Saturday, August 2, 2014

Geopolitical Tensions Make Gold a Must Have Asset

There’s no doubt that with all the tension in the world the average person would have a higher inclination to wanting a physical asset. And anyone in the Middle East or in Europe could see that this tension can spread from one place to another. None of these situations have been resolved. They’re ongoing. They’re kind of flaring up. We even have the Ukraine prime minister resigning yesterday, and it looks like their parliament might dissolve.

So there’s lots of reasons for people to consider owning precious metals. We also have a situation in Asia, where there’s lots of tension between China and Vietnam, China and Japan, even China and the US, which could be explosive. I’ve never been one to use that as a factor for necessarily owning gold, although it is one, but it’s not my primary reason to suggest that people should own precious metals.

My primary reason is just simply an excess of demand over supply. Obviously, I believe that the paper markets where they have an unlimited supply of paper gold have restrained prices, and ultimately we’re going to win that war. I’ve written many articles about the central banks possibly having no gold left, and I think there’s very, very much evidence of that.

Of course, the people at GATA have done a great job of explaining that. We see some very odd data that the UK is a huge exporter of gold. Well, they don’t produce any gold. The US exports more gold than they produce, and you’ve got to wonder where is this gold coming from. If you don’t produce it, where is it coming from? Of course, the assumption I would make is it’s coming from the central banks, and they’re totally non-transparent about their transactions. In fact, there is way more demand than supply, and sooner or later this will play out in the markets.

- Eric Sprott via a recent Ask the Expert interview: