Eric Sprott: Is the West Dishoarding Its Sovereign Treasure?

Tyler Durden's picture




 

Submitted by Adam Taggart via Peak Prosperity,

We are well into the financial crisis. Everyone’s trying to keep it together, even though it would appear from the reading of the economy things are not going well at all here. And everyone's ignoring things.

 

But I think, in their hearts, the Central Bankers must know what they’re doing is totally irresponsible. And the tell of that irresponsibility which is the debasing of the currencies is the fact that real things will go up in value. This should be reflected in the price of gold and silver.

So expresses Eric Sprott, CEO and founder of Sprott Asset Management, and one of the most experienced and vocal advocates for owning precious metals.

The past decade has validated Eric's thesis, as gold has risen considerably against all world fiat currencies. But what vexes him is that in recent years, when currency debasement has accelerated to extreme levels, precious metals prices have been clearly suppressed, particularly versus the U.S. dollar.

As the topic of price manipulation is nothing new, Eric finds his focus increasingly drawn to where the precious metals are going at these bargain prices - who is accumulating and who is dishoarding:

I’ve done a lot of work on the flow of metals. I come up with a net change of 2,300 tons a year in new buying in gold when the supply of gold hasn’t even gone up in the last twelve years. And you keep wondering: Well, where’s all this gold coming from?

His findings support the growing meme that there is a massive bullion transfer from West to East. This should particularly concern those in the U.S., EU and Canada as his suspicion is that, increasingly, it's monetary gold that is being sold.

There are several key questions to ask here (not that the data publicly exists to answer them):

  • How much of our sovereign monetary bullion reserves have been sold to date?
  • How much will be sold in the future? (Are we willing to sell all of it? or is there a limit we refuse to let go of?)
  • What will happen to the price of gold & silver when central banks stop selling to another? (Answer: shoot the moon)
  • What will be the fate of those economies that dishorded their treasure? (Answer: lamentable)

When I see China buying 95 tons of gold in December and I read that India bought 100 tons in the month of January, when we all collectively know there’s only about 200 tons a month available –  you have to conclude that G6 Central Banks continue to sell their gold in a very non-transparent fashion.

 

One of the things we saw in December was that the U.S. Department of Commerce reported that U.S. exports of gold were $4 billion. We exported 2.5 million ounces of gold. And where it comes from, [only] God knows; the country only produces 8.8 million a nd most of that’s used internally. So I don’t know how you just come up with 2.5 million ounces that you’re able to export. So I believe that even though it’s described as non-monetary gold, my guess is that it is monetary gold.

 

There’s lots afoot here in central banking to try to keep it organized. And I think one of those things is to keep the price suppressed.

 

But the non-G6 nations have been huge buyers of gold, and I think the more anybody looks at the system from outside looking in, they realize they have to have gold and silver, notwithstanding the nonsense that goes on in COMEX and the LBMA (London Bullion Market Association).

 

When I got involved in the gold market, it was assumed that the central banks had something like 36,000 tons of gold. And there was a great study done by Frank Veneroso where he suggests 18,000 those tons didn’t even exist anymore.

 

The [global] central banks are sellers of 400 tons in an overt fashion. Now we see buying of over 500 tons. That, just in itself, is a 900-ton change in a 4000-ton market, if I’m including recyclables here. And yet there’s been no increase in supply.

 

So I have to assume that these central banks are running low, and the question in my mind is, do they just go down to zero and then give up?

 

Or do they look in the cupboards one day and say look, this is just not going to work because the intensity of buying by people, like China in particular, has just gone absolutely bonkers. And it looks like India, notwithstanding putting a surtax or excise tax on gold, the demand seems to be very firm. And as you mentioned, mint sales have been amazingly strong here.

 

So I think there’s enough element of the world who get it that the pressure’s going to continue to be on the price of gold going higher. And yes, there’s nothing we can do in terms of what’s going on in the COMEX and the LBMA, but we keep seeing more and more people asking for delivery, even in the COMEX. So I think that the day can’t be far off. We can’t predict when it’s going to be, but the natural stage should be that the price of gold is going up, and we’re in such a tremendous financial crisis that it hasn’t been allowed to manifest itself because they’re putting out fires all the time.

