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

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gaoptimize's picture

A supporting comment: Argentina (no pun intended).  The majority of the population lived through http://en.wikipedia.org/wiki/Argentine_economic_crisis_(1999%E2%80%932002).  Sarajevo:  The majority of people lived.  http://en.wikipedia.org/wiki/Siege_of_Sarajevo .  I could go on and on.  I know it is scary.  Use your fear as motivation and to focus the mind.

Bingfa's picture

Small colonies will survive, not individuals....

Like minded people that are mentally strong and can work together.

Probably won't be any Pizza takeout.

francis_sawyer's picture

Oh yes there will be... Only difference... I'll be the 'pizzaiolo' & my house & oven will be the 'HUT'...

Kirk2NCC1701's picture

Yup, yup, yup!  Just for grins, I did an Excel Sim recently, that had a grid of skills and number of people per skill. 

At the low end, I figured you need about a 12-15 families to cover the skill spectrum in medical sciences, natural sciences and skilled trades.  With an average of 3.5 kids/fam.  That adds up to about 60-80 people for starters.  To have better semblance of a civilized community with full range of skills & services, you need to increase the head count and skills to a total of 600-1000 people.  In other words, you need a village of hand-picked (group-vetted) people to restart from scratch and rebuild a place where you actually want to live, rather than hide out (miserable, lonely or angry) in a micro-world "according to me". 

BTW, the model has NO bankers, lawyers, analysts, brokers, financial advisers, CPAs, or Talking Heads in PR, Media or Politics!  Also, secular Renaissance people with real skills and creative ideas count for more than... monotheistic ideologues, re-selling ancient 'vapor-ware'.  If you get my meaning.

francis_sawyer's picture

Helps to have a fortress [or the geographical & geological means for building one]... Oddly ~ that's where Europe, Asia, & ROW in general have some advantages over North America... TIME TO BUILD...

Bingfa's picture

Yes sir, I'm a Machinist/fabricator/welder/inventor. I work for all the area farmers and a huge Amish presence and I barter for chickens, potatoes, vegetables, etc... one farmer even makes beer(yum)

We have all talked about it, we feel we can barter/sell/trade roughly no further than 5 miles from our area.

You would be surprised how much farmers know about the position this world is in, they're very smart people.

I'm not going anywhere. I'm just a cog in all this.

 

akarc's picture

You left out people trained in the art of war. You will need them. No group functions w/o politics.

James_Cole's picture

"Probably won't be any Pizza takeout."

If there's no pizza takeout then forget the whole thing, I'm done.

Haole's picture

There is no place in our collective future for people that give-up so easily. If/when you feel it necessary to take your self-inflicted exit from this life, it will give those left just that much more of a chance. I can suggest however, that a smart, somewhat enlightened and capable person suiciding one's self is an unadvisable solution to anything in this life and beyond to say the least. It's your soul though...

PUD's picture

There's no such thing as a soul and you seem to not understand that some situations are not worth suffering through only to meet the same inevitable result.

i would not give up like some hapless sheep sir but I would not care to live in a world that knows only suffering and deprivation

akak's picture

And YOU seem unable to understand that the end of the current economic/financial/monetary paradigm, like the end of all such paradigms in the past, is in no way equivalent to the end of the world, or even the end of civilization.  But since the banksters use such threats and propaganda in the attempt to prolong and maintain that current paradigm, you in your complete historical ignorance blindly and gullibly fall for their self-serving lies and hysterically overblown rhetoric.

