Eric Sprott, “Investment Opportunity of your Lifetime”
by Travis Johnson, Stock Gumshoe | April 4, 2014 1:15 pm
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Source URL: https://www.stockgumshoe.com/2014/04/eric-sprott-investment-opportunity-of-your-lifetime/
What have you been smoking???
Hi Howard – could you please explain your response? Rather vague and not in keeping with the usual responses I read on the Gumshoe site.
Thanks!
Hi Travis:
I think in this line:
Barrick he thinks is the worst, and if gold goes to $32,000 they earn $2.50, versus 0.71 at $1,300 gold. $3.56 if gold is at $2,400.
Your “$32,000” should be $2000?
Hi, jer_vic
‘Your “$32,000” should be $2000?’ should be:
‘Your “$32,000” should be “$2,000.” ‘
Absolutely.
yep, sorry.
Happy to see that Travis is getting a first hand account from one of the sharpest minds in the precious metals space who has built an incredible company now joined by American Rick Rule considered one of the most successful commodities investors in the world. Also on the team is John Embry whose columns I have been reading in Investors Digest, (a Canadian publication) I have been reading since I started investing back in the 80,s.
Yes Eric Sprott may well be ahead of his time, but better a few years early than a day late, because WHEN the fractional reserve banking system finally breaks down, (it already has been doing so since 1971 when Nixon closed the gold window) a major event in world history will take place overnight or a weekend that will leave those unprepared financially devastated. Eric Sprott did not become a billionaire by following the “establishment” he is a true critical thinking contrarian, a rare breed in our modern world. The Sprott Group of funds offers various opportunities for the retail investor to have professionally managed funds in all the best “safe haven” sectors such as precious metals, agriculture, (see my last 2 columns), PGM’s and other specialty funds.
I don’t get the headline, why is it an investment opportunity of a lifetime when the prices are being manipulated and no one knows where the bankers will take it next? Why would anyone want to invest in a manipulated market hoping that the manipulation is over and that demand will push up the prices? Is Mr. Sprott trying to say something intelligent, or is he just sprotting off about gold because he is in the asset market? There’s another guru out there who has been yammering for years about the manipulation of the silver market by Morgan Stanley or J,P, Morgan, I forget which, and nobody seems to pay attention. It seems the precious metals are always either being manipulated (e.g., Hunt Brothers) or being talked about being manipulated.
Is that your actual email address? I’m not sure that you want that for your user name….
JOHN: Maybe its you that is not paying attention, maybe you need to dig a little deeper to understand the situation that has made Eric Sprott a billionaire and such a strong advocate of precious metals. As an absolute foundational understanding of the issues involved I suggest you read a book called, “The Creature from Jekyll Island’ by G. Edward Griffin which you can google and order on-line. Yes I can understand the skepticism you express in respect to banker control of the market through manipulation of the price, but in spite of that, by playing both sides of the market through the unprecedented rise in precious metals since 2002 hundreds of millionaires have been created among people who have dug deep and gotten the full story you will not hear from establishment media. In general terms, the U.S dollar has lost over 30% in purchasing power this past decade while the gold price has returned 600% plus, so which makes the most sense in which to put your savings?
As a secondary source I, challenge you to listen to every daily interview on KWN (King World News) for at least a week. Maybe you have never heard of the Austrian School of Economics, but if you take up my challenge and have an open mind then I predict you will have to admit that it makes a lot more sense that what the government and banker propaganda is spewing out. Highly accomplished and academically qualified men with literally dozens of millionaires and several billionaires in many different countries HAVE studied the situation for decades and realize it is only a matter of time until the bankers ability to manipulate will be curbed, either by regulatory agencies or mathematical inability to use their current methods. Surely you have heard of the bankers manipulation of “Libor rates” among many other white collar crimes and that class action lawsuits have already been filed. It may take a few years until it all get sorted out, but holders of physical gold and silver will win out in the end. Leverage through low cost miners may fare even better.
Sorry Travis, having a bit of trouble with parts of your column today. Probably not enough coffee on my part. If I may summarize the parts I’m confused about:
1) The over all message is that gold will not continue to be manipulated down, and we should expect to see higher gold prices in the future.
2) Should that happen, highly leveraged companies like Crocodile are potentially better investment opportunities than less leveraged companies like Barrick.
Do I have it correct?
thanks,
Jer
Not my column, these are notes taken on the fly from Eric Sprott’s presentation. But yes, that was part of the gist. Sprott has said much the same for quite a while, he is convinced that the paper manipulation of futures markets will blow up eventually and we’ll resume the tremendous precious metals bull market, which would benefit highly leveraged and more troubled companies much more than it would the big producers.
For the record, I own stock in Crocodile who have 3 mines in production in Australia and several more “near” production. Reading their most recent press release I am convinced they will have a HUGE breakout in their price once market sentiment turns rational again as the U.S. dollar continues its decline, repricing gold that is in high demand.
