Bring It On... Eric Sprott On The FOMC Rate Hike

Another week behind us, and Eric Sprott returns from the field to help us interpret it. In this edition of the wrap-up, you'll hear:

The macro fundamentals moving people towards gold.

What you should pay attention to in the mining sector (hint: it's not the news releases).

Plus: Eric's predictions for a volatile week ahead.

"My first thought is: OK, bring it on, baby! Let's have that rate increase. Let's get it over with here. Because typically, I don't think the Fed really could possibly read things as bullish as it might have started the year off thinking. Because it's really not quite coming together. Housing's weak, auto's week, retail sales are nothing special, you've got inflation affecting lots of areas... We have lots of reason for the Fed to be expressing concern. So, fine... Let's bring it on, let's see what happens. And I'm pretty certain that gold and silver will survive yet another rate increase. And prosper, quite frankly."

- Source, Seeking Alpha

Summer Rally? Gold and Silver To Prosper After Yet Another Fed Rate Hike

Despite another Federal Reserve rate hike already priced in for Wednesday, the U.S. central bank has “lots of reason” to be concerned, said billionaire precious metals investor and founder of Sprott Inc Eric Sprott, adding that gold and silver will “prosper” following the very likely hike.

We could possibly be looking at a summer rally here, according to Sprott, who told the Fed “to bring on” the likely rate hike.

“Let’s have that rate increase. Let’s get it over with, here. Because, typically, I don’t think the Fed really could possibly read things as bullish as they might have started the year off thinking. Because it’s really not quite coming together,” he said in a Sprott Money’s Weekly Wrap-Up on Friday. “Housing’s weak, auto’s week, retail sales are nothing special, you’ve got inflation affecting lots of areas… We have lots of reason for the Fed to be expressing concern.”

The Fed language will be key to pay attention to during Wednesday’s announcement, founder of Sprott added.

“I’m pretty certain that gold and silver will survive yet another rate increase. And prosper, quite frankly,” he said.

Latest historical trend is also on Sprott’s side as gold has rallied between 10-30% during the last five out of six Fed rate hikes.

The macro fundamentals are also working in favor of the precious metals, which could support prices going forward, Sprott pointed out.

“The macro fundamentals going on in the world that might also cause people to go to gold. For example, if you are Brazilian and your currency is falling 5% in a week, maybe you’d be better off owning gold. Things going on in [Turkey and Italy] are becoming potentially upsetting for Europe,” he said. “More and more exports data are suggesting that the world economy is slowing down, which would cause rates not to be continually pushed up.”

Out of the precious metals, silver was a big winner recently, gaining about 1.85% during the last 30 days and moving up above its 50-day moving average. Silver also had over 220,000 contracts of Comex Open Interest, which totaled about 1.1 billion ounces, according to Sprott.

July Comex silver was last trading at $16.74, down 0.44% on the day, while August Comex gold futures were at $1,302.70, down 0.02% on the day.

- Source, Kitco News

Eric Sprott: The ongoing chaos in European markets

Eric Sprott: This Is When Gold Will Begin its Climb

Eric agrees that the average gold investor likely feels rather depressed. However, behind the scenes, there is a lot of activity. Kirkland was up 150% last year, and Novo has good performance. He feels we are still in the beginnings of a bull market for several reasons. 

Real economic recovery is lacking as low-interest rates and money printing continues. The second half of 2018 should be better than the first. Commodity prices are looking good across many assets like copper, lead, and zinc. Many exciting things are going on in the commodity space. 

Lithium, nickel, and vanadium are all also doing quite well. Much of the speculative investment in cryptocurrencies has now moved away from that sector. A decline in the economy and stock market could happen soon. Those two things will be critical to watch as a drop should get people thinking about gold and silver. Eric likes the recent bulk sample results from Novo Resources. 

Marindi metals have found fine gold and recently nuggets. Marindi feels that the basin-wide theory is correct and that could mean a 250km by 250km with the potential for multiples of tens of millions of ounces. 

Kirkland is doing very well regarding earnings and their stock still seems cheap compared to other companies. He discusses the mines and production details that they are working on. It takes work to find the opportunities, and you have to be on the hunt for them. 

Your fortunes can change quickly in the natural resource sector. When things turn good, the stock prices often change fast. If you don’t have time to look, you need to invest with someone that can do that for you.

- Source, Palisade Radio

Eric Sprott Talks About The Chaos In European Markets And The Volatile World

“The week has been—I would just say from a normal understanding of economics and financial situations—rather chaotic, to say the least… It must be confusing for the average viewer to try and figure out what’s going on here. Sometimes I suspect that we’re only told half of the information. And we’re told in a very biased way.”

- Source, Eric Sprott

When Interest Rates Go Up, Gold Doesn’t: It’s Totally Fallacious

The argument that when interest rates go up, gold goes down is a “totally fallacious” one, said Eric Sprott, billionaire precious metals investor and founder of Sprott Inc.

“I don't believe the argument, but it's an argument that's made … Interest rates go up, gold doesn't go up, it's totally fallacious. But you get it in the markets,” Sprott said during Sprott Money’s Weekly Wrap-Up on Friday.

What’s actually next in store for gold prices will be determined by how investors react to future financial conditions in the U.S. as the Federal Reserve proceeds to tighten its monetary policy, according to Sprott.

And a good sign for the yellow metal is that the economy might not be ready for higher interest rates, he noted.