francis_sawyer's picture

 "I would not care to live in a world that knows only suffering and deprivation"

~~~

Might as well change your avatar to a kitten...

akak's picture

Given his apparent and self-imposed helplessness, lack of spine, and willingness to drift in the currents of higher forces while making no attempt to take an active role in where he ends up, I suggest changing his avatar to a jellyfish would be more in order.

francis_sawyer's picture

AK ~ a jellyfish, at least, could sting the shit out of you... This motherfucker thinks he can MEOW you to death...

akak's picture

He reminds me of the Mayan sacrificial victims who were forced, before having their beating hearts ripped out of their chests, to play a ritualized game against obsidian-spear-wielding warriors armed only with a feather.

francis_sawyer's picture

eh well ~ It worked on the Nintendo game anyway...

TheFourthStooge-ing's picture

Ah, ah, US citizen duplicity being now manifestering bulbously.

Wonders how you two 'americans' learn somehow of Crispy Lotus Bloom Kitten new menu item at JKC* preparingedness being with kitten flanks and jellyfish made.

Evertheneverless, gourmet culinary innovatations contains in the lemon garlic sauce practises it lavishly. So doing now you instead that thinking 'americanism' has prevailing, but actually, that is not that, for put them level-plain as the things that happened.

A bit too well for the taste of many your accomplishmentation now exists as uncompensated promotings of JKC menu improvings firmly dangdang.

 

*JKC (Just Killed Cat) being much successful Chinese citizenism fastfood franchise prosperously.

akak's picture

Thanks to you, FourthStooge-ing, my screen is now splattered with chewed pasta, ejectulated from my US 'american' mouth much vigourous doing resulting of uncontrolled laughter in the make firmly of humor dangdang.

Damn your uncanny channeling of the mind (and I use the word very loosely) of AnAnonymous!

Intoxicologist's picture

ROR!

Make me blob up many tears of us citizenism laughter!

 

delacroix's picture

pud, is your avatar a baboon skullfucking a little bald white guy? if not maybe I need better glasses

ArrestBobRubin's picture

Extremely well said Akak. I want you on my team.

Some wilt in the heat, you shine... like silver.

ForWhomTheTollBuilds's picture

Funny how they simutaneously convince us that without them we have total collapse and also that those against their agenda are weirdos who spend their time preparing for total collapse.

Boondocker's picture

you have bigger issues than worrying about the end of the world.....

delacroix's picture

homicide before suicide

NoWayJose's picture

We are not likely to see a zombie driven bunker collapse. But if Congress cannot trim $85 billion off a $1.2 trillion deficit, we will see the US dollar weaken a great deal further. With PM's you know that you will preserve your purchasing power in every currency. There is nothing else that can do that.

James_Cole's picture

Gold yes, the rest unlikely.

Bicycle Repairman's picture

You haven't thought it through.  Stay here and get educated.

PUD's picture

Oh I've thought it through all right. A systemic collapse of the global financial system equals outcomes direct from the sickest minds in hollywood. All trade stops. Unemployment rockets. Poverty and desperation rules. Martial law. Uprisings. Shops empty of food in 3 days. Anarchy on a global scale.

What will you do when you get an infection? Swap gold for antibiotics?

What will you do when your food runs out? Your fuel, your water? Swap a shiny coin for the last can of spam?

I think not.

Do I know how it all plays out? Of course not...no one does...it could unfold in a limitless number of ways with very few of them being good.

How about when the workers at the nuclear power plants all go home to care for their own? Will you use your gold coins for shielding from the radiation clouds?

It is you who fail to think through what may come not me.

akak's picture

PUD apparently is a fervent disciple of Bernanke the XIV:

"Apres les banksters, le deluge".

 

Washington and Wall Street propaganda has certainly not been wasted on you.

 

Charles Nelson Reilly's picture

Sounds like you're long vibrators and blow with intentions of going out like that cat who was the leader singer of INXS.

Me... I'm gonna trade some of my gold at some point for 100 acres of farmland and live to fight another day.

PUD's picture

Sure you are skippy. You and your mule and plow?

Bicycle Repairman's picture

You seem to believe that the outcome will be a permanent "Mad Max" scenario.  Given that you may be right, but that outcome is very unlikely.  And the most likely precipitator of that scenario is an immediate nuclear wipe-out.  In that case no preparation is necessary.

joego1's picture

Gold is just part of the equation obviously you need to have other stuff. The idea is not to expect much from your local 7-11. I see something in between full colapse and a retarded economy with high inflation. For example I'm looking forward to paying my property tax bill by trading in "a single once of silver. I'm already growing a lot of my own food.

PUD's picture

And if "you" thought it through you would realize that you and your brothers are engaged in nothing but speculation just like all the other wall st minded. Betting on one of the casino games in the rigged market that produces nothing but momentum for the global system pendulum that swings wider and wilder every day. You're just one cog in the same damn machine you all condemn

akak's picture

When one lives in a hurricane-prone area, and storm clouds gather on the horizon, and satellite images show a major storm heading in your direction, is it "speculation" to board up the windows and head for higher ground?

The turbid and seemingly limitless depths of your idiocy continue to amaze me.

PUD's picture

A hurricane comes and goes. It affects a limited area and a finite number of people and systems. How about a serious sized asteroid hitting anywhere on earth? You prepared for that? A systemic collapse would be worse than a comet strike. At least it's over quickly with the visitor from space

akak's picture

So even the fact that a hurricane is clearly heading in your direction would not prompt you to take any measures to save yourself from the coming storm because an asteroid MIGHT (with incredibly low probability) meanwhile hit the earth and extinguish all life?

Wow, that is one derailed train of logic you're riding, buddy.

Kirk2NCC1701's picture

Dude, have you ever heard of the saying:  "Arguing with a fool is a bit like mud-wrestling with a pig.  After a while you realize that the pig is enjoying himself."

akak's picture

True, but after the mud-wrestling comes the abbatoir.

;-)

delacroix's picture

you're right pud. don't buy any green bananas

Crabshacker's picture

Well then, I say kill yourself now before somebody does it for you...

sunaJ's picture

Well, thank you for telling us what YOU would do.  The end of Western world financial dominance is a good thing.  It has had to become so corrupt to extend its existence, requires massive resources to sustain and a disassociation that appears disturbingly close to insanity. 

The liberation potential of giving up on a dying system can be immense.  I intend to be a part of that; however, I am also convinced that the transition will be so intense; the emotional unwillingness of people like you to let go, that there will be a need to stand up to those that would otherwise see the future so bleak as to take a cyanide pill or further extend the current consumptive paradigm.

It sounds to me like you need to work on the concept of personal sovereignty.

Acidtest Dummy's picture

Sounds to me like PUD is vitamin D deficient. PUD, buy a bottle of vitimin D, take some, in a few days you won't be so glum. It is not expensive and it is very low risk.

akak's picture

Unfortunately, vitamins can't fix stupid.

delacroix's picture

would it be illegal to sell cyanide pills?

akak's picture

Not if they are consumed on the premises.

Bingfa's picture

We shall see.

80% of Americans would never survive a prolonged conflict anyways.

We're buckling under our own weight.

Fail to prepare at your own peril.

 

 

PUD's picture

True enough but tell me what you and the 20% are going to wake up to

Bingfa's picture

I never said it was going to be easy, just doable.

Everyone should be looking around right now and surrounding themselves with strong people that bring something to the table.

It's going to be mental.