Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Eric Sprott told Silver Doctors that he sees no reason for precious metals’ to be priced so low with the current global economic weakness.
“All of the data speaks to huge volumes of physical gold being consumed, way beyond the ability of the miners to provide that gold, which makes me think the central banks are continuing to lease or to supply the gold into the market somehow,” said Sprott.
He says China bought 100 tons in April, Kazakhstan is lifting reserves from 12% to 15%, and Turkey and Iran are both buying.
“Of course gold and particularly silver being in such short supply will be massive beneficiaries when all of a sudden people realize that there’s not as much gold around as people think. Of course the silver supply would disappear in a nanosecond because it’s a very small amount of money.”
Sprott says the US, Japan and UK are all deeply in debt. Europe is most worrying. On a trip to the EU, Sprott was discussing the size of potential bank runs.
“I was sitting there and I asked someone, how many mortgages do they have? And they said, they have about a trillion. I told them, well the hole will be about $400 billion then because I’m sure all those things are 40% underwater!”
Sprott argues that the banking sector in Europe is way bigger than the countries and due to the massive deficits each country is running, there will be no way for the countries to bail out the banks.
“It’s a mess, everyone’s behind the curve, and I don’t think they’ll get in front of the curve quite frankly. Extending and pretending, program after program, and when the program ends, the markets always go down.”
Image of Eric Sprott speaking at Casey Research/Sprott Summit When Money Dies
11 Comments
Rockpicker1
Sure glad I have my own silver mine.
Rudi Gerber
Start buying Silver & Gold bars and – medallions. Should the currencies crumble and the next recession starts, these coins and bars should get you through a recession as it would be able to do trading in an international arena.
Initially I started buying jewelry, but a big component of the price tag is the manufacturing value. No, rather start buying medallions / coins (because those little ones are within reach of the masses) and then you expand by buying silver bars and gold bars as investments.
Enterprises could also enhance their balance statements with gold bars (as long / medium term investments) and gold coins (as current assets). Then you win both ways with the tax man.
Lummax73
I propose we use the ‘egg’ standard. One egg will buy you one tomato, a box of tomotoes, will buy you a tin of caviar. One box of caviar will buy you a barrel of oil.
Metals can then be priced in the same way. There will be no short selling, no derivatives that essentially turn the market place into a casino.
Andy1223
what is the best form of silver to purchase?
Richard
Physical. Silver bars are closer to spot and don’t have as much premium as coins. Just keep buying bit by bit. Don’t focus on cost as much as how many ounces you have. Don’t worry about buying at 30 or 60 when you sell at 250 or more it will become worth it.
Don’t focus on the daily price it will do your head in. If you do decide to buy silver set a date long term say 10 years and then relax. Don’t worry about price as its a volatile market and it will go up and down sometimes very heavily. Focus on your 10 year plan not a monthly one.
The market is highly manipulated but it will correct itself one day soon. If you don’t like the stress don’t invest. If you do enjoy the ride.
Wlr0922
That’s great if you have another 10 years but when that number takes you beyond the expectancy figure it becomes a different ball game, Kinda hit and miss to insure you don’t copme out loser
Jung
As long as general population is in denial I won’t stop stacking gold/silver. Yes it’s rigged and I don’t care. I would rather have physical instead of currency. Should’ve started alot sooner but I was in college getting brainwashed like 95% population. Now I converted most of my currency into physical metals and only keep enough to pay bills every month.
mark
Is Mr. Sprott really so naive he doesn’t understand why precious metals prices are continually hammered down, regardless of supply or market demand? Maybe he’s equally perplexed as to why we’re still paying $3.50 at the pump no matter how many barrels of crude the Saudi’s crank out? The game is rigged, fella. As long as traders are allowed to margin sell equities, oil– or billions of ounces of silver which don’t physically exist– in automated transactions 60,000 times a second, this sort of shill bidding will continue until the entire global Ponzi scheme vaporizes every last bit of wealth right out of your pocket, and Wall Street becomes nothing more than a seedy strip mall littered with pawn shops and check cashing outlets.
For what it’s worth, it’s not the billions in bad mortgages that has thrown a noose around the world’s economy, but the $700 trillion in derivatives and Credit Default Swaps riding on top like the Horsemen of the Apocalypse.
Guest
what happens when currencies break down and when people no longer measure their silver or gold in terms of fiat paper ?
for ex in india the rupee dropped from 44rs a $ to 56 rs a $ in no time, fuel prices shot up 20% overnight and gold touched all time highs in the rupee to 31,000 + rs per 10 grams
they paper vampires will keep winning till people trade paper, once people realize there is no stock available then in my own experience i have seen how prices shoot up even 20% more than spot price for immediate delivery and that will only increase, eventually we will have a separate local price for physical bullion with delivery which will be way higher than the artificial paper markets
Steve3
he knows its rigged-however the rigging will eventually collapse
VegasRage
Mark here in the US the news has done a good job of convincing people precious metals are just commodities. Quite a feat when you consider it was only 41 years ago when the tie was severed. Go ask a few people from China and then India if they think gold or silver is money or a commodity.
As you will discover, they know gold and silver is money. Then consider that 5% of the world population is in the US and that China and India each make up 1/3rd the worlds population alone. The Chinese government is actively encouraging it’s people to buy silver as an investment. Indian’s of course buy gold all the time for weddings and as an investment.
Personally I don’t worry about the price per ounce on a day to day basis. All one needs to do is ask, what has been fixed that will solve the huge fiscal issues which lead to the last crash in 2008? The answer is obvious, nothing. As long as we face the massive imbalances we do, I’ll keep stacking precious metals because their is 5000 years of precedence showing gold and silver is what people return to in times like this.