Sprott Says Paper Markets Are Joke, Still Bullish On Gold (ABX, EGO, IAG, SLW, XG)

Noted gold and silver bull Eric Sprott said the Federal Reserve’s two quantitative easing packages and the monetary printing efforts of the European Central Bank, the Bank of Japan and other governments across the globe indicates paper currencies will not survive and that investors should own precious metals as a result. The comments were made in an interview with ChrisMartenson.com.

Sprott’s Sprott Asset Management has long-held, well-documented bullish stance on gold and silver, owning stakes in miners such as Barrick Gold (ABX), Eldorado Gold (EGO), IAMGold (IAG), Silver Wheaton (SLW) and Extorre Gold Mines (XG) at the end of the first quarter.

Sprott told Martenson that recent government policies have been an effort to support troubled banking systems throughout the world and that people realize holding cash in banks when it earns little interest isn’t worth it in terms of maintaining purchasing power. Sprott said the safest areas for investors to be involved with are metals, agriculture and energy.

As for gold, Sprott is forecasting deflation in paper assets and inflation for real assets, noting that the strength in gold prices is not a one-off event.

“I think it is a secular thing. It’s going to carry on for quite a while here until we find some resolution of these problems. And the resolution probably will be some form of default where people just have to expunge debts that cannot be repaid. So, you have got to be in some asset which will not be affected by that,” Sprott told Martenson.

Regarding silver, Sprott said paper markets are a “joke” given that a billion ounces of silver trade every day yet only 900 million ounces of the metal are produced each year and just 1 million ounces per day are actually readily available for investment. Sprott reiterated his view that silver should trade at a 16-to-1 ratio to gold, meaning if gold trades for $1,600 an ounce, silver should trade for $100.

If you want to see how your performance stacks up against Sprott’s or just view some of the firm’s top holdings, visit tickerspy.com to view the firm’s latest disclosed holdings and a chart of their combined performance.

Tags: ABX, EGO, IAG, SLW, XG