For precious metals holders licking their wounds from the carnage of the past several months [23], this podcast offers both new insights and sound reminders of the long-term reasons for owning gold and silver. Those on the sidellines considering entering into the precious metals, perhaps for the first time, should consider reading our guide to Buying Gold & Silver [24] after listening to this podcast. 

Click the play button below to listen to Chris' interview with Eric Sprott (34m:40s):

Click here to read the full transcript

0
Your rating: None
 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sun, 02/24/2013 - 21:03 | 3272659 midtowng
midtowng's picture

Fiction, non-fiction, it doesn't matter.

What matters is that the market is moving against the fundamentals, and it can do that for a very long time. I need someone to tell me how long?

Sun, 02/24/2013 - 21:15 | 3272697 Stock Tips Inve...
Stock Tips Investment's picture

The post is very poorly supported. I think there are many reasons that can sustain a growing trend in the price of Gold, however, in this post, it says nothing about this.

Sun, 02/24/2013 - 21:52 | 3272782 Long-John-Silver
Long-John-Silver's picture

True horror is knowing the real truth and not having the ability to do anything about it.

It's like watching a train wreck.

Sun, 02/24/2013 - 19:05 | 3272422 Al Gorerhythm
Al Gorerhythm's picture

Here's a fiction for you. This is Ben Bernanke's speech about monetary policy in 2002. Nearly any paragraph from it is worthy of ridicule but this is worthy of a hangman's noose. That people aren't marching in the streets over this is an indication of the success of their (Govt/banker's) con. Try reading and absorbing the first paragraph and see if you are not repelled by the second. I advise that you read the first para twice before reading the second. Tie the two together. If you are not ready to hang the destroyers of the nation's wealth and worker's hard won savings by the time you finish absorbing this, then you are essentially brain-dead or taking large doses of hopium. The enemy is within. They have taken control of the bridge:

 

"Today an ounce of gold sells for $300, more or less. Now suppose that a modern alchemist solves his subject's oldest problem by finding a way to produce unlimited amounts of new gold at essentially no cost. Moreover, his invention is widely publicized and scientifically verified, and he announces his intention to begin massive production of gold within days. What would happen to the price of gold? Presumably, the potentially unlimited supply of cheap gold would cause the market price of gold to plummet. Indeed, if the market for gold is to any degree efficient, the price of gold would collapse immediately after the announcement of the invention, before the alchemist had produced and marketed a single ounce of yellow metal.

What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation."

Ref: http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.h...

 

Sun, 02/24/2013 - 21:35 | 3272744 BeanusCountus
BeanusCountus's picture

No more so than Bernanke, Mishkin, Gartman, Soros, etc, etc. They all talk their book. Period. General public is left to make their own decisions. So lets get to it. Healthcare has increased at 9% compounded since 1996. College education increased at 6% compounded in last twelve years. Utilities, well you tell me. Food, continues to increase unless you are buying whatever the hell it is in Fed's basket of what the "little people" eat. People who go broke (banks maybe?) disappear without anyone ever having to recognize a loss. Countries that borrow money borrow it from: themselves? WTF don't you see here? This is insanity. How the hell can you possibly criticize anyone that believes in gold as a store of wealth? Could they be wrong? Sure. But if you step back, look what is going on, please give us some thoughts on a better alternative.

Sun, 02/24/2013 - 21:47 | 3272762 AmCockerSpaniel
AmCockerSpaniel's picture

Try reading "When Money Dies" by Adam Fergusson.  You'll see this all went down before in 1920~1924.

Sun, 02/24/2013 - 16:43 | 3272130 BKbroiler
BKbroiler's picture

Soros is out, trendlines broken... no time for shaky hands.

Sun, 02/24/2013 - 16:45 | 3272136 francis_sawyer
francis_sawyer's picture

I only regret my shaky hands when I'm out boating...

Sun, 02/24/2013 - 17:02 | 3272166 espirit
espirit's picture

Lotsa water in and around them thar parts.

