Tuesday, September 13, 2011
Default threat boosts case for gold, Sprott says
The risk of Greece defaulting on its debt may be roiling the world’s financial markets, but it’s good news for Eric Sprott.
Investors seeking refuge from the financial storm drove the price of gold to a record high last week, and Mr. Sprott is optimistic that demand for the precious metal will expand as fears grow that Greece and other European countries will fail to repay their massive debts.
“Greece either defaults or they print money, both of which are great for gold,” said Mr. Sprott, chairman of Toronto-based Sprott Inc, which holds $2.2-billion of gold and $900-million of silver among its $11-billion in assets.
While acknowledging that a Greek default would lead to “a crescendo of problems” for the global financial system, he argues that it would be unambiguously positive for haven commodities such as gold. “The market has made gold the reserve currency. The market has already made that decision, that this is the safest asset when there is potential financial contagion.”
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at 5:29 PM