Jim Rickards: Next Crisis Will Be Worse than 2008 Because it Will Be Bigger Than the Fed!

dollar collapse panicThe five biggest banks in the United States in 2008, today those banks are bigger. They have a larger percentage of the assets of the banking system.  They have much larger derivatives books and if you apply what I use which is complexity theory, to understand the risk in capital markets, you know that when you increase something in scale, the risk does not go up in a linear fashion. It goes up in an exponential fashion so the risk is – the size of the system is greater than ever before and the risk gets exponentially greater than ever before.
So we have a lousy economy. We have massive risk. We have the whole thing getting propped up like money printing by the Fed. This is naturally going to happen except this time, the next time, it will be worse than 2008 because it will be bigger than the Fed.
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Rick Rule: Platinum, Palladium Supply Squeeze Will Turn Ugly

2014 Platinum EagleStrikes at South African mines have caused a massive drop in platinum and palladium production. And the world’s palladium supply could decline by 41% overnight if the West imposes export sanctions on Russia.  Speculators are betting that these events will reduce supply of the metals and drive up prices.
Rick Rule, Chairman and Founder of Sprott Global Resource Investments Ltd., recently weighed in.  He believes platinum and palladium could go lower in the near-term, as fears of a sudden crunch dissipate.
The real reason platinum and palladium should rise over the coming years has nothing to do with geopolitics or labor issues, Rule believes. 

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Eric Sprott: The Great Non-Recovery

fiscal cliffWe are now in the 5th year since the “official” end of the Great Recession.   Numerous indicators of the state of the U.S. economy point to a non-recovery:

  • The participation rate is low and supported by baby boomers working more or coming out of retirement.
  • Students (the future labour force) are defaulting on their loans in record amounts.
  • Disposable income is still below its pre-recession level.
  • An ever increasing share of disposable income is being spent on health care, crippling discretionary spending.
  • Higher interest rates are further depressing discretionary spending (home and auto sales).
  • All of which is resulting in anemic business and economic activity.

Claims that the U.S. economy is suddenly rebounding have been made before. They are misleading at best and fallacious at worst. It would not be surprising to see further deterioration, which would force central planners to initiate additional unconventional intervention (i.e. Quantitative Easing). [Read more...]

Sprott’s Charles Oliver: Gold to 5,000-$15,000 within a few Years!

launch rocket verticalSprott’s Charles Oliver puts the current gold price rally into historical perspective:

In 1980, when the gold price peaked at $800, it took 1 ounce of gold to buy the Dow Jones Index. After 1980, financial assets took the lead over hard assets. In 1999, it took 44 ounces of gold to buy the Dow Jones, at a gold price of $250. If gold were to regain the position it held in 1980, we could easily see a 3:1 ratio – gold at $5,000 given the current level of the Dow Jones, or even $15,000 if gold returns to the 1:1 level.[Read more...]

Eric Sprott: ETF’s Have Been Pillaged to Supply Central Bank Gold Shortfall

Sprott$8 billion fund manager Eric Sprott says there is a big opportunity surfacing in precious metals. Sprott contends, “I’ve always believed there is more demand than supply for the last 14 years. I’ve documented it.  I am suggesting the western central banks have very little gold left. I think the whole decline in the gold price is the liquidation in the ETFs to supply some of that shortfall. I think manipulation and relief from the manipulation and the ongoing demand, well in excess of supply, is going to power gold higher.”
On precious metal price manipulation, Sprott charges, “We seem to get more and more evidence of it all the time. The German equivalent to the SEC saying the possible manipulation to gold would be worse than LIBOR, and I think worse is a very important word here because there can’t be more money involved because LIBOR is way bigger than gold, but worse means the egregiousness of the price decline. Furthermore, we had another group come out and say the LBMA fixed the price . . . the price was manipulated 50% of the time.”

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Eric Sprott: Bankers Manipulate Precious Metals to Make Bonuses!