Sun, 02/24/2013 - 16:55 | 3272155 GubbermintWorker
GubbermintWorker's picture

Haven't sold a single ounce of physical gold or siliver in over five years. Don't plan on it anytime soon either.

Sun, 02/24/2013 - 19:07 | 3272433 fockewulf190
fockewulf190's picture

Same here.  Converted more fiat to Phyzz over the weekend.  The banksters can continue raiding, but the lower the price, the more phyzz is being snatched up.  The weak hands are all but gone.

Sun, 02/24/2013 - 19:20 | 3272452 auric1234
auric1234's picture

Soros sells GLD, that's right, out of paper gold. Guess what he's rotating into?

 

Sun, 02/24/2013 - 19:41 | 3272508 GMadScientist
GMadScientist's picture

A hover-round?

Sun, 02/24/2013 - 16:44 | 3272135 ZerOhead
ZerOhead's picture

Au revoir now means you won't be seeing your gold again...

Sun, 02/24/2013 - 17:11 | 3272182 Motorhead
Motorhead's picture

And Ag, too, bitchez!

Sun, 02/24/2013 - 16:34 | 3272115 Confundido
Confundido's picture

Nothing new here. Can someone tell me what will prevent central banks from further expanding fiat gold? That's the key question.

Sun, 02/24/2013 - 18:05 | 3272212 Pseudo Anonym
Pseudo Anonym's picture

nothing

will prevent central banks from further expanding fiat gold?

but it will stop when they can no longer meet or make deliveries.  for now, there is still gold to be stolen in middle east, i.e. iran, and the hofjuden have their eye on it already, so selling fiat gold paper will continue for years

Sun, 02/24/2013 - 19:01 | 3272418 Sean7k
Sean7k's picture

Do you think that regular people, 98% of whom own zero gold whatsoever, will care if SLV and GLD and the other ETF's go under in a cloud of criminal charges? Do you think the governments will attempt to charge their banker owners? 

The People transact their business in paper and will change over to bits if required, AS LONG AS THEY ARE ALLOWED TO KEEP THEIR STUFF. With the elimination of alternative value instruments to conduct trade, the west will do what they are told or resort to barter- which is to say, the same as condemning yourselves to baseline living. 

Governments will then seize gold or make it illegal to hold. With gold and silver mainly in the hands of ultra authoritative governments (ones controlled by the same bankers), the Elites can then dictate wage levels, work conditions and tax rates. 

Considering the excess labor in the world (see the CIA global reports), they have control over who lives and who dies. Barring someone having a very unique skill set, slavery can be brought out into the open. 

Markets as we have understood them NO LONGER EXIST. To think in terms of alternative value instruments is to think we still have freedom or choices. When all the world is under their thumb, there is no where to run. 

Now, if I'm wrong and I don't think I am ( and my research imbues me with some confidence in this), then gold and silver could be useful in black market operations only and then, only if black markets are allowed to exist- which may also be a false hope. 

We may be facing the barrel of a gun moment in the near future and it won't be pretty.

Sun, 02/24/2013 - 19:11 | 3272439 fockewulf190
fockewulf190's picture

How do you sieze gold and silver that have been lost in countless boating accidents?

Sun, 02/24/2013 - 19:27 | 3272482 Sean7k
Sean7k's picture

I've had as many boating accidents as the next guy, but we have to stop being manipulated by ALL SIDES. We have to look at what is happening. Look at this from economic theory and market behavior. How do you justify the value of gold and silver in the face of trillions in debasement from all major central banks?

Do you think people are stupid? Major holders of private capital and wealth? Would not people like Sprott avail themselves of the judicial systems to prove manipulation? Sprott is a billionaire, he has the deep pockets to force the issue into the open. Instead, he writes about the coming movements in metals as HE PROFITS FROM THE INVESTMENT OF PEOPLE IN HIS INSTRUMENTS. 

Remember the golden rule of investment: you make money by using other people's money. 

Finally, if your gold and silver are marginalized through criminal covenants, its' value will be reduced. Ultimately, holding gold and silver may be a bet on revolution. The Rothschild's don't let people prosper without taking a cut , a big cut.

