Eric Sprott Presentation: Silver Prices Will Triple
Sprott's Hedge LP has had a 23% annualized return over the last ten years while S &P has declined 5.4% in Canadian dollars.
Sprott thinks that it is possible that silver could triple over the next few years.
Since the start of 2011, silver prices have gone parabolic surging almost 20%. Earlier in 2010, Sprott predicted that silver could hit $50 in 2011.
Sprott's thesis is based on investment demand and current silver shortages.
On the demand side of the equation Sprott thinks that Asian investment demand will drive silver prices higher. China imported 112 million ounces in 2010 yet in 2005 China was a net exporter of 100 million ounces.
On the supply side, Sprott has observed signals that the physical silver market has no inventory.
COMEX holds only 106mm ounces of silver which would cover 21,000 contracts yet there are more than 137,000 silver contracts outstanding. If 15% of silver long holders decide to take delivery of physical silver, a massive short squeeze would result.
The final part of Sprott's thesis is that the gold t silver ratio is at historic lows despite the fact that silver has rocketed higher in recent months.
"Historically silver has traded in a ratio to gold of 16:1. That ratio has not been effective in the last 20-30 years. The ratio today is 40:1 and I think it is going to 16:1 and in the next 3-5 years I could see silver going to $100/oz."
Sprott's presentation at PDAC was similar to the presentation video below.
Sprott also gave an interview with BNN last week where he outlined his bullish thesis on silver.