Loading ...Eric Sprott: Get Your Money ‘Out of Banks and into Something Tangible’
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Eric Sprott: Get Your Money ‘Out of Banks and into Something Tangible’By Henry Bonner (hbonner@sprottglobal.com)In a recent call with Eric Sprott, founder of Sprott Inc., he said he was still buying physical gold -and planned to keep buying it for as long as he could. The gold shortage that he talked about in our May interview is still there, and economically, things aren’t getting better. “When people finally decide they want to buy gold, there probably won’t be any gold,” he explained.
Nice to catch up with you again Eric. Where are you putting your own money now? Well, I’ve recently bought some gold and silver funds up here in Canada. I probably have 70 or 80 percent of my portfolio in precious metals right now, and I believe that’s the right amount to have. Time will tell whether I’m right or not. Sprott stands for precious metals in a great way – a large part of the value of our company depends on precious metals, and I’m totally committed to that. Much as I find it unsettling what gold and silver prices do on a day-to-day basis, I am absolutely confident that precious metals will prove the right choice in the longer term. The moves that you can see in the stocks are almost unimaginable in other assets. We’ve already had gold and silver stocks that have put on three-digit moves this year. It feels like more of these moves could be coming. When you look at more recent economic data, do you believe it still supports the gold thesis? Since before the crash of ’00, I have thought the banking system was susceptible to pressure. I didn’t want to have my money in a bank because I thought the banks could go broke very quickly. Fast forward to 2008 — all the banks were essentially broke, as far as I could tell. The Fed came in to support the banking system, which they’ve now been doing for the past six years. And yet, there has been essentially no improvement in capital ratios at the banks and the risk of putting money there. In fact, you now lose money when you put it in the bank because of negative real interest rates – and you still take on the risks associated with the bank. To me, it’s just totally ludicrous to put yourself in that position when you realize how levered the banks are. A lot of people would contend that ‘things aren’t that risky’ because we have this ‘wonderful economic recovery going on.’ I think that’s mostly bunk — there is no real recovery. We’ve spent trillions and trillions of dollars buying bonds and we’ve taken interest rates to zero, but we have very little to show for it. Certainly not any great recovery. I look at economic data like Caterpillar’s sales and McDonald’s sales which have been stagnant. Consumer confidence as reported by Gallup has been flat for 2 or 3 years. 90% of the US population hardly gets any wage growth and we have significant inflation. A great portion of that inflation comes from what we call ‘shrink-flation.’ You go to the store and buy a box of cereal, but your box has 20 percent less cereal than it used to have. The price may be the same, but the fact is that for the same value, your costs are up 20 percent. There’s also the price of beef, chicken, or pork or any kind of commodity that you want to talk about. They’ve all risen dramatically. The consumer is not better off; in fact, he’s way worse off today. And I don’t even know if he has felt the true impact of the healthcare costs, with the rate increases from various states. They always seem to be double-digit increases. When your healthcare is already 20 percent of your expenses and you’ve got double-digit increases in your healthcare cost, that’s significant inflation. It’s your whole wage increase, if you have any. Then you also have a big problem in America with student loans. You have these huge handouts that people regard as free money but ultimately results in a cost. It sustains an entire industry relating to education because the students keep taking on 50 or 100 billion a year in new student loans. But you borrow and eventually you have to pay off those debts. That’s why you hear all these stories about people who have to pay off these student debts but are in no position to pay them. This isn’t good for the economy. Why do I talk so much about the economy? Because if the economy doesn’t turn around and we end up with either a slow economic contraction, or if a black swan comes along and makes that contraction faster, it weakens the assets of the banking system. If you have a 5 percent decline in your assets and you’re highly levered, it means you’ll get wiped out. A 5% decline in the stock market is not an unreasonable assumption. We have cracks in the housing market here — and not just in North America. You have all these subprime and auto loans that will come back to haunt us. Those loans are on the books of financial institutions. There is a large list of potential black swans out there, whether it’s geopolitical stuff in the Ukraine, in China and Japan, or India and Pakistan. Some government could find that it can’t pay its bills and renege on its debts. There is also this whole Ebola thing in Africa. This disease is described as out-of-control. The prime minister of Liberia had to sack some of his ministers because they all left the country. If you were in Liberia, you would be leaving too. Many end up exporting the disease when they leave. If it starts showing up in Western countries, the implications for the economy could be hugely negative. Going back to the original thesis, I was concerned in 2008 with people having their money in banks and was saying they should own gold and silver.
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After this news and all the other vaccine failures……
……..I’m sure the entire world will just line up for their “free” mandatory Ebola vaccine.
