Weekly Wrap Up

The Upside Down Year in Gold and Silver - Eric's Yearly Wrap Up

The Upside Down Year in Gold and Silver - Eric's Yearly Wrap Up


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What a great way to close our 2021 Monthly Wrap Up series with a special Yearly Wrap Up courtesy of Eric Sprott. After a frustrating year where many things that would typically send precious metals higher had the opposite effect, what should an investor do? Host Craig Hemke sits down with special guest Eric Sprott to break down all the gold and silver news you need to navigate an upside down market.

In this edition of The Yearly Wrap-Up, you’ll hear:

  • Why gold is down YTD even as real rates are the lowest in history
  • Words of advice for new stackers
  • Plus: where we go from here

“I just want to lead off with: look, I’m a skeptic, OK? And when I look back at my involvement in the financial markets, I very much foresaw the NASDAQ crash in 2000. The ’07-’08 housing/financial crisis didn’t escape me. And of course, it brings me to precious metals, the fact that you’re a skeptic about all the things that we’re seeing going on here. And even in that same vein, when you talk about inflation—it was reported at 0.8% this last month; that’s annualized 9.6; if you actually want to compound it, it’s like 10—and I don’t believe the number… I don’t believe the number is that low.”

To hear Eric’s full thoughts on the month’s gold and silver news, listen here:  

Announcer: You're listening to "Sprott Money's Monthly Wrap Up," with Craig Hemke.

Craig: Well, welcome back and Happy Holidays from "Sprott Money News," sprottmoney.com. It is Friday, December the 10th, 2021. The year is almost over. So it's time for a yearly Wrap Up. 2021 Wrap Up. And of course, we welcome back a very special guest, Eric Sprott himself, Eric, Happy Holidays, Merry Christmas, all that stuff to you.

Eric: Hey, Craig, all the best to you and the listeners and good to be back again. As probably most people are aware, we had a bit of a health issue in the family. My wife is in suffering, and it's taking a lot of my time and hospital visits and whatever. So I can't quite keep up with things the way I'd like to. But looking forward to this conversation.

Craig: Yeah, well, at least on the metals end you haven't missed much this year. Hopefully, save you a few headaches having to watch this stuff on a daily basis. Hey, and look, before we get started. Remember all of this information, whether it's the thing I just recorded a couple days ago with Chris Vermeulen, the monthly precious metals projections. It was a great conversation. We looked at the monthly charts, very valuable information. The Ask The Experts segment. These conversations like this. They're all sponsored by Sprott Money. So be sure to keep them in mind anytime you're in the market for physical precious metal or metal storage. Again, there's just one week left in the Sprott Money holiday sale. They've lowered their prices on a number of the best selling products with prices that are hard to beat. So look for special price products at sprottmoney.com. Or, of course, you can always just give us a call 888-861-0775. Hey, Santa Eric, I understand you're feeling kind of generous this holiday season.

Eric: I understand.

Craig: Yeah, you are. You're a very generous guy. All right, well, I understand that you are giving away five, count them 510 ounce silver bars. That's a good deal. Now all you have to do to enter to win one of these 510 ounce bars, is to head over to Wall Street Silver's Reddit page and you #sprottmoney, and then tag three of your friends on the Sprott Money contest post. Sounds pretty simple. That sounds like something you and I probably don't know how to do. Eric.

Eric: I probably should jump off this call and get on there right now.

Craig: Yeah, look I would do it. I'm not sure I have three friends to tag in the first place.

Eric: Well, you've tagged a lot of people already my friend.

Craig: That's why they're not my friends anymore after a year like this, but if I had three friends to tag, I would tag them. So I'd have a chance to win one of these 10 ounce bars. Anyway. That's all you got to do there. You go to the Wall Street Silver Reddit page, you #sprottmoney, tag three of your friends on the Sprott Money contest post, and then the lucky winners will be announced, December the 29th. So anyway, thank you, Santa, that's nice of you to donate those. We got to try to keep our heads in the game as we go into the end of the year. We got a lot to talk about today. I don't know exactly where to start. Why don't we start the way we used to back in the day and talk about just the news of the day? The big news today was the U.S. inflation data, which hey, we're keeping up with everybody else in the world, apparently at least. Highest annualized U.S. CPI since 1982. I was just 16 back then. Eric, you were sick. 55 or 60. Anyway, I lose track. Anyway, big number. What do you think of that?

