Eric begins the week discussing the phenomenon of EFPs (Exchange For Physical) where contracts on the COMEX are being settled for the physical but out in London.
Eric says there must be tightness here because these numbers of EFPs issued are not insignificant.
Also, Eric says that if there is a rate hike in December, gold is going up regardless because of the yield curve and the long bonds, so if there is going to be selling, Eric says bring it so that he can buy even more.
Rounding out the discussion is the recap of the fundamental news in the economy, as well as talk about the mining sector, which Eric says may involve some “tax loss selling” to take the tax write off. If that happens, Eric says the price of some of the miners that are down this year could go down even further, and that means a good buying opportunity.
Eric and Craig begin the conversation with the recent gold price smashings. Eric says it’s sickening to see, but at the same time, it’s good to see the price pop right back up.
The conversation then shifts to silver, where it is hard to watch as silver is only up slightly on the year whereas the other metals have rallied like crazy.
After discussing the metals, the conversation turns to the fundamentals of the economy. The fundamentals are deteriorating, and now there are signs of trouble in the stock markets. There is specific focus on the lack of wage growth in conjunction with “shrinkflation” (paying the same but getting less of the good or service).
Finally, there is a recap of the precious metals sector including the miners.
Rick agrees that there is capital misallocation on locating and extracting gold from the ground. Precious metals historically have been the most volatile part of the resource market.
Reasons for this include the narrative around gold and silver being more interesting than say that of copper and coal. There is an allure to it. Thus there is a flaw in the way investors think. Investors that focus on precious metals likely do themselves a disservice.
Gold itself has been strong this past year in spite of the dollar also being strong. This is unusual and encouraging. Investor fatigue in the gold sector is not the fault of gold it is the investor's fault as they have unrealistic expectations in regards to time. Gold stocks haven’t kept pace this year probably because they did so well in 2016. Gold may never be good enough to satisfy the wild interest of speculators but indeed good enough for contrarians to make a tidy sum.
Mr. Rule discusses battery metals including nickel and why there are opportunities in the space. He likes cobalt as increased supply is unlikely to reduce the price. There is plenty of available lithium worldwide; however, that demand has increased faster than the processing capacity of the lithium industry.
Rick feels that outside of urban areas electric vehicles are unlikely to reach operating cost parity with gasoline based cars. Electric cars are unlikely to be practical for long-range transport. Platinum and palladium need to see a global, sustained recovery that increases the number of vehicles sold.
Since 2008 the market has been constrained worldwide. Demand could rise if China pushes for cleaner diesel fuel standards something they have discussed but so far failed to do.
Eric reminisces about the early days of Sprott and where we are today in the gold market. He points out that Gold holds it's value, unlike fiat money. It’s hard at times to recognize that we are in fact in a bull market; however, we are as the TSXVenture Exchange has had an excellent rally over the past couple of years. Price increases in the gold market have a significant impact on the profit line of a company.
Price is more important than production. We are in an exciting environment for speculation. Some things are speculative, and some investments are well reasoned sure bets with limited down-sides.
Eric says to look for opportunities where you can get multiples on your money and where the downside risk is less than 50%. If you know you have a good investment than all you have to do is sit back and wait for it to play out. Mr. Sprott discusses several companies that he has a stake in and why he thinks they are good opportunities.
It’s difficult when you have a winner to determine how much further a stock can go up. You need to look at how much higher it can go up and look for even better opportunities. Try not to get scared out of your trade. Eric doesn’t believe in technical analysis he prefers fundamentals. Company management shouldn’t be conservative when it comes to pricing things they should be realistic.
As investors, we need to know what is going on. You want to see the future early and know where things are going today not next year. How do you find out what is going on? First of all, you listen very carefully, and you have to read things critically. Connect the dots.
If the information is in the public domain, you can use it. Sometimes smart people are talking about companies and what they are into. You have to learn to use whatever you can, and the Internet can be a great resource.
With all the fundamental news and the data releases, gold and silver so far look to be set to eek out weekly gains here, and this encouraging, but Eric says that the commercials still aren’t done yet because the open interest is just too high.
There is discussion of the BLS Jobs Report released just today.
Eric and Craig also discuss the latest news of the Fed Chair nomination in Jerome Powell.
Eric points to signs of hyperinflation all around, namely as evidenced by a recent trip and the soaring cost of Bitcoin in fiat dollar terms.
Finally, there is discussion of the mining sector.
Eric is optimistic however, and he says that gold and silver investor’s day in the sun is still coming.
Rick agrees that there is capital misallocation on locating and extracting gold from the ground. Precious metals historically have been the most volatile part of the resource market. Reasons for this include the narrative around gold and silver being more interesting than say that of copper and coal. There is an allure to it. Thus there is a flaw in the way investors think. Investors that focus on precious metals likely do themselves a disservice.
Gold itself has been strong this past year in spite of the dollar also being strong. This is unusual and encouraging. Investor fatigue in the gold sector is not the fault of gold it is the investor’s fault as they have unrealistic expectations in regards to time. Gold stocks haven’t kept pace this year probably because they did so well in 2016. Gold may never be good enough to satisfy the wild interest of speculators but indeed good enough for contrarians to make a tidy sum.
Craig and Eric start off by discussing what is turning out to be a slow, drawn out flushing of the speculators on the COMEX.
The conversation then shifts to the bad data that keeps coming out, regardless of what the GDP statistics say.
Since we are in the midst of a short-covering flush, and since the covering has been slow and painful, there is discussion about the mechanics of market manipulation.
Finally, discussion shifts towards the mining industry.
Eric discusses simple strategies that investors can use to research companies to look for returns on their investments in the mining industry.
Eric reminisces about the early days of Sprott and where we are today in the gold market. He points out that Gold holds it's value, unlike fiat money.
It’s hard at times to recognize that we are in fact in a bull market; however, we are as the TSXVenture Exchange has had an excellent rally over the past couple of years.
Price increases in the gold market have a significant impact on the profit line of a company. Price is more important than production. We are in an exciting environment for speculation.
Some things are speculative, and some investments are well reasoned sure bets with limited down-sides. Eric says to look for opportunities where you can get multiples on your money and where the downside risk is less than 50%.
If you know you have a good investment than all you have to do is sit back and wait for it to play out. Mr. Sprott discusses several companies that he has a stake in and why he thinks they are good opportunities. It’s difficult when you have a winner to determine how much further a stock can go up. You need to look at how much higher it can go up and look for even better opportunities.
Try not to get scared out of your trade. Eric doesn’t believe in technical analysis he prefers fundamentals. Company management shouldn’t be conservative when it comes to pricing things they should be realistic.
As investors, we need to know what is going on. You want to see the future early and know where things are going today not next year.
How do you find out what is going on? First of all, you listen very carefully, and you have to read things critically. Connect the dots. If the information is in the public domain, you can use it.
Sometimes smart people talk about companies and what they are into. You have to learn to use whatever you can, and the Internet can be a great resource.
