Saturday, October 3, 2015

Price of Gold and Silver are Being Suppressed & No Gold in the Treasury

Money manager Eric Sprott contends, Physical demand for gold is out of line with fundamentals.

Wednesday, September 30, 2015

Eric Sprott Discusses BitGold vs. Bitcoin

Eric Sprott spoke at the Sprott-Stansberry Natural Resource Symposium on July 31st, 2015 in Vancouver. He took the opportunity to discuss his thoughts on BitGold, its relation to bitcoin and the role BitGold will play in the development of gold.

Saturday, September 26, 2015

I just know that the economy is not functioning smoothly

I’ve actually been very surprised that there hasn’t been more disruption at the university level for example. I mean here we have all these people taking on all these loans with the promise of some job that they don’t get.

They can’t possibly pay off the loans, and yet nobody seems concerned about them. How about if you’re at university today and you know darn well that when your time comes to get the social security, there’s not going to be any social security? Literally, people of my era are benefiting at the expense of people that are going to be in your era because all these programs that we have, we can’t afford. But nobody wants to cut them down to size -- not on their watch, not while they’re running the government, even though it’s so obvious that there’s no way that when you retire the social security benefits that you’ve been promised can be paid.

For example, they just announced that the disability fund is going to be out of money next year and then the retirement fund will be out of money in 2034. Well, that’s maybe getting to when you might retire.

But there won’t be any money there. So it’s a very difficult situation and I’m surprised that there haven’t been more people complaining. Maybe someday if food prices go up shockingly high -- perhaps because of the drought in California or other things -- when you start affecting food and its availability, then people will be more disruptive.

I don’t like to even contemplate those things. I would much rather just look at the economy. Let’s not get into how people are going to react, although it could be very negative to markets.

I just know that the economy is not functioning smoothly. Sooner or later-- because I have to care about these things -- stocks won’t sustain the highs that they’re at and the banking system won’t be able to pretend that it’s solvent.

And of course it’s the banking system not being solvent that always takes me to precious metals.

I think of the people in Greece, who could only get – what was it? -- sixty euros a day? Well, if they’d had their gold somewhere, they could cash something in. But they go to the bank and they got to get in the line-up and they get 60 euros in a day. I mean that doesn’t carry you too far. So I still believe that’s the ultimate manifestation that there’s no economic recovery. The banks will suffer. People will figure out that banks are risky and the money will go to where it should go -- precious metals.

Wednesday, September 23, 2015

Double Digit Inflation With No Growth

They pretend that inflation is low but I don’t think inflation is low. As you would have seen in my presentation, there’s an index called the Chapwood Index that measures 500 different items in 20 different cities in the US. The index, every year from ‘11 to today, has been in the double-digits.

So imagine double-digit inflation with 2% GDP growth. You would be really shrinking at 8%. Today we saw that wage gains in the second quarter were 0.2%. Well, 0.2% in the quarter is like 0.8% for a year. I can assure you that everyone’s increases in healthcare costs this year will suck up more than that wage gain. Somehow these costs don’t go into the CPI thing. I don’t know how they don’t, but they’re just not going to tell us what inflation really is. It’s much higher than is being reported, I think.

It tends to distort all the numbers. It makes GDP way higher than it would otherwise be and tries to keep a certain calmness in a very, very difficult economic environment.

- Source, Eric Sprott via Proactive Investors

Sunday, September 20, 2015

Inflation is Way Beyond What is Reported

We have this constant interference by the powers-that-be to not let the markets function properly. In the bond market, it’s through low interest rates. I personally suspect that governments are in the stock market. We know the Japanese buy stocks. We know that the Swiss national bank buys stocks. We don’t know for a fact that the US government buys stocks but there might be methods by which they can convince people to “keep it together.” Every time we get a little correction, it bounces right back up again.

So that’s just the environment we’re in. We’ve spent all this money. We’ve taken rates as low as we can get them and we’re just hanging in there. Even recently we had the GDP for 2011 to 2014 revised down so that it turned out to be 2% a year. Of course the 2% is a function of the inflation rate. Say, if inflation was reported as 1% but is really 3%, then you had no growth because GDP is just a dollar number.

