  Buy rolls of nickels AND pennies.  It is my belief that nickels will assume a value higher than their face as silver prices ramp upwards.  The base metals could increase in price but even if they don’t they will be the small change that we can use when  pre 1965 silver coins become useful in  the normal course of purchases. 
    If nothing else, they will at least retain the same value of the FIAT bills you use to buy them so you have nothing to lose. At least you have some real metal rather than paper. Convert a C note to 2,000 nickels and a saw buck to 2,000 pennies.  Maybe you’ll find some numistmatically valuable coins buried in this stack.  If not, you will still have something of value.
      I can’t believe Doc can offer junk bullion at the special today.  I just bought some JB two months ago and was happy with the price.  And now 50 cents off.  I like Senior silver because if I convert it back to FIAT or buy something with it there is not one chance in h*** that I will report the gain on that transaction.  If the government thinks it’s legal to debase our currency by 90% over the last 50 years I think its legal to retain my REAL money in its original form and buying power.   Frig the IRS

  5. I run into a brick wall when trying to convince some members of my family. My brother is receptive to it but is anxious about storing silver in his house. My father has a large balance in a savings account and I have persuaded him to convert 5% to silver but the conversation goes round in a circle with “Silver doesn’t pay interest” and “But I won’t make any money”. I can’t get the basic concept through that silver and gold hold their value and that even the best savings account today pays an interest rate that is below, or will soon be below, inflation.
    The major problem I see with people’s inability to recognise real value is that, for a long time now, saving has been blended in with the act of accumulating new fiat. Savings accounts have been designed to provide an income thru the interest earnings… which gives these fiat savers the impression that they are profiting. My cousin has something called a Sharesave account which ties his savings with shares and possibly bonds… somehow he got a 90% dividend when it matured. I still tried to suggest to him he should park his dividend into silver but I got the reply “Stuff silver!”
    I persist because it will be an absolute tragedy to see the fruits of my family’s savings waste down to nothing when they could have prevented it.

    • I’m going to be ordering some Wooden Nickel’s and hand them to the people I tried to warn them about when they come crying when the system crashes.
      Many people forgot what they are and why they came into being.  What a wonderful way to reintroduce them to it 🙂  I’ll post a photo of them when they come in.

  6. Cordoba 
    I am guessing you dad amassed a good size savings account because he was able to save money in the world where that does not occur too often. That makes him smarter than the average bear.
    Most people have very marginal net worths, savings balances and liquidity.  Ask your dad how much his savings bank pays him. 1 basis point; 5 BPS; 20 BPS? Then let him know that the FDIC has $9 billion in assets to protect about $5 trillion in checking and savings accounts. 
    If we have a large bank failure, a mathematical certainty in the next 6-12 months,  the FDIC will go broke.  The FDIC is no longer legally charged with bailing out the funds lost by bank failures.  They don’t have to pay your dad. With the 7 Circuit Court stating that Sentinel Securities was not responsible for repaying any of the client’s segregated accounts which were pledged as collateral for its risky trading, your dad’s bank is probably doing the same thing with Dad’s stack.
    Your Dad’s money is no longer his once in the bankers hands. The law of the land now stands to protect the bank if their bad lending bets cause their failure. It no longer protects your dad’s money. Period.   Most banks have trading desks and with that system embedded in the bank, the court has ruled the client’s money, hypothecated in any manner, become the property of the primary creditor.  The FDIC or SIPC will not bail out that loss and your dad would be screwed. 
    Additionally, he needs to keep in mind that the near bankrupt FDIC was created as insurance to protect people from stupid, greedy criminal bankers.  I say this with certainty because I am a former banker. I watched as 3 generations of banks failed from the 1981-1984 S&L debacle, the 1,000 banks that failed from 1989 to 1994 and the most recent series of bank failures that have taken down over 400 banks.  Those numbers don’t include the $700 billion of tax payer dollars that were wasted trying to bail out the TBTF banksters in 2008. 
    Your dad’s entire savings balance could be gone in an instant.  And I have not even gotten into bank holidays that will visit our shores if one big bank in the US fails.  B of A and Morgan Stanley are rumored to be in serious trouble.

    • What do yous think will happen to mortgages and equity lines when this collapse happens?  I have some rental properties and a place of my own. But obviously being new I still have loans out? Really appreciate thea thoughts. Thanks   New to silver doc today. Exciting

  7. Jailer 08  Speaking as a former banker, I know that if you have a loan secured by property with a lien on that property in favor of a lender, you will owe on that loan.  If the bank holding the loan fails the new bank will take over the loan. If the government takes over the loan for some reason that might mean the government will be the only holder of that lien, you will be notifed that your new lender is the government.  There is a slight chance that due to massive fraud in paperwork or some sort of transfer that does not fit typical real estate law, your loan may drop between the cracks; for  while.  It would probably require a WORL, World without Rule of Law, to effectively extinguish your loan since no legal entity would remain to enforce the lien and recorded title documents.
    I think there is a case building in which Wamu  did not transfer their legal mortgage documentation (undelivered at the time of the bank failure and takeover orchestrated by the Fed and FDIC) to Wells Fargo. The thought is that these loans and liens might be made invalid.  Some legal precendence is is being formed that says due to the robosigning fiasco that was ‘punished’ by $25 billion in fines against many of the major residential lender, these falsified signatures and other failures to create legally binding documents may make these loans voidable if the borrower pursues a strong legal remedy throught a class action. The plaintiffs  may win their case IMO. 
    Some of the people who were roped into the liar loans/sub prime mortgages were  offered promises that their loans were safe and had reasonable rates and terms. Underwriters and processors filled in and forged borrower details then slammed loans closed before the ink was dry and without due diligence. That is a fatal flaw in lending and cane give a borrower good cause of action to repudiate the loan due to fraud.  
      Loans like these, founded on illegal documentation or false and fraudulent promises, can be ruled unenforceable.  Given the extent of the complete fraud perpetrated by the LIBOR rigging of the top 25 western banks, there may be far more loans released due to this fraud.  It is presently estimated that $175 BILLION in penalties are looming over these banks for their illegal and corrupt actions.
    You may want to find an attorney who is specializing in mortgage fraud and find out if there are irregularities in your loan documents. Piling on to a class action could help. Your loan documents may contain small mistakes are not sufficient to defeat the force, effect and intention of the loan. This is commonplace as harried processors miss a step or two.
    We made mistakes at my bank that were later caught by regulators or borrowers. We did not lose the loan due to these minor mistakes but we ate the misteaks. Like this little typo.
      But major FUBARs in loan docs, we later found, were not going be be corrected by appealing to the client. We screwed up and had to live with our mistakes.  The clients invariably benefited by these mistakes even if the  general intentions of the loan remained in force.  The mistakes usually involved the wrong interest rate that benefited the client.  A mistake in extra collateral was a benefit to the client. Poorly placed liens were also a factor that helped the client.   These oopsies derailed careers but the loans were still enforced.

  8. Gold will sure hit 3200$ and silver, 200$ because of price manipulation which caused silver shortages, energy prices increasing and inflation. It’s more likely that silver will hit 200$ because it has a lot of uses.

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