Gold's momentum is picking up dramatically - Eric Sprott
ES: As an investor I am pretty sure what areas of the market will do well, but I truly cannot tell you how things will function when the current fiat currency system fails. To be brutally honest, I have no idea. It is hard to imagine what happens when people turn their backs on currencies, but I would suggest that we are already seeing it happen as we speak. You can feel in the market; people do not want to own currencies today. Particularly U.S. currency.
I am not saying that this is anything imminent, but people are questioning many global currencies now, not just the U.S. dollar. I would question the U.K. pound today; I would question the Japanese yen today. Many governments have completely overdone it.
When the Indian government purchased 200 tons of IMF gold, the finance minister said that Europe and the U.S. had "collapsed." Those were his words. They wanted to get those dollars out of their treasury; they would obviously much rather own something physical.
TGR: Do you see the potential of any currency becoming the new reserve currency?
ES: The only one would be the Chinese yuan. However, I think collectively the world would probably say, "Having one reserve currency was a mistake the last time. We should probably use a basket to determine values."
TGR: So what are the options?
ES: Various members of the G-20 talk about commodity backing and so on. You could create a computer system where you could actually use commodities as currencies. It's pretty easy to quantify all these units, so maybe we will go there. Hardly any hard currency physically trades hands now, you could literally have everything just trade in gold and silver on computers. Maybe it goes to that. We will see.
...
TGR: Your funds are heavily invested in precious metals, basically as a hedge against devaluing dollars. To what extent are you looking at physical metals versus equities in these funds?
ES: Early this year I began to move out of some of our physical gold and into mining stocks. There have been a plethora of mining stocks that had incredible value if you could buy into the companies' production forecasts and buy into the price of the metal at the time. When gold was $850, we could buy stocks that in two years' time would have been trading at two times cash flow. When we were buying them at $950, we could still do that. There were some phenomenal values and most in an agglomeration of names no one's ever heard of. Many of them are new with things just starting up. Of course, they had financing problems because of the decline in the market. But the opportunities were overwhelming. So we bought a lot of stocks of that nature.
mineweb.com |
