Eric Sprott: Why Are (Smart) Investors Buying 50 Times More Physical Silver Than Gold?

Why are (Smart) Investors Buying 50 Times More Physical Silver than Gold? (Sprott Global Resource Investments):

By: Eric Sprott

As long-time students of precious metals investing, there are certain things we understand. One is that, historically, the availability ratio of silver to gold has had a direct influence on the price of the metals. The current availability ratio of physical silver to gold for investment purposes is approximately 3:1. So, why is it that investors are allocating their dollars to silver at a much higher ratio? What is it that these “smart” investors understand? Let’s have a look at the numbers and see if it’s time for investors to do as a wise man once said and “follow the money.”

Average annual gold mine production is approximately 80 million ounces, which together with an estimated average 50 million ounces of annual recycled gold, totals around 130 million ounces available per year. In comparison, annual mined silver production has averaged around 750 million ounces, while recycled silver is estimated at 250 million ounces per year, which adds up to approximately 1 billion ounces. Using this data, there is roughly 8 times more silver available to buy than there is gold. However, not all gold and silver is available for investment purposes, due to their use in industrial applications. It is estimated that for investment purposes (jewelry, bars and coins), the annual availability of gold is roughly 120 million ounces, and of silver it is 350 million ounces. Therefore, the ratio of physical silver availability to gold availability is 350/120, or ~3:1.1

Now, let’s examine how investors are allocating their investments between gold and silver. The data below is from the US Mint showing gold and silver sales in ounces:

Read moreEric Sprott: Why Are (Smart) Investors Buying 50 Times More Physical Silver Than Gold?

The Physical Silver Market Is Getting Dangerously Tight

The physical silver market is getting dangerously (Hang The Bankers, July 18, 2012):

With continued volatility in global stock markets, and gold staging a big rally off of the lows, today King World News interviewed one of the wealthiest and most street-smart pros in the business, Rick Rule. Rule told KWN that when it comes to silver, “there is the strong case for some very substantial upside.”

Rule, who is now part of Sprott Asset Management, discussed silver and gold at length. He also talked about the problems the world currently faces. But first, here is what Rule had to say about Sprott’s very successful offering in the Sprott Physical Silver Trust: “I think it’s evidence of two things: One, we felt we had reasonably good chances of buying the silver if we raised the money. Second, this points to the continuing strength of the high end retail investment market for silver in North America.”

Read moreThe Physical Silver Market Is Getting Dangerously Tight

Billionaire Eric Sprott: ‘There Isn’t A Solution To The Problem’ – ‘If The People Had Any Sense They Would Be Buying (PHYSICAL) Gold And/Or Silver’

Sprott – We’re Being Lied To, Even The 1% Is Having Problems (King World News, June 29, 2012):

Today billionaire Eric Sprott gave King World News an extraordinary interview, and it’s not the kind of thing you are going to see in the mainstream media.  Sprott told KWN, “…as much as we knew the 99% was having a problem, I can guarantee you the 1% is having a big problem today.”  Sprott, who is Chairman of Sprott Asset Management, also said, “the markets go up because the central planners want the markets to go up … The system is imploding on itself, but the central planners want everyone to think it’s fine.  They just lie to us.”


I’ve been asked before, is there a solution to the problem?  There isn’t a solution to the problem.  There’s things that might happen.  There’s a default that could happen.  There’s hyperinflation that could happen, but none of those would be deemed as solutions to the problem.  But one or the other or both is going to happen.

People should, rightly, have fear of having their money in paper instruments, whether it’s in a bank account or a bond.  If they had any sense they would be buying (physical) gold and/or silver.  That’s the only way to maintain your purchasing power.

Eric Sprott: ‘When Fundamentals No Longer Apply, Review the Fundamentals’

Eric Sprott: “When Fundamentals No Longer Apply, Review the Fundamentals” (ZeroHedge, April 28, 2012):

When Fundamentals No Longer Apply, Review the Fundamentals

This may not come as a surprise, but we’re still not seeing it. We’re not seeing a US recovery.

Here we are, well into 2012, and the fact remains that the US housing situation is still a bust. There is simply no housing recovery happening in the United States. US New Home Sales fell for the fourth time in a row month-overmonth in March, representing a seasonally-adjusted annual rate of 328,000, down from 353,000 in February.1 Do you know what the annual rate of New Home Sales was back in 2006? About 1.21 million.2 No recovery there.

Same goes for US Existing Home Sales, which fell unexpectedly by 2.6% in March to an annual rate of 4.48 million units.3 Again – would you care to know where they were in the same month back in 2006, before the financial system fell apart? Approximately 6.92 million units.4 No recovery there either.

Then there’s unemployment. Judging by all the recent earnings-release cheerleading, March’s jobs numbers seem to have been forgotten, but they were plainly weak. The US Labor Department showed US hiring slowing to a mere 120,000 new jobs in March, below expectations of 200,000+.5 That’s not a recovery. That’s simply weak data.

