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.

…The availability in dollar terms of gold is 100 times that of silver, so you can’t keep buying at a one to one ratio without something giving here.  As long as people keep buying it you know the price has to go up, there is very limited supply.  I think Comex has something like 27 million ounces (available for purchase), which is all of one billion dollars.  What is one billion dollars these days?  I mean there’s probably 500 different organizations that could clean them out.

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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  1. Logically it makes sense…But as we have seen the cartel will do everything to stop it. Today is a perfect example: With gold, once again, making new highs we can barely stay above $40. As soon as gold pulls back a bit silver gets taken to the woodshed! Does eveyone now see how corrupted this society is?
    Things are going to get a lot worse!

  2. To Silvergood: It's very clear to me too! It's all [email protected] up !

  3. Eric Sprott should convince any fund manager or a millionaire to buy all the physical COMEX Silver and end the manipulation. Exclente profits for those who would buy the silver.

  4. Doc –

    My questions here might test the topic boundaries of this site a bit, and may go into a thing or two that I don't know if you would want to, but….

    Do you place any credence in FOFOA's $50K for gold?

    If so, do you really mean to say $10k at least for silver?
    (That really would flip a lot of who is wealthy and who isn't, wouldn't it.)

    That would also put you in Bix Weir's territory projection-wise.
    Do you place any credence in the rest of Bix Weir's "theory"?
    (Is that an OK question for this site?)

    (All the numbers just mentioned are referencing a value in today's purchasing power, regardless of future inflation or hyper-inflation.)


  5. Ennis..don't have time to fully address your questions tonight…I will attempt to sit down this weekend to answer them…perhaps it will make a good Q&A with The Doc post.
    A little something for tonight…anything is possible (As in FOFOA's numbers)…but I would put myself closer to Sinclair's $10,000-$12,500 gold in today's purchasing power in my gold outlook.

  6. Doc
    Thank you
    That also partially answers some of the questions I left in another thread.
    No need to respond there if you haven't yet.
    I can wait patiently.
    I need sleep too.
    Good night.


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