Patrick MontesDeOca: Mr. Sprott, can you please give us the current situation in terms of price in the silver market? What you might see in the short term as it unfolds in the next six to twelve months, what is your forecast?
Eric Sprott: Sure, I take a longer term view than six to twelve months. I’ve been involved in silver for about probably almost ten years now and of course the price of silver has done wonderful things in that time period even though recently it has come under a lot of pressure. My thesis being that even though the last decade has been the decade of gold, this decade will be the decade of silver. I can only imagine that it will go back to its historical relationship to gold of 16 to one in term of price. And as an example of 16 to one, with gold at $1600 it would suggest that the silver price should be $100. And most of the data that I look at certainly as it pertains to day to day markets, and I don’t mean the Comex, we’re not talking about that, we’re talking about the physical market for silver, and we have data points that suggest that buying for silver by the public is almost on a ratio of dollars of silver being bought to dollars of gold being bought. We can see that the U.S. Mint’s data that comes out every month, and pretty much every day, so for example, the amount of silver coins being bought through the mint’s service – they sold 50 times the number of silver to gold coins. This month it’s actually running around 70 to one. This really means people are putting as many dollars into silver as they are into gold. But there is nowhere near the amount of silver to invest in as there is gold.
P: So do you attribute this correction we saw recently to the correction we saw in the beginning of April?
E: Sure, well, I think both corrections were orchestrated by people who are massively short silver. When the price went from 20 to 50 roughly, I mean, those shorts had lost about 20 billion dollars. If silver had broken through $50, things would have gone absolutely crazy. Like when gold went to 850, it doubled shortly thereafter, which would have created great stress on those people who were short. And unfortunately in the Comex market, which is mostly a paper market, those who have huge amounts of money can force the price down, and as you may have recalled Patrick, there was a Sunday night around 9:30 when the price went down $6.
P: And it’s usually over the weekend that this happens.
E: Exactly, when nobody was trading. And that particular day the Chinese market was closed and the UK market was going to be closed that day. And of course, everyone comes into work at the New York time and the price of silver is down $6, they already have the margin call. Then the CME raised margins 4 times in the next week which put the long holders of silver contracts under tremendous duress, so they had to sell them. So a lot of the short position has been covered here, I’m not saying there won’t be further raids. There was a raid recently where they recently knocked it down to $27, and that is what happens in the paper markets. Paper markets can trade up to a billion ounces a day, while we only produce 900 million ounces a year. And looking at the physical markets, which I spend most of my time looking at, I can identify something like a 380 million ounce change in supply and demand just in the past five years in a 900 million ounce market. I believe that sooner or later we are going to run into a shortage in physical silver and the physical silver price will then determine the Comex price.
P: I think a lot of people would like to know, potentially, how soon would you see this change taking place?
E: Well that is a very tough question to answer because there are forces at work every day, right, and you have to exhaust those forces or they have to have some reason to change their view on what’s their best interest in the paper markets. I’ve always imagined there, or hoped that some industrial user of silver will say “Oh, I can’t get the silver” and the word gets out that there is a physical shortage. Or the people just continue to buy at the rate they are buying, because you just can’t keep buying silver on a one to one ratio to gold and have the price be 50 to 1. That is mathematically impossible.
P: I know that you like silver very much, but let’s talk about gold for a minute and please tell me your opinion about Venezuela, Chavez repatriating the gold that they had on deposit with English banks. Is this possibly or potentially the beginning of a new trend of realizing the inventory of real gold by these countries or institutions.
E: Sure, well, I think it is one step in the process. One other thing that has happened is we’ve now seen that central banks are buying gold; while they used to be sellers of physical gold, now they are buyers of physical gold. The GFMS this year suggested that central banks may buy as many at 500 tons of gold, whereas they were sellers last year. And this is in a 4000 ton a year market. And I think Venezuela’s statement is “We want to have our physical gold in our physical possession.” Is it going to make a difference? I can’t tell you the answer yet because of course Venezuela doesn’t have their gold yet. And I’m surprised it’s taken, theoretically, until the middle of November for them to get their gold because it was on deposit you wouldn’t think the logistics of transferring that amount of gold, I think its 93 tons or 110 tons, that’s not a lot of gold is it in terms of physical size; because it is so dense.
P: You experienced the same kind of reaction I believe when you recently wanted to purchase some silver. Where it took a little longer than what one would think to be normal.
