Silver Price Update From James Turk And Eric Sprott
Eric Sprott, Chairman of Sprott Asset Management, and James Turk, Director of the GoldMoney Foundation, talk about how there isn't enough silver in the silver market to back existing "paper silver" commitments. While there is much in the attached interview, the bottom line is that Sprott thinks that "silver will be the investment of this decade". And with 3 out of 5 central banks having just embarked on monetization, and two more imminents, he will almost certainly be right.
Silver price update from James Turk and Eric Sprott
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But...but...insufficient physical silver to back the contracts would be ILLEGAL
"Illegal" can be fixed....
Seems to be a lot of that 'fixin' going on around the planet...
short silver to protect a long physical silver position.
-11 ?snake eyes.
SHORT 66 sexy TO HEDGE YOUR..... what?
Miners can't agree to sell future production?
Shh. The entire argument rests on a fixed supply of silver.
You dont understand the silver market. Most silver is produced as by-product of base metal mining. By-products dont get sold forward.
But...but...insufficient physical silver to back the contracts would be ILLEGAL.....
In an interview last week, when asked why some billion dollar hedge fund doesn't try to bust the COMEX, Sprott admitted that COMEX contracts can be settled with SLV paper, which is the reason why you don't see the raid.
Also, quite pecularily, he said that stock in pm miners would out-perform the metal, which makes no sense to me - at all.
Maybe its the mathematices arising from the fact that miners are depressed below where they should be and they will outperform while they catch up? Just a theory.
the problem i have with miners is they are largely valued for their reserves
as they dig it up and exchange it for fiat, their value doesn't necessarily go up
if they double production in a year, the life expectancy of their reserves would be halved. how does this add value to the company?
if a major were thinking of purchasing a junior, the value would be based on reserves. and if before the deal went through, the junior miraculously harvest 30% of their reserves, how would it become more valuable to the major? ... or china ... or saudi arabia
miners might be better to just leave the metal in the ground. it can't be stolen that way. it would encourage price increases on the metal and thus on their reserves.
instead of issuing dividends, a miner might be better to continue production but use cash reserves to fund themselves and put production in a vault. reserves would remain unchanged as both in-ground and above-ground reserves would be included.
for me, i'll just stick with the metal. it's the only thing i'm dead certain will never lose it's AAA rating
i'm not too into the conspiracy of things, but it would seem the case being made for the 'undervalued' miners might be part of the manipulation argument.
please don't buy the metal, we need that in the future ... let us have it. don't you see how undervalued we have made the miners for you. please go buy shares in diminishing reserves and leave the precious production for us to buy.
i'm surprised sprott and others don't question this more
Hi JohnnyWangerTexasBravoSlinger!
If you will recall, last year (or maybe it was earlier this year) he sold a bunch of PSLV shares and people freaked for a day or so about silver topping. But, he revealed that he thought that the miners were underperforming in the market in comparison to physical and was merely reallocating to the miners...not getting out of the silver trade.
Here is a chart that illustrates that the miners are still underperforming physical...its Yahoo, but it works
http://finance.yahoo.com/q/bc?s=SLV&t=1y&l=on&z=l&q=l&c=sil
of course Sprott thinks that "silver will be the investment of this decade". He is talking up his own book.
not that i think he's completely wrong but he does have a huge vested interest in people buying silver.
You are right, much better when fund managers promote toxic investments to the sheeple. That's the ticket. If a Billionaire sees the potential of silver, why would he not promote his investment of choice?
cue hugo... Hugo Salinas Price at GATA
Having a vested interest does NOT make someone an automatic liar.
Slogans substitute poorly for thoght.
certainly did not call him a liar. I think he's a smart guy and he's been spot on and I beleive what he's saying. But if the building starts burning down and Sprott smells smoke....you'll be the last to know.
this is the same for most professional commentary but Sprott has a pretty narrow investment focus.
your understanding of the metals appears to be somewhat limited.....us physical holders do not worry about price, just how much more we can get. to infer that eric has the same charactor as saint warren buffet i feel is a mistake. so if eric decides that after 6,000 years the metals or no longer relevant i will still have mine...and politley disagree with him...
I hold physical and if I was broke, jobless, destitute with no way of feeding myself I think I can admit I'd worry about the price.
Deflation is a bitch, yo.
-FN
"us physical holders do not worry about price, just how much more we can get."