Same goes for the most recent jobless claims numbers, which have been running above 380,000 for the last two weeks, above the 375,000 threshold that supposedly signals future unemployment increases.6 Again – this is not positive data, this is weak data. How high will it have to go before the economists admit that it’s weak? 400,000? 425,000? We’re asking – we’d like to know.

Then there are US tax receipts, which continue to point in the same direction. If the US is recovering so strongly, then why are employment tax receipts only up 2%? ($484 billion fiscal year-to-date as of March 2012 vs. $475 billion over the same period to March 2011).7 A 2% increase is explainable by inflation alone, which was last reported running at 2.7% according to the Bureau of Labour Stastics.8 Shouldn’t the tax receipts be much higher than that? Wasn’t unemployment down so far this year? As the Associated Press plainly states, “The unemployment rate has fallen to 8.2% in March [2012] from 9.1% in August [2011]. Part of the drop was because people gave up looking for work. People who are out of work but not looking for jobs aren’t counted among the unemployed.”9 Oh! Sorry,… now the numbers make more sense. There hasn’t been any net new employment at all. Question: if everyone “gives up” looking for work next week, will the US unemployment rate go to zero? We’re asking – we’d like to know.

Read moreEric Sprott: ‘When Fundamentals No Longer Apply, Review the Fundamentals’

Sprott’s Chief Investment Strategist John Embry: ‘The Current Financial System Will Be Totally Destroyed’

Related info:

Eric Sprott Fights PM Manipulation Fire With Fire: Calls Silver Producers To Retain Silver Produced As ‘Cash’

Eric Sprott To Buy $1.5 BILLION In PHYSICAL Silver

John Embry, Chief Investment Strategist Of The $10 billion Strong Sprott Asset Management: Why Central Banks Smashed Gold & Silver


– Sprott’s John Embry:“The Current Financial System Will Be Totally Destroyed“ (ZeroHedge, Feb. 17, 2012):

Sprott strategist John Embry has never been a fan of the existing financial system. Today, he makes that once again quite clear in this interview with Egon von Grayerz’ Matterhorn Asset Management in which he says: “I think that the current financial system, as we know it, will be totally destroyed, probably sooner rather than later. The next system will require gold backing to have any legitimacy. This has happened many times in history.” Needless to say, he proceeds to explain why a monetary system based on gold, one in which one, gasp, lives according to one’s means, is better. Logically, he also explains why the status quo, whose insolvent welfare world has nearly a third of a quadrillion in the form of unfunded future liabilities, will never let this happen. Much more inside.

From Matterhorn Asset Management

“The Current Financial System Will Be Totally Destroyed“

John Embry, the chief investment strategist at Sprott Asset Management, talks in this exclusive interview about the motives and the means of certain interests to prevent a free gold market; tells the reason why the gold price will remain high; shows the opportunities in silver; and explains: “Gold is about the furthest thing from a bubble that I can think of.“

Read moreSprott’s Chief Investment Strategist John Embry: ‘The Current Financial System Will Be Totally Destroyed’

Eric Sprott Fights PM Manipulation Fire With Fire: Calls Silver Producers To Retain Silver Produced As ‘Cash’

See also:

Eric Sprott To Buy $1.5 BILLION In PHYSICAL Silver

Flashback:

James G. Rickards of Omnis Inc.: Get Your Gold Out Of The Banking System

US DEPARTMENT OF HOMELAND SECURITY HAS TOLD BANKS – IN WRITING – IT MAY INSPECT SAFE DEPOSIT BOXES WITHOUT WARRANT AND SEIZE ANY GOLD, SILVER, GUNS OR OTHER VALUABLES IT FINDS INSIDE THOSE BOXES!


Eric Sprott Fights PM Manipulation Fire With Fire: Calls Silver Producers To Retain Silver Produced As “Cash”

In what is likely the most logical follow up to our post of the day, namely the news of the lawsuit between HSBC and MF Global over double-counted gold, or physical – not paper – that was “commingled” via rehypothecating or otherwise, we present readers with the monthly note by Eric Sprott titled “Silver Producers: A Call to Action” in which the Canadian commodities asset manager has had enough of what he perceives as subtle and/or not so subtle manipulation of the precious metal market, and in not so many words calls the silver miners of the world “to spring to action” and effectively establish supply controls to silver extraction to counteract paper market manipulation in the paper realm by treating their product as a currency and retaining it as “cash”. To wit: “instead of selling all their silver for cash and depositing that cash in a levered bank, silver miners should seriously consider storing a portion of their reserves in physical silver OUTSIDE OF THE BANKING SYSTEM. Why take on all the risks of the bank when you can hold hard cash through the very metal that you mine? Given the current environment, we see much greater risk holding cash in a bank than we do in holding precious metals. And it serves to remember that thanks to 0% interest rates, banks don’t pay their customers to take on those risks today.” And the math: “If silver miners were therefore to reinvest 25% of their 2011 earnings back into physical silver, they could potentially account for 21% of the approximate 300 million ounces (~$9 billion) available for investment in 2011. If they were to reinvest all their earnings back into silver, it would shrink available 2011 investment supply by 82%. This is a purely hypothetical exercise of course, but can you imagine the impact this practice would have on silver prices?” And there you go: Sprott ‘reputable’ entity to propose to fight manipulation with what is effectively collusion, which in the grand scheme of things is perfectly normal – after all, all is fair in love and war over a dying monetary model. Who could have thought that the jump from “proletariats” to “silver miners” would be so short.