E: Well, when we started the Silver Chest, we had to go into the market and buy 15 million ounces. This was about exactly a year ago. And 15 million ounces at the time, [an ounce] was probably $20, was like 300 million worth of silver, which is not a lot of silver. And you would think people advertise it as a billion ounces of silver and you want to buy 15, you’d get pretty speedy delivery. It took us 3 months for us to get the silver and some of that silver that was delivered to us was manufactured after we had made the purchase agreement. Which really means, in my mind, there wasn’t a tremendous amount of silver lying around waiting to be delivered.
P: So there could be the possibility that we may have a lot less inventory than what appears to be told on these government reports.
E: Sure, nobody really knows how much inventory there is. We know how much is in Comex, we know how much the PSLV owns, but theoretically that shouldn’t be available, beyond that, I just don’t believe there’s huge amounts of silver and we are buyers of silver every day. We’re very often delayed on our shipments. You know we could go in and buy 2 or 300 thousand ounces and we sort of get the common “Well, you know that shipment is going to take 2 or 3 weeks”, which really means, I don’t think there is really any ready silver inventory that’s just waiting for someone to say “Ok fine, I’m going to buy” [then] “We’ll deliver it to you” because it’s not really that difficult to deliver silver.
P: Let’s talk a little bit about the European crisis, Eurozone crisis, the banking crisis. How do you see that effecting the silver price short term, intermediate, or even long term?
E: Well, I think, Patrick, it depends on how it gets resolved. I mean if it gets resolved simply by printing money, I would think it would be incredibly positive for gold and silver. Because people would realize that felt currencies are being debased through those actions. I think the fact that gold and silver are where they are is very much a result of people more and more realizing that the powers that be seem to care less about how much they print and therefore if that is the solution; that we just print I think it would be very optimistic. But there is one other choice. The choice is: they don’t solve the problem, which as you know has become a banking problem and if there was a banking problem that erupted, it could be even more positive to silver because people will realize “If I can’t have my money in a bank, what are my choices”, and as we all know, very limited. And most of us that are believers in silver and gold believe we don’t want a counter party and we’d much rather own the physical, so we aren’t relying on someone else to fulfill the promise.
P: According to Arabian Money they commented that the Arabian banks have isolated themselves from what they believe to be an economic crash of the western world. How do they fit into this equation in terms of the demand for precious metals?
E: I don’t have a lot of data on Arabian banks. I truly don’t. I mean, we watch the gold sales in Dubai and places like that and we’re very aware that the Arabs, the whole Arabian community is a believer in gold and they like trading physical things for physical things, but I must confess, I am not enough of a student of what’s actually happening in that area to tell you one way or another what the flows are. We did see a data point about a years ago where Saudi Arabia said “Oh, our reserves were supposed to be this but they are really 60% higher” and it came out of nowhere. I mean, I would certainly imagine if I was there, and I were selling goods to the world I might very well want to have my cash invested in silver and/or gold.
P: I’m going to ask you to stick your neck out here and try to do some kind of a forecast for our audience. What do you see, I would say; let’s say within 2012, in terms of the mint picture, the crisis in Europe and essentially trying to resolve this issue and finding some kind of resolution? If these economic world leaders are able to come and put together an intelligent plan, what do you feel the price of silver could do?
E: Well, I have to beg to differ with the word ‘intelligent plan’, because I don’t think there is an intelligent plan. In fact I think we all now know that most plans have not worked and created a very difficult situation for the average person in the world and has exacerbated the problem in the banking world. So, they’re going to come up with a plan, it won’t be an intelligent plan. I don’t think solving a debt problem is solved by more debt and leveraging, which is what’s being discussed in Europe today. But either way, as I said before, I don’t think the impetus will be for precious metal prices to rise, if I had to predict, I certainly would believe that silver would be above $50 next year and that gold certainly would be above $2000 and it could be substantially higher than that. It’s a question of how irresponsible governments are and maybe we will find out there is a European plan, and then 3 or 4 months later, there is an American plan where we get QE3. It’s hard to know where it’s going to go because we don’t know how irresponsible the governments are going to be, but they are tending to be irresponsible, therefore you would think there would be lots of impetus for higher prices.
P: Eric, I would like to thank you once again for taking this time to spend with us and answer some of these questions for our audience. Thank you so very much.
E: Patrick, My pleasure.
