Sprott's Rick Rule tells Silver Doctors if precious metals reverted to their three-decade mean as a percentage of total U.S. investments, demand would quadruple.
Almost every asset class has been rising. Over the last month, gold and silver have been playing "catchup," Rule says. The size of the precious metal market is tiny right now in comparison to other asset classes.
Rule reveals that if precious metals reverted to their three-decade mean as a percentage of total U.S. investments, demand would quadruple. U.S. Treasury Bonds are seen as one of the safest place to put money. However, Rule says inflation makes U.S. Treasuries depreciating assets.
Gold will do well this year but is not on a verge of a breakout, says Rick Rule, CEO of Sprott U.S. Holdings.
“Confidence in too many things is too high,” Rule told Kitco News on the sidelines of the Vancouver Resource Investment Conference, “gold does well when people are afraid of other stuff.”
Rule is more upbeat on gold miners, despite miners having lagged physical gold last year. “Gold miners are going to surprise, particularly because of low expectations,” Rule said.
After an interesting week with lots of major changes going on, Eric Sprott feels optimistic. "Last week's report was stunningly positive for the future of silver and gold," he says, making it easy to imagine "a period time when the prices keep rising."
At the same time, Bitcoin suffered a dramatic loss following CME's launch of Bitcoin Futures Trading - a reversal of fortune that doesn't surprise Eric in the least.
"All of these things are just in huge declines today…I've never really been a believer in Bitcoin, that it stood for anything other than: I can understand people not wanting fiat currencies. I can understand people not wanting to deal with banks. I can understand people trying to hide things from the government. But look at the appreciation that happened. And you gotta wonder, it's a 'greater fool' thing, right?
Somebody has to buy this thing from you. And if that other person stops buying it, it's over. There's a lot of people suggesting this could go down to a very, very, very low level, and bringing it back, one of the things that will happen, people will realize that gold and silver are real things - when you buy them, you have a coin. You have something tangible that's not about to disappear. So I think that could be the real benefit from the demise of cryptocurrencies, if you will. I'm not wishing their demise, but I'm not a participant in the cryptocurrencies."
It's a serious correction that looks like a bear market to Eric, and he hopes someone who wants to avoid fiat currencies and government interference looks at markets closer to his, hear. "If any of this money could come into the silver market - wow! Could it ever be dramatic."
In the final weekly wrap-up for 2017, Eric Sprott talks the top stories of the year and makes his predictions for the New Year ahead.
The good news? Gold is up almost 13% - the best since 2010. "It's been a pretty steady, consistent kind of rise here, it's like something has changed in the market," Eric says.
Comparatively, "you saw what happened with cryptocurrencies - the degree to which they've exploded. We've seen nothing in gold and silver… There's lot of reasons to think more and more people are going to come into this market." Eric adds, "these are usable items that will always have value."
Get Eric's full thoughts on:
• How the new U.S. Tax Bill will affect the dollar and bond markets
• Political uncertainty and how it will affect the precious metals markets
Going into 2018, we are already see strong demand and a nice price movements in the precious metals space. Meanwhile, Bitcoin has suffered a huge setback, after experiencing massive gains throughout 2017. Now, what comes next? - Video Source
Lows in gold, Comex curiosities - it's been an interesting week for precious metals. Whether or not there will be a rally in 2018 remains to be seen, but if history is anything to go by, there just may be a lift in the market as we turn the calendar to the new year. Eric Sprott thinks so, too.
"It's been a pretty good week so far," he says. "It's interesting and sort of sickening in a way that the commercial banks, who were shorting gold and silver, can use these Fed meetings as an excuse to knock gold down to raise rates.
That's their cover, right? That's their cover for their illegal trading activities, the minute the shorts knock the prices down and the Fed raises rates, up she goes. What a massive turnaround in as little as two weeks."
Eric Sprott discusses the recent price action of both gold and silver and the price movements he sees coming throughout the year. Will gold be the winner, or will it be Bitcoin once again?
Luke speaks with the legendary Canadian Gold Bull, Mr. Eric Sprott on his view on the gold market, distinguishing between the paper market and the physical market and the current market dynamics. Eric concludes the interview by sharing his advice for both new investors interested in Gold and experienced investors alike.
Rick feels the market needed time to consolidate the gains from 2016 and this was accomplished in 2017. Many mining companies were able to put in strong corporate performance and generate cash relative to the gold price.
Gold did better in the face of a strong U.S. dollar than many believed and has outperformed the gold equities. This coupled with good corporate performance, and low expectations will likely lead equities higher in 2018. Rick has just returned from meetings with a lot of retail and large institutional investors from around the world.
There is a lot of smart money waiting on the sidelines. Rick says, “Perhaps I am an incurable optimist, but it feels not too hot, not too cold, just right.” Rick doesn’t see the negative attitudes towards mining stocks since he begins with this basic assumption: “If there are a thousand mining companies in Canada, eight hundred of them will return to their intrinsic value which is zero.
