This page has been archived and commenting is disabled.

As Silver Prepares To Take Out $30, Here Is Why Eric Sprott Believes The Metal Is Going Much Higher

Tyler Durden's picture


As silver attempts to break $30/oz yet again after the LBMA woke up and rejected an earlier attempt to take out the critical barrier, it is appropriate to present the most recent interview with Eric Sprott (by the Globe and Mail): the man who one of few, and very much against the conventional wisdom grain, called the move in precious metals many years ago, and so far, has been spot on. The summary on why the much maligned PM bubble is not even close yet: "I think gold is the reserve currency today. There is not a currency in
the world that it hasn’t appreciated against by at least 300 per cent.
And it has beaten every stock market. You can’t even rent a safety
deposit box in Germany because they are all full of gold and silver … I
am pretty convinced that gold will go a lot higher because it is
under-owned as only 1 per cent of people’s money is in it. It could go
to $2,000 an ounce. I could imagine it at $5,000. I am not giving a time
frame on that, but I could certainly see that happening. But the real
story now is silver." And on silver: "Gold has traded at a ratio of 16-to-1 to silver in terms of price, but
today it trades in the range of 50 to 1. I think the gold-to-silver
ratio is going to go back to 16 to 1 given the passage of time, say
three to five years. And I bet you that silver overshoots. The
gold-to-silver ratio may even get down to 10 to 1. I believe that the
price of silver has been suppressed."

Key excerpts from the interview:

Why did you become bearish just before the Nasdaq stock market imploded in 2000?

We had an 18-year bull market from 1982 to 2000. This is about the
average length. You could tell from the almost insanity of the market at
the time that it had to be over … We were valuing stocks at 100 times
sales in the Internet boom. It was ridiculous.

How long do you expect a bear market will last?

I have always thought it would be a long bear market – about 15 to 18
years. It started in 2000, but it might even be longer this time because
the powers-that-be keep manipulating the financial market. Having a
zero interest rate policy is manipulation. Having quantitative easing is
manipulation of what the market would otherwise do. …They are delaying
the liquidation phase of a bear market. Almost all governments keep
bailing out their financial systems.

You have been a bull on gold from the get-go. Is its price over $1,350 (U.S.) unfolding as you expected?

It’s been the investment of the decade. When I bought gold, I was buying
gold to hold [as a long-term investment]. As it turned out, it
quintupled. I didn’t think it would go that far because no none would
have imagined that the central banks and governments would get
themselves in a position where they are printing money.

The printing of money makes gold more valuable. You don’t have to be a
genius to figure this out. The Johnny-come-latelies – the Paulsons,
Einhorns and Soros – all figured out, when [the Fed announced the first
round of quantitative easing], that they should own gold. It becomes
more obvious every day as you see these financial challenges that we
have in Europe.

How high will gold go?

I think gold is the reserve currency today. There is not a currency in
the world that it hasn’t appreciated against by at least 300 per cent.
And it has beaten every stock market. You can’t even rent a safety
deposit box in Germany because they are all full of gold and silver … I
am pretty convinced that gold will go a lot higher because it is
under-owned as only 1 per cent of people’s money is in it. It could go
to $2,000 an ounce. I could imagine it at $5,000. I am not giving a time
frame on that, but I could certainly see that happening. But the real
story now is silver (SI-FT29.750.481.65%).

Why are you more bullish on that metal?

Gold has traded at a ratio of 16-to-1 to silver in terms of price, but
today it trades in the range of 50 to 1. I think the gold-to-silver
ratio is going to go back to 16 to 1 given the passage of time, say
three to five years. And I bet you that silver overshoots. The
gold-to-silver ratio may even get down to 10 to 1. I believe that the
price of silver has been suppressed.

Do you like base metal stocks because of China’s growing demand?

I wouldn’t be a buyer today. If interest rates go up in Europe and you
have these policies of contraction, how much can China bear? I don't
believe in the growth of the developed countries, and China needs the
developed countries to buy goods.

Sprott Canadian Equity, your mutual fund, has an impressive
20-per-cent annualized return over the same 10 years as your hedge fund.
Why is that?