Dozens of children feared dead after being injected with ‘tainted’ measles vaccine in Syria
Farmboy @ 9:09
It’s your fault. You put the idea in my head and I went back and got ahold of the original. I just spent 45 minutes listening to it over and over. One can forget for awhile just how good those boys were. And Gregg, good God almighty, how he could sing.
protect and teach
The Los Angeles Unified School District – the nation’s second largest school district covering 710 square miles and with more than 900,000 students – said it would remove three grenade launchers it had acquired because they “are not essential life-saving items within the scope, duties and mission” of the district’s police force.
But the district plans to keep the 60 M16s and a military vehicle – known as an MRAP – used in Iraq and Afghanistan that was built to withstand mine blasts.
buy gold
Did gold really go down 4.00? 3.40
massive shorts keep the price down .. when will they make a moon shot .. not until they have squooze all the blood out of the turnip …
.. the large shorts have fragmented the market .. and have the dough to keep up the pressure
Should I be Short or Long Gold?
Its a very simple Construct that tells you if you should be short or Long Gold ,right now the Shorts are still in trend ,but it looks like a turn is near,look at the Stochastic at the top.No guesswork the chart tells you ! Short or long ?
If your technically challanged ..if this chart is headed up short Gold ,if its headed down buy Gold..!
re 20:26 Chemical producer lobbies for increase of pesticide
Its looking like enforcement is getting softer after the 2008 meltdown. Enforcement waning, needs tax dollars. Budgetary restraints. A new need for freedom and prosperity in the USA for the next 30 years. We should be happy for the kids and grand kids.
When prosperity is obvious in 2045, that’s when things will gradually go down, higher taxes less freedom more alarmist neurotic emotional regulations etc. 🙂
Landmark fracking study finds no water pollution
part
The Department of Energy report, released Monday, was the first time an energy company allowed independent monitoring of a drilling site during the fracking process and for 18 months afterward. After those months of monitoring, researchers found that the chemical-laced fluids used to free gas stayed about 5,000 feet below drinking water supplies.
http://abcnews.go.com/Health/wireStory/landmark-fracking-study-finds-water-pollution-25539364
Gee, I wonder
What direction we’ll go in tomorrow. How did Bill Murray get out of his nightmare in Groundhog Day?
redneckokie1
I can’t wait … 😉
Did gold really go down 6.20?
yep and it just never ends.
Looks like the same criminals run Shanghai too.
Ipso 20:22
That’s my old house. I downsized. Will post a photo in a few days of my new digs.
rno
goldielocks @ 17:03
My observation and view is….
Every time the activists cause a new “rule” or “law”, they create more and more gov’t employees that the tax payers have to pay. High pay and costly benefits, big pensions and free medical insurance.
I’ve noticed they never stop. They are never satisfied. They keep raising the bar. Its all anti business, anti freedom and costs taxpayers. They are playing right into hands of big Gov’t that wants to get bigger. More employees, more vendors etc. And more people to vote with their hands out.
When I was a kid, (’50-’60s) taxes were very low, everybody was happy, and prosperous. Meanwhile, everybody up here burned Coal for heating homes. If you drove into NYC and parked your car, you come out and find soot dust on the hood. So what? Nobody was dropping dead in the streets.
My grand parents lived in Brooklyn with all the coal burning. They lived into their ’90s. They had 8 kids with coal and lots of other so called pollution.
Ted Kaczynski was an extreme case of wanting people live the way he was. Lower living standards, and make us progress backwards like himself. We have the idiocy here of protecting these piping plovers. Can’t walk on the sand dunes. Sometimes its a salamander that needs protection. It simply all went too far, and its time to reverse.
Imo a small group of people should not get their way just because they break balls all the time. Think about prohibition. I heard it was 19 woman. The squeaky wheels need to be ignored.
Farmboy….Cost of Honey
This is most likely the reason prices have doubled.
Chemical producer lobbies for increase in allowed levels of pesticide linked to ‘Beemageddon’
Thanks a lot … cretins!
PS RNO … this house is for sale. Jus sayin. 
augirl
When you have watched Russian Ark please let me know – I would be happy to talk about it.
aurum
ment17 @ 19:01
LOL! 🙂
Your thoughts on the Metals market
I know nothing.
OK Floridagold
I’ll buy that but what is the limit beyond where they can control it? $19, $20?
For some reason there is something about silver that it needs to be repeatedly crushed.
Dear Sleepless in Seattle
Silver has now opened down 98 of the last 102 access market openings.
Can someone, anyone, explain why it is so important to keep silver down?
Enquiring minds want to know.
Moggie
Although a shed it looks like it was built to code. Know someone who built one so well insulated in the summer going in it to help with something felt like it was air conditioned in the middle of summer and winter stayed warm. Insulation was amazing and still had air vents. Something good to keep in mind if the grid goes down in extreme weather conditions. On the other hand they might not think of fire hazards to it. One of my brothers who lives amongst to woods lost his to a bond fire that hit the roof.