Sprott Precious Metals Round Table

The Fed taper. Turmoil in the Middle East. 

Selloff in Emerging Markets. 

What does it all mean for precious metals?

To find out, join our webcast on September 24, 2013 for a round table discussion with Eric Sprott, Marc Faber, Rick Rule and John Embry.

You can register for this round table by clicking here.

Gold Could be $5000 to $10000

I'm only looking at 1 year in this conversation, but 4 years from now you could be somewhere in the $5,000 to $10,000 range with the amount of printing and debasement that’s going on.
And of course this financial situation that all of these governments find themselves in -- they are essentially broke. And if governments are broke, then you don’t want to have your money in a bank. So you've got to put it in gold. You could imagine where you get this tidal wave of interest in gold, which we already have by the way -- certainly in China and India. I can (also) sense that there are a lot of people refocusing on gold and silver today, which is manifesting itself in the prices. 

So it’s not too hard to imagine there could be a situation where there is a great run on gold. I've said many times that I think there is a shortage of gold, and there has been a shortage of gold for a long time. This got particularly acute late last year and early this year, which I think is what caused the raid. Of course it (the raid on gold) totally backfired as demand just sky-rocketed.

- Source, Eric Sprott via King World News:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/8/25_Eric_Sprott__This_Will_Shock_Investors_%26_Send_Gold_Skyrocketing.html

A Return to Fundamentals

Daily paper volumes are many times larger than annual mine production. I believe that the return to fundamentals driving gold prices will be triggered by a shortage of physical gold and ultimately, a failure to deliver. We already see signs of physical gold shortages, as evidenced by the negative Gold Forward Offered Rates (GOFO) rates, record low physical inventories and backwardation in the futures market.

- Source, Eric Sprott via the Globe Investor:

http://www.theglobeandmail.com/globe-investor/inside-the-market/qa-eric-sprott-on-gold-and-why-its-heading-to-2400-in-1-year/article13765335/

Smoke and Mirrors

It was smoke and mirrors since day one. In fact, in the back of my mind, I suspect they might even have used the taper talk as a reason to hammer gold. Of course, they didn't realize that interest rates would go up. When Dr. Bernanke was asked that at one of the latest hearings, he said he was very puzzled by interest rates going up. This is the Chairman of the Federal Reserve Bank, puzzled by rates going up. That seems like an incongruous kind of situation that he’d be puzzled.

But I think he scared the hell out of people, because everyone was assuming they’d just print, print, print. The minute they said they may not print, of course, who’s the biggest loser out of it all? Gold. I think it was meant as part of the whole policy of keeping gold under control, which I think is a major problem that these central banks have in gold today. That’s why it was part of the process of getting the price of gold down.

- Source:

Sprott Money Ask the Expert

Patience Will be Rewarded

I have always believed that I am right and that markets are wrong, but throughout the years, I have had to endure situations like this. It happened in 1998 and 2008, but my funds have always rebounded. In due course, the markets will realize their failure. After this short pause, the gold bull market will continue and those that have been patient will be rewarded.

- Source, The Globe Investor:

http://www.theglobeandmail.com/globe-investor/inside-the-market/qa-eric-sprott-on-gold-and-why-its-heading-to-2400-in-1-year/article13765335/

Economic Data is Very Punk These Days

I don’t see the taper happening. The minute he mentioned taper and it was this negative reaction in the bond market, negative reaction to stock market, as you and your listeners would know there was recant after recant the next day. “Oh, well, people misunderstood Dr. Bernanke. He didn't really say that,” and of course, subsequently he said, “Well, you know, we could taper. We could also increase buying of bonds depending on the economical data.”

In my mind, the economic data is very punk these days. I mean, retail sales were up 0.2 percent last month. They were up 0.1 percent the month before. The labor numbers were awful for the last month. Not only did we not have many jobs, the average hourly earnings went down. The average work week went down.

It was one of the most brutal reports I've ever seen in my life. My own analysis of what’s going on is we have created a situation in the States where we’re replacing full time employees with part-time employees, and pretending that it’s a job gain. But the reality is that the total income of workers is not going up at all. So, I don’t see taper happening.

If they did taper, I think we've seen the worst in gold from the taper talk. Now, gold’s going to live its own life here, based on other fundamentals that are going on. Then, of course, you and I can talk about those fundamentals. So, I think it’s going to have its own determination based on things other than taper talk, or buying extra, fewer than 10 billion bonds in a month.

I don’t see that as having any impact. I think the biggest impact might be if they actually tapered. They said they were going to do it, that rates might just keep going up here, and, of course, that would be an awful economic development for everyone. The stock markets would come under pressure, and the bond market, of course, would come under even more pressure than the crash that we've already had in the bond market.