It was hard for me to imagine that it was possible. As it turned out, I
was wrong. You can prosper in a bear market in a long-only fund. It has
done very well because we just decided to keep pushing into precious
metals … Whatever I own in my long-only fund is exactly the longs that I
own in the same proportion as my hedge fund. It’s only the shorts that
are different. [The shorts] are all in U.S. stocks with a focus on
financials, including major U.S. banks and brokers, consumer
discretionary and housing.

How much of your wealth outside of Sprott Inc. shares are in bullion and precious metals stocks?

I only own funds and gold and silver. I am probably 90 per cent in precious metals personally. And I don’t lose sleep over it.

This interview has been edited and condensed.

Sprott Favourites

Sprott Hedge LP does not reveal its positions monthly, but it holds the
same long-only stocks as Sprott Canadian Equity, also managed by Eric
Sprott. Here were the top 10 holdings in the mutual fund at Oct. 31.

Silver bullion

Gold bullion

Cash and short-term investments

Gold Wheaton Gold Corp.

Yukon-Nevada Gold Corp.

East Asia Minerals Corp.

Corridor Resources Inc.

Sterling Resources Ltd.

CGA Mining Ltd.

Timmins Gold Corp.


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 12/06/2010 - 12:13 | 782106 gwar5
gwar5's picture

Sprott has the anti-paper/anti-GLD ETFs for PMs.


Mon, 12/06/2010 - 12:13 | 782107 wharfdaddy
Mon, 12/06/2010 - 12:23 | 782137 Kali
Kali's picture

Too funny.  Hope it works!

Mon, 12/06/2010 - 12:26 | 782144 Spalding_Smailes
Spalding_Smailes's picture

Instant Classic.

Mon, 12/06/2010 - 12:30 | 782161 Hook Line and S...
Hook Line and Sphincter's picture

"Fck those smartass's over at ZeroHedge."

Hitler is seething and truly going off the deep end this time. Love it!



Mon, 12/06/2010 - 12:46 | 782235 johngaltfla
johngaltfla's picture

Congrats to Tyler for ZH getting prominence in the video. That is some funnnnnnny stuff right thar!

Mon, 12/06/2010 - 12:48 | 782245 bankonzhongguo
bankonzhongguo's picture



I'm sending this everyone, including my 15 year old Eagle Scout nephew.


These motherfuckers need to be burned at the stake.

Mon, 12/06/2010 - 13:52 | 782582 A_MacLaren
A_MacLaren's picture

Definitely one of the best of the Bunker Series.

Mon, 12/06/2010 - 15:36 | 782961 damnitalready
damnitalready's picture

lmao, great post! 

Mon, 12/06/2010 - 12:31 | 782108 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Silver caught gold's move this fall; it is up 600% since the fall of '08.  It is monie.  You want monie, you better own silver.  Oh yeah, and you do it and you won't just end up with something in your pocket, you may very well help take down the biggest bankster of all time, the John Pierpont Mourgue.  Rest in peace, snitchez!


by Mr Lennon Hendrix 
on Sun, 12/05/2010 - 21:39


Gold to test resistence at $1420 on Monday, it will test support on Tuesday at $1401 and stay there on Wednesday.  Thursday, it should move back to $1420 and then breakout on Friday to $1440.  This not considering any swans.

Silver should continue its move higher, with less of a downside risk when compared to gold.  Silver is also primed to break out to $36 this month.  There will be a major move in silver during the next three weeks.  It should take gold, platinum, and oil with it, and at the same time, crush the dollar.  The next three weeks could be the biggest month of the year for gold.

Mon, 12/06/2010 - 12:15 | 782115 ReeferMac
ReeferMac's picture

/SI Hit $30/oz and bounced right off... Trying again, and again, and....


Bullion Bitchez!

Mon, 12/06/2010 - 12:18 | 782122 TheMonetaryRed
TheMonetaryRed's picture

Buy, Buy, Buy, you wise survivors of the imagined age.

Gold to $1700

Silver to $50

Meanwhile, back at the ranch........

Mon, 12/06/2010 - 14:50 | 782810 midtowng
midtowng's picture

That sounds like a safe prediction. But what then?

Mon, 12/06/2010 - 12:19 | 782125 chinaguy
chinaguy's picture

Gold has traded at a ratio of 16-to-1 to silver in terms of price, but today it trades in the range of 50 to 1.

Agreed, which is why I over weighted silver to gold 2 -1 when I made my PM purchases three years ago.