Eric: Yeah, pretty crazy. Well, it's funny, Craig, having not been on this interview for quite a while, I wanted to start off with a little background actually. And because some of the comments that I'm gonna make might seem from left field if people aren't aware of kind of my history and what I might think of people. And I just want to lead off with look, I'm a skeptic, okay? And when I look back at my involvement in financial markets, I very much foresaw the NASDAQ crash in 2000, the '07-08 housing/financial crisis didn't escape me. And of course, it brings me to precious metals, the fact that you're a skeptic about all the things that we're seeing going on here. And even on that same vein, when you talk about inflation, it was reported at 0.8% this last month. That's annualized 9.6, if you actually want to compound it, it's like 10. And I don't believe the number. I just don't believe that number. I don't believe the number's that low and we see what's going on around us.

And of course, it's not as you and I haven't talked about this before. There are, for example, the Chaplet index, which we've spoken about before. He's around 10% for the last decade, when the U.S. said their inflation was 2%. Like, there's just so many things that you see going up a lot, whether it's fuel, car prices, house prices, health insurance, you name it, it's going up. And I don't think it's going... well, it's obviously not transitory. And one of the reasons I think it may very well continue is due to the logistical issues that we are all having to put up whether it's trucking, or emptying ships in LA Harbor. Even the labor participation rate seems to be going down. And look, we don't have people who want to work to produce things. Anecdotally, I go down to a very major store here in Toronto. I can't find Kellogg's cornflakes.

Craig: Really?

Eric: How is that possible? No, no Kellogg's cornflakes. And whether they just can't get the truckers or what they can't get the ingredients or whatever. And I hear more and more that every now and then you see this missing, you see that missing. And most of the CEOs are talking about those issues. The inputs aren't available, where did I read today, that Apple is gonna stop producing iPhones. Because they can't get some of the inputs, I read that this morning. So that's a big part of it, right? The fact that when you have a shortage, you're almost dead in a position where the vendor can increase the price because he's got the product, so I don't see it as transitory.

And of course, when we talk about inflation, the reason we talk about it is well, how do you protect yourself from inflation? Well, you certainly don't own a bond that's yielding 1.4%. When your currency should be depreciated by 10% a year because of inflation and you should own gold. Doesn't necessarily translate that way, which I think is probably the next thing we should get into. When I think about this discussion we're gonna have, I go back to the last expiry on the coal mix, which was around the end of November. And sort of halfway through November, my partner I were discussing, well, what's the max pain level for gold? And max pain is that level where the banking community wants to get the price so they make the most from selling auctions to their customers. And it typically closes there. And at the time, now, the gold price is 1875. And the max pain price was 1870. And it was seemingly under a roll and technically breaking out and nah, nah, nah, nah. And all of a sudden Jerome Powell gets renominated to head the Fed and gold was down $40. Oh, no, here we go. And sure enough, on expiry day, gold was below 1800.

And then that's the situation we find ourselves in. And I have a particular theory I'm gonna call it The Theory of Repression. And some of us might think, well, it just doing it to get the gold price down, so their inventory doesn't have to take such a big loss. In truth, it's all about the options. And all these premiums that are written and a lot of people are buying options all the time in short dated options. And typically when you buy at an auction, everything staying exactly the same for the time period, you lose 100% of your money. But it's even worse than that when the guy selling the option makes sure that even if you were making money, which the 1875 guys would have been making money, but when it expired, no, you weren't making money. And I just think they sweep the table, they sweep the table on the stocks, they sweep the table on the options, they sweep the table on the commodity, and it's a huge payday for the banking business. And it happens in many things, not just in precious metals, but many things. And it's a very unfortunate thing. And I don't know when it comes to an end, but it's something we have to bear in mind.

Craig: Well, and that's what has made it such a challenging year. You've got that relentless overhang of short positions by the banks. That never seems to go away and is always an impediment to any kind of rally. I mean, I think back, Eric, when in January, I always write my kind of annual forecast. And I posted yeah, sometimes it's good, sometimes it's not so good. This year, not so good. I hit the macro stuff right. I didn't even think we'd get to 7% inflation like we are. I thought we'd just get to three or four and have these sharply negative real rates. And I thought that'll get us up over 2000. Instead, I mean, we're down $100 year to date, and we've got the lowest real rates in history. How do you reconcile that?

Eric: I reconcile it with people wanting markets to be where they want them to be and I've had two words in my mind, they are tamped down. And I'm sure you might have seen those tamped downwards before by one of the directors of the coal mixing saying well, we had to tamp down silver.