My own feeling is that inflation is way beyond what’s reported. If inflation really was 5%, and you said GDP growth was 2%, then the real growth is -3%.

So I’m not a believer that there is any economic recovery that’s sustainable. I always say we’re trying to get liftoff. But we don’t get liftoff because we haven’t finished the cleansing process yet.

- Eric Sprott via Proactive Investors

Tuesday, September 15, 2015

The Financial Crisis Nearly Took the Whole System Down

I’ve never been a believer in the economic recovery that we’re supposedly in. I think that the powers-that-be are pulling out all the stops to try to hold it together. I go back to the NASDAQ break which I think should have caused a huge cascade of stock values to stay low for quite a while. And then of course the powers-that-be used whatever methods were available to them to try to stimulate things. Back in those days, it was “cash-for-clunkers,” the new homebuyer tax credits and of course the whole zero-interest-rate thing. Then we had TARP and TALF in ’07 and ‘08.

We had conservatorships of Fannie and Freddie, and AIG, which I’m sure nobody really understands. It’s all “try to keep it together.” I think we learned in ’07 and ’08, when Lehman went down, that the powers-that-be can’t allow a liquidation where a financial organization has to sell something, which unfortunately is what happened to Lehman and nearly took the whole system down.

So subsequent to that, we’ve never had a liquidation. Even, for example, in the Cypriot bank crisis, the Cypriot banks never had to sell anything because they just took from the depositors. It looks like the Greek situation that we have today; the Greek banks don’t have to sell anything because the ECB just comes in and supplies the Emergency Lending Authority. I think if you allowed the market to function as it should function, where values are determined by the market, we would see this sort of domino effect where the Greek banks would have to sell their loans off and then the Greek stock market would collapse, the bond market would collapse and then people [in countries] around them would start thinking, “Well, that could happen to me.”

- Source, Eric Sprott via

Thursday, September 10, 2015

The Powers That Be Don't Want To Admit There's A Problem

The market is out of step with reality, Eric Sprott tells Tekoa Da Silva in his recent interview.

“We had no growth in the economy to speak of. Yet these stocks were trading at record-high prices,” he says of the overall market.

He also believes the banking system is over-exposed to assets which stand to depreciate in value.

The strength of bonds and stocks so far has masked these weaknesses in banks’ balance sheets, says Eric, but that could change if markets came under more strain. “When you have people starting to take money out of the banking system,” he warns, “that’s when we all find out what the assets (of the banks) are worth.”

Especially worrying for investors in stocks should be the massive build-up in debt and un-funded obligations in developed countries, says Eric. This is leading towards a big breakdown in world bond and stock markets, he believes.

Eric also discusses his “principles” for success and how anticipating a crash in tech stocks during the late 1990’s led him to first become interested in gold and silver.

Sprott Provides Update on Central GoldTrust and Silver Bullion Trust Exchange Offers

Please Join Sprott for a webcast hosted by John Wilson, CEO of Sprott Asset Management and Eric Sprott, Founder of Sprott Asset Management and Chairman of Sprott Inc.

John and Eric will provide an update on Sprott’s Exchange Offers for Central GoldTrust and Silver Bullion Trust and will answer questions from participants.

Thursday, September 10, 2015, 10:00 am EDT

Sunday, August 30, 2015

Eric Sprott Was Right, Inflation is Rising

Eric Sprott believes that we’re still living in the times of inflation.


Eric showed the above table in his presentation. It shows that the true level of inflation, a persistent increase in prices, has been sitting around 10% since 2011. Indeed, a far worse picture than what the US Federal Reserve paints. The Fed argues that prices have been rising below 2% for the past four years. That said, the Fed doesn’t include food, petrol and taxes in its inflation index. This is similar to the Reserve Bank of Australia’s inflation calculation.

But then who needs petrol and food, right?

So it’s not surprising that Jim Rickard’s, over at Strategic Intelligence, argues that there’s no worse forecaster in the world than the US Fed.

You may have noticed each year that Australian healthcare companies raise their premiums by roughly 6%. Well, costs are also rising over in the US.