Mon, 12/06/2010 - 12:19 | 782127 butthead
butthead's picture

The real fun will begin when silver breaks $50.  Then the sheeple will really start to buy.  They didn't want it at $5 or $10 or $20, etc...but they will rush in as it breaks the 1980 high.

Mon, 12/06/2010 - 12:25 | 782141 Arius
Arius's picture

thats people for you...but with all the misinformation, so, carefully managed out there cant really blame the regular joe (mutual fund manager not the six pack one)...

Mon, 12/06/2010 - 13:58 | 782595 living on the edge
living on the edge's picture

The masses always come in late but will arrive nevertheless. Our gov has succeeded in keeping the masses at bay till now. I see the storm rising on the horizon. I have waited 25 years to see this day (started buying PM's). With mixed emotions I sit in anticipation of the inevitable.

Mon, 12/06/2010 - 12:19 | 782128 TheMonetaryRed
TheMonetaryRed's picture

Sprott - what a ganef.

Mon, 12/06/2010 - 12:36 | 782196 Cdad
Cdad's picture

I understand why you might reference E. Sprott on the matter, however, the guy is a giant ass.  I was on his PHYS when he more than doubled the size of his physical gold fund [double the IPO proceeds] through secondary offerings sold at sweetheart prices to his Wall Street buddies...two secondaries with over allotments before the fund was even a year old.   

As far as I am concerned, Sprott is part of the syndicate to which I often refer.  Good luck with your physical metal crush on him.

Mon, 12/06/2010 - 12:21 | 782132 SwingForce
SwingForce's picture

2nd Derivative Dreaming.....

Mon, 12/06/2010 - 12:22 | 782133 quasimodo
quasimodo's picture

You still can't eat it

But can sure as hell eat WITH it


Mon, 12/06/2010 - 12:22 | 782134 dryam
dryam's picture

Sprot on.  Silver just hit $30.

Mon, 12/06/2010 - 12:26 | 782149 unky
unky's picture

holy shit yes, cant stupid JP M not manipulate a little downward please, i still need to buy some more

Mon, 12/06/2010 - 12:24 | 782138 Harry Hood
Mon, 12/06/2010 - 12:28 | 782155 oddjob
oddjob's picture

Sprott is the largest shareholder in Alexco Resources.

Mon, 12/06/2010 - 12:38 | 782203 Bring the Gold
Bring the Gold's picture

Been holding AXU for awhile now. A great stock. He also holds a lot of Arian Silver. I originally got in between $0.09 and $0.12 it's around $0.60 as I write this. He also likes Avion gold miner.

Mon, 12/06/2010 - 12:28 | 782157 rubearish10
rubearish10's picture

Short squeeze in PM's not nearly upon us. If you've witnessed the late 70's you would know this. Many amateurs afoot.

Mon, 12/06/2010 - 12:36 | 782190 spartan117
spartan117's picture

OK, I'll bite.

I was too young during the late 70s to invest in anything but lollipops and G.I. Joes.  Care to elaborate on when you believe the squeeze will occur?

Mon, 12/06/2010 - 12:46 | 782234 rubearish10
rubearish10's picture

Wish I knew when however, the Silver market (gold not as much) is an extremely tight community of players. Let's assume the JP Morgan/HSBC manipulation theme plays out further. Well, anyone, of these "players" or group of players (outside of them) would and do have the ability to "corner" the product. Given the global economic theme, a "squeeze play" against the manipulators should develop rather soon. When it does, you'll see volatility and price extremes not seen since the 70's and culminating in 1980. I'd play that bet all day play with enough dry powder to trade through it or else greed will beat you.

Mon, 12/06/2010 - 12:29 | 782162 Alex Lionson
Alex Lionson's picture

According to Silver just took $30, but was repelled (for a while I think)

Mon, 12/06/2010 - 12:33 | 782183 CD
CD's picture

$30.04 @ 11:32 EST

Mon, 12/06/2010 - 12:32 | 782173 Oh regional Indian
Oh regional Indian's picture


Happy baby!



Mon, 12/06/2010 - 12:37 | 782199 Silverhog
Silverhog's picture

eBay Silver averaging $33 an oz plus shipping. Better know brands going up to $40+ no shortage of buyers.

Mon, 12/06/2010 - 15:43 | 782987 Fearless Rick
Fearless Rick's picture

I've been able to buy on ebay at spot INCLUDING shipping, but only on small amounts.