...of course you worry about price. for anyone on this board i doubt there's a shortage of silver. you can go out and buy basically as much as you want,unless some of you are closeted billionaires.
right...but priced in what terms? any asset must necessarily be valued in terms of at least one other asset...many hold physical silver because they do not have faith in the present or future value of the USD...or any other fiat currency for that matter
Don't really see the problem in a guy committing himself to a partuclar plan and then selling that same plan to others. Sounds like a guy who believes in what he's doing.
A starfish uses suction to overpower the tiring muscles of a clam. It just takes time.
The vested interest that has kept silver from already clearing at $65+ is the Morgue's/Crimex's huge short, which I believe is the true driver of some of these misdirection raids. Anyway, the Morgue is the clam, physical is the starfish. It just takes time.
excellent analogy mayhem
at one point or another in our lives all us guys have been that starfish trying to wear down and finally open the clam, no?
What ya getting at there? Oh...
yeah.
you know, even the use of suction part fits...
great analogy is right.
Oh yes. And when that clam is opened, the payoff is always in Silver Dollars.
JPM:AG was under 1 all week.
need better analogy: you can't eat a starfish...
er...
The tides out Bitchez, time to start picking up the starfish...
Yes, I only buy things of which all advisors I trust have short positions on! /sarc
Being a contrarian just for the sake of it isn't really that convincing...
Yes, he should be like Goldman:
i don't know why so many junked you because you're essentially right.
personally i am deeply invested in PMs and hope that Sprott is right but when you look closely, everyone who touts anything has something to sell or is invested in the said product. i mean, everyone from mike maloney to peter schiff touts PMs while selling PMs.
funny how you can't win with your logic. if hes invested, hes got an angle, if hes not invested, hes a hypocrite for not backing his statement.
The whole argument is totally pointless anyways: That someone is invested in what he is talking about, just means that he is affected by what he is talking about.
That could result in:
1. He being biased AND yet being right.
2. He being biased yet NOT being right.
3. Him pushing something because of a personal agenda.
4. Him pushing something because of being convinced of it.
Him being invested in it could mean all kinds of different things - good, bad and irrelevant ones - and it isn't possible to know which of those is the case, without looking at the details and history of this relationship.
It's like: Let's say two people are married - does that imply that the guy is a wifebeater? Does it imply that the wife is a manipulative bitch? Does it mean that they fit together greatly? Does it mean that there will be lots of crisis because they don't match? Does it mean that they will be bored with each other quickly? Does it mean that they will find each other fascinating for a longterm, because else they wouldn't have married? WHAT does the mere fact of them being married imply? Uh, nothing... just that they're married... the rest depends on the details of the "how".
Yeah, he has only been talking about the bull market in PM's for years and years, and backs everything he says with facts and numbers. Wake up ding dong.
and one more thing driven, it seems kinda easy in this day to seperate the agenda driven pundits and the few that are just honest....and being honest does not mean those few are right all the time....to not believe in eric sprott would be similar to not believing in the tylers.
and why is it that people have to go to such an extreme to discredit a point...of course price matters to a degree, but i would guess that most physical holders are hoping they never HAVE to sell..but the worse of all are the grammer nazis....and you know who you are, were a point can't possibly be correct because of a missed spelled word or the improper use of a word....or did i just define what it is to be a troll....
It's "grammar", not "grammer", you dolt!
with it being the one and only draft, not giving a shit if i miss a key and not proofed, not bad by todays standards, ya tink?
Ha! Only stirring the possum!
Peace - and keep your powder dry!
i get jokes!..
jokes are funny...
"..but the worse of all are the grammer nazis....and you know who you are, were a point can't possibly be correct because of a missed spelled word or the improper use of a word...."
and then this:
"with it being the one and only draft, not giving a shit if i miss a key and not proofed, not bad by todays standards, ya tink?"
Wow.
A bit more than a missed key there amigo...
silver is the new...uh...silver...
"And with 3 out of 5 central banks having just embarked on monetization, and two more imminents"
Am I missing something? What does that mean? Which CBs are emarking on monetization?
http://www.zerohedge.com/news/ecb-buys-italian-bonds-third-major-central-bank-intervention-past-24-hours
Euro, Japanese and...um...
I'll take the under on that trade.
Default can wipe out monetized credits every bit as fast as the central banks can generate them.
And the more liquid PMs appear during a credit crisis, the more certain they are to be selected for liquidation to meet margin calls.
And that is exactly what we "stackers" are praying for...more on sale.
