Weekly Wrap Up

A Volatile Week Ahead for Precious Metals - Weekly Wrap-Up (September 13, 2019)

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September 13, 2019

It’s Friday the 13th. Will today be unlucky for gold and silver? Eric Sprott returns to the Wrap-Up to preview the volatile week ahead and break down all the gold and silver news you need, including:

What to expect from next week’s FOMC meeting

How the “economic funk” is leading to a paradigm shift

Plus: a deep dive into your questions about the miners

“I was reading that ten million people a year—TEN MILLION—get medicals bills that they can’t pay. Now, you give that ten years, you get a hundred million people. That’s a third of the population! And these sorts of things would cause people to not be able to afford things. Plus, as people are passing away, of course, their greatest expenses are right at the end of their life… And we read that something like 78% of people are living paycheck to paycheck. No wonder they can’t afford a house! When you can’t even think about buying food, how are you going to buy a home or a car?”

NOTE: The audio quality of the podcast is poor due to weak internet. The transcript for the audio will be posted on Monday.

Announcer: You're listening to the Weekly Wrap Up on Sprott Money News.

Craig: Well, greetings once again from Sprott Money News and sprottmoney.com. It's Friday the 13th of September, 2019, and this is your weekly wrap up. I'm your host, Craig Hemke, and joining us, as usual on a Friday, is Eric Sprott himself. Eric, happy Friday the 13th.

Eric: Yeah, Craig, I didn't actually realize that it was Friday the 13th. That's probably going to be a very lucky day for us, I'm guessing.

Craig: Let's hope it is. Hey, it's always a lucky day at Sprott Money. You like that segue, Eric? It's always a lucky day at Sprott Money, especially if you're a stacker. We always have great deals at sprottmoney.com. We mentioned last week the Royal Canadian Mint Silver Grizzly coins, I thought I would point those out again. As everyone knows, my friend Eric Sprott is silver and also, kind of grizzly with the way the markets have been performing lately. Great time to add, when prices are a little bit lower than they were a couple of weeks ago, go to sprottmoney.com, or of course, call us at 888-861-0775.

Eric, we're talking about being grizzly, but as you and I record this on Friday morning, silver is actually up this week, as kind of painful and as volatile as it's been. Gold's almost unchanged and silver is up 10 or 12 cents. How you feeling at this point?

Eric: I'm feeling grizzly, and I should tell you, I bought 100 Grizzlies, knowing that's my favorite coin of the month. And I think, there is nothing better than giving away silver coins. It's a wonderful, wonderful, wonderful gift. And what better a gift with a picture of