It's true, though, buying pressure is huge.

Mon, 12/06/2010 - 12:38 | 782200 rubearish10
rubearish10's picture

Will we ever experience the wake-up call the equity market needs to lean over, roll over and die? Somewhere between 40:1 and 16:1, right??

Mon, 12/06/2010 - 12:44 | 782228 SilverIsKing
SilverIsKing's picture

$30 looks expensive...just like $20 looked expensive a few months ago.

In a couple of months, $30 won't look so expensive.

Mon, 12/06/2010 - 12:51 | 782257 MsCreant
MsCreant's picture


Mon, 12/06/2010 - 13:43 | 782549 samsara
samsara's picture

I just have to mention Ms, that your assessment of RobotTrader the other day was one of the best I have seen.  A perfect observation on where he is at.

Sorry to interrupt your celebration.

(p.s.  I got in at $7 and $400 respectively.  GREAT to watch this unfold,  So long in coming,  Soooo long in coming... )


Mon, 12/06/2010 - 12:51 | 782263 velobabe
velobabe's picture

silver jewlry, bitchez†

Mon, 12/06/2010 - 13:01 | 782316 MsCreant
MsCreant's picture

Silver Belles

(silver belles)

Silver Belles

(silver belles)

It's Christmas time, in get Jacked City.

See the Stings

(see their stings)

Those ding-a-lings


Soon it will be, Indictment Day.

Mon, 12/06/2010 - 14:01 | 782609 Dr. Sandi
Dr. Sandi's picture

Thanks. Yes, I really did LOL over that.

Mon, 12/06/2010 - 15:11 | 782883 MsCreant
MsCreant's picture

I know you have gold and are gold, but are you too a silver belle?

Mon, 12/06/2010 - 16:17 | 783093's picture

Cue Burl Ives...

Tue, 12/07/2010 - 21:58 | 784840 Dr. Sandi
Dr. Sandi's picture


Mon, 12/06/2010 - 13:00 | 782312 JonNadler
JonNadler's picture

Oh please don't buy anymore silver, please, Jamie took away my Ritz Carlton pass and says I have to use 3 star hotels now! I may have to be next to a truck driver. This is not what we're used to. Blythe will have share a room with a truck driver soon, you can let this happen to people like us! We are the masters of the univ.....well we used to be.

Does anybody have employment opportunities for a couple of shill have beens? Blythe and I are available

Gold will be confiscated!..... oh what's the use

Mon, 12/06/2010 - 15:10 | 782879 MsCreant
MsCreant's picture

Keep your bra on or there will be trouble.

Mon, 12/06/2010 - 13:03 | 782327 Mongo
Mongo's picture

If gold takes on $10,000 and gold/silver ratio hits 10:1... the that means it's paaaardey time!


Silver @ 30 bucks is still cheap. Dirt cheap!

Mon, 12/06/2010 - 14:10 | 782638 dehdhed
dehdhed's picture

yup, buy 10 oz bars of silver and trade later for 1 oz gold.  it's like buying gold for 300 bucks an oz today.  

just keep stacking

Mon, 12/06/2010 - 13:12 | 782384 Prejudice in Fa...
Prejudice in Fancy Dress's picture

using past performance as evidence of why to buy something is how you get caught up in a bubble... if you're a long term investor and not trying to get rich quick then don't buy gold/silver... look at the dow/gold ratio

Mon, 12/06/2010 - 13:13 | 782389 Client 9
Client 9's picture

To narrow that ratio gold will shortly tank and silver not far behind.  You zombies are such suckers!