There have been some very interesting developments in the precious metals markets.  BaFin, the German regulator came out & said that the main regulator said that precious metals are manipulated worse than LIBOR and that word “worse” is a very significant word in my mind.
Then when you think about some of the chronology for BaFin, they announced in the middle of November that they were going to investigate the possible fixing of gold prices or manipulating of gold prices on the London gold fix.
On the very next day, Deutsche Bank declined to continue being a member of the fixing of the London bullion market. When you think about what must have happened, my own feeling is that the regulator probably went back to Deutsche Bank having looked at their records and said, “Do you know what your boys in London have been doing here?” And of course the next day they quit the LBMA…
If you think about manipulation, there’s only one reason in my mind that bankers manipulate things. They don’t manipulate them for the bank to make money. They manipulate them for the employees to make bonuses.

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Eric Sprott Warns: Don’t Miss this Golden Opportunity!

goldIt is obvious to us that precious metals markets were manipulated in 2013. It is also obvious that demand far exceeded annual mine supply. Now let’s analyze what should happen, going forward, with these revelations. If gold prices are back on their long-term trend, ex-manipulation, a linear progression of the gold chart from 2000 to 2014 would suggest a price of $2,100 now (62% higher than the current $1,300 level) and $2,400 by year-end.
Gold and silver have broken their downtrends and have surpassed their 200 day moving averages. The golden cross (i.e. the fifty day rising through the 200 day) still awaits, but it is most likely to happen within weeks.
When was the last time that an obvious reversal of an anomalous, yet explicable market dysfunction allowed you to imagine that you could expect multi-hundred per cent returns over a short time period?
Don’t miss this Golden Opportunity! [Read more...]

Rick Rule: U.S. Debt Out of Control, “Gold is Catastrophe Insurance”

debt ceilingIn this interview with Finance & Liberty, Sprott’s Rick Rule discusses the coming recovery in the precious metals sector, as well as his view on whether a fiat currency and sovereign debt collapse is dead ahead.
Rick Rule’s full interview is below:
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Eric Sprott: Sovereign Banking Systems Will Fail in 2014, Sending Gold Through $2k & Silver Over $50!

smash popEric Sprott of Sprott Asset Management predicts, “The price of gold and silver will both hit new highs in 2014. The price of gold goes north of $2,000, and silver will quickly go over $50. When it does, it will get a little crazy.” Sprott says,
They know a day of reckoning is coming, and they are setting up for it. . . . I am convinced some sovereign banking systems fail in 2014.
Join Greg Hunter of USAWatchdog.com as he goes One-on-One with $8 billion money manager Eric Sprott. [Read more...]

Eric Sprott: One More Sign of Manipulation in the Gold Market

sprottAs demonstrated in our Open Letter to the World Gold Council, there was a large supply-demand imbalance in 2013. The evidence presented here suggests that the decline in the price of gold in mid-2013 and the subsequent raid of gold ETFs (but not silver ETFs) was engineered by Western Central Banks to help solve their physical gold supply problem. However, the resulting increase in Indian gold demand exacerbated the problem. The solution was to restrict Indians from importing gold by all means possible in order to help the Western Central Banks regain control of the gold market.
However, the rate of drain in gold ETFs cannot continue forever; at the current pace of 930 tonnes/year, there are less than two years of gold left in ETFs. Moreover, Indians have proved highly creative at finding ways around import restrictions.  Smuggling is on the rise and will most likely increase as smugglers become more sophisticated. Overall, we believe that interest in physical gold from emerging markets will remain a driving force.
Accordingly, we believe that the manipulation of gold prices by central banks, as demonstrated by the below analysis, cannot continue in 2014. Therefore, we expect substantial increases in the price of precious metals as the true shortages become obvious. [Read more...]