Craig: It was the CFTC guy. He was the head of the CFTC.

Eric: Yeah, you had to tamp down silver. What do you can't bring down the silver market? Well, it's probably part of the playbook, right? Silver and gold can't go with there's. In particular, if there's inflation. I've always been a believer, if there's an economic data point that says gold and silver should go up, it will do the opposite that day. And as I look at where the gold and silver prices are right this second, I see that we've given up most of the rally that we experienced today. And there's probably decent odds that the gold price is down at the end of the day, because they don't want it up. When everyone's reading that inflation's up, they don't want them to read that gold's up because everyone says, oh, inflation equals higher gold prices. They don't want that. So these are some of the things that we have to fight about.

Craig: So I mentioned Wall Street Silver earlier. And I mean, they've done a wonderful job, it started on Reddit. And then that sub page, the Wall Street Silver page, and the guys that run that page they just do a great job. And they have a YouTube channel, and they're really spreading the good word about hard assets, physical metal and the like. And they brought a whole bunch of new people into the fold as we've gone through the year. And, smart people that recognize, you know what, yeah, let's diversify out of dollars into some physical metal. But yet, I mean, Eric, I mean, all we've seen is price go down this year. So for people like that, that are new stackers, after what they've experienced this year, what kind of words of advice would you give them?

Eric: Well, first of all, I have no doubt that silver will go to where it should go to on the upside. I have no doubt about it at all. I mean, you can't keep fighting the forces of physicalness. And yes, there is a group that's complicit in doing it, whether it's the bankers on the coal mix, whether it's, for example, the U.S. Mint, all of a sudden, they don't sell any silver coins. Well, when you used to sell 4 million a month, and you stopped selling them, that's an annualized rate of 48 million in a market that's an 800 million ounce market. Well, that makes a bit of a difference, you know. And so that means we got to find, let's say that, what they're producing and what they could have sold might be 30 million, we got to find 30 million of buyers here that otherwise weren't gonna have to buy it because the mint is working in collaboration with, I'm sure the Treasury and the Central Bank, and all those people who try to paint this picture of a wonderful financial situation, which we don't have.

Craig: Right. And so I mean, is it just, I hate to say patience, because you've had to stay patient longer than I have. And I feel like, Jesus, it's such a challenge.

Eric: You know what I do, Craig, when I when I look at what's going on, I'm lucky that I've been involved in precious metals for the last 21 years since the low in 2000. And I think was roughly 250. And today, it's 1750. Well, it's up 600% in 20 years. And for a guy who's participated in it well, thank you very much. And of course, the stocks have done better than that. And if you could take even better stocks within the stocks, you've generated pretty sufficient return for yourself. So I take great comfort in thinking, ultimately, you lose a lot of battles in this game, but you see it every day, when the price of gold goes down $15 in two minutes, and you're thinking, "Oh, my God, how can this possibly happen?" But ultimately, I'm sure we're gonna win the game, and we'll see 3000, 4000. Who knows what crazy prices we're gonna see. But I think there'll be a substantive payoff.

Craig: Right. That leads me to another topic that has been on my mind and everybody's mind this year. And that is the shares. You know, it has been such a lousy, lousy year for the shares where the GDX got to what 45 or 6, back in August of last year, and now it's about 31. I had an interesting conversation. I think it was here at Sprott Money with Joe Mazumdar of Exploration Insights. And I also spoke with David Groffle, who I'm sure is a guy that you know. And they both suggested that in a period like this where metals prices are flat but yet inflation is rising, and so your input costs are going up, then that's generally a better time for like a royalty company rather than a producing mining company. What are your thoughts on the shares in general at this point?

Eric: Yeah, well, let me deal with the royalties first. And of course, that's perfectly true, because their costs don't go up and the proceeds stay the same essentially, okay, they get the value of the gold with no cost. So yes, a royalty company is has better prospects going forward to get an outsize return versus a stationary and I stress the word stationary gold company. Now, most gold companies aren't stationary, however. In other words, they're out looking. And they spend a lot of the money that they generate from mining on trying to find new things. So if you can find a mining company who's producing X, and in three years, he's producing two times X, yes, on the X, the guy who's got the royalty is gonna outperform them. But if the guy with X goes to 2x, the royalty company hasn't done that. Okay, they sit with their royalties. And so there's lots of opportunity we've seen, in fact, it's funny, we used to talk about a Great Bear resource...