Disclosure:I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. Interview conducted at the Silver Summit Convention. Met Eric Sprott and he agreed to answer a few questions about the current state of silver and the future trends in price.
Hello, I’m Patrick MontesDeOca, president of Capital Metals Trading Group. Capital Metals Trading Group is a premier Precious Metals broker/dealer. Our mission is to help investors diversify a portion of their portfolio into physical assets, in order to be as successful as possible in protecting wealth during this most historical period of time.
We accomplish this by providing you with a transparent, educational, and innovative platform of premium market intelligence on the cutting edge of technology that we refer to as the “Vedic Code Price Momentum Indicator”.
Let’s take a look and see how we use these theories, and the results they achieved by analyzing the initial presentation of the Vedic Code for the Gold Market video report that first aired on YouTube, September 7th 2011
Aired: September 7th, 2011: So, this identifies for us that the month of September, potentially, we’re looking at some kind of a top in the monthly Vedic Energy Cycles table is indicating that the trend is turning down in September and that you should cover your long positions and reverse to short.
That was more than a $387 down side move, in 20 days! Now that’s pretty amazing and, as you can see from the chart above, it was accurately predicted by the Vedic Code Price Momentum Indicator.
To show you exactly how you can diversely apply this market intelligence, we have prepared a special edition report on what the Vedic Code is forecasting for PSLV in 2012.
PSLV is a physical silver trust managed by Eric Sprott from Asset Management. A couple of weeks ago, we had the fortunate experience, at the Silver Summit in Spokane, Washington to meet with Eric Sprott and he so graciously agreed to do an impromptu interview.
The following is a quote from that interview and a profound fundamental prospective on the price of silver for the immediate future.
Patrick MontesDeOca: Mr. Sprott, can you please give us the current situation in terms of price in the silver market? What you might see in the short term as it unfolds in the next six to twelve months, what is your forecast?
Eric Sprott: Sure, I take a longer term view than six to twelve months. I’ve been involved in silver for about probably almost ten years now and of course the price of silver has done wonderful things in that time period even though recently it has come under a lot of pressure. My thesis being that even though the last decade has been the decade of gold, this decade will be the decade of silver. I can only imagine that it will go back to its historical relationship to gold of 16 to one in term of price. And as an example of 16 to one, with gold at $1600 it would suggest that the silver price should be $100. And most of the data that I look at certainly as it pertains to day to day markets, and I don’t mean the Comex, we’re not talking about that, we’re talking about the physical market for silver, and we have data points that suggest that buying for silver by the public is almost on a ratio of dollars of silver being bought to dollars of gold being bought. We can see that the U.S. Mint’s data that comes out every month, and pretty much every day, so for example, the amount of silver coins being bought through the mint’s service – they sold 50 times the number of silver to gold coins. This month it’s actually running around 70 to one. This really means people are putting as many dollars into silver as they are into gold. But there is nowhere near the amount of silver to invest in as there is gold…
If you would like to receive a complete transcript of this interview, please go to www.cmt-group.com/contact to request your copy.
This is the 2012 Special ETF Edition for the PSLV Vedic Code Yearly Cycles Report.
The highs for this period (RED): According to the Vedic Code Price Energy Momentum Indicator, the upper end of the vertical axis indicator above 8 begins to get overbought anything above 9 is extremely overbought. These are the following months for this period: March, July, September, and December, 2012. The recommended strategy: cover long and reverse to short.
These monthly dates contain a high probability factor for the monthly cyclical patterns to change and reverse as the cycle energy period is completed and the indicator adjust to the access level one in preparation for the next cycle wave pattern to start again continuously in a forward motion. Use these dates as a reversal indicator. For stocks and ETF’s use the New York Stock Exchange PM Closing Prices.
The Lows for this period (GREEN): According to the Vedic Code price energy momentum indicator, the low end of the indicator below 2 begins to get oversold. Anything below 1 is extremely oversold. These are the following months for this period. January, April, and October, 2012. The recommended strategy: cover shorts and reverse to long.
These monthly dates contain a high probability factor for the monthly cyclical patterns to change and reverse as the cycle energy period is completed and the indicator adjusts back to the axis level 9 in preparation for the next cycle wave pattern to start again continuously in a forward motion. Use these dates as a reversal indicator. For stocks and ETF’s use the New York Stock Exchange PM Closing Prices.