From Eric Sprott

Silver Producers: A Call to Action

Read moreEric Sprott Fights PM Manipulation Fire With Fire: Calls Silver Producers To Retain Silver Produced As ‘Cash’

Eric Sprott To Buy $1.5 BILLION In PHYSICAL Silver

Silver wars: Eric Sprot to purchase $1.5 billion in physical silver for fund (Examiner, Nov. 23, 2011):

As the price and predictions of silver futures have dropped over the past several days, one leading management firm is creating a new silver fund, and it will require the purchase of over $1.5 billion in physical silver bullion to fill customer requirements.

Let the silver war begin.

On November 23rd, Eric Sprott of Eric Sprott Asset Management, filed a prospectus to purchase $1.5 billion dollars worth of physical silver bullion to accomodate a new exchange traded fund, the PSLV.

Canadian-based Eric Sprott Asset Management CEO Eric Sprott filed a follow up prospectus for the purchase of an additional $1.5 billion of silver bullion to cover expected demand for the company’s exchange traded fund, PSLV.

Combined with the recent decline in the PSLV premium to spot silver to 14 percent from the typical 20 percent, along with Sprott’s reported sale of some of its holdings of PSLV at the rich premium, it appears a familiar hallmark of a gigantic $580 million silver bullion purchase in December of last year emerges once again.  Since demand for silver products at Sprott remain brisk, it should come as no surprise to the silver world that Sprott needs more silver. – profitimes.com

The ramifications of a $1.5 billion dollar purchase of physical silver could lead to a massive rise in the price of the metal over the near and middle terms.  According to Harvey Organ’s recent inventory report, the total number of silver ounces outstanding with the Comex is 1,485,000.  At the current futures price of $31.99, the value of that outstanding silver is $47,505,150.

Read moreEric Sprott To Buy $1.5 BILLION In PHYSICAL Silver

Hedge-Fund Manager Eric Sprott: Silver Will Keep Outshining Gold


* Hedge fund boss says more dollars flows favor silver

* Wary of investing in base metal due to uncertain economy


TORONTO, March 8 (Reuters) – Silver is likely to keep outperforming gold thanks to strong dollar flows, though both are still good investments compared with copper and other base metals, according to Eric Sprott, the hedge-fund manager and Canadian investment guru.

“I watch where the money goes and the money’s going into silver. There’s as much money going into silver as into gold in dollar terms,” said Sprott in an interview with Reuters.

Sprott, who heads Toronto-based hedge-fund Sprott Asset Management, said it is important to note that silver available to buy is relatively scarce in terms of value, and that bodes well for further gains.

“There is 75 times more dollars worth of gold to buy than silver, but the money’s going in one to one,” says Sprott, while speaking on the sidelines of an investor event held in conjunction with the annual PDAC mining convention in Toronto.

Silver stocks in COMEX warehouses are near their lowest since April 2006, when the metal traded at $5 an ounce. Demand for silver coins has also picked up, especially in the United States, where it was at record levels early this year.

“My biggest thing is silver — I think silver is going to go up a lot here. Gold’s right in there, but not as good as silver,” said Sprott, following a presentation to hundreds of investors in a resplendent ballroom at Toronto’s Royal York Hotel.

Read moreHedge-Fund Manager Eric Sprott: Silver Will Keep Outshining Gold

Eric Sprott on Silver: ‘THERE IS NOTHING LEFT’

And this is the Greatest Depression!


Eric Sprott made an appearance at Casey Research Gold and Resource Summit where in addition to providing a succinct summary of all his monthly letters from the past year, whose forecasts are all gradually panning out, he spoke about the prospects for gold, and particularly silver.

We will leave it to readers to parse through the brief must watch clip, but here is the punchling for those wondering why increasingly more distributors are reporting indefinite lack of physical silver inventory:

“There’s $22 billion of silver available in the world, of which the ETFs already own half, and between you guys and us we probably own the other half… Which means there’s nothing left.”

Submitted by Tyler Durden on 02/23/2011 15:05 -0500

Source: ZeroHedge