Craig: Yes, I was gonna ask you that next.

Eric: Which [inaudible 00:15:54] bid for yesterday. And a stock that I didn't own. I've spoken about it a few times as, boy, that's just one I missed. And I liked their numbers. And I nearly bought it when they were suddenly sure around 12 or 13, I think I'm gonna say a year ago and didn't. But there is an example of a company, I don't even know where it started. But I know it probably was like a buck and they got taken out at 29. So and that's probably in the three or four year period. So there's lots of opportunities if you can focus in on something that's likely to outperform so you don't have to rely on all the gold stocks going up or the gold price going up. If somebody can make a discovery, you're gonna be okay.

Craig: Yeah. Well, first of all, I want to point out to you that I do own it. Haha, haha.

Eric: Oh, good. Good for you.

Craig: Thanks. Hey, think of blind squirrel and nut, right. Anyway, do you think... I mean, we've had a couple things like that. We've had the Kirkland Lake, Agnico Eagle deal in the last couple of months. I don't know, we've all been sitting on this going, okay. Someday, there's gonna be this big move of M&A. Do you think we're any closer to that or these just kind of one offs?

Eric: Oh no, I think we're closer to it. No, Kirkland Agnico was not as good for the market as a cash bid, right? Because people get cash, and they have to redeploy it. And typically, if you made a lot of money in Great Bear, you're looking for some other stock that could do a Great Bear like thing. Okay. And that's not gonna be some senior producer. So that's very helpful. I happen to own a little company called Amarillo Gold that just received a takeover bid for cash. So it's happening. I don't regard the share bids as nearly as important as the cash bid. And of course, it was rumored that Barrick was taking a serious look at Great Bear. Maybe now that Kinross might have snared it, maybe Barrick will be looking around for other things. So there's gonna be lots of opportunity for a senior's to by people who are finding gold, which we'll talk about in due course here.

Craig: Well, that's what's also frustrating about the miners is that they're spinning off actually have cash flow. Right? Seems like the first time forever.

Eric: Yeah, no, they got lots of money, and most of them have the de minimis debt. So they just been afraid to do something. Because the previous time when all these acquisitions were taking place, it was right at the top of the cycle. And most of those acquisitions ended up being foolhardy. So there's a little reluctance on the part of the seniors to pull the plug. And in fact, when I even look at Kinross buying Great Bear, I mean, I say, "Well, hold on. I was looking at this thing when it was 11, 12 bucks. Why wouldn't Kinross look at it when it was 11 or 12 bucks?" Now maybe they did, I don't know. But to think that they couldn't have recognized that this was an interesting opportunity well before $29, that's always what kind of blows my mind.

Craig: Yeah, yeah. Well, as you know, that, sometimes that's like turning a battleship to get everybody moving in the same direction in a big company like that.

Eric: I might even say the same with Agnico and Kirkland. I mean, there was a time, I mean, hey, you and I talked about Kirkland for five years. We could see what was happening for five years. How come nobody realized it until five years later? It's a little shocking in a way but it makes a statement about that the opportunities are there, by the way, because people don't realize and don't step into action that quickly.

Craig: Yeah, yeah. Then if you can do your own homework and get some people to help you out, finding things like that, finding ideas can certainly still profit even if the share is... if you measure by the index or the ETF, even if they're going sideways, there's still opportunities in there. We'll get to some of those. I know some folks are dying to hear about some of the stocks you like, we'll get to some of those in a minute. But I do want to ask you about where we go from here. Personally, I'm concerned about 2022, because it's another election year here in the U.S., even though a president's not up for reelection, most of our legislative branch is. And so, you know what 2020 was like, obviously the last time we had an election. And then we've got, what's the fed gonna do? What's the economy gonna do? What are your thoughts just kind of big picture as we head into next year, Eric?

Eric: Well, I almost hate to raise it. But I mean, I still think this whole pandemic thing is a huge problem. And when I, you know, I have different views than are accepted on Main Street, if you will. In my mind, I see no effectiveness from vaccines. And I could use many examples of that, whether it's these fully vaccinated countries, Israel, Singapore, who all of a sudden have a huge spring up in cases. United States, that's well vaccinated, but all of a sudden, the cases start going up. And in fact, I contrast that with some countries like India, where they used to have 400,000 cases a day, they now have 9000 cases a day. Japan, they used to have 30,000 cases they now had... today reported 222. And you know, what you think to yourself, What are those guys doing? What are they doing that's different that we don't do? And one of the things that they do, do is a one, they allow the prescription of ivermectin and I think hydroxychloroquine and other drugs that deal with COVID.

