All Fiat Currencies Are Flawed

The Canadian dollar should be one of the stronger currencies, but all currencies are flawed, and they’re flawed in the sense that by having created this zero interest rate environment, the cost of government’s borrowing money is as negligible as you can get it. So, therefore, the willingness to keep increasing deficit spending is quite significant and to keep ignoring the increasing obligations.

And I always turn to the US in which they publish every year what the present value of their future liabilities is, and every year it goes up by about $5 trillion. Well, the GDP is $17 trillion. The government has revenue of $3 trillion. They spend $4 trillion. And, they’ve got an extra $5 trillion of obligations at the end of each year. Those obligations are pushing towards $80 trillion now. And any thinking person would know that this organization that has $3 trillion in revenue cannot meet these obligations.

It’s not just the US. I’m sure it’s Japan and England and the various European countries. They all keep making promises that they know they can’t keep. And, therefore, it’s another reason not to believe in currencies, because someday they’re going to default on their promises. There’s no doubt they will default on their promises or they’ll just keep printing money, and the money that they pay to these people who have these claims will be worth very, very little, because in reality the economies can’t afford it.

- Eric Sprott via Ask the Expert

Global and US Economic Recovery & Weakness in the European Commercial Banking System

Eric Sprott shares his views on global and US economic recovery, weakness in the European Commercial banking system, and action in the precious metals market.

GoldSeek Radio: Eric Sprott, James Turk, Dr. Stephen Leeb

Billionaire-entrepreneur and founder of Sprott Asset Management, CEO Eric Sprott says the official economic numbers are bogus; most people realize they are paying more for life's necessities than reported. Even after spending trillions of taxpayer dollars, the Fed has accomplished little other than put the US further into debtor's prison. Last week, the EU put savings accounts with over 100,000 Euros at risk of confiscation - Eric Sprott says that investors across the pond should be bracing for something similar, unless of course savings are held in physical bullion, coins and bars. But tarry not, according to his research physical demand for gold exceeds global mining output; one nation (China) is consuming all of the gold produced in the entire Western world. Bank trading desks combine their financial clout with the leverage facilitated by paper contracts to manipulate the precious metals markets with impunity. He shares a recent headline story of a homeowner who found a container of gold coins in the backyard worth $30,000 when buried, now worth $10 million, illustrating the safe haven qualities of the yellow metal.

You Get Nothing for Having Your Money in the Bank

If there’s no ability to pay back debt, then these very, very leveraged banks suffer catastrophic losses, because it takes so little decline in asset value the way that their capital. We’ve already seen a number of instances – we have the one in Portugal, I think we had one in Bulgaria, and there’s talk of some banks in Austria being in trouble – because of all the economic weakness that prevails pretty well throughout the world here.

So that’s why I keep looking at economics to affect the banking industry. Then people realize that you get nothing for having your money in a bank and when you put your money in a bank you’re a creditor.

- Eric Sprott via Ask the Expert

Manipulation in the COMEX and LBMA

I don’t really think you need a fix, quite frankly. Most of these markets are 24-hour markets. I mean somebody might argue that you need it for pricing at a specific time for some contracts that are out there, but I suppose one could just say, “Well here’s where silver was trading, let’s say 10:00 a.m. London time this day, and make that the price for contracts to settle.”

But, there seems to be no doubt that the LBMA fix was fixed, and of course we’ve seen examples of manipulation where Barclay’s was fined, I think it was 40-odd million dollars, for manipulating the price back in 2013. As I’ve said before, you see these weird trades on COMEX when options expire. I mean it’s a game that the boys with the money can play and move things around.

I wish they would’ve disbanded the fix, well, they have disbanded the fix, particularly when it manifested itself, because they had five traders sitting on the phone for five minutes deciding where things would go, and of course, in the meantime, they are placing orders to make their books look more attractive to them and/or participating in the market before the fix was made.

So there’s no doubt that it’s outdated. It shouldn’t be used and will not be used, but the fact that we’ve got the CME back in there is somewhat distressing to most of us precious metals holders who want to deal on the physical market.

- Eric Sprott via Ask the Expert

The COMEX Data is Corrupted

I might argue that the COMEX data is tainted, that they’ll just say whatever they want to say.

In fact, I find it very interesting that there was a lawsuit just filed against the CME and one of their principals for facilitating high-frequency trading in the CME – Chicago Mercantile Exchange, and giving priority to certain high frequency traders. The suit was just filed, I think, yesterday, Thursday, or maybe on Wednesday. It’s probably available to the public. I haven’t specifically looked at it yet.

I just think that the COMEX data is corrupted. It’s very hard to make any sense of it all. The fact that there’s no deliveries from the dealers is incredible. You’d think there’d be some change in the inventory. I don’t care whether it’s up or down, but at least you’d think there’d be some change.

- Eric Sprott via Ask the Expert

Turmoil in Ukraine, Iraq, Israel, Palestine & US Recovery

With MH17 being shot down in Ukraine yesterday, geopolitical unrest is widespread around the world. Janet Yellen also testified before the Senate Banking, Housing and Urban Affairs Committee about US economic recovery this week. How does all these affect the gold and silver markets? Listen to what Eric Sprott has to say.

Lots of Investigations into the Manipulation of the Gold Market

I think the central banks are a part of it. There’s no doubt about that. There’s a great book written by Dimitri Speck called ‘The Gold Cartel.’ And he indicated that gold manipulation started on August 5th, 1993, basically led by central banks for the purpose of maintaining credibility of their currencies. They had this theory that if they keep gold down no one will be concerned about owning fiat money.

But I think laterally it’s the manipulation has obviously been amongst the commercial banks. I think they figured out that with their very deep pockets that they can kind of overrun the natural buyers of paper gold and force the price to do what they wanted. And I’ve discussed many times I think they play this game in the options market where they cause their customers who are long options to lose the premiums constantly, and every option expiry the price of gold goes down. So I think it’s transferred itself over to the commercial banks.

Luckily, we have a number of investigations going on, whether it’s in Britain, or Germany, not so much the US. But there’s lots of investigations into manipulation of the gold market.

So today I think it’s a combination of both the central banks and the commercial banks perhaps working in cahoots. Because let’s face it, the central banks by their zero interest rate policy and printing of money have kept the banking industry in a profitable position much to the detriment, of course, of the public and savers, because you can’t get any return on your money any more.

- Eric Sprott via a recent Ask The Expert interview

US Economic Data & Weakness in Gold and Silver Options Expiry

Eric Sprott shares his thoughts on the upcoming gold and silver options expiry, US housing starts data, and recently released Indian silver data. Listen to Eric's perspective on how these issues will unfold in the future.

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:

http://www.sprottmoney.com/news/ask-the-expert-eric-sprott-july-2014