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Eric Sprott: "Paper Markets Are A Joke: Prepare For Bullion Prices To Go Supernova"
Exclusive Interview by Chris Martenson
Eric Sprott - Paper Markets Are A Joke: Prepare for Bullion Prices to Go Supernova
"I think that the prices will continue higher. I mean the amount of money printing is unbelievable. I just think you have to take that initial stand in terms of buying it. I use the James Turk analogy: just keep dollar averaging. We have gone up eleven years in a row, this year it looks like it will be no exception; I would certainly think next year will be no exception. If we ever have QE3 announced, I think gold and silver will just go absolutely bonkers here. And so I just think you have got to step in there and own it; we’ve had these fears all the way along. You know, $400, and $500 and $700 and $800 dollar gold, everyone was afraid it was a one-time thing. I don’t think it is a one-time thing, I think it is a secular thing. It’s going to carry on for quite a while here until we find some resolution of these problems. And the resolution probably will be some form of default where people just have to expunge debts that cannot be repaid. So, you have got to be in some asset which will not be affected by that."
So predicts Eric Sprott, founder of Sprott Asset Management and famed investor. In this wide-ranging interview, he shares his insights on the precious metals markets - specifically what investors need to be aware of in terms of the way the markets are currently managed (manipulated), the macro outlook for the economy (grim) and the true value of gold and silver (very underpriced; particularly silver).
Eric sees the current "extend and pretend" intervention by world governments and central banks to prop of a fundamentally flawed baking system, particularly the vast money printing efforts of the past few years, as a ruse that is losing it's influence. Once enough people ask "Why have your money in a bank earning nothing? Why not have it in something that might at least maintain it’s purchasing power?”, the capital flows into the precious metals will dwarf current levels, sending bullion prices much higher.
Those interested in hearing Eric's insights on:
- why we're in a global secular bear market for most assets classes
- what the safest investment options are
- how much precious metals exposure investors should have
- the key factors that will drive PM prices much higher
- the mindboggling supply shortage and manipulation within the silver market
- why there may eventually be two prices for bullion: one for paper and (a much higher one) for physical & how high Eric thinks prices could go
should click here to listen to Chris' interview with Eric Sprott (runtime 38m:01s):
Or start reading the transcript below:
Chris Martenson: Welcome Eric, it's a real pleasure to have you today.
Eric Sprott: Chris, good to be here and thank you for all the work you are doing in apprising your investors of what's really going on in the world.
Chris Martenson: Oh thank you. We’ve been at it many years and unfortunately much of what I think both you and I saw coming - though unfortunately not enough others along the way - is really coming to pass. If I could, let’s start with your views. You have been advocating and creating investment vehicles for people to own gold and silver for a long time. How did you get to that position and what are your views on owning gold and silver at this point?
Eric Sprott: Sure. Well it all started, Chris, with our studies back in 2001 where we were entering into a secular bear market and wondering how you deal with that. And a typical response would be to own gold and silver, which is what we decided to do. I think the one thing that really tipped us into it was an analysis of the physical supply and demand for gold and some work by Frank Veneroso that suggested things would have to change dramatically in the physical gold market because the central banks were selling four to five hundred tons a year. And as you know, here we are eleven years later and now they are buying four hundred tons a year on balance, and this is in a market where the mines supply only twenty-six hundred tons a year. So that is a huge change that had to take place that Frank identified back then. He also identified that the gold companies would stop hedging. We’ve had the ETF’s come along. So we have had a lot of dramatic changes in the physical balance between supply and demand in gold. And that is really what took us there in 2000; to get actively involved in that particular market.
Chris Martenson: And looking at it today, has anything changed in that analysis? You mentioned a secular bear market, are we still in one and also has anything changed in the fundamental supply/demand equation that has actually tipped it one way or the other, further or less, since the initial analysis you looked at?
Eric Sprott: Sure. Well I do think we are still in the secular bear market and basically what people describe with the phrase “extend and pretend”. And we had the zero interest rate policy, the housing boom, the lending boom, TARP and TALF and all those things which try to delay what naturally should happen. When I look at the headwinds for gold and silver, I really believe that we have been aided and abetted by a lot of these policies, particularly QE1 and QE2 and the various printing mechanisms of the ECB and the Japanese government and almost all governments in the world. So as much as I would not have anticipated those types of developments happening, they have happened and they provide an even stronger headwind for people realizing that currencies are not going to survive and to maintain your purchasing power you have to own precious metals.
Chris Martenson: You know, I too have been surprised by how long all of this has stretched out. If you had told me five years ago - Eric if you had said “Chris, the Federal Government in the U.S. is going to be running a $1.6 trillion dollar deficit and the Federal Reserve is going to monetizing 75% of that and the bond markets will be relatively tame and the dollar will still be roughly where it is at”; I would have said you’re nuts. But here we are. And my view on this is that what we are kicking the can down the road. We have bought some time, - which I am thankful for personally - however the risks are now increasing. And the risk that I have identified that concerns me a lot is that, sooner or later, much is happening in Greece right now where suddenly the world wakes up and says “Hey, wait a minute. They can’t possibly pay that back. And at 22% interest rates on 2-year paper, they really can’t pay that back.” So suddenly the illusion is lifted. We have collectively suddenly gone, “Greece is not solvent. Oh, that’s terrible.” And now we are grappling with that. But that same dynamic can be extended to, I think, any of the governments that you just mentioned. It varies across Europe somewhat, but in Japan and the U.S. there certainly are fundamental mismatches between current productive economic output and the levels of indebtedness. We are printing our way to that. Is there a way that you can see that this could actually be turned around where it all sort of pencils out? Is there a solution to this that does not have to pass through a fiscal crisis and possibly a currency crisis?
Eric Sprott: Well Chris, it is very hard to imagine that happening. And then I look at really what has happened over the last eleven years since we hit the high in that, we basically created a problem in the world of banking business and I always think of banks as being levered 20 to 1. And when your paper assets start to decline, of course it does not take much of a decline to get rid of all the capital. And we have seen that in so many instances whether it is Iceland or Ireland or now the Greek banks. And all the moves that have happened so far, really have been in response to the problems in the banking system. That is why you have TARP and TALF and all those things because the banks basically were losing deposits and somebody had to come in and support them. That is what happened in the UK, it happened in Iceland, it happened in Ireland, it’s happening in Greece as is transpiring right now. And I think the big fear is that you cannot let one banking system go down without an impact on all the other banking systems. So collectively everyone is trying to support the banking system and I think people see through the ruse. And the natural reaction is “Well, why have your money in a bank when you earn nothing, why not have it in something that might at least maintain it’s purchasing power?”
Click here to read the rest of the transcript.
Note: listeners interested in the conclusions expressed within this interview will also want to read Chris' recent report on The Screaming Fundamentals For Owning Gold And Silver, which takes a deep dive into the data behind the supply and demand imbalances in the bullion markets.
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if i had thousand dollars i would but silver rounds of some sort
or 5 - 10 oz bars.
if $3000 a gold ounce and some more silver ...
if $10,000 then gold and silver in some ratio that is appealing.
i like the 24k buffalos and most of the silver rounds. eagles and leafs etc.
.
http://www.gainesvillecoins.com/Cart.aspx
.
i have heard others complain about this place but have never had a problem
and they take credit cards.
local dealers, walk in, are sometimes the best however. also ask
a lot of questions of the different dealers within the same store and
figure out who is the dirt bag and don't buy from that one. if there
are a number of sales people in the store it seems there is always the guy
who has a higher premium than the other ones. not that it really matters
in the laarger scheme of things. not a bad idea to become something of
a regular, you may get better deals that way....
and i guess you've seen this
http://www.zerohedge.com/article/buy-dip
Singing to the choir here
Where you been AssFire? Miss your wonderful rants...
To think they locked up von Nuthaus & Buttnekkie is churning out all that contrafiat!
'Taint right!
I can't think of any other asset that carried this type of mentality.
I'm going to take this conversation to the end 2001 since we are talking about an 10-11 year time frame. In 2001 AAPL was trading at $6 and change, it is now trading at $349 juxtaposed against a rise in silver from $4-$35. I'm not advocating stocks or PM's because if you look at the price action they both rise in concert practically. However, I personally feel comfortable in only USD's or Swissies. Of course, the dollar bears are going to knock this as ludicrous thesis but in all honesty the dollar is the most appealing turd in the currency basket next only to the Franc. It is of my belief that just because an asset as gone up for 11 years is indicative of it never falling in price. I thought we all learned this lesson with ENE and housing.
The asset is not going up...your fiat is going down like like an intern on Billy Boy.
In 2001 AAPL was trading at $6 and change, it is now trading at $349
I wonder how well AAPL would have done w/o TARP, QE1, QE2, etc.