Whereas, in North America, in Europe, we don't allow that, for some reason, we don't allow that kind of care. And I think the fact that we spent, well, we're almost pushing two years here, right? Dealing with COVID. And bottom line, my bottom line with COVID and the vaccines, totally ineffective. In fact, study out of South Africa, which kind of got covered up by a comment that Pfizer made said, "The two vaccines lose for a factor of 40 of their effectiveness against the new variant, a factor of 40." That's not 40%. That's a factor of 40. So if you had 100... if it could do it for 100%, now, it does it for two and a half percent. And then the Pfizer CEO can be," We're out, but if you take the third booster, it then increases that by a factor of 25." But the bottom line is, we've all taken these vaccines, and what do we got to show for it? And there's a negative part of the vaccines, which I might talk to later. Oh, no I'll talk to it now.

Craig: Yeah, go ahead.

Eric: When you're very concerned about what the vaccines are actually doing and why do I do that? Because I see... Well, there's a headline yesterday, it was on Zero Hedge up to 300,000 people facing heart related illnesses due to get this post-pandemic stress disorder, I don't think so. It wasn't post-pandemic stress disorder. It was in fact, the myocarditis and Aperio carditis that has been very much talked about it, okay. And then when you see these soccer players dropping off all the time. I've seen evidence here in Canada, the stillborn deaths going up by a factor I hate to talk about even, 24 times. I see people around me that are experiencing these heart issues, I hear of increased cases of dementia. And of course, the one thing we know is the media does not allow conversation of this, which in itself should raise the red flag, right? I think the last time I was on here I talked about Cliff High and how I have a great regard for him. And he predicted all these things would happen with the vaccines and the cases and all that stuff. And I used to read him on Twitter, which I'd never used until I found out that's where I could find him.

Well, sure enough, now, he's not on Twitter anymore, because they pulled him. And it's just interesting that was another item on Twitter yesterday where Ghislaine Maxwell trial, there was some website you go to on Twitter that had 500,000 people looking at it, and they killed it. And it's just okay, come on, guys. Do we see what's going on, don't we? Some guys trying to control what we're learning. And it's just wrong. And now we have this new Omicron which I gather it may not be nearly as harmful as the original beta and delta, it spreads like, hello, oh my god, it's like four times more, a factor of four times the spread of the delta virus. So you still might overwhelm the healthcare system. So, is there some price to pay for being totally wrong for two years? To answer your economic question, we've gone through all this stuff, we're gonna have these huge deficits, we get handed out all sorts of money. We have logistical issues now. And for what is the question.

Craig: Yeah, flatten the curve. 15 days to flatten the curve. Eric. So as we look forward to how... we don't know how it's gonna play out. Who does, you know? Like you said, two years ago, nobody even heard of COVID. But as we go into 2022, that even Powell and Yellen have been forced to admit, it is not transitory this inflation. You and I back in 2020 were talking about stagflation as an inevitable outcome of all of the shutdowns and the monetary policy and everything else. Is that gonna become kind of the dominant idea next year, this kind of slowing economic growth, but inflation is persistent, and the fed is kind of trapped? And I mean, how do you think all that plays out?

Eric: Well, I totally believe it well, particularly if the fed ever did what it should do.

Craig: Right. They can't.

Eric: Oh, my God. Talk about deflating. That would just be... the markets would collapse. So I don't think they're gonna do that. They're probably happy to have the GDP continue to grow at 2% and not have the financial markets collapse, and particularly the bond market. Right. And it looks as what we witness today, I mean, why did bonds... they actually rallied today, and gold is hardly up at all today, and I guess the stock market's up and looked at it, but the futures were up. So everything's hunky dory here. So it looks to me like much as they might talk about tightening, I think they're gonna have a tough time tightening. And what's tightening? We're gonna go from 0-50 basis points? Come on. There's no relationship to the problem of inflation that we're all facing.

Craig: Precisely. Do you think that augers more for something like silver, because we're seeing so much action in other commodities, in other inputs, iron ore, lumber soaring, again? Does silver and copper, things like that, do they maybe have more upside potential?