You gotta love stacker logic. Price down: I haven't lost money because I haven't sold AND it's an opportunity to buy more!! Price up: stackers count their gains, even though they haven't sold.
I hold PMs, but I don't hold to this logic. When it's up, it's up. When it's down, it's down. FWIW - I don't know WTF you guys are doing with all your silver. I'm limit up cause the shit is too bulky and heavy. Gold from here on out for me.
An anecdote for my friends here at ZH.
Today I went and bought a little bit of gold. At the coin shop, there was a lady behind me, middle aged. She had a gold coin in a pendant on a gold chain. She told me that she was there to sell it. She asked me what it might be worth (a gold 1971 Rand, a coin I am not familiar with). I asked here if could examine it, it seemed to weigh about 1/5th of an oz. So, I told her maybe she could get $300, but that the coin shop guy was the expert, not me.
She then dropped the bomb: margin call...
I wished her good luck.
All that does is reload the spring even more tightly...
"And the more liquid PMs appear during a credit crisis, the more certain they are to be selected for liquidation to meet margin calls. "
Ah yes grasshopper... and once liquidated the PMs fall into stronger hands... and the ships are loaded with PMs for the trip to SE Asia, India, Mid East, et al...
You are taking the 'short' view... pun intended...
When much of the physical PMs are sucked out of the West the paper traders will be irrelevent... They can trade pretend silver/gold or they can spend their time playing monopoly; ie, the board game.
The longer that the bullion banks play the paper game to suppress PM prices in order to make fiats look stronger, the longer the East can purchase paper PMs, and take delivery at bargain prices.
So, who is winning...
what a piece of BS.. i am still eating with silver spoons forks and knives
dollar down today, gold up near the highs, silver down. ????????
CBs not hoarding silver - easier for the Morgue to beat down.
BTFD
Thoughtcrime is death.
The one beef I do have is Sprott using the 16:1 ratio and saying how "since the price of gold is $1600, that means silver has to hit about $100". Couldn't this just as easily imply gold is overpriced in and of itself? Maybe gold should be $600/ounce right now. I agree with the big picture but this argument from silver-bugs always bothers me.
fine, if you think $600 is a fair price of gold i will gladly take some from you for this price
me too please...thanks
No thanks, like I said, I agree with Sprott for the most part and invest in silver/gold as well. But it's def a sales pitch to say that since the ratio should be 16:1, silver should be $100/ounce. The ratio alone is only useful for a spread trade.
you may be right...but the 16:1 ratio is not completely arbitrary...it is based upon the historical value relationship between the two metals...legal and otherwise...for example... Cross of Gold Speech
edit: btw i don't mean to imply a gold vs bi metal standard by this example...there are several others...just saying that 16:1 is not an arbitrary ratio
Do your homework: read Sprott's piece on supply/demand in silver from a month back or so.
There is a trade in there somewhere.
Hey goofy
the 16:1 ratio is historical, based approximately on how much of gold vs silver has been pulled out of the ground, i.e. 16 oz of silver have been extracted for every ounce of gold, and he is simply saying that the current price ratio will at some point return to the historical norm.
He also said that he expects the gold price to go much higher (once the paper gold market blows up), and silver will tag along for that ride, though it will outperform since it has a longer way to go to bring it into the historical norm visa a viz gold
http://en.wikipedia.org/wiki/Abundance_of_elements_in_Earth%27s_crust
http://seekingalpha.com/article/206897-the-historical-gold-silver-ratio-...
You are mistaken. The specific ratio 16:1; is more or less arbitrary; this ratio has varied from around 10 to 25 during the millenia when silver and gold were money. But it is not stable at 40:1; and it will not remain there. A sense of time is important; an electron can be in two places at once; for a very, very short time. for the metals ratio; five or six years is getting on for a long time. The ratio will revert to the mean; one of the most dependable mathematical processes available. This will not occur by the Gold price getting cut in half. Mr. Sprott is right; and I am right, have been for eleven years; these things take time. Silver will outperform Gold very significantly. There are six reasons why this is so; supply and demand, supply and demand, and supply and demand. These are valid reasons.
The Coinage Act of 1834 was passed by the United States Congress on June 27, 1834. It raised the silver-to-gold weight ratio from its 1792 level of 15:1 (established by the Coinage Act of 1792) to 16:1 thus setting the mint price for silver at a level below its international market price. After its passage, one ounce of gold was the equivalent of $20.67.