And therein lies the rub.
If you are cheering for higher PM's, it is also a vote of confidence in equity prices. Both assets benefit from the same catalyst which is the causality between printing money, and rising prices.
DJIA: up 43.6% since July 5, 2009
Gold: up 62.6% since July 5, 2009
DJIA: down 9.9% since July 5, 2007
Gold: up 133.3% since July 5, 2007
DJIA: up 15.6% since July 5, 2001
Gold: up 471.7% since July 5, 2001
Are both assets still benefiting from the same catalyst?
If so, what accounts for gold's 145% rise from July 2001 to July 2007, BEFORE the financial crisis and any so-called "quantitative easing"?
First of all when did I ever mention the DOW? If you look in percentage terms @ PCLN/AAPL/NFLX they are up far more than any PM.
What accounted for gold rise between 2001-2007? Uh...easy credit (which was later replaced by printed money as the shadow banking system collapsed). The same thing(s) that helped AAPL/NFLX/PCLN.
And stocks pay dividends right? Don't PM's have storage/insurance premiums?
Like I said I'm not advocating either one but there is a cultish backdrop to PM's that I have only seen associated with bubbles. That's all I'm saying.
LOL. I remember those days. No one was saying Apple's going to $300, they were saying Apple didn't have a chance against MSFT and taking bets on how long until they went bankrupt. You are aware I hope that your three examples cherry-picked with hind sight don't have dividends. Just saying you could have made a better case here.
You're going to use three companies for a comparison? What about all the stocks that didn't see their prices rise, or went into bankruptcy?
Ah yes...the dividends...the P/E ratios...picking just the right stocks at just the right times...
Reminds me of the gambling guides at casinos on "How to win at Craps" or "How to enjoy Roullette".
*cough*
Glad you are betting 30 to 1 on Steve Jobs roll and a Transient entertainment media vehicle.
Ah, yes Bob, cherry-picking a few high-flying stocks in hindsight is truly a valid and meaningful comparison.
And so if your glib assumption that gold and silver are each up over 400% in the last decade strictly due to "easy credit", then why is your beloved stock market not ALSO up over 400% during the same timeframe? Are you saying that that credit somehow preferentially flowed into the precious metals?
As for your putative "cultish backdrop to PMs", as opposed to say equities or bonds, you clearly have never once tuned into CNBC, or read a copy of the Wall Street Journal, or any sort of mainstream financial rag. But it is true that the partisans of the precious metals are a vocal and opinionated lot, because they tend to have studied economic and monetary history, and realize the depths to which governments will lie, cheat, and screw their citizens out of their savings and livelihoods by manipulating currencies and interest rates for the benefit of themselves and their political and financial allies.
I have no argument with those who make rich profits in manipulated equities markets. Profit isn't the problem. Manipulation is. Particularly when they're manipulated with wealth stolen from ...well... just about everybody.
PMs' rise isn't by stealing from everybody. AAPL's rise is.
Well if PM's are benefiting from printed money, isn't that the beneficiary of confiscation of wealth from the masses through inflation?
Seems to me like both benefit from the same forbidden fruit.
AAPL is being manipulated upward by the Fed (via proxies) with TARP, TALF, QE1, QE2, etc, printing press money which robs wealth from everyone.
PMs aren't.
Actually PMs aren't rising in value. The dollar is losing value. So PMs aren't benefitting from anything.
And they're no supposed to. That's the point. PMs are relatively stable commodities over hundreds even thousands of years.
PMs aren't being used to silently steal wealth from everybody. Paper currencies are. It's the #1 reason paper currencies and central banks exist. To silently steal wealth from everyone via inflation. And in the present case, boost equities like AAPL.
PMs aren't benefitting from false demand created by the Fed using wealth silently stolen from everybody.
AAPL is. And I'm not going to participate in it. I'm not going to be hypocritical like many people are. I'm not going to bash what the Fed is doing while benefitting from what the Fed is doing.
That's why we don't hear RoboTrader and similar equities bulls railing against QE. They're benefitting from it. They're feeding at the same QE trough Wall Street and the federal government and a host of other parasites are feeding at.
They're riding the Fed gravy-train just like Wall Street and the federal government and a host of other parasites are, getting some of that wealth looted from everybody else.