Barrick on the other hand I would not touch with the proverbial “10 ft. pole” because I have never trusted management, past or present, who have a highly distorted “entitlement mentality” as recently displayed by their paying a $11.Million dollar signing bonus for an executive they think can turn the company around. Contrast that with the famous Rob McEwen who was responsible for building Goldcorp into the great company it became, who now has $25. Million of his own money invested in his new company and takes exactly $1. in salary per year so his interests are 100% aligned with other shareholders. What a contrast in thinking on a management level, (see my next column) where I will profile what I think will be a very successful company long term.
Myron; I think what Sprott meant in re June December comment is those mark end of fiscal year/calendar year when banks reconcile accounts. I greatly value your take on metals & to whom you look for info. In my view as long as gold is priced in dollars I think it reliable indicator of $ worth. Gold value doesn’t change,,, $$ very variable.
Frank: As I am sure you know I have long pointed out that the masses have the cart before the horse, or put another way, that they are looking through the wrong end of the telescope.
What I mean is that the price of gold is not so much going up as the purchasing power of paper currencies, (not just the dollar) is declining, so it takes more of them to buy an oz. of gold silver or PGM’s, a trend that will continue however much the temporary distortions created by the banker/government alliance manipulations fools people who think the present system can restore balance and create wealth. I know you basically said the same thing, but there are millions out there that have still never given it a thought or made any serious attempt to learn the truth about our badly flawed fractional reserve banking system that robs us all blind by legalized counterfeiting.
Sorry, I got the JIST of the notes but couldn’t make sense of the figures. The jist was if gold is rigged sometime in the future it should go up, and the figures didn’t make sense .
The other readers seem to have trouble also. It was as if someone was impaired
Howard this may well be oversimplification,,,,When world realizes that central banks have no reserve of gold it means they (the banks) really have no reserves. Bodes ill for fractional banking,,,, such as Federal Reserve,,,,,,,,which is NOT Federal and has no reserve.
If $$$$ loses status of world reserve currency,,,,,, not good news for USA.
Can I safely assume it’s ok to purchase more SAND. I’ve been a seller so far. I’m not sure “safe” is good word to use when buying gold or silver.
“SAFE” is a relative term, if you buy on dips you should do fine. One thing Travis and I agree on is that the royalty model is probably one of the safest in the market, which is not to say that there will not be ups and downs even there, the difficulty is overcoming emotion and proving the fundamentals and being willing to buy when the majority are fearful.
The problem is that most retail investors are not sophisticated enough to “read the tea leaves” and know WHEN is a good buy point for individual stocks or even sectors. Most end up buying near the top when euphoria really gets them excited about missing out on a rally and then they sell on a correction instead of seizing the opportunity to buy more at a discount price. Most stocks have a discernible channel either slopping upward or downward and buying at the bottom of the established channel and selling at previously established TOPS offers opportunities for excellent profits no matter what the market as a whole is doing. Following the herd usually leads you over a cliff.
I am disturbed about the 800 lb. gorilla sitting in the middle of my living room. I have asked many people how will the manipulation of the market by J.P.Morgan will end? (I refer to shorting the gold market with paper gold and no real gold to back the shorts.) Sprott, Casey, Rule, and Steers simply take as a given that it will happen.
After all, the Federal Reserve and U.S. Government do not want people collecting gold instead of dollars. If gold becomes universally preferred, the U.S.Dollar will be abandoned as the U.S.Carry Trade. Redress through the court systems is not going to happen because of the repercussions that would ensue. The ability to increase dollars dollars and the national debt is unlimited; while the ability to increase the gold supply remains limited. (I am speaking of the metal and not the “paper gold” that is traded on the markets.
No other central monetary authorities want gold preferred to cash as a medium of exchange.
All of these men who profit by our buying gold keep assuring us that the manipulation must end; but, frankly, I can’t imagine the scenario in which it will happen.
Of course currencies would lose their value if there were hyperinflation. (The misery that would ensue with hyperinflation is too awful to contemplate.) But, fortunately, there is no hyperinflation in sight. Meanwhile the world accepts the dollar in the international carry trade, and we American’s benefit greatly by the acceptance.
If someone knows the answer to my question of what will stop the manipulation of the gold price, I would love to know.
Wow – you guy’s want exact dollar figures for market entry and maybe the tooth fairy?
Get the point – where is the physical gold coming from? and how long can gold stay at near all in mining costs?
Great work Travis!
p.s. Have you been following the fact that Germany wants their gold bars back from us and we don’t have them?
The Dollar seems certain to depreciate as there will always be political pressure to print more and have some inflation. But that seems primarily an argument against holding cash.
Perhaps gold is prone to manipulation because it doesn’t actually “do” anything. How can we value it?
I’d rather invest in a mix of companies that will provide a service, develop products or whatever and actively grow
just posting for updates
Roger,
Good question. I would also like to hear that answer but until someone can explain it better, here is my theory.