Acceleration Patterns (BLUE): According to the Vedic Code Price Energy Momentum Indicator, the acceleration patterns are directional momentum indicators that identify increasing trend volatility and are used to add to your position according to the 30 day trend patterns. These are the following months for this period: February, May, June, August, and November 2012. The recommended strategy: Add to positions on corrections.
As you can see from our PSLV 2012 preview chart, the Vedic Code Price Momentum Indicator is forecasting some extremely valuable and timely information. If you’re an investor looking to make your own decisions which are able to accurately identify major cyclical turns in the financial markets. It will produce consistent transparent market intelligence you can count on, better yet; the results speak for themselves.
Aired: October 11th 2011 Gold Report:Let us take a look back and incorporate some Elliot Wave Principals and Fibonacci Sequences into the Vedic Wave Energy Momentum Indicator and see how this amazing tool produces such accurate results. According to the Vedic Code Indicator it appears the first wave pattern began on June 20th 2011. The first top of this wave was made on Aug 23rd, with a second top completion made on September the 6th at $1923.70 and a double top confirmation. We can identify clearly an A, B, C second wave corrective pattern with the second top of $1923.70, B wave and the second pattern completion on September 23rd at $1631.70 per ounce C wave.
In applying the Fibonacci formula, using the low of June 30th, we get our Golden ration measurement of 1.618 percent completion price objective of $1647.50 and the beginning of the 3rd wave. The top objective of this 3rd wave is $2,519 per ounce, synchronizing its pattern perfectly to the ten-year third wave price projection made on September the 6th 2011 at $2,500 per ounce. Based on the yearly Vedic Code Gold Chart for 2011, we can anticipate that there is a high probability that the third wave pattern should resume its upward trend by or no later than October 15th 2011
The market bottomed on September 20th , from its low of $1604.70 the gold market rallied above the $1800 as of November the 8th. That is a whopping, almost $200 upside move in forty nine days. That is what I call “Premium Market Intelligence”, and all predicted by the Vedic Code Indicator
I hope that we were able to put into perspective the various market applications to the Vedic Code Price Momentum Indicator . We are also happy to announce that we are now offering our free live chat room open during the hours of 9 AM to 12 PM pacific time daily that will offer you up to the minute real video discussions.
All you need to do is visit tinychat.com/cmtgroup and join us in a real time trading session and learn how to apply the daily Vedic Code Cycle Signals in the Financial Markets.
After more than 30 years of trading experience, Patrick MontesDeOca has eveloped a unique proprietary trading tool based on a combination of Elliott Wave, Fibonacci, the Vedic Code Wave Theory and Western Physics mathematics to identify trading opportunities in the Precious Metals and Financial Markets.
Patrick MontesDeOca is long PSLV. Precious Metals trading involves significant risk of loss and is not suitable for everyone. Past performance is not necessarily indicative of future results.
The Vedic Cycles of the Stock Market is an amazing scientific revelation of the relationship between the universal life cycles and the financial world. Similar to the planetary cycles, these cycles can also be identified in other areas in the financial markets including technology, medicine and the food industry. The cycles of many US stocks have been traced to the Vedic Cycles of the planets. Beyond Elliot Wave and Fibonacci, the results in this book are derived from the application of the amazing science of Vedic Mathematics
Gold Market Outlook: Patrick MontesDeOca gives his Vedic Code based predictions the actions of the gold bullion market from September 15 through October 15th, 2011. A new book, “Vedic Cycles of the Stock Market” by Swami Ram Charran is mentioned, as is our brokerage partner, CMT-Group.com.
At the Heendu Learning Center, our research gives us ample reasons to believe that Vedic Mathematical Cycles of the market are just as important as the universal trends and cycles that make us exist. Our experience is that it is impossible to understand the cycles of the financial markets by using only Fibonacci graphs and other western systems unless we look at the cycles of the Universe, world events and Earth changes calculated by Eastern sciences.