Gold and silver may go higher but there is absolutely no 'money printing' going on. Actual physical coins/bills is still under $1 trillion. The QE shenanigans are at the top of the M pyramid, not the bottom - ie. they have 'printed' a couple trillion on a base of ~$100 trillion in claims - mild impact only. The big impact is deficit spending/stimulus which is about to disappear/shrink - this will cause severe double dip. Gold probably better than $ but I am of opinion one won't be able to maintain their wealth amplitude shifting paper into metals. Wealth amplitude is going away in almost all scenarios.
That's right, there's no money printing going on. Never has been. That's because money has to be mined from the Earth. Currencies are printed.
<golf clap>
Even so, cyber-bucks will implode the financial system just as easily as FRNs in MeatSpace.
I agree immediate impact of QE is modest. However QE started clock ticking whereby everyone desires to move from long term to short term debt. This will take time to unwind but guarantees a big inflation impact down the road.
I have seen a few strange, yet somewhat plausible arguments that because of electronic banking, physical paper cash and coin might decouple from EFT payments.
Hard to say until we see it, but anything's possible.
The Post Office tires of handing me the heavy boxes, but little do they know what I have planned.
Cremation day is set for July 15th. What happens to Silver and gold is going to be discovered very rapidly.
I'll bite. Cremation day is set for July 15th?
Close of business day on the 15th, anyone still holding positions in Paper Gold and Silver, wiped out completely.
Do you have any explanation or evidence for that scenario?
Gothcha! Never to return and explain....
Love me some Sprott. :)
What Eric Sprott really meant to say: "My AUM has reached $10 billion and I'm in a ton of illiquid holdings and scared shitless because redemptions will hit me hard!!!"
and "please, one more rally - I have more PSLV shares to dump on the suckers".
Yeah, after ten years of doing this, I'm sure you two have him all figured out. He's trying to suck everyone in on a "big PM scam"?
Are you guys really this fucking stupid?
Wow...
And Leo, how are your greek 10-year bonds doing? Talk about credibility...
Oppositional personality disorder-- If you say black, they must say white, they can't help it. If you crave gold and financial stability, they want fiat and Ponzi.
Now tell them to be celebate with themselves and you will get the result you desire.
It's not a personality disorder, Ms. It's a job.
Or, wait. No -- you're right. It's a pretty damned evil job.
These guys get paid to say "Stay with what you know, folks! There's nothing wrong in here! Those outsiders are crazy!"
But I think that the only door out of that place is a chimney.
The short answer is 'yes'
Leo, correct me if I am wrong, but don't solar panels use silver in them? PS The answer is yes. So, why aren't you long silver then? And why do you bash it?
Because leo is a clueless, disingenuous, ignorant Keynesian fuckwad.
Well, guess what leo?
My Austrian karma just ran over your crippled Keynesian dogma.
The psychology of gold buyers might follow predictable historical tracks ... but technology changes. If silver becomes prohibitively expensive there are plenty of alternatives waiting in the wings. Now a short squeeze might very well happen, but depletion causing a huge spike in pricing because of industrial use ... not so much IMO.
"If silver becomes prohibitively expensive there are plenty of alternatives waiting in the wings"
Please Marco, tell us, what metals will possibly become simultaneously the next best conductor of electrons and reflector of photons? Just list them 1, 2, 3.
And don't go over $100 an ounce or you will have shot your foot off, like you just did your mouth.
The conductor will be synthesized linear graphite. The reflector is someone else's guess.
Thin film metastable metallic hydrogen.
(Well, you asked for a guess!)
It's not about being as good ... it's about being good enough to give better price/performance, for instance for mirrors we will switch to aluminium (already replacing silver/glass mirrors in concentrating solar). For conductors on traditional solar cells we're spoiled for choice, even good old copper will work. We have realistic alternatives which can be scaled up very quickly for the use of silver in solar applications ... silver isn't like say oil.
For most electronics it won't matter. For the missles and maybe even the solar panels yeah it might. Silver would have to go up pretty high before it would make a significant cost increase for most uses.
there are most definitely not plenty of alternatives, to silver, and in fact new applications involving silver, are more numerous, than any other substance. silver has multiple characteristics, not found together in other elements. that's why they blow up 480 ounces, per pop, in a cruise missile. alternatives, waiting in the wings. waiting for what?
Missiles do as well. Silver's a beauty in a lot of ways.
What leo really meant to say: "Big Brother/Daddy Government, will you hold my hand and make everything all better?"
"Why yes I will, dear little leo! But first, let's go inside and play a game --- you take off your pants, and I'll play pin the tail on the donkey (jackass)."
