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Eric Sprott - Silver to be the Investment of the Decade

November 12, 2011 | About:
Lelde Smits: Hello I’m Lelde Smits for the Finance News Network. Joining us today from Canada, ahead of appearing at The Gold Symposium in Sydney, to explain why he’s bullish on gold and silver is CEO and chief investment officer of Sprott Asset Management, Mr. Eric Sprott.

Eric, welcome to FNN. Now you speak about the importance of owning physical commodities, in particular gold and silver. When did you first start aggressively buying up precious metals?

Eric Sprott: We started in 2000 when the NASDAQ obviously was rolling over and we sort of determined that in order to survive a long secular bear market, we had to be involved in gold and silver. So we would have been the buyers of gold at probably as low as $265 and silver around $5, so it’s been quite a while.

Lelde Smits: Why are you still committed to gold and silver even at these elevated prices?

Eric Sprott: Sure, well when I started, I really bought gold and silver because I thought there’d be a physical shortage of those metals. And I know others have suggested one of the reasons you should be involved in gold and silver is because of our alternative perceived currency, and both have worked incredibly well. I think there is physical shortage of gold and silver and of course as we got to ’08 and we had the financial collapse, and you had the you know, printing of money, the QE1/QE2, what’s going on in Europe a year ago, what’s going on in Europe today. It would seem that gold and silver as an alternative to paper currencies, looks like it should win the day here. So we’re certainly staying the course on both.

Lelde Smits: Now you’ve just mentioned gold and silver as an alternative to paper currencies and you’ve mentioned before you prefer investing in the physical commodities, rather than the paper market. Could you explain what you mean by the paper market and why you favour investing in the alternative?

Eric Sprott: Yeah. Well a lot of people buy certificates that say they own gold but there’s a counterpart to that certificate, right and most of those counterparts are financial institutions. And you know, the history over the last few years is financial institutions can be here one day and gone the next. I mean the most recent is the Dexia example over in Europe which you know, three months ago was considered one of the highest rated banks in terms of the stress test, but three months later was taken over by various government levels because of issues that were going on here.

So the beauty of physical is you don’t have a counterparty, you own it or you have something where you trust that it is there. And I think owning the physical is a lot more important than owning a piece of paper, where the counterparty may or may not have that physical bullion.

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