Eric Sprott: Gold From A Billionaire’s Viewpoint (GLD, IAU, SGOL, PHYS, SLV)

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February 16, 2012 3:09pm NYSE:GLD NYSE:IAU

Andrew Snyder:  I spoke with some of the top resource investors on the planet this week. When it comes to buying gold, there was a common theme. Do it wisely.

Oil is up. The euro is down. Stocks are mixed. And gold is bouncing all over the place.

It’s the result of a world in flux.

In preparation for our big (maybe even huge?) natural resources conference in late April, Sara and I sat down with some of the brightest minds in the business.

On Monday, we talked with Ian Gordon, the famed economist behind the Long Wave Cycle. He tells us to prepare for even stronger gains in gold. As the world’s debt bubble deflates, he says, gold will be the safe haven of choice.

It is all part of what Gordon calls the economic seasons.

Right now, we are in winter. But this isn’t the kind of season that lasts a mere three months. We’ve been in this cold spell for several years — ever since the beautiful leaves of economic autumn fell to the ground in 2008.

In winter, we’re forced to live off what we’ve stashed away.

For most folks and most governments, though, the pantry is empty. There’s nothing but an IOU left over from better days.

And that’s what Gordon is focused on. He knows the only way out of this cycle of debt is to paper it over with more debt and more funny money.

In other words… inflation.

That’s why Gordon agrees with us and recommends alternative assets. It’s also why he likes gold.

But even though he expects gold to flat-out soar as winter becomes spring (I’ve heard him mention the $4,000-an-ounce figure), I don’t think he’s as bullish as the man who called me on Tuesday morning.

Eric Sprott is a billionaire gold investor. He’s got over 80% of his portfolio in precious metals.

And he says you should, too.

One of the first things this famed investor mentioned during our call was how the rules have suddenly changed.

We’ve got huge reform efforts out of Washington. But the problem is our leaders tell us one thing and do another. The fact that we still don’t have a final version of the Volcker rule — more than two years after the president first endorsed it — is perfect proof.

What’s worse, Sprott says, is the constant manipulation.

If the Fed isn’t printing money… it’s “twisting” interest rates.

And if it’s not the Fed, it’s the suckers in Europe that are forced to prop up a country drunk on public spending.

Gordon and Sprott both said something that needs repeating.

Physical possession is key.

Again… physical possession is key.

In the off chance gold becomes the currency substitute so many investors want it to be, a few shares of an ETF will be next to worthless. If the system melts down, it will start with an implosion of counterparty risk.

In other words, when the banks fail, why would we be so ignorant to think the bank that sold you a gold derivative (little more than a piece of paper and a promise — just like the dollar) would survive?

The chances are quite good, in fact, that it will be those same derivatives that take down the banks.

You do remember 2008, right?

If/when failure happens, it will be a great day for the folks with a chunk of gold in their home vault. But then again… it will also be a great day to buy a gun.

Most of today’s gold investors, though, are speculators. They don’t care about protection from a full-on meltdown. They just want to get rich between now and fiscal Armageddon.

And remember, the market will go wherever the money pushes it.

Right now, the money is pushing gold higher.

Related: iShares Gold Trust (NYSEArca:IAU),  ETFS Physical Swiss Gold Shares (NYSEArca:SGOL), SPDR Gold Trust (NYSEArca:GLD), iShares Silver Trust (NYSEArca:SLV),  Sprott Physical Gold Trust (NYSEArca:PHYS).

Written By Andrew Snyder From The Taipan Publishing Group

Andrew Snyder is the Editorial Director of Taipan Publishing Group and the Managing Editor of Taipan Insider.  Andy’s first year in the world of finance and investing involved  learning the intricate details of the financial industry, as an advisor.  He specialized in handling the vast portfolios of very wealthy clients, where he excelled at making them even wealthier. Since then Andy has received his MBA, published an award-winning book and been published in  numerous publications. He has also appeared on Fox News and other media  outlets.

With his  background in research combined with his hedge fund-style education and knowledge of the market, Andy is acclaimed for his no-nonsense style of writing and his sharp, deep-thinking analysis. His goal is to use his  knack for Wall Street research and analysis to lead his readers to  little-known profit opportunities. Andy’s readers have described him as unshakeable, suspiciously knowledgeable and just a  bit nutty; these qualities have led him to uncover market-moving events  and turn them into reliable, double- and triple-digit gains.

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