Please don't refer to ass, even jackass, around Leo...speak softly as you know...wink...wink, he is greek.
LOL, so true..
It amazes me how many metal haters there are, and how many actually make the time to troll ZH.
What Leo Kolivakis really meant to say: "I'm sore about losing my shirt on Timminco and somehow I blame my own stupidity on Eric Sprott"
LOL! Owned 10,000 shares of Timminco at 40 cents, it went down to 34, and I sold them. hardly lost my shirt. Sprott is too big, in too many illiquid names. His performance sucks lately, he's going to suffer huge redemptions.
Yeah, he'll get wiped out Leo. So he has to bat 1000% for you to approve of all his calls? Illiquid names? He just throws darts does he? Just a bunch of dummies there at SAM?
Why don't you just fuck off?
Leo,
please check the LBMA daily trading volume for silver.
Claiming that 10 billion in bullion is an "illiquid" position is intellectually dishonest.
but Sprott says there is no silver to be had anywhere!
So either his position is illiquid, or his claims there is no availability of silver is false.
Oooooor...a liquid asset can be scarce because no one wants to sell it at current prices. Oh wait, there was no manipulation so the prices land at the intersection of supply and demand.
What Leo is really saying is that because he could not make it in the real world and couldn't keep a job for any length of time, he is now providing his free commentary for everyone to ponder <laugh at>. He sits behind his computer and creates this stuff for free... that 's quite a business model Leo... then you come on here, trying to insult people and you think you're going places???
Leo, you're lucky writers are not paid to submit their content on this site because you'd not even make it to the trash can.
The best thing everyone could do is simply NOT POST when you submit and you'll hopefully just go away...
Google is an amazing tool...
Twitter... a total of 5 people following Leo
Linkedin... a total of 0 connections for Leo
McGill University... is that some sort of Canadian Beer?
You're a real mover and shaker there Leo... you haven't even bought your domain name leokolivakis.com what a joke.
He actually bought the reverse-spelled site --- sikavilokoel.com --- which, when translated from the Greek, means "Keynes, I love you".
Mr. A... you're the best!
lol
web bot, you moron, just got on Twitter and I haven't used LinkedIn in over 10 years. And McGill is way above your mental grasp. Stick with the fleas here, you make good company. And don't worry about me, I am making money trading which is more than I can say for you pathetic losers.
Boy, you really told him!
(did you stick your tongue out at the screen while you were typing all that too?)
SUPERNOVA MO FAKAS!
BrianOflanagan....eats horse cock...and loves it.
Can you imagine if you went long LULU, CMG, FOSL, TSCO, etc. in 2009 and cashed in two and a half years later and started buying mining stocks today after they have been obliterated by 40% - 60%?
Instead of 6 months ago when everyone was squealing "This is It! It is now!"????
Vast riches, baby!!!!
LOL...
Took a break from counting your money did you? *rolls eyes*
Robot, you are the perfect trader. You know every stock and what it is going to do and reap the rewards. Too bad it is all hindsight. Would you really hold LULU when it dumped from 100 down to 80? Is that your idea of investing in quality companies? Would you buy AMZN at 180 with a PE of 75. Sure it is over 200, but is that rational, intelligent investing and a quantifiable risk.
I sure hope you do not run other peoples money.
@ Robo
I would have been happy if I went long LULU two weeks ago at 95. It's starting to look parabolic but I'm not getting in front of that freight train.
There you folks go temping both Robo and Leo. Don't mentioin "hindsight" or he will be looking you know where.
hey, RT.
this is interesting, what you wrote: ...and started buying mining stocks today
and yes, a lot of people got tired of waiting as these stocks and indices got pounded...while PMs advanced. then, PM's stopped advancing; and the stocks stopped falling.
eric sprott---ordinarily, i would discount this much hype (from the headline; i didn't read/listen past what is on this page fr. tyler) as "sprott talking his book" BUT the action this morning looked to slewie like the miners were actually leading the nice upticks in the PMs. i mean, barring a huge reversal, i think we can say that the bottom is in for the miners.
either that, or the banksters are painting one of the most devious charts imagineable.
if the bottom is in for the stocks and they are straining at the traces, then sprott, RT, and slewie might all be prophetic in saying: you ain't seen nothing, yet, BiCheZ!
smart traders have been known to fade my calls, frequently resulting in (as RT said, above): Vast riches, baby!!!!
Well, what's the call then Slewie, 'banksters painting an incredibly devious chart' or 'bottom in for the miners'?