I’ve been speaking to many US citizens up here at the conference. The word on the street is that Obamacare is one of the worst policies of all time. It’s legally forced those who can’t afford health care to buy; at the same time, hiking insurance premiums for those who require modest healthcare.

And it’s only going to get worse…

Now, after two years of being relatively stable, premiums are going to skyrocket. New Mexico, for example, is about to see a 51.6% jump in costs next year. No doubt this will squeeze the US economy even more.

So Eric Sprott is correct…yet again. The general level of prices across the economy has been increasing. You’ve probably noticed the same thing here in Australia — food, healthcare, education, etc. — It’s all going up!

Tuesday, August 25, 2015

I’ve always believed you should own gold

I’ve always believed you should own gold and it has played out very well since I got involved back in 2000. It has been spectacular, quite frankly.

Of course it has been a very, very tough game for the last four years here. In my own account, I continue to invest in gold and silver companies. I recently bought a mine in the United States personally. I just took on 40% of another mine here in Canada.

So I’m a believer. I look at the physical supply and demand of gold -- and silver for that matter, where we are experiencing some shortages here.

The demand numbers I’ve seen are way beyond the supply. I think that Western central banks surreptitiously make up the missing supply and that someday they’re going to look in the cupboard and realize that it’s bare.

So far, everyone in the press is downplaying gold but I haven’t lost any conviction whatsoever.

To your bigger question, how do you survive in a recession or a depression?

You have got to take matters into your own hands. Make sure you have essentials and the things you need to get you through. It could fall apart pretty seriously all of a sudden – just like we experienced in ‘08 where there was almost a zero credit available at one time.

That is just as likely to happen this time and it’s hard to transact in an environment like that. So you had better be prepared. Have some ‘good’ currency -- gold and silver.

- Source

Thursday, August 20, 2015

Fiat Money and Central Planners Will Fail

That is totally the case.

It’s similar to what we’ve seen in Japan, where there really is no recovery. We see it happening in the States where there’s no recovery. The only hint of a recovery is coming from the fact that you took rates to zero. You let the marginal buyer buy a home. You let the marginal buyer buy a car. Those slight gains, which are often at very low levels, have kept the economy bumbling along here.

But as you know, there are lots of signs that the economy is not strong. Retail sales were down 0.3 percent for the month of June.1

The middle class is getting pillaged because inflation is way higher than the wage gains they have seen. Therefore, there’s no extra money for discretionary spending, even in the US.

Europe looks like it has failed the Greek situation here.

And we even have a situation in China now where the monetary authorities were perhaps too lax and now they are paying the price.

The population bought into the stock mania and now they are getting their hats handed to them too.

The theory that central planners can alter events on a sustained basis is fundamentally wrong. We saw the central planners fail in the USSR. We see them failing in Japan. We see them failing in the ECB. We see them failing in the US.

I think it all shows that fiat currency -- and more importantly debt creation -- can sustain an economy for a while. But once you have to start paying back the debt and you can’t take on increasing amounts of credit, then your GDP goes down because people don’t have the spending power.

That’s essentially where we are now. Countries, central banks, and people really can’t take on more debts. Therefore, you’re likely to see a contraction in economies as that extra spending from debt vanishes from the scene.

Saturday, August 15, 2015

The Greek Crisis Will Continue

Well, of course the fundamental problem, which was very much expressed by Mr. Varoufakis, is that Greece is broke.

He said it probably three months ago now. The fact is that they are broke and have around 25 percent unemployment.

They’ve been undergoing a recession for five years. So how do you expect somebody who’s broke to pay up? Normally, when someone is broke, they go through a chapter 11 bankruptcy or something in order to get out from under debt.

So I think it’s going to be an ongoing crisis. It will be interesting to see how it plays out in the banking system. But of course it’s the banking system that the powers-that-be want to preserve. That’s because the banking system can create a domino effect where all of a sudden everyone is questioning everyone else’s credit. Also, writing down a debt would be bad because that debt is on people’s balance sheets, particularly the ECB’s.

They can pretend that there are no write-offs or put it up in some organizations where you never see the losses. But we all know that if Greece repudiates its debts, there are going to be lots of losses on those bonds. We will see how it plays out.

- Source, Eric Sprott via Proactive Investor

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