Eric Sprott: 2014 Will Be the Year Gold & Silver Set New All-Time Nominal Highs!

sprottOur friend Eric Sprott, the man who nailed silver’s move from $18 to $49.73 in late 2010 (when he predicted silver would rise to $50 in the next 6 months) has made another bold prediction for gold and silver for 2014: Gold will break $2,000, and silver will surpass its previous all-time nominal high of $50.
The price of gold and silver will both hit new highs in 2014. The price of gold goes north of $2,000, and silver will quickly go over $50. When it does, it will get a little crazy.  They know a day of reckoning is coming, and they are setting up for it. . . . I am convinced some sovereign banking systems fail in 2014.
Eric Sprott’s full interview with Greg Hunter is below: [Read more...]

Billionaire Eric Sprott: “Gold Stocks Will Go Up Multi Ten Thousands of Percent!”

gold bull“You have to be a buyer when people are non-believers. You have to believe in something based on data that says you’re right when the world will tell you you’re wrong, because when the world says you’re wrong and you’re right, you know that the return will be outsized because no one is there. It’s like buying gold stocks in 2000 which I did to a very large extent. The HUI index was at 35 and it went to over 600. It went up 1700% in eight years. And that’s because everyone was against it. It was like a killing field for an investor to go in and buy things cheap and I really believe it’s kind of a similar opportunity again today.
Once gold starts looking like, ‘Hold it now—maybe that secular bull market wasn’t over?’…All will be forgotten quickly. If the price of gold is $2000 Tekoa, you would not believe what the sentiment will be…They’ll all come in…you will have everyone trying to get through the same door at the same time and it could be quite stunningstocks will go up multi ten thousands of percent!
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Rick Rule: “Every Billionaire I Know Took Bets Contrary To Conventional Wisdom At The Time That Were Highly Risky”

Eric Sprott is making a bet that we’ve reached the capitulation point in precious metals and that the precious metals will pivot sharply higher in the next 12 to 18 months.  He rightly points out that by putting sort of $50 million into this bet…he might lose 50% of $50 million or $25 million…or if he is right about the timing of the move in precious metals and the quantum of the move of precious metals, he could easily turn that $50 million into $500 million. A bet where you have one chance of losing half your money and another chance of making 10 times your money to the extent that you can afford to make that bet—that’s how you build businesses like Sprott.
I’ve had the good fortune in my life to know 12, 15, 20 self-made billionaires and what segregates the billionaires, what segregates the people who get that last digit—is guts. You have to take risks…Every billionaire I know has been willing to take bets that were contrary to conventional wisdom at the time that were highly risky. You have to see a situation that you think has outsized possibility of reward and you have to really, really, really swing for the fence.” [Read more...]

Eric Sprott: Inform Act to Bring a Dose of Fiscal Sanity & Awareness to US Public?

Thanks to Boston University’s Larry Kotlikoff, it now seems like the U.S. might be getting closer to acknowledging that it has a serious fiscal problem; or at least this is what one might infer from the strong support from Congressmen and Senators from both sides of the aisle, as well as from fifteen Nobel Laureates in Economics (see Figure 2 for a complete list) and thousands of business leaders and economists from all stripes, for a new bill called the Intergenerational Financial Obligations Reform Act or “Inform Act”.
We find it appalling that, while some of the world’s brightest economists consider this an issue of paramount importance, notwithstanding its introduction to the Senate and the House, the “Inform Act” completely flew under the radar of the mainstream media.
Hopefully, if this becomes law, it will not be possible for people to keep their head in the sand on fiscal responsibility.
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Sprott’s Thoughts On The Curious Case for Silver

sprottIt has been a difficult year for silver investors with the metal falling by 36% year-to-date. While the Federal Reserve balance sheet continues to expand, ‘taper’ discussions by the Federal Open Market Committee have weighed heavily on the price performance of all the precious metals this year. By our calculations, over the last five years silver has a beta to the gold price of 1.5. This implies that price changes in gold are magnified in silver. Combine this with an 80% correlation in the price action between gold and silver over the same time frame and it’s easy to see that where the price of gold goes, the price of silver goes faster. As we break down the fundamentals for silver, market developments this year give rise to a curious conundrum – how can the case for silver be stronger while the price continues to languish? We begin with investor sentiment. [Read more...]