If you buy the sector, you will go broke.” He would argue that the better juniors are still selling at a good value. You make money buying individual stocks, and you should start with the best of the best juniors. He expects that from a speculative position the uranium equities will perform well due to the supply cuts and because 2017 used up the sellers.
He feels the rally will be short lived because companies will issue shares to stay afloat. The cutbacks are good news as they were not due to market manipulation but the economic realization that they were losing cash with every pound produced.
These two companies realized that they could likely sell their resource base for $60 a pound in a few years.
With metals up and down, it can be easy to think that the market won't rise. However, Eric Sprott talks gold and silver, the COMEX, and the potential for a rally in 2018.
The global precious metals demand is through the roof, Eric says. "There's a serious misallocation of physical gold and silver," he says. "This is not a little bit [of silver]. This will be interesting for us to study this whole play that's going on and the movement of the physical delivery."
And what about Bitcoin? "Most Bitcoin people don't know how bad [Bitcoin futures] would be," Eric says. "The reason [Bitcoin can rally] is it's essentially a closed loop."
Canadian billionaire investor and gold bull Eric Sprott says the Pilbara conglomerate gold story could provide a huge economic boost for WA.
Talking from Melbourne yesterday, where he is a keynote speaker at the Precious Metals Investment Symposium, the 73-year-old chairman of Kirkland Lake Gold confirmed to WestBusiness that he was a believer in the story, which he described as already being 90 per cent proved.
The discovery of watermelon seed-shaped nuggets, talk of conglomerate-hosted gold and comparisons with the massive Witwatersrand gold basin in South Africa has sent the share prices of several Australian Securities Exchange-listed Pilbara explorers soaring recently.
But it is the Sprott-backed, Toronto-listed Novo Resources which has led the charge by securing vast tracts of land in the Pilbara (12,000sqkm) and striking a joint venture with the ASX-listed, David Lenigas-chaired Artemis Resources over the Purdy’s Reward prospect south of Karratha.
Novo’s shares have soared from C82¢ at the beginning of July to a high of $C8.55 earlier this month, giving it a market capitalisation of more than $C1.2 billion.
Artemis shares have surged from 8¢ to more than 50¢ over the same period, giving it a value of more than $250 million.
Having visited the Pilbara recently and used a metal detector to find nuggets, Mr Sprott said he believed the region could host a gold resource of the same scale as Witwatersrand, from which more than a third of the world’s gold has been mined.
“We know conglomerate rock exists over a wide area of the Pilbara and we’ve discovered gold nuggets unlike any other nuggets in the world,” he said.
“We now need drilling and assays to test the grade and thickness of the mineralisation.
“It’s not yet conclusive but it’s looking good.”
The former Merrill Lynch analyst said large-scale gold mining in the Pilbara would be a big economic boon for WA.
“It would create huge opportunities. Wouldn’t we all want this type of thing in our backyard,” he said.
Besides Novo, Mr Sprott also recently made $5 million investments in Pilbara explorers De Grey Mining and Kairos Minerals, but signalled it was unlikely he would make further plays.
“I think the time for a steal is finished, unless there are other data points that emerge,” he said. He also conceded that he stood to “lose a lot of money” if drilling failed to reveal economic gold mineralisation in the Pilbara.
Mr Sprott’s comments came as Kairos enjoyed a 20 per cent share price rise yesterday after announcing it had identified prospective conglomerates at its Croydon project south-west of Port Hedland as well as discovering visible gold from panning.
Meanwhile, shares in West Wits Mining jumped 16 per cent after it said it was close to finalising the acquisition of the 224sqkm Mt Cecelia project in the East Pilbara, which it believes is prospective for conglomerate-hosted gold.
Eric says the physical market is tight already, and if smart crypto holders move into gold & silver, the market could blow…
“More of the same” – that seems to be the refrain for precious metals this year, according to Eric Sprott. It’s been tough, and gold and silver bugs may be feeling a bit low this holiday season. But, says Eric, a renewed rally in 2018 may be possible.
“We’ve never seemed to be able to get that large short position down,” says Eric. “It just shows they [Central Banks] have control of the market. Whatever their purpose is, they get there. Once they can cover this, we probably will find a creative low, here. It’s been tough.”
But, Eric says, there may be hope. “We may have lost all our game, but we have things that will happen here shortly that I think will change things rather quickly.”
Bitcoin’s massive capital rush just may be positive for a rush into precious metals – and Eric definitely believes physical commodities will be affected by Bitcoin and other cryptocurrencies. “When people cash out their Bitcoins, where are they going to put their money? Some people will be selling here and look for a place to put it – it won’t take much for things to move around in the precious metals markets [as a result].”
As always when it comes to speculating, anything can blow up – the key is to keep your ear to the ground and remain patient.