Sun, 02/24/2013 - 20:21 | 3272588 delacroix
delacroix's picture

maybe sprott doesn't want to go the martin armstrong route

Sun, 02/24/2013 - 16:37 | 3272116 francis_sawyer
francis_sawyer's picture

To Germany: The check is in the mail & the dog ate my homework...

Sun, 02/24/2013 - 16:41 | 3272121 ZerOhead
ZerOhead's picture

Precisely...

If the Fed is in fact supplying the market then it is disgorging someones elses gold.

It sure isn't mine!

Sun, 02/24/2013 - 17:53 | 3272270 Pseudo Anonym
Pseudo Anonym's picture

it sure isnt hugo chavez' gold either!

Mon, 02/25/2013 - 10:09 | 3273720 AE911Truth
AE911Truth's picture

I know it sounds crazy, but it is possible the Fed is selling to the Chinese gold which was previously leased from the Chinese.

http://www.scribd.com/Free_Nations/documents

http://www.scribd.com/doc/73793248/11-Civ-8500-Keenan-Complaint

Sun, 02/24/2013 - 16:45 | 3272137 akak
akak's picture

And SLV and GLD are fully backed by unencumbered, unrehypothecated physical metal.

Sun, 02/24/2013 - 16:50 | 3272144 CH1
CH1's picture

And SLV and GLD are fully backed by unencumbered, unrehypothecated physical metal.

LOL... of course they are!

Would Wall Street execs lie?

Sun, 02/24/2013 - 17:04 | 3272165 francis_sawyer
francis_sawyer's picture

That subway line that passes directly by the vault under 60 Victoria Embankment [on the Thames] is still CLOSED TO THE PUBLIC on Sundays, right?... Just checking...

Sun, 02/24/2013 - 18:04 | 3272248 earleflorida
earleflorida's picture

The problem with Germany, et.el., is that they borrowed?, collateralizing their gold. Whereas, the sovereign CB's are now on... and have been for a long time-- the FRB's, honey-bucket serial 'blackMaul'd list`er'?!

Ref:  archive @ TD's ZeroHedge__ 6/12/11 [00.25-0400] '$600Bn. Bailout of Foreign Banks

Sun, 02/24/2013 - 17:50 | 3272267 americanspirit
americanspirit's picture

The check is in the mail & the dog ate my homework...and yes my Mercedes is paid for, and I promise I won't cum in your mouth

Sun, 02/24/2013 - 16:39 | 3272120 logicalman
logicalman's picture

One ounce gold Canadian Maple Leaf

1600 rectangles of printed paper

String of ones and zeros on a banks computer hard drive.

Which would you choose?

Hmmm......

Sun, 02/24/2013 - 16:40 | 3272124 Silver Garbage Man
Silver Garbage Man's picture

I would not take $100 an ounce for my silver if I could not replace it. This thing is going to blow and there is no better place to be in my opinion than physical silver.

Sun, 02/24/2013 - 17:40 | 3272242 Bingfa
Bingfa's picture

Every single person I know is stacking silver coins.

They are smaller denomination than Gold coins and more easily acquired.

People of modest means can get on board.

 

Sun, 02/24/2013 - 18:39 | 3272372 WmMcK
WmMcK's picture

+1 -
That's great, are you in any way responsible for that?
If so, I'd love to know your secret power of persuasion. Most everyone I know thinks I'm crazy for stacking. Where (in general) are you located?

Mon, 02/25/2013 - 10:29 | 3273784 DosZap
DosZap's picture

Just WTF constitutes PAPER GOLD?,and how does one add it to actual bullion reserves or sales,since in reality it does not exist?.

Sun, 02/24/2013 - 21:55 | 3272131 The Heart
The Heart's picture
E-Mails Imply JPMorgan Knew Some Mortgage Deals Were Bad:

http://dealbook.nytimes.com/2013/02/06/e-mails-imply-jpmorgan-knew-some-...

"Rather than disclosing the full extent of problems like fraudulent home appraisals and overextended borrowers, the bank adjusted the critical reviews, according to documents filed early Tuesday in federal court in Manhattan. As a result, the mortgages, which JPMorgan bundled into complex securities, appeared healthier, making the deals more appealing to investors."