So why could Gold be a Bubble?1) Rapid price run-up. Prices never run up forever; they always come back to stable levels. Gold prices are up almost 500 percent since 2000 and almost 1300 percent since the mid-70s. At some point they have to come back down. When that will happen is still in question, but they will stabilize at some point. And stabilization may involve a quick plunge in prices.2) “We Buy Gold” everywhere! In the past two years, there have been more “sell your gold” commercials and “we buy gold” stores than ever before. It seems as if everywhere I go or look I see some kind of reference to gold. The prevalence of these stores and commercials not only points to market saturation, but also points to the massive spotlight that has been shining on Gold.3) EXTREME speculation. A bubble requires investors to be so absolutely certain that prices will continue to rise that they actually neglect to protect themselves from the risks involved. By asking “How high is Gold heading?” instead of “Why is Gold going up?” or “Can Gold go higher?” we’re actually ignoring the downside involved, which can lead to severe panic if Gold actually does start to drop. Here is why extreme speculation is here and very dangerous: a. Common investors can now buy gold. With the introduction of the Gold ETF (GLD), any person who wants to buy gold can easily do so by simply buying the GLD. Before 2004 the only way to buy gold was to buy the actual thing. If gold is available to everyone, and becomes the hot new commodity, a bubble is definitely possible. b. No hedging by the mining companies. In order to protect their businesses from a sudden decline in Gold prices, mining companies have generally hedged themselves by owning some put options or other forms of derivatives that would limit their losses in case of such declines. And the higher the price of gold, the more dangerous the price decline is for the miners. But because most of the miners think that gold prices are going to continue rising, they have recently stopped hedging themselves. At a time when protection is actually the most important in the history of their businesses, they’ve joined the gold craze and ceased to hedge. This has to be one of the most counter-intuitive moves I’ve ever seen. Hedges are protections “just in case” prices go down; miners seem to have forgetten that “just in case” is a small bet compared to the potential devastation they may be setting themselves up for. 4) Gold isn’t enough! With Gold prices soaring, investors have looked for new ways to take advantage of the run-up. Not only have investors run the price of gold (GLD) to high levels, but they have found ways to leverage their positions and even increase speculation in related metals. First, Gold itself was enough (GLD). Then, when investors wanted increased returns if gold went up, they bet on the gold miners through the Gold Miners' GDX ETF; the GDX moves in correlation to GLD, but with a higher beta (in essence, if GLD goes up GDX should move proportionally higher). Now it seems even the regular miners aren’t enough! Investors are now going even further downstream, betting on the junior miners (GDXJ). The junior miners are not only a third derivative bet (Gold-Gold miners-junior miners), but they also signal the extreme belief investors have that prices will continue higher.And if a third-derivative play in Gold wasn’t enough, investors have speculated in the entire precious metals sector. Since Gold is going higher, they say, so should the prices of related metals. And to satisfy investors’ insatiable demand for these metals, the “Glitter” ETF (GLTR), composed of gold, silver, platinum, and palladium investments, was introduced on October 22nd.And if metals weren’t enough, investors have also chased “Rare-Earth” resources through companies such as Rare-Earth-Elements (REE) and Molycorp (MCP). Not only did Molycorp CEO, Mark Smiths, recently “mistakenly” call the Rare-Earth craze a “BUBBLE” (“I don’t think short-term prices in rare earth (minerals) are prices people ought to be counting on…they are really spiked right now and there may be a bubble occurring because of all of the news and the frenzy.”), but the fact that REE and MCP are up about 500 percent and 300 percent respectively since the summer should be enough of a warning. 5) Gold Vending Machines. It wasn’t enough for Gold to be bought at jewelry stores or through distributors directly. They have now built vending machines from which to buy Gold! A German company, Gold-To-Go, has began setting up vending machines around the world in order to attract the average investor. Buying Gold coins and bars from a vending machine? I hear “BUBBLE”!6) Inflation or Deflation? Gold prices have increased due to fears over currency and economic growth. But buyers of Gold have bought Gold both due to fears of deflation and due to the potential for inflation. In other words, some bought Gold because they expect deflation and some bought it because they expect inflation – but one of the two is wrong! We can’t have both deflation and inflation; therefore, a considerable number of investors are wrong and have pushed the price of Gold up farther than is warranted.7) Front Page of the Wall Street Journal. When a story makes the front page of a widely-circulated newspaper or magazine, it signals widespread recognition of that story or theme. Since heavily-distributed newspapers and magazines tend to reflect the widespread sentiment of its readers and the general population, a front-page headline signals the acceptance of that idea as consensus.It’s been a fairly long-standing negative omen for the market when major cover stories marvel at the wondrous bull-market run-ups and, inversely, a positive omen for the market when cover stories mourn the death of markets. That said, positive cover stories regarding investment themes are bad omens, signaling an upcoming pause or correction, if not an end to that theme.Gold made just such an appearance on September 29, 2010 on the front page of the Wall Street Journal, in an article titled “Gold Vaults to New High.” If a front page spot is a signal of widespread acceptance and a warning of an upcoming correction, the Gold Bubble is alive, but probably not so well.