For additional information about the “Vedic Cycles of the Stock Market”, in particular how it is been used in the gold market with great results, you may watch the video in the following link http://www.youtube.com/watch?v=j7nIgP2KWNI
The market predictions for the month of October for selected stocks are as follows:
APP American Pharmaceutical Partners Inc Higher in September, Lower in October, High in November
T at&t Higher in September, Lower in October, High in November
MTOR Careerbuilder.com Higher in September, Lower in October, High in November
CQB Chiquita Brands Higher in September, Lower in October, High in November
FOOD Fresh Foods Higher in September, Lower in October, High in November
GLD Gold Lower in October, High in November
HOG Harley Davidson Higher in September, Lower in October, High in November
HWK Hawk Corporation Higher in September, Lower in October, High in November
K Kellogg Company Higher in September, Lower in October, High in November
WYNN Wynn Resorts Low in October, High in November and December
ED Consolidated Edison Low in September, High in October and November
YOKU Yoku.com High in September, Higher in October and Lower in November
CTE Sino Tech Energy Ltd Lower in September, High in October and Lower in November
P Pandora Media Higher in September, Low in October and Lower in November
MX MagnaChip Semiconductor Lower in September, High in October and Lower in November
LNKD LinkedIn Higher in September, Low in October, High in November
GAGA Le Gaga Holdings Higher in September, Low in October and Lower in November
GM General Motors High in September, Higher in October and Lower in November
DANG E-Commerce China Dangdang High in September, Higher in October and Lower in November
XOM Exxon High in September, Higher in October and Lower in November
FDO Family Dollar Lower in September, High in October and Lower in November
DRE Duke Energy High in September, Higher in October and Lower in November
EBAY eBay Low in September, High in October and Higher in November
MORN Morningstar Inc Higher in September, Lower in October, High in November
NOK Nokia Higher in September, Lower in October, High in November
NUAN Nuance Communications Higher in September, Lower in October, High in November
TTEK Tetra Tech Inc Higher in September, Lower in October, High in November
TWTC Time Warner Telecom Inc Higher in September, Lower in October, High in November
WRG Western Energy Higher in September, Lower in October, High in November
ARCO Arcos Dorados Holdings Higher in September, Lower in October, High in November
WIFI Boingo Wireless Higher in September, Lower in October, High in November
CJES C&J Energy Services Higher in September, Lower in October, High in November
DMD Demand Media Higher in September, Lower in October, High in November
FLT FleetCor Technologies Higher in September, Lower in October, High in November
NLSN Nielsen Holdings Higher in September, Lower in October, High in November
ZIP Zipcar Higher in September, Lower in October, High in November
AA Alcoa Inc Higher in September, Lower in October, High in November
If you would like to know more about predictions and forecasts for the stock market you may purchase the book Vedic Cycles of the Stock Market at www.swamiramstore.com or www.eBay.com
As 2012 looms up ahead the financial markets and economy worldwide will begin to recover itself. It is only when people suffer as a result of greediness, selfish indulgences and excessive spending that they will learn how to treat money in a divine way. The faster the people learn about the fact that they must be grateful for all that they have and learn to give back to the world so also will people become happier and contented in the world. The consumer and the business owners create economies and financial markets. When one cheats the other there is an imbalance and that is how economic imbalance is created. Madoff became part ofAmerican history for a reason…and that is GREED.
EXXON – September High, October Higher
FAMILY DOLLAR – September Lower, October Higher
GAP STORE – September High, October Higher
GENERAL MILLS – September High, October Higher
GENERAL MOTORS – September High, October Low
HOME DEPOT – September High, October Low
JUNIPER NETWORKS – September Low, October High
MASTERCARD INCORPORATED – September Low, October Lower
MARRIOT – September High, October Higher
MERCK – September High, October Low
MICROSOFT – September High, October Higher
NETFLIX – September High, October Higher
SIRUS SATELLITE RADIO – September Low, October High
SPRINT WIRELESS – September High, October Higher
TIME WARNER TELECOM – September High, October Low
If you would like to know more about predictions and forecasts for the stock market you may purchase the book Vedic Cycles of the Stock Market at www.swamiramstore.com or www.eBay.com
BIDU – Will be going down in August at a Low price and will become Higher priced in September- October
FORD – Will be down in August and High in September
GOOG – High in August Low in September
GE – Down in August , High in September
AT & T – High in August , Higher in Sept and Down in October
ANADARKO PET – High in August and Higher in September
APPLE – High in August and Low in September
B&G FOODS – High in August and Very Low in September
CISCO SYSTEMS – High in August and Very Low in September
DRYSHIPS, INC. – Low in August, Higher in September
JUNIPER NETWORKS, INC. – Low in August and Lower in September
MASTERCARD, INC. – High in August, Low in September and Lower in October
MERCK – High in August and Higher in September
If you would like to know more about predictions and forecasts for the stock market you may purchase the book Vedic Cycles of the Stock Market at swamiramstore.com or ebay.com
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