Sun, 02/24/2013 - 16:43 | 3272132 akak
akak's picture
 
Is the West Dishoarding Its Sovereign Treasure?

 

Does a gold bear shit on GATA?

Sun, 02/24/2013 - 16:43 | 3272133 Global Hunter
Global Hunter's picture

Mr. Sprott!  Please step away from the hot tub, I repeat please stay away from the hot tub.  And while your at it stay away from scizophrenics claiming to be Holden Cauldfield.

Sun, 02/24/2013 - 16:48 | 3272142 Hannibal
Hannibal's picture

Anyone (still) holding "paper" gotta 2b nuts!

Sun, 02/24/2013 - 16:55 | 3272153 PUD
PUD's picture

You can't eat silver or gold. They will confiscate it, tax you out of it, render it useless except for a crown on your #31 molar. How so many of you can cling to this fantasy that a mineral is your guarantee to safe passage when the shit hits the fan is beyond me.

It's as mindless as you ammo hoarders...how many gunfights do you think you're likely to win?

Your bunker might allow you to hold out longer than most but you will have to sleep and you will someday have to emerge....I doubt you'll like what you emerge into and I doubt your shiny coins will bring you much when you do.

I think you all watch too many fantasy video games.

When the system collapses you would be better off crunching down on a cyanide pill 

Sun, 02/24/2013 - 16:59 | 3272159 akak
akak's picture

 

When the system collapses you would be better off crunching down on a cyanide pill

You first.

Sun, 02/24/2013 - 17:03 | 3272168 PUD
PUD's picture

When it comes to that, I will.  i don't harbor any false illusions about what the world will be like or the possible nightmare scenarios that could unfold. Unlike you fools though, I accept it and have no notion of being the sole survivors climbing out of your dens with fists full of shiny coins thinking you'll inherit what's left.

Sun, 02/24/2013 - 17:12 | 3272176 akak
akak's picture

You are a complete putz and an ignorant fool of the first order.

Has it ever occurred to your historically clueless, government-induced hysteria-raddled mind that there are alternative outcomes (an infinity of them, in fact), not only realistic but almost infinitely more PROBABLE alternative outcomes, between the indefinite continuation of the current status-quo and the total collapse of civilization?  Literally HUNDREDS if not thousands of societies have experienced financial and economic upheaval, monetary collapse, and hyperinflation, and yet I fail to find almost any examples of any which have thereupon regressed to roaming hordes of brain-craving cannibalistic zombies.

Your specious strawman mischaracterization and denigration of those who, unlike you, have enough spine, foresight and courage to attempt to prepare for inevitable bad times to come rather speaks for itself.

 

Sun, 02/24/2013 - 17:28 | 3272206 francis_sawyer
francis_sawyer's picture

 "It's as mindless as you ammo hoarders...how many gunfights do you think you're likely to win?"

~~~

Why don't you come on by & add yourself to the stat&probability sheet... Jumpin Jack Flash it's a gas gas gas...

http://www.youtube.com/watch?v=wQPlU5q1CBI

[REWARD suprise ending there ~ if you take the time]

 

 

 

Sun, 02/24/2013 - 17:28 | 3272215 PUD
PUD's picture

you don't know what you're talking about. you can't prepare for that which you can't conceive. we're not talking losing power for a couple of days dude.

Sun, 02/24/2013 - 18:05 | 3272300 css1971
css1971's picture

Wow, you swallowed the banker's "we are gods", "masters of the universe" thing hook line and sinker, didn't you.

 

Sun, 02/24/2013 - 19:06 | 3272430 tenpanhandle
tenpanhandle's picture

Please Akak, don't try and talk the Pud out of swallowing his cyanide pill.

Sun, 02/24/2013 - 19:22 | 3272462 akak
akak's picture

OK, that was my first literal "LOL" of the day here!

Well done!

Sun, 02/24/2013 - 19:35 | 3272494 TheFourthStooge-ing
TheFourthStooge-ing's picture

.

Please Akak, don't try and talk the Pud out of swallowing his cyanide pill.

Better still, convince him that it is a cyanide suppository.

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