Eric: They have all kinds of upside potential. Look at the the silver demand in India and China. I look at the demand that could be there if the mint would sell the coins. I look at these countries that have PPIs of over 20% and 30% in Europe. I mean, you'd have to be an idiot not to think that silver and gold would be a decent opportunity in such an environment. So it's only because the Komik has controlled it so far. And but even as you know, the deliveries were pretty good and silver for the expiring December contract. They were good in gold for the expiring contract. And every day, there's a lot of people using the Komik to take physical delivery now on a daily basis, right where the open interest goes up instead of down. So I think that everything that you and I could want to have happen is happening other than the price going up. And of course, the price going down is because of weird things. Who knows why, I don't know why the silver price went down to 60 cents the other day or yesterday, I guess. Crazy.

Craig: Right. But 15 out of...

Eric: Some guy making it go down for some reason.

Craig: Yeah, it's like 15 out of 17 days in a row, Eric.

Eric: I know why they might do it, because they want to get their books organized for December 31st so they don't have a big loss. That does not escape me. Okay. But that's just being crooked. And ultimately, that too will end.

Craig: Yeah. All right, let's turn to some of the shares, I guess, in our final minutes. Let's start with this, though, Eric, because this has been on my mind. This has come up in a couple interviews I've done this week is tax loss selling. We didn't have like a tax loss selling last season last year, because the shares were actually up. But now you've got, we're kind of back to like '13 through '18, where people have gains in other areas. And so they're looking to offset that with losses. Well, hey, I've got some losses in my mining shares. You've seen this now for decades. Is there kind of a calendar in December that you have in mind that you've always seen the past where like tax law selling wraps up by a certain date, generally?

Eric: I'd say about five days before the year ends. Most people have done things by then, right? Because you got Christmas and New Years. Most people aren't thinking about the portfolio's but they're thinking about their capital gains right now. And of course, there's so many people have made so much money this year. Easily. I'm thinking the cryptocurrencies, the mean stocks, these things that have gone crazy. And so the profits are outsized in many cases. And if you have a loss, you're gonna take the damn loss for so you don't have to pay the taxes. So that is going on for certain. It's gonna start waning real soon here. Like, I have no doubt that anything purchased between now and year end will look good come January 31st next year.

Craig: Yeah, yeah, that's kind of was my recollection too is usually between the 17th and maybe the 20th, or 21st, it seems to finally be done. And then you get a lot of times a rally between Christmas and New Year's.

Eric: Oh, yeah. Well, that's because there's a two day settlement. So what you buy and whatever date is gonna be December 29th, that goes into next year. So and you can't sell it and get the loss on December 29th. I don't know what the exact trading days are at the end of the year this year, if you haven't looked at it. But it ends before the end of December. Selling.

Craig: Yeah. Well, so hopefully, maybe that'll help us. Over the next couple of weeks, then we'll flip the calendar in the new year. And we'll just see where we go from there. Eric, we put out that you were gonna be on this week. And of course, folks have sent in a number of names, and a lot of them repeat names. So there's a lot of consensus. I know there's a few on your mind. You want to start or do you want me to start?

Eric: Sure, sure. No, let me start. Because I will start with the whole Newfoundland gold play. And I think I talked about it the last time and why did I go there? Because I had all these experts talking about how the two plates collided in Central Newfoundland. And there's all this manifestation of gold. And whether it's Quinton Henning, or Rich Goldfire [SP] these are really skilled people all saying that there is a tremendous endowment there. At the same time, we had a couple of companies that I'm gonna refer to, [inaudible 00:32:08] that were hitting it out of the park with these high grade, nice fairly wide intersections. And Hans Berger described as potentially being as big as the apatity, which had 180 million ounces, and okay, that really intrigues me and of course, you marry that up with the results that Newfoundland, Newfoundland gold has had, I thought man, this thing, I think it's gonna come together.

Now, there's been a problem with Newfound Gold because they were accused of bias in some of their sampling, I think that problem is gonna totally go away. Okay, my prediction, just so that people know, we'll see. I think the sample size of 30 samples is way too small to be drawing any conclusions about any bias. And the other problem with the Newfoundland province is that the labs are backed up and nobody else has really hit another hole that makes us draw that conclusion. Okay, here we go. We do know it's kind of universal for Newfoundland. But we can't quite draw that conclusion, although there's lots of wonderful soil samples and field samples and high grade and all that which suggests it's gonna happen, but we haven't really had enough confirmation that people are gonna go, "Okay, this is goes over long distances. And lots of people are gonna find lots of gold there." So that's where I've been concentrating. And I own Newfound Gold. I know Labrador exploits Canstar all sorts of companies there that I'm hopeful that theory proves that.