Or are you suggesting the way to Costanza you is to 'fade the hedge'? If so, I need more info or my ears are going to start smoking.
Robot,
Where have you been? Scaled back on my solars, playing networking stocks now.
It's embarrassing to see somebody talking to themselves in public.
I find it turly unbelievable that some still think the dollar is the place to be. Just because it will be the last one to fall into a sinkhole you think it is worth holding. As long as we have this type of thinking, well, gold, silver will continue to be the asset of choice by those who feel Obama, Geithner, Bernank, are not on the correct path to recovery. The theft in this country is mind boggling and continues to this day.
I think it interesting that the buck was up today and miners and silver/gold were up.
DXY up is like being the fastest guy in the special olympics. (No offense)
I'll probably go to hell for laughing, but that was pretty damn funny.
Rollover bitchez.
http://www.youtube.com/watch?v=6butfe1f9Hg
On a long enough timeline the survival rate for fiat drops to zero. So the only questions are, do I you feel lucky, punk? And, for how long? The latter is the only relevant question.
On a long enough timeline the survival rate for EVERYBODY drops to zero. So stop the bitchslapping and get out and do something you enjoy, and make someone else feel good while you are at it.
Well, I must be kinda slow, but I think I'm starting to get it.... when you chumps say "paper is bullshit" what you're really saying is one would be silly to buy contracts on margin. Duh, that's like a no-brainer. Gimme some news, something I don't know... Or are you having too much fun slapping yourselves on the backs for not being stoopid, like the on-margin contract buyers? Meantime, as Brian whoever said at the top: paper [price] = physical [price]; fixed it for ya
anticipating the first round of bitch-slaps, let me say I think I got the part about a contract (on margin or not) is dumb, because you're probably not gonna receive delivery.........
The guy that bought a couple contracts on margin at $22 and cashed out at $45 is feeling pretty smart right about now.
yup, that (among others) is why I have trouble with somebody that's got "the answer"
Only if his goal was paper dollars, and not silver. If the goal was to get silver in hand, he didn't gain anything at all.
It is not whether your wealth is in gold or silver or paper or oil. If it can be exchanged for the things that you need or want you are wealthy.
As long as you accumulate the paper faster than the paper becomes worth less, you are gaining wealth.
gh
If the goal was to get silver in hand, he would have bought physical rather than contracts (which he also did, by the way).
It is wiser to watch what Sprott does and not what he says. He was still pushing silver near
$50.00 when he was selling. But I have been long physical PM's for 11 years, and I agree with
his views, just not always his timing.
Let's see. He is calling this decade the decade of silver. It was long ago sorted out even on this web site that when he sold his PSLV shares he put it into physical and miners.
When hasn't he been pushing silver?
I may be biased and you will probably agree at least Sprott is putting out articles/interviews with facts. In other words he backs up his views.
talking of fiat money, check Fiat Money
Try Tulving.
Not going to happen...sorry
As we appear to be close to a bottom for the PM sector yet again, I put this note out for those that have held on through all of this nonsense and remain leveraged to the metals and mining stocks. I suspect our community is much smaller today based on the lower trading volumes for most of the stocks, and the poor sentiment indicators as expressed from low participation on websites that focus on the sector. The COT report has also documented a much smaller open interest, and last month the bullion sales data from the US Mint showed sharp declines in gold and silver coin purchases. Collectively, one may assume from these observations that investors have been driven to the sidelines yet again, and many have probably taken some big loses in the process.
I have often remarked that there is no easy money to be made in this sector. There is no free lunch. Speculators show up during the periodic manias and buy the tops, only to get crushed in the brutal corrections that follow, as engineered by a corrupt Cartel operating outside of the rule of law. Only those with the starch to ride out these selloffs can hope to win. I know several people that jumped in late last year, and many have confided that they recently sold out and booked losses. The media bias has been so overwhelmingly bearish on the commodities for several months and it is too demoralizing for the little guy that is new to this circus to hold through one nasty raid after another. And so they sell.
I have seen quite a few commentaries presented lately that suggest silver may drop to the mid-$20 range and gold to $1400 before the bottom is at hand. Maybe that is coming. I do know that for every dip lower the metals become more attractive to people who have never read such nonsense, who do not watch CNBC or other western financial programming, and who could care less what the hedge funds are doing or what the margin requirements are to trade paper bullion. There is a growing contingent of empowered buyers that are happy to buy bullion cheaply for the same reasons bullion has been held through the centuries. Let the fools gamble on every tick in the market and play for pieces of paper that pretend to be bullion. Any new lows on this move will be recovered to the upside as the real metals continue to find willing buyers.