Those who currently manipulate the price of gold will have that privilege ripped from their grasp by the Chinese in a true “emperor has no clothes” moment. When the time is right the Chinese will use their abundance of fiat US dollars to flood the paper gold market and then call for collection on gold contracts, thus defaulting the COMEX. It’s common knowledge that the COMEX is leveraged 100 contracts for every 1 oz. of real physical gold they hold, therefore it will not take much for China to tip the scales and expose the western markets as barren and unable to deliver. Then, once the thinking has changed and the COMEX has defaulted, China will move to have the Shanghai exchange set the price and only trade/settle contracts in physical gold. No paper contracts. Personally I think it could be another 2-3 years before China is set to flip the switch. They are still very much in the accumulation phase and busy signing currency swap agreements with other countries. However it would seem that Russia is in the beginnings of trying to break away from the Petrodollar which could accelerate the process. Could be wrong but that’s my theory.
Myron,
Would you mind explaining in greater detail about your confidence with Crocodile Gold?
I follow your columns all the time and I also read KWN columns every day. I know you are busy-appreciate your time.
Eric,
Your theory most interesting. I also think that China will take action against the dollar within 2+ years but had not figured out what form that ‘attack’ might take. I think that dollar ‘attack’ may occur in conjunction with their ‘occupation’ of the territory they claim both in the East China Sea and the South China Sea.
My question is how will you be tracking the likelihood of that dollar ‘attack’ in one year rather than 2 or 2.5 years? Can one track the % swap agreements a country has that do not require dollars at least on a vague basis? Is there another metric that you will be monitoring? Thanks for sharing your theory.
Alvin,
Thanks. Those are some good questions to ponder.
For me 2-3 years is a vague guess based on a few theories.
Theory one: Those who live in economic glasshouses shouldn’t throw stones.
I think China needs another 2-3 years to get their house in order, clean up their debt/nonperforming loan issues and fix the whole housing/construction/shadow bank issues they have. Then, only when they have their own economy under control, and only if they can prevent a “hard landing” can they really attack the dollar. Right now everyone is trying to be the best looking mare in the glue factory. China will eventually try to make the argument that they are “the best in show” but it can’t do that until its markets are more transparent and corporate private sector debt is under control. Bottom line, China needs more outside investment to flourish and right now its problems with corruption and its lack of transparency do not inspire confidence. For me, that’s 2-3 years down the road, minimum.
Also, I think that right now China is happy to let the Yuan depreciate or stay flat against the dollar due to their need to maintain their export advantage. Healthy exports = more gold. Let’s remember that gold is on sale right now so China is more than happy to continue to let gold flow from west to east. China is also still trying to get its people to buy into the whole consumer based economy thing which isn’t working so well because the average Chinese citizen is a saver by nature, therefore they’ve recommended to their people that they save “in gold” which is why I’m following suit. If it’s good enough for the Chinese people, it’s good enough for me. A lot of westerners will be late to the game and most simply do not understand Indian/Chinese/Asian attraction to gold. I think gold will become the physical stock market of the world when the paper stock markets tank. Global consciousness may change and people may seek to hold onto their investments and let the 1% play with paper, if it has any worth by then.
Theory two: If your enemy is dying a slow death, don’t interrupt him.
I think the attack on the dollar will come when China has accumulated enough gold and they could use another 2-3 years in order to do this. Only then will China attempt to show the world that the west has sold the gold they claim to hold (go ahead, say that 3 times fast!) which will shake confidence in the USA and anger a lot of nations (Germany anyone). If China can do this they can recommend that the BRICS introduce their own bank/ currency to settle trade with or settle trade with commodities. They may demand all accounts be settled in gold, special drawing rights, or some basket of currencies printed by member nations. Again, just brainstorming here, but I see a future where the Yen, Dollar, and Euro are so abused by the people who print it that the emerging economies/BRICS decide to stop playing this currency war/ race to debase and decide to establish sound monetary policies together. I think that as resources become more limited, individual countries will be less likely to accept fiat paper for the goods they produce and may demend more tangible goods in return.
As for China attempting to take land in the South China Sea, I doubt that’s going to happen. By doing so they would give the USA and Japan a reason to go to war which is what the US/Japan wants. The west knows that the best way to get out of debt and to strong-arm the world into using its currency for another 100 years is to wage another world war for the sake of “peace and democracy”. China will not play that game. China has time on its side. It can simply sit back, play nice, and wait until the US and Japan are so weak economically that their military (and citizens) cannot support a war. At that point, which could be 10-20 years from now, China will be able to take what it wants in the region. If there’s one thing we can be sure of it’s that China plans in decades, whereas the USA plans day to day. As far as the dollar goes, I think it dies a slow death and Gold is simply a yardstick/measurement tool. Gold was at $300 in 2000 and is now $1300. My guess, give it 5-10 years and gold could be $5000 an ounce, but only if Shanghai is setting the price sans manipulation.
As for warning signs, I would keep an eye out and wait for China to announce its official gold holdings. Last time it officially updated its stash was 2009 and I believe that announcement might be the first warning shot. Some believe that China will announce that it has 3,000 tons or 5,000 tons but I don’t see a point to that. I believe China will wait until its gold holdings are on par with the USA’s alleged 8,000 tons and then it will announce. I think it could possibly have between 4-5,000 tons now and China may be able to accumulate approx. 1,200 tons per year, therefore in 2-3 years China’s gold holdings might equal the USA’s. Some think that China will announce its gold holding this month so we’ll see.