“What is the market going to do as the Fed literally tightens? Other things are going to go down, car sales are going down. It's getting tougher for the average American,” Sprott said. “In one state they're raising [Obama care premiums] 64%, in another one, 98%. Who could afford this stuff? We say there's no inflation. I mean that’s a 60% rise, if you already spend 17% of your salary on healthcare, that would be an increase in your inflation index of 6% for the year.”

What worries Sprott is how the markets will react when these risks materialize. And the likely scenario for the billionaire investor is the Fed pausing its tightening cycle, which will benefit gold.

“I found it very, very instructive that the UK passed on raising rates … And the Fed may, in fact, have to pause here somewhere along the line because [the economy is] not nearly as strong as we're all thinking it is,” Sprott said.

The American central bank might at the end of the day say: “Well, you know, if the numbers aren't looking that good, we're not raising,” according to Sprott. “And it could be that that's ultimately what happens with the Fed. And, of course, that would take away one of the arguments for gold not going up.”

According to the CME Fed Watch Tool, there could still be three more rate hikes coming this year.

On Monday, Cleveland Fed President Loretta Mester also expressed her support for gradual rate increases.

“In my view, the medium-run outlook supports the continued gradual removal of policy accommodation; it seems the best strategy for balancing the risks to both of our policy goals and avoiding a build-up of financial stability risks,” Mester said in prepared remarks for a speech in Paris. “We want to give inflation time to move back to goal ... this argues against a steep path.”

Earlier this month, the Fed kept interest rates unchanged within a range between 1.50% and 1.75%, while also making cautious comments regarding inflation pressures.

- Source, Kitco News

Pension Funds Are Losing Money, A Disaster in the Making

"The pension crisis is not going away. Of course, you start raising rates and it puts an even greater stress on pensions. You know, pensions own bonds-we're in a bear market in bonds! They're losing money. 

In fact, there's a chart you can see every day that shows the net gain of stocks and bonds together. And so far this year, I think it's probably zero-if not negative-the combined total of stock market gains and bond market losses. So these pension funds that were underfunded… now they're not even making any money!"

- Source, Eric Sprott

When The Currency Starts Going You Want To Be Long Gold & Silver

“I’m a bear on the economy. We have a jobs number today that’s classified as weak. We have soft data that’s weak. We have hard data that’s weak. Logic says Flyover America is having a tough time. So, those all would argue for lower rates. 

You have a Fed that, of course, could change their mind quickly if the market continues to weaken here. The only thing arguing for higher rates, of course, is just the sheer inability of the U.S. government to fund itself, because of the excessive demands from a cash perspective.”

- Source, Silver Doctors

It’s Not Difficult To Understand Why Gold Could Break-Out And Rally $1000 From Here

“We don’t have the economic strength that everyone is suggesting that we have. Even 2% growth is pretty paltry here … A lot of it is because of government spending money that they don’t have. Which helps GDP, by the way. 

But sooner or later, if you’re spending money you don’t have, you’re not going to be able to spend it the next time, because you truly don’t have it. And the bond market’s going to make you pay for the money, and then you’ll come to your senses and stop spending. 

So I think… we’re all going to find out that the rising market was built on false premises.”

- Source, Sprott

Eric Sprott: “I Can See There’s A Bit Of A Tightness Showing Up In All Of The Metals”

Eric says if the longs decide they would rather have their metal, things could erupt because the shorts have sold metal that doesn’t even exist. Here’s an update…

Eric Sprott interviewed by Craig Hemke on The Weekly Wrap-Up

It’s been another week of rising inflation and interest rates, but the commodities markets look good, with silver in particular poised for a breakout.

This week, Eric tells you:

• What a possible short squeeze means for you
• Why you should be watching the bond market right now
• And why India might be the next big buyer of gold

“It’s not just the net short position that is important. It’s: What if a Long says to a guy who’s short, ‘I’d like my silver?’ ‘I’d like my metal?’ We have over a billion ounces of short metal in silver. What if the Long simply says, ‘I can see there’s a bit of tightness showing up here in these various metals… maybe I’ll take delivery, thank you very much.’ Of course, as we know, the seller of the silver and/or gold doesn’t have the metals. So, yeah, there’s a very distinct possibility that this could erupt as people are getting more distressed… There are lots of smart guys that worry about the system crashing.”

- Source, Sprott Money

Gold’s 2% Spike Was Too Much For The Cartel To Allow So They Smashed Gold Back Down

Eric says it’s very frustrating day in and day out to witness the blatant manipulation, but in the long run, owning gold & silver will pay off. Here’s why…

Eric Sprott interviewed by Craig Hemke on The Weekly Wrap Up

It’s Friday the 13th, and after an almost perfect week, things are looking bumpy again. Eric stops by to calm our frazzled nerves on this, the unluckiest day.

In this chat you’ll hear:

• Why you shouldn’t rely on fiat currencies
• Eric’s thoughts on price suppression in the precious metals space
• His top picks for mining companies to look into

“We are seeing people throughout the world buying more physical gold… The logic for that is getting stronger all the time. We have a stock market that’s getting very jittery here, we have a bond market that’s in a bear market, we have inflation rising, we have craziness going on in various currencies… How many people does it take watching their currencies being that volatile before you say, ‘Give me something little more secure?’

- Source, Sprott Money

Rick Rule: Bond Bull is OVER