Mon, 12/06/2010 - 13:45 | 782555 SilverRhino
SilverRhino's picture

 Gold prices are up almost 500 percent since 2000 and almost 1300 percent since the mid-70s. At some point they have to come back down.

IF you were dealing with a pure commodity you might have a point, but you are not.  EVERY fiat currency has structural problems or is being actively debased by their governments.  

When those debt/debasement issues are corrected THEN you will see corrections.   Till then the only corrections you will see will be related to margin requirements changes and/or paper (naked) shorts.


Mon, 12/06/2010 - 14:18 | 782663 ViewfromUnderth...
ViewfromUndertheBridge's picture

"If Gold prices fail to close at new highs within the next few days, expect this to be a short-term peak if not the long-term top"....this was the last line of the post (of a person who declared they are short gold) on Nov. 10 on SeekingAlpha... you left out both.

If you are short gold, good luck to you, but please don't post someone elses self-serving opinion and leave out pertinent details that don't suit your argument.

I junked you for your content, for your dopey approach and for no paragraphs.

I hope you are double-short gold.

Mon, 12/06/2010 - 14:18 | 782675 hugomarch
hugomarch's picture

They are already talking about QE3 on cnbc.  I've changed my mind since yesterday.  Silver is going higher.  There's not going to be any pullback...

Mon, 12/06/2010 - 15:48 | 783004 damnitalready
damnitalready's picture

Could you link?  I couldn't find anything on CNBC referring to another round of QE.

Mon, 12/06/2010 - 14:21 | 782690 Hephasteus
Hephasteus's picture

Ya the bank loan I was after to buy 300 k worth of gold fell through. The bubble is bursting!!! I can't put any more gold on my credit cards. It's bursting!!

It takes a bank to blow a bubble you fooking idiot.

Mon, 12/06/2010 - 14:30 | 782737 dehdhed
dehdhed's picture

In other words, some bought Gold because they expect deflation and some bought it because they expect inflation – but one of the two is wrong! We can’t have both deflation and inflation

fiat prices will inflate, but priced in gold everything will eventually deflate.   i know it's a hard concept to wrap one's mind around.  i'd ignore everyone calling for a bubble, they don't get it.   they'll get it when it can't be bought at any price.  then they'll say oh yeah ... doiee, how could i forget the golden rule - he who has the gold rules.

Mon, 12/06/2010 - 21:23 | 784250 StychoKiller
StychoKiller's picture

These bubble arguments are always equivalent to asking why anyone is so stupid as to buy insurance -- look!  There's some zombies with matches and a gasoline can -- hope they don't find your house!

Mon, 12/06/2010 - 13:14 | 782401 Client 9
Client 9's picture

Btw, check out your hero Sprott's 5 year stock performance.  Not so hot:

Mon, 12/06/2010 - 14:42 | 782780 dehdhed
dehdhed's picture

now i think you lost the little credibility you may have had left.  you've basically compared an investment in gold to the share price of something like charles scwab.   i don't know who you work for but it's obvious you're getting desperate.

Mon, 12/06/2010 - 13:18 | 782417 Bull v. Bear
Bull v. Bear's picture

Corridor Resources Inc. getting butt slammed today...

Mon, 12/06/2010 - 13:24 | 782450 Caviar Emptor
Caviar Emptor's picture

It's not so much that Gold and Silver are rising. The astute observer knows that it's the floor that's sinking. Paper currency is in the early stages of a crisis: the first stage was over-leverage, followed by the crisis response which was debasement through debt monetization. Now we're entering the beginnings of the next phase: the crisis of confidence. A rising tide of people, most educated people, are inching toward the exit and hiding more and more paper in Gold and silver. They're scared. They're right. Now that critical metrics have been reached (debt/GDP) and critical lines in the sand have been breached (bailing out once 'solid' banks and entire nations), and credibility of central banks gets undermined more and more on a daily basis, there's a Pinocchio effect (Ben last night: we would NEVER print any my lips!) . 

People of average means ask me how to buy gold and silver, how to store it and where to get it. They're sure they want it. 

Mon, 12/06/2010 - 13:29 | 782485 Client 9
Client 9's picture

and true to your name I presume you tell me that it's all just another scam/speculative bubble, that they've missed the big runup and are exposed to perhaps a bigger bubble that the one that preceded it, and that they're best bet is really buying TIPS?

