There Will Be A Reset

Legendary investor and Sprott Asset Management Chairman Eric Sprott explains why he expects a junior resource "renaissance" and how he became successful by "stealing value." He also describes why gold price suppression is doomed to fail, how India could shock the silver market, and mentions three gold juniors in which he's "putting his money where his mouth is."

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Shortages in Gold and Silver Very Quickly

Well, of course you won’t get a rebirth in the stocks unless you get a rebirth in gold and silver. I find it interesting that as we sit here today, though we don’t have the final numbers for the month of July, US mint sales I believe will be up at least 400% year over year.

Gold is dead. But we have a 400% increase in demand.

In the month of July, the US mint stopped silver sales. And ultimately silver sales for July, even though they missed about two or three weeks, I’m going to guess that we’re up at least 100%with two weeks of non-selling.

So you can see that there’s a move afoot here. It’s not just in the US mints or the Canadian mint in Canada, the Perth mint. Even at a company called Sprott Money where we sell coins on the internet, our business was very substantive in July.

So people are coming in to buy. I suspect that as we move into the second half of ’15, the physical demand out of Asia, and particularly India, really gets going. So there are lots of signs that there’s true interest in gold and if the interest in gold comes back, of course the leverage in the stocks is mind-boggling. I mean when the HUI index was last at around 110, the price of gold was probably $400. Today it’s at $1,100.

So you tend to think that there’s a lot of torque here. People actually started to believe that gold was going up. Most people, probably in the market, think gold is going down. So they’re probably pricing maybe $800 in the gold stocks today.

Well, if it ever reversed here, there would be a lot of catching up to do. So that could be very exciting if it were to manifest itself.

I believe that the physical buyers are there. The Russians are buying, the Chinese are buying, and the Indians are buying. People are buying. You would imagine everybody in Europe would be thinking, “OK, we got Greece going on. Is there going to be another one? Where is that other one?” There have been good sales in Europe recently of gold coins and silver coins. So you get enough of a groundswell that we could find out that we have shortages very, very quickly.

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What Are the Banks Assets Worth?

We’re going through the exact same thing in Greece. There has been no bail-in announced yet but if there’s a bail-in announced in a country that’s a little more developed than Cyprus, then in the countries around them who might be in similar situations, maybe then people will start reacting sooner.

I can think of Italy or Portugal or Spain or maybe some of the Eastern European countries. It could catch fire very quickly. I’m not suggesting it will. But when you have people starting to take money out of the banking system -- in terms of deposits --, that’s when we all find out what the assets [of the banks] are worth if they have to sell them.

When you have to sell an asset, it’s nowhere near the worth of some quote in the newspaper or some housing index that somebody says is up five percent this year.

You’re not going to get that market price. Now you have to sell it. The market will adjust to that.

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Gold & Central Banks Manipulation

Eric Sprott - More bullish on Silver than Gold

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.