Those of us who have survived a few of these cycles understand that nothing new is going on. We have seen how the media reporting is utterly flawed and shallow, and have learned to ignore most of what the bubbleheads have to offer. We have learned how to interpret what is going on behind the scenes, and can think independently. We understand that the deep selloffs represent the opportunities to buy real value. We stand to continue to win in a long term bull market, but every dollar of those profits are earned.
There is no easy money. Fading the crowd has always demanded the utmost of confidence and commitment. At times such as these, only those who truly understand that gold and silver represent the only real claim to wealth will be able to hold their discipline and stare down the banksters. I have sat at the poker table many times and watched my opponents squirm and buckle when I upped the stakes and put on the pressure. Having the best hand is not good enough. You only get paid if you have the commitment to play to win. When the last sucker has been driven from the arena, the next uptrend will commence. I think we are close.
Cheers!
MexicoMike
www.lemetropolecafe.com
I think silver may just go up from here. There is just this feel about things right now. I should have gone down further, but it didn't.
But "fading the crowd" can be hard on the backside. Custer faded the crowd....
gh
Reading that interview s like reading an infomercial for a fitness product...
Don't be put off by the length of the interview. It's only 1/2 that long if you skip over all of Chris Martenson's blathering and just read the jewels from Sprott like a hungry puppy lapping up milk.
Gold will crash like everything else. In the end there is only 'physical' paper money, and it is this physical paper money that will be in demand when the crash comes and wipes out all the 'metaphysical' money that is leveraged off base 'physical money. Sprott clearly has interest in hyping the precious metals market, come to think of it, so do all these anti Keynesiasts that permeate the internet sphere.
That's quite a fascinating fairy tale you're pushing their, Kita.
Too bad all of monetary history refutes your thesis.
Friend, trolls prefer fact-free, no argument positions, a disposition that goes with their intellectual disabilities, especially cognitive slippage.
"In the end there is only 'physical' paper money,"
Would that be denominated un USD, AUD, HKD, JPY, EUR, CHF, CHY, or will just any type of reserve note suffice? It is an interesting point, as "legal tender" is what your respective government determines it to be. On the other hand, barter has been an acceptable method of exchange for private debts - and in a more convoluted sense, for governments debts too (think prison labor exchanged for non payment of owed taxes).
Problem is that it is hard to get a strong and growing economy using barter. A slow economy makes those bennybucks more valuable vs. the much hyped real things which will be in oversupply also...
gh
"Problem is that it is hard to get a strong and growing economy using barter."
True, but I was thinking more along the line when the "wheels fall off of the bus" type scenario. When a financial system is humming along just fine, you have to have some type of created currency in order for it to grow. When growth stops, and their is no demand (from trading partners) for your currency, then you have to make the best of the situation. If our currency was not acceptable to our overseas trading partners, how much confidence will the average citizen have in it?
PMs wont go "supernova" till the dollar collapses ...but then they will.
Yes, the paper currency ponzi will continue merrily along right up to the point where it collapses ...suddenly ...without warning ...as in no time to get out ...without losing everything.
...like all ponzis.
yeap, if i had a silver eagle for every time someone said this... i would have at least a few thousand bennybux by now.
Newb question. Can gold go down in USD but UP in other currencies?
And isnt the real question not IF gold will go up, BUT rather WHAT WOULD make its value decrease?
Yes,
that happened after the US$ top in 1980. The top in German Marks was about a year later.
Gold does not go up and down- it's the only thing that has always been money, and it is the yardstick you should be using to measure the health of the various currencies.
You can still buy the modern equivents of most things with an ounce of gold today that you could have 3,000 years ago.
But, to answer your first question, a (real) strong dollar policy would make it go "down" in nominal terms, while going "up" in other currencies that are debasing their money supply.
And why would anyone debase their money supply? If they do, debts with fixed interest can be paid off for pennies on the dollar with the inflated currency. It also makes products produced in the countries with the weak currency more attractive to importers from countries with stronger currencies, stimulating manufacturing development. This is why China pegs it's currency at a low rate to the US dollar- it makes their stuff "cheap," so that we will buy it from them rather than making it ourselves. In the end, we have their products, but they have the tools of production.