Mon, 12/06/2010 - 13:40 | 782533 qussl3
qussl3's picture

Negative real rates, monetization of deficits in the US, EU, soon Japan.

"Creative" accounting rampant, managed earnings the norm.

It's no wonder that objective stores of value are appreciating relative to everything else.

Gold and silver will be in a bubble when the sheep are willing to trade prime real estate for pieces of bullion.

Mon, 12/06/2010 - 13:50 | 782569 Client 9
Client 9's picture

Prime real estate is real value and impossible to acquire. Gold is for fools who like to follow the herd.  Buy why the cover of the WSJ tells you to!  Soros and Paulson will get out and leave you holding the bag in the blink of an eye!

Mon, 12/06/2010 - 14:11 | 782644 Caviar Emptor
Caviar Emptor's picture

Same tune, different day.....

What if you make 50% on real estate and prices have doubled? What if prices double AND stocks get dumped by Soros and Paulson like in 2008 and 2000?

Mon, 12/06/2010 - 14:24 | 782711 ViewfromUnderth...
ViewfromUndertheBridge's picture

ha are short. The WSJ was a balanced article and certainly not exhorting people to buy gold. They included a warning from JP Morgan.

Ummm...under 1% of assets in gold today, 1980 was somewhere around 27%...where is this herd you speak of.

Client 9 is Johnny Bravo, welcome back.

Mon, 12/06/2010 - 14:30 | 782736 Client 9
Client 9's picture

I'm only short by not buying it. I don't dabble in speculation. Too risky.  I did on my way to acquiring wealth but now I'm just trying to preserve it.  I do know that the masses get slaughtered.  Monetizing the debt may have pushed it up somewhat since 2008 but not to this extent.  No, this is pure speculation by the retail class.  Same as the dotcom bubble. 

Prime real estate (unlevered) pays you.  What does gold do for you, assuming you don't see the global financial landscape completely collapsing?

Mon, 12/06/2010 - 14:52 | 782815 MichaelNY
MichaelNY's picture

Prime real estate (unlevered) pays you, until it is vacated.  Then it costs you.  And I junked you for being a fool.

Mon, 12/06/2010 - 15:04 | 782863 greased up deaf guy
greased up deaf guy's picture

please tell us the price at which you opened your short position so we know where to point and laugh in the coming weeks and months.

prime real estate pays you? does it pay you enough to cover the taxes owed?

Mon, 12/06/2010 - 15:22 | 782912 dehdhed
dehdhed's picture

i'm just glad there are still people like this out there.  could you imagine where gold would be if everyone understood?   it takes a long time for me to convince my loved ones to keep stacking and these kind of people just buy us more time.   i've often wondered what fool was selling the bars i was buying.  this guy helps me to not feel sorry for them anymore.

Mon, 12/06/2010 - 16:05 | 783056 Client 9
Client 9's picture
Too much LSD deadhead:

Few silver linings when gold bubble bursts

By Mark Williams

Published: October 17 2010 20:37 | Last updated: October 17 2010 20:37

Beware of bubbles. Tulips, the dotcom boom and pre-credit crunch real estate have a lot in common; they are assets that were in vogue, became overbought and eventually fell to earth. And now it’s gold.

Mon, 12/06/2010 - 21:31 | 784269 StychoKiller
StychoKiller's picture

Bottom line:  Paper, even high-quality linen paper (with pretty pictures on it!), is only worth around $85/Ton!  Sell me your Gold and Silver, thanks.

Mon, 12/06/2010 - 15:35 | 782956 Prejudice in Fa...
Prejudice in Fancy Dress's picture

Client 9, you can take them to the water but you cant make them drink it. 

Mon, 12/06/2010 - 13:46 | 782560 Caviar Emptor
Caviar Emptor's picture

Ummmm....nope!It's not a bubble at all. It's not so much that people are speculating in PMs so much as currencies are losing value. Ask yourself, if almost EVERY major currency is dropping versus gold but not relative to one another, what does that spell? Crisis of confidence in global financial accords and management aka the 'global Ponzi' aka the post-Bretton Woods world. 

Ordinary People see it as "playing defense" against such very concrete things as inflation (which is already here). Wealthy people see it as that plus a hedge against debasement of their currency which would erode their wealth. Others seek PMs to protect their buying power. Central banks are worried about the dollar losing status as global reserve currency. 

