manager Eric Sprott's
speech at this week's Silver Summit turned a room full of
nervous precious metals owners into pumped-up silver buyers. Some of the
highlights are posted below, and here's a link to a recent Financial Sense interview
where he makes many of the same points.
- The US Mint sells about the same
dollar amount of gold and silver coins, which means it sells 50 ounces
of silver for every ounce of gold. It's more or less the same story at GoldMoney
- Ten times more silver than gold
is produced each year, and the ratio in the earth's crust is 15:1, so
how can the price be 50:1? Expect a return to the historical norm of
15:1, which implies that silver will outperform gold.
- The supply/demand picture has
seen a 380 million ounce per year positive swing -- in a 900 million
ounce market. Where is the silver coming from?
- The paper silver markets trade a
billion ounces a day and the world only produces 900 million in a year.
The amount available for settlement of these futures contracts is
something like 1.5 million ounces, ludicrously little compared to the
amount of paper.
- "On the physical side I'm
seeing only buyers."
- "There are a lot more
people who can afford a one-ounce silver coin than an ounce of
- Gold will be a reserve currency
and silver will also play a role.
- "We tried to buy 15 million
ounces of silver and had to wait three months -- and some of the silver
we got was manufactured after we ordered. So there's not a lot of silver
sitting on shelves waiting for people to buy it."
- "Somewhere along the line
some manufacturer will say 'I can't get the silver I want' and the jig's
- People will prefer gold and
silver to having money in a bank where there's tremendous counterparty
risk. Three months ago Dexia
was considered to be the best capitalized European bank and now they've
- "You go to some of the
biggest names who own gold and ask them about silver and a lot of them
haven't even looked at it."
- Central banks are selling gold
- "It's shocking how
undervalued the junior miners are...Gold and silver stocks are growth
stocks. They all have a plan to increase production dramatically. Small
miners can start a new mine and double in size...The relative value of
gold stocks will become apparent with time...The breakout, when it
comes, will be very sudden."