Billionaire Sprott - Metals Smashed As West Hemorrhages Gold

 On the heels of another plunge in gold and silver, today billionaire Eric Sprott warned King World News that the smash in gold and silver is being accomplished through unprecedented levels of dwindling Western central bank gold being supplied into the market.  He also spoke about the massive gold and silver demand.  Below is what Sprott, Chairman of Sprott Asset Management, had to say in part I of this remarkably powerful interview series.

Eric King:  “Eric, I have to start of talking to you about this smash in gold and silver that we’ve seen here very recently.  It’s continuing this morning, your thoughts here?”

Sprott:  “As you know, Eric, I take a big macro view of gold here, and what I sense all along is that the Western central banks must really be running on fumes when it comes to (physical) gold.  I must say that I am never disappointed by the data points that I see in physical gold.

For example, I just saw the Perth Mint, their gold sales were up 50% and the silver sales are up 70%.  The Bank of England, the Royal Canadian Mint, all of the sales are up and getting into seriously high numbers.  All the while, this is all predicated on the gold and silver supplies hardly going up at all.

In fact, I think the gold supply will be down this year from maybe even back to (the year) 2000....

“And so the big macros are (one):  What is China doing?  Now, we have one data point on China and one only, and that’s exports from Hong Kong into mainland China.  But I can assure you there are exports (of gold) from places different than Hong Kong, into China, but we don’t get to see the numbers.

So I can imagine (the immense) gold flows from Geneva to Shanghai, or London to Beijing, or New York to Shanghai, but the Chinese don’t publish that data.  But the data (which is published) shows that China is (now) importing over 100 tons (of gold) each month. 

I think for your listeners (and readers) the important thing to understand is that 2 years ago, back in 2011, China imported something like 200 tons of gold.  We’re (now seeing the Chinese) running at 1,200 tons of gold.  That’s a (staggering) 1,000 ton change in a 4,000 ton market.  That’s 25% of the market they are now gobbling up that they didn’t gobble up 2 years ago, and through that whole time period the price of gold has (remarkably) gone down.

I think if anybody asked themselves if we heard the Chinese were buying 25% of the wheat market, the corn market, or the oil market, we would all imagine the price had gone up.  So I’ve long believed that the central banks, through the raids on gold, the raid on GLD, and through leasing, have provided this gold into China and other countries.

As Sean Boyd recently pointed out to you (on KWN), you could look at 3 sources of gold (buying), India, China, and the central banks, and you can almost account for all of the (entire world’s annual) gold production.  This really means that nobody else would be able to buy gold, but we know there are lots of other people buying gold.

So I think there is a continued suppression going on -- the numbers (definitely) argue for that.  There aren’t a lot of numbers available, but even the few we have, like the six or seven sources, I calculated a year ago that there is a shortfall of something like 2,200 tons (of gold) each year in a 4,000 ton market.

If I updated the Chinese numbers it might be a (remarkable) 3,000 ton shortfall, which by the way exceeds all (global) mine supply in the (entire) year.  So, I think, ultimately, not withstanding the stuff that goes on on the COMEX, and as I thought about this interview it seemed to me that the price of gold and silver almost flatlined for six hours yesterday (laughter ensues).  Then, bang!  In one hour it goes down $25 between 3:00 and 3:30 AM (EST) in the morning (during very thin trading), and then I guess another tranche down here (in price) subsequent to the COMEX opening.

I found it stunning that it would be flat all that time (yesterday), and then all of the sudden there is this huge raid.  You have to wonder, well, you don’t wonder, you know exactly what’s going on, it’s being marked down.  And I suspect it might be because of the big decision coming out of the FOMC next Wednesday.”