As an example- right now, 1 euro is worth 1.4411 US Dollars. If tomorrow, the Fed announced that they were raising interest rates by 20% to contract the money supply, and the EU central bank decided to lower their rates to increase liquidity, you would see that ratio reverse, and 1 Euro might only be worth .55 US dollars. If that were to happen, Gold would spike in terms of Euros, but fall off a cliff in terms of dollars.
But, those are Euros and Dollars- a stronger dollar means that your purchasing power increases, and even though you have taken a nominal hit on the gold price, you can still purchase the same amount of goods with your gold stash because the dollars you traded it in for are worth more.
At least, that is the way it worked for a long, long time- right about now, it's a fool's game to try and time any of this stuff, and that is why so many are advocating moving to physical metal. The charts are going up and down, but a gold coin is a gold coin.
Silver is a different animal, though. The traditional ratio has usually been right around 16 ounces of silver to 1 ounce of gold. Right now, that ratio is closer to 50 to 1. It's far more volitile than gold, but has always been money right next to it's big brother. If the paper systems fail, there is a decent chance that that ratio will reassert itself. In that case, if you bought 16 oz of silver today at spot for $564, you could then trade it when the ratio hits 16:1 for one oz of gold, and make a 268% profit on the transaction.
If you're going to trade metals, just looking at spot price is probably not wise. I track mine in terms of USD/INX, USD/EUR, Ag:Au, Crude:Au, and Cu:Ag. It is much easier to have strong hands if you can see that even though the "price" of the metals has dropped, it is still able to purchase about the same amount of other commodities.
Remember that paper is just a placeholder- commodities are things that you need to survive, like food and oil. Who cares how many placeholders your commodities are worth, if the commodities you have in hand can be traded for the things you need?
Only better bet than gold or silver right now is crude oil- I wish I had the space and storage know-how to buy a warehouse full of barrels, but since that is not the case, metals are the thing.
I agree with all you say with 1 exception, historically the ratio of gold/silver has been in the ~30-1 range, not 16-1, so when silver was $15 gold was around $450, so now either gold drops alot, silver runs up, OR they have a meeting more in the middle, I think silver will be $50 again by year end, if so and ther is a 30-1 ratio that leaves gold right here at $1500 which is very possible
Typical asshole troll post... no argument presented.
Whats with the "asshole" crap?
You obviously disagree with his actions. Why not just make a logical argument.
I see that he is just buying hope. If you buy and hope you usually lose. But, I hope people continue to hope....
gh
globally, interest rates are beginning to rise. That should be negative for gold so I am (gasp) selling 30% of my gold and buying rental properties (gasp) hoping and praying that when the time comes in the next year or two that stocks tank gold will go down with it and I can buy back in with the rental income I have generated in the mean time. That's my strategy; I hope the world does not interfere with my plan in the mean time.
"Gold may rise to $99,145 per ounce" says one analyst due to debasement of the dollar.
That is a fantasy, bordering on a wetdream such as experienced by a teen entering puberty.
99K gold at 20%x silver will make it such costly that hardly anyone who pays with paper money or credit card can buy it
And those who have PM's can sell one coin and become a proud owner of a city block.
I call it 1900 Gold and maybe 70 Silver by August. Depending on the tone of the Default Crisis ongoing in Congress prior to Aug. 2
you talk like paper is money.
What is x / y as y -> 0.0 ?
or do this
take a bottle of whiskey, have a drink pass to your buddy. Then both of you piss in it. Shake. Rinse. Repeat. What are you left with?
Did you perchance miss the part about the debasement of the dollar? A city block in that scenario would cost billions or trillions of dollars.
I will say looking at a 12 month chart that 1465 is the low and it did look like it would get there as of last week, but even if it did that's only 5-10% no major forecast
Whats up.....?
Tyler is removing comments.
this is just like getting winning lottery numbers in advance of the drawing. If you don't get it you are ree tar dead.
RobotLemming and leo quislingasskiss do not get it.
QED
Gold's more like Winston Smith's corner, the only place he didn't have to force a pasty ass smile.
Silver to the moon:
See the biggest "Google Trend" drop in "silver bullion", the bottom it has reached and the technical volume trend for the end of 2011. Silver will go to 100 US$:
http://www.google.com/trends?q=silver+bullion
FWIW
the issue of control, trust and your own resposibility resposibility are crucial.. my only investments that i totally control and understand completely are my physical silver , gold and bitcoin ...
His opinion is as valid as anyone elses.
If interest rates creep upwards though ..