Craig: You own so much up there, if I wanted to actually just go buy property, do I have to contact you?

Eric: No, I wouldn't advise that. There's lots of guys hunting around for properties.

Craig: Like if I even like the beachfront, right, because you've bought almost the whole island or whatever it is. Okay, what are some of the others that are on your mind?

Eric: Well, first of all, I did get an update on Walbridge, recently. The stocks seriously underperformed. I kind of had the feeling when they were going for the 43-101 that it probably wouldn't be well received. And I can say this again, probably said it lots of times. I do not like 43-101 because they're so conservative, that as you see the drill results you your mind is working about how big this deposit is gonna be than the 43-101 when it comes up. It's almost always disappointing to both in grade and size because they got some guys cut it but Walbridge did have a close to three and a half million ounce 43-101. They still have lots of areas to drill. And of course, to get it to the 10 that I might hope for, they've just got to sit there and pound holes in there and and I suspect that they will come up with 10 million ounces, in due course. I hope by the time they do that, that the gold price is better and the environment for gold companies is better. Because right now with kind of a low grade deposit and the price of gold sort of whimpering along here, it doesn't give you much interest in that like. And of course, also with some of these high grade developments going on in other companies. I could talk about discovery mine, discovery silver?

Craig: Yeah, yeah.

Eric: They came out with a PA that suggested it could be worth, I think it was around a billion and a half Canadian and they're trading around 600 million Canadian. Look pretty good. I'm sure that'll get bigger. Of course, I'm a big owner of First Majestic. I think things are going better there. I'm hoping that Jerry Ken will help them out. I could talk about Freegold, they just had some holes out. And you know what, I sort of have a dispute with the management of Freegold. And I keep saying, "Look, will you just focus on the high grade here because they'll come up with three meters of 20 grams and about 800 meters of one gram." And I just think that in this market environment, it's a lot easier to mine the three meters of high grade versus the whole capex billion dollar development that you can't possibly fund yourself.

So I think it'll be a good deposit. The Tudor, Teuton thing, Treaty Creek, the ore body, they came out with a reserve of, get this, 19 million ounces. And it was inferred of seven, I think it was. It had a total of 26 million ounces. And the drilling has been spectacular. And it looks like it would be quite a lot larger than that. And they're hitting higher grade. And it just seems to go deeper. And deeper is not a problem when it comes to underground blockade mining. In fact, it's an asset to be lower. So I'm pretty keen on Teuton and Tudor and American Creek. What else do we want to talk about? I've been a little disappointed in some things that go on in the mining companies. One of my pet peeves is these transactions that tend to destroy market cap. Kinross yesterday, if you're a Kinross shareholder, you're not a happy camper today. You just lost 10% of whatever you had, and which in their case is something like maybe almost a billion dollars in market cap because of a $1.8 billion takeover. That just doesn't seem right.

And some of the companies that issue stock, and then all of a sudden, because the issue of the stock comes under pressure. It's almost like the short sellers have been given fuel here or something. And I've seen that in too many cases. I saw it in MAG silver recently, I saw it in SilverCrest earlier in the year. So I would wish that the management's would think about what happened to the stock if I do this. And some of us don't like to wait for the five years to just see it manifest itself. We'd much rather see it manifest in the next five months. So I just put that out there. Are there other companies that you'd like me to...

Craig: How about if I veer off into Uranium? Sprott Inc, has been all over Uranium. Are you dabbling there at all?

Eric: That's not me, I'm not in Uranium. I know that Rick Rule of Sprott, guys, of course, are big in Uranium, but I'm not in it at the present time, I tend to focus on precious metals.

Craig: Okay. And just a couple of the other names that we're commonly asked, Pure Gold is not one I've ever recalled really talking about.

Eric: Oh, yeah, no, that's been, oh, been a tough performer. Again, it's a beautiful ore body startup, the mine, and it has not performed well from a mining perspective. I mean, I have stayed in touch with the management that keeps suggesting it's gonna get better. But the proofs in the pudding and there's no proof yet. I mean, yes, they come up with great drill results but hey, you got to produce the gold. Okay, and I know they've had some management changes there. And hopefully things will change. I still own every share I ever owned. I still own every share at Walbridge I ever owned. So I'm taking a big case here. But I think the ore body will win in case of Pure Gold money.