Peace
I usually don't say much on these gold/silver posts, but I think this fixation on metals looks really stupid right now.
The Fed doesn't need QE to fund the government budget--everybody's running into treasuries. QE will only drive up commodities which is the last thing the Fed wants to see right now.
I can buy a stock with a 10%+ dividend, trades 20% below book value, has a p/e of 4, a 25% total debt/equity ratio. If that's not value, I don't know what is.
And when said stock goes to zero, I'll still have my PHYZZ....
Yeah, every company in the world is going bankrupt. Sigh.
Except the TBTF banks. They'll make certain they're the last to go....
Perhaps 'all the companies' will not go bankrupt... but there is a very good chance that some soverigns will... and the interconnectness of the world financial system guarantees that there will be some domino effect. Simply take a look at how much soverign paper CBs are holding. Meanwhile the currencies are being printed to oblivion. At some point this will collapse.
Play with your paper in front of the oncoming locomotive if you wish.
If you think paper is as safe as gold/silver...Why didn't gold sell off to the extent of stocks yesterday?
Fine, there is all kinds of turmoil going on. If the price of a stock goes down from here, I'm compensated at least in part by the dividend until it recovers. I've even got some padding in a worst case because it is trading below book value.
A stock claim on real assets. It is ownership. "Paper" has nothing to do with it.
I don't know what gold or anything will do in the furture, nor does anybody else. All the jackasses saying I told you so never put a date on anything, so they are worthless or got super-lucky. But gold is not cheap. Hell, it's almost the saem price as platinum right now.
"A stock claim on real assets. It is ownership. "Paper" has nothing to do with it."
Wrong... The world is littered with paper stock certificates of now defunct companies. If you don't believe it check out how many of the current DJ listed companies were listed in 1920, or 1930, or etc... A stock certificate is paper and it can go to ZERO equivalent purchasing power. Gold, on the other hand, has never gone to zero... Even after being declared a 'barbarous relic' by central bankers and the price beaten down by them since 1913.
"But gold is not cheap." You gotta do better than that! Compared to printed fiat who's intrinsic value has always gone to zero? Compared to bananas? lol
Gold is now returning to it's rightful place as the supreme store of value. Fiat, with an inflation target of 2% by central banks, was never a good store of value. We were forced to use fiat at gunpoint. We are witness to history in the making here. Because you don't recognize what you are seeing, or are in denial, does not make your conclusions right.
Watch what SE Asia is doing and you will find out where the PMs are going. They are buying every dip...
The certificate is worthless because the real aseets didn't perform and the company went bankrupt, not becaue the claim is paper. If you actually think that every company is going bankrupt in the near term, whatever. I think you are stupid for thinking it, but whatever. Don't diversify.
"Gold is now returning to its rightful blah, blah, blah." Is zero hedge now kindergarten!?!
"The certificate is worthless because the real aseets didn't perform and the company went bankrupt, not becaue the claim is paper. "
And if the certificate itself had been made of gold/silver it would never have become worthless. So, yes the certificate is worthless because it is just one more piece of paper.
"Is zero hedge now kindergarten!?!"
Well, you are here so I suppose you answered your own question...
I can buy a stock with a 10%+ dividend, trades 20% below book value, has a p/e of 4, a 25% total debt/equity ratio. If that's not value, I don't know what is.
For those of us that are less adept at picking stocks, do you mind providing a few examples of said stocks?
I have no incentive to tell you, as I want to continue buying on the bets terms.
So run some screens, do some homework, and stop being lazy!
Translation: he can't name a stock with a 10%+ dividend, trades 20% below book value, has a p/e of 4, a 25% total debt/equity ratio.
Aren't equities low on the totem pole if a company goes bankrupt?
"you can think of equity as ownership in any asset after all debts associated with that asset are paid off." - Investopedia
hmmm...can't pay your debts or balance your budget eh? quick...sell me some treasuries!
Who hired you to come in here and try to persuade us to buy stocks in a fixed market that only allows the big banks and algo's to win. Can you please provide us with inside information so that the playing field is level and fair?
Where the heck is the spell check button? So I don't have to edit all my posts?
Who the fuck cares if the "playing field" is level or not?
Nothing is fair in life. Think price and yield instead.
Think "assets held" and "purchasing power."
If you are thinking 'yield'... What has yielded a greater roi over the last 11 years than gold? Of course there are a few individual stocks that have done better... But are you good enough to pick them?
If you bought the Dow you would be behind gold, same with the other exchanges.