But we're entering a phase where many want insurance against the central bankers screwing it all up. What they hear from them makes less and less sense. They feel their buying power diminishing fast. 

Mon, 12/06/2010 - 13:37 | 782516 samsara
samsara's picture

The astute observer knows that it's the floor that's sinking.

The analogy I use with non-financial astute friends is this.

"Picture 6 or 8 skydivers holding hands, falling,  If one bundles up into a ball, he drops faster then the rest, If one spreads out with a little webbing, he raises about the others(falling slower)"

Well the skydivers are all fiat currencies.  They are ALL going to zero. One may be worth more than the others for the moment(the spread out one), and one might be worth less than the others(the one tucked into a ball).




Mon, 12/06/2010 - 13:51 | 782576 Caviar Emptor
Caviar Emptor's picture

good one. We agree. 

Mon, 12/06/2010 - 13:33 | 782498 Caveman93
Caveman93's picture

Let's see, faith in "Bennie Bucks" or faith in something which has never gone to zero....hard ass choice ain't it?

Mon, 12/06/2010 - 13:38 | 782521 CustomersMan
CustomersMan's picture

          Patience is A Virtue Now


In markets like this, patience is king. Once you've made a well thought out decision, its often difficult to just sit back and wait. Yet this is percisely what is needed.


That is why owning physical is also such a gift. If you own the silver you are not tempted to run down and cash it out. You need to make some arrangements, this is why the stamped envelope to the cash4gold system works for them. They want to make it as easy as possible for you to sell.


Lets say we get a $25 spike through the old high. If its easy to sell, thats just what many people would do, and never get the right price to get back in. BIG MISTAKE.


A breakout to new highs is a strong position, exactly the time to buy.


Talking from experience.

Mon, 12/06/2010 - 14:14 | 782649 hugomarch
hugomarch's picture

Oriental gal/newscaster on cnbc just asked, "Bernake indicates economy is not good. Why would silver go up?"  Misdirection or is she clueless?

Mon, 12/06/2010 - 14:31 | 782742 Client 9
Client 9's picture

The correct term is Asian.  Oriental is not politically correct. 

Mon, 12/06/2010 - 14:42 | 782783 hugomarch
hugomarch's picture


Mon, 12/06/2010 - 15:23 | 782916 BigJim
BigJim's picture

Since when?

Mon, 12/06/2010 - 15:28 | 782933 Upswaller
Upswaller's picture

Who gives a crap about being politically correct?  My sister happens to be adopted from Korea and terms herself "oriental."  Asia is on big ass continent.

Mon, 12/06/2010 - 21:32 | 784273 StychoKiller
StychoKiller's picture

And that would be because...? (Some of us here are dis-oriented)

Mon, 12/06/2010 - 14:42 | 782776 hugomarch
hugomarch's picture

The last time I bought an ounce of silver it cost me $4, including transaction cost. 

Mon, 12/06/2010 - 14:44 | 782790 Zeroexperience2010
Zeroexperience2010's picture

Just for info for our German residents: it is still possible to rent safety deposit boxes at banks in Frankfurt/Main, just checked last week.

STEINBEIS-HOCHSCHULE BERLIN" showed that Germans (the people, not the government) owned around 7500 metric tons of physical gold (jewelry, coins,...) roughly twice as much as the government is supposed to have.

Mon, 12/06/2010 - 15:33 | 782949 FreedomGuy
FreedomGuy's picture

Germans are smart. Americans need to do the same. I'd like to overrun all the JP shorts and oversold bullion paper with physical delivery.

Germans make damn good cars, too. So, I hope all their automakers are stocking PM's and preparing to price their cars in them.

Mon, 12/06/2010 - 15:54 | 783020 Fearless Rick
Fearless Rick's picture

If gold hits $3000, at just a 20-1 ratio silver will be $60. I see an easy double and, if the worst-case scenarios hit the fiats, then a 10-bagger from here through 2015 is a distinct possibility.

Mon, 12/06/2010 - 16:27 | 783123 rosiescenario
rosiescenario's picture's a tout on a stock I have owned for years and in which Sprott may bow be taking a position...Impact actual operating company sitting on very promising your own d/d.

Do NOT follow this link or you will be banned from the site!