Craig: Okay. Actually, we touched on most all of them. Eric, is there anything else that's popped up on your radar as of late that you might want to share with everybody?

Eric: No, not really much as you know, I've been a big believer in the Silver's companies even though the silver has not met our expectations, but I own a lot of silver companies. And I still bring high prices and, for example as I look at Discovery with a billion ounces equivalent silver and imagine the silver price going to 50. Whoa, as an investor, that's what you have to imagine, right? That there's a very good chance of going there. And when it goes there, you're not gonna buy it for these prices. So you have to kind of position yourself ahead of time. I'm quite keen on things even though the performance has been disappointing. Maybe as you say, when the tax loss selling ends, we can start flying again. I certainly hope so.

Craig: Yeah. Well, and as we wrap up, let's just double back to silver. Again, Sprott Money is working with the good guys over at Wall Street Silver. And we have that contest, where if you can win a 10 ounce Sprott silver bar, just by going to the Wall Street Silver Reddit page and put on the #sprottmoney and tagging three of your friends that will get you entered. For not only the Wall Street Silver people, but for everybody that is, and this has been such a challenging and frustrating year, because so many things that would typically in the past have driven precious metal prices higher, it's been the opposite. So do you stay the course? Do you just keep averaging, just add to your stack on the dips? Do you buy PSLV? All of the above? Just what are your thoughts for folks that are still kind of relatively new to this and understand that things are upside down? But what would you tell them?

Eric: Craig, I looked at two charts recently. And they were the charts of Great Bear and Kirkland Lake. And I went back historically to look at them. And you look at some of those times when the stocks went down, I mean, there was a time that Kirkland stock fell by 50% only to totally rally right around again, Great Bear had many times when people would question the veracity of if this is gonna work out or not. And the same with Kirkland. And meanwhile, you get your 10 and 20 bagger out of it. Like, man, those are paydays. Okay. Those are serious paydays. And I'm happy to see that the Wall Street Silver Reddit crowd is in here. And I love looking at all the pictures of the people collecting their various coins, bars and silver. So all the credit to them. I'm always happy with the work that our friends at [inaudible 00:42:17] do. Bill Murphy and Chris Powell, boy, they've had to hang in there. Bill does a daily commentary on the gold bracelet. That's a tough job for anybody.

Craig: Tell me about it

Eric: Anyway. Yeah, I know. Hang in there. Thank you, Craig.

Craig: I've been doing it TF Metals Report for 11 years now. It only feels like it's about 35.

Eric: Your day's coming. Well, not that we haven't had days. We've had days. Right? I mean, the price of gold is not okay. Price of silver is not okay. But oh, we get more bad days than good days. So I'll try to stay optimistic.

Craig: Well, I wish you more good days than bad days, personally, for the entire Sprott family. And I pray that you have a safe, wonderful, relaxing holiday season with your family, Eric, and I hope we can visit again, at least on a semi occasional basis in 2022 as things maybe get more fun again.

Eric: Yeah, I look forward to that and all the best to your listeners. Let's hope that '22 is way better than '21. Not that there weren't some... there were some big wins. And you owning Great Bear. Congratulations. So there's opportunities out there and we got to stay the course here.

Craig: Yeah. And just one reminder, again, this content. If you want to be alerted every time there's something new from Sprott Money, like this podcast, if you want to hear it first, you got to sign up for the Sprott Money Newsletter. That's another thing you'll find at sprottmoney.com. So again, besides great deals on metal and metal storage, you can also get all kinds of great information there as well, sprottmoney.com. And if you want to do some holiday shopping, give us a call at 888-861-0775 Eric, my old friend, all the best, and again, I wish you a safe, relaxing, peaceful holiday season.

Eric: Great. Keep up the good work, man.

Craig: I'll try. Can't make any promises. But anyway, hey, hang in there, my friend. All the best.

Eric: Okay, thanks a lot. Bye for now.

Craig: And from all of us, it's "Sprott Money News" and sprottmoney.com We hope you have a great holiday season, and we look forward to a very prosperous 2022.

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About the Author

Our Ask The Expert interviewer Craig Hemke began his career in financial services in 1990 but retired in 2008 to focus on family and entrepreneurial opportunities.

Since 2010, he has been the editor and publisher of the TF Metals Report found at TFMetalsReport.com, an online community for precious metal investors.

*The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.

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