Posted on 06/09/2010 7:19:00 AM PDT by blam
Eric Sprott: Soon Someone's Going To Try Buy A Gold Bar, And It Won't Be There
Vince Veneziani
Jun. 9, 2010, 8:36 AM
If anyone knows gold, it's Eric Sprott. We previously spoke with Mr. Sprott on the subjects of the IMF, GATA, and the Plunge Protection Team.
Needless to say, he's a bull on gold.
Sprott recently sat down with Eric Jackson of TheStreet.com for an interview and what he had to say should have investors concerned.
He says that gold is more popular than ever before, which is fantastic for his fund. The problem is, there's a shortage of physical gold out there and it's only getting worse. After all: you can only mine so much gold but you can always print more money.
TheStreet.com: Central governments were selling gold 10 years ago. This put a burden on a very small market. Today, central governments are buying, the miners are unhedged, you have big gold ETFs, you have coin sales going crazy. Some central banks are even telling their people to buy gold.
I've got to believe that a physical shortage will manifest itself somewhere soon. There's only 162,000 tons of it out there -- and I don't know anyone selling it. Someone's going to try to buy a bar of gold sometime and it won't be there.
Indeed, the gold rush is upon us. Yesterday, COMEX reported that gold hit a record high of $1254.50 an ounce.
[snip]
(Excerpt) Read more at businessinsider.com ...
Half the ads on talk radio is for people trying to sell you physical gold. They must have an adequate supply or they wouldn’t be dumping all that cash into ads.
Tell you what, Mr Sprott. Keep doubling your asking price and someone will eventually sell you a bar of gold.
I feel like I'm missing something here. If I offer you $1025 for a bar of gold and the gold is "not there", then what do I have to do to make the gold "appear"? Maybe if I offer $1050? $1100? $1300? I'm guessing at some point in this sequence, the gold will "be there".
Careful, careful on gold. Everyone wants to own it. That is probably a bearish signal.
Also this, there is very little connection between inflation and the price of gold.
Gold should be bought as a hedge against uncertainty in the markets and geopolitics.
God luck. :)
Oops. s/b “Good luck”
This guy’s an asshat.
Sprott is talking about real size, not the few ounces you see on TV.
In mid-February, the IMF decided to sell a ton of gold. Specifically, 403.3 metric tonnes of the stuff. It sold 200 tonnes to the Reserve Bank of India, 10 tonnes to the Central Bank of Sri Lanka, and 2 tonnes to the Bank of Mauritius, a total of 212 tonnes.
That left 191.3 metric tonnes left available for purchase to qualified buyers, which include central banks and sovereign nations. According to Kitco, Eric Sprott bid to buy the remaining 191.3 tonnes and the IMF refused to sell it.
This B.S. indicates that stocks are a bargain.
Godl mining stocks, maybe.
"Bullion" is gold bars, "coinage" is the stuff you and I can barely afford.
Goldbug ping
Mail me to get on or off the Free Republic Goldbug Ping List.
He might be an asshat, but he's a billionaire asshat and he made his money by being a great investor, so I don't discount what he says. If you consider that David Einhorn, John Paulson and several other top fund managers, all of whom were ahead of the curve in predicting and profiting from the financial meltdown in 2008 are buying tons of physical gold, you would be wise not to discount what they say with a simple Ad hominem attack.
“Actually a gold bar is bullion and weights about 430 ounces. So at $1200 per ounce, it’s worth over a half a million bucks. So Mr Sprott has to ask for a gold bar for a million dollars, then 2 million, then $4 million. Sooner or later someone will sell the bullion.”
You just made his point, he was saying large amounts of gold are not available at today’s prices.
Sprott and Embry are two guys who know natural resources probably as well as anyone on the planet. Sprott asset mgmt has a very long history of making lots of money in the Canadian natural resource arena.
With total public and private sector debt along with unfunded liabilities around 800% of GDP tangibles are the name of the game. The only way out is to inflate your way out. The big question now becomes..... when does the bond market crack?
I don't care if we're talking about a single Kueggerand or bullion in gold bars, or 10 metric tonnes.
The idea that the gold "isn't there" is silly. What about supply and demand? If I offer an amount of US dollars for a gold bar and it's not there, then the current price is not accurate. It's too low. The sensible conclusion is that gold is worth more than people think -- people are offering to buy gold and it's "not there". Well, as others have said, just keep doubling your offer. I guarantee you that at some point gold will "appear".
“Today’s prices” are those of which one is willing to pay.
Right, that’s the point. He wasn’t saying the gold doesn’t exist, he’s saying supplies are tight at current prices and that is one reason why he is bullish.
“large amounts of gold are not available at today’s prices”
Which, I assume, means gold prices will go much higher. There IS gold, and it WILL sell at a high enough price.
No fund manager is going to pay much more than the current spot price. They may be willing to pay a small premium. If large supplies are not available at CURRENT prices, that is bullish.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.