- Source: Sprott Money Ask the Expert

Money Printing Can Hide Financial Problems for a While

I think that the Fed will remain accommodative for a very long period of time. However, the official debt is only the tip of the iceberg and, as we discussed in the most recent Markets at a Glance, longer-term benefits such as social security and medical care will have to be cut as well. The promises made by governments are too generous and cannot be kept. Not just for the average Joe but for everyone, I think we should expect less from the government and prepare to fend more for ourselves. Money printing can hide financial problems for a while, but it can’t provide tangible services to citizens.

- Source, The Globe and Mail:

http://www.theglobeandmail.com/globe-investor/inside-the-market/qa-eric-sprott-on-gold-and-why-its-heading-to-2400-in-1-year/article13765335/

Many More Detroit's Coming!

I had the great honour of interviewing Eric Sprott in our latest episode of Ask the Expert. Eric Sprott is Chairman of Sprott Money Ltd. Additionally, he is CEO, CIO and Senior Portfolio Manager of Sprott Asset Management LP and Chairman of Sprott Inc. Eric has accumulated over 40 years of experience in the investment industry and has earned a recognized standing not only as one of the world’s premier gold and silver investors, but also as an expert in the precious metals industry.

During the course of this interview we were able to delve into some of the most important topics currently afflicting the precious metals market. Shown below are a sample of the questions I was able to ask Eric Sprott:

• Do you see a possibility of the Fed tapering? If the Fed does taper, how will this affect the price of gold? How will it affect interest rates?

• Do you foresee many more Detroits coming in the future?

• In the gold and silver community, there’s a vicious attack that began in April. Do you believe this was a coordinated effort by central banks to stop the flow of gold? Do Western central banks have the gold they claim to have?

• When the next big correction occurs, what do you see in store for Canada? Do you see Canada being dragged down with the rest of the western world, or do you see Canada weathering the storm?

• Do you believe that the worst is behind us? Do you believe gold and silver have begun the next leg up in this bull market?

As you will learn throughout the course of this interview, Eric believes that the worst is behind us. The central banks have fired their shots and failed. The FED can’t taper according to Eric. They have no choice but to keep printing. The question is, how long can they keep this house of cards together?

- Source, Sprott Money:

http://sprottmoneyblog.com/ask-the-expert-eric-sprott-a-new-bull-market/

Explosive Gains in Junior Gold Miners

Billionaire Eric Sprott, the chairman of Sprott Asset Management, not only thinks the gold bull market is far from being over, but also says he expects to see junior gold mining stocks “higher by many hundreds of per cents,” soon.

Answering to Globe and Mail readers’ questions, the famed gold bug reiterated he thinks the market hit rock bottom on June 28th and that the price for the precious metal will be around $2,400 per ounce by mid-2014.

He added there is strong evidence that Central Banks worldwide have covertly conspired with bullion banks to sell their gold in the market.

- Source, Mining.com

Continuation of the Gold Bull Market

The continuation of the gold bull market will lead the junior gold mining stocks higher by many hundreds of per cents, just like it did during the 2008 recovery. By the way, since hitting the bottom on June 28, gold has rebounded by 12 per cent while gold miners have gone up by about 25 per cent.

- Source, The Globe Investor:

http://www.theglobeandmail.com/globe-investor/inside-the-market/qa-eric-sprott-on-gold-and-why-its-heading-to-2400-in-1-year/article13765335/

Gold Should Double

I firmly believe that we reached the bottom on June 28th and that gold should double from that bottom within the next 12 months. So by next summer, I think that the price of gold will have made new highs and stand around $2,400 per ounce.

- Source, The Globe and Mail:

http://www.theglobeandmail.com/globe-investor/inside-the-market/qa-eric-sprott-on-gold-and-why-its-heading-to-2400-in-1-year/article13765335/

We Are All Detroit

Unfortunately if you think Detroit is an aberration, Eric Sprott is out to prove you wrong. A recent survey found that state and municipal pension plans were underfunded to the tune of one trillion dollars. Makes Detroit seem rather insignificant when you start throwing around the word trillion.

Sprott focuses on a report done by Boston University Professor Laurence Kotlikoff. He says to fix the funding shortfall in Social Security alone, the US would have to raise the FICA tax by 32% to 16.4% or slash benefits by 22%. Good luck getting either of those through Congress.

As for the Federal Budget as a whole, the professor says we are operating at a $222 trillion shortfall according to Sprott. To wipe it out, we would have to increase taxes by 64% or slash all expenditures by 40%.

Sprott concludes with the simple statement. We live in an age of a demographic time bomb. Every level government has promised too much and is now faced with the dilemma of how to walk back those promises.

What remains at the heart of the issue for Eric Sprott, is how much pain we will have to endure? Eventually the system will have to be fixed. Either we can endure a short term pain now, are a long hard slog later. Sprott concludes with this: “Over time, politicians from all stripes have proven adept at cognitive dissonance, but these increases in taxes and cuts to benefits will have to happen, one way or another; it is just a matter of time.”

- Source, Trade the News Room:

http://www.tradethenewsroom.com/eric-sprott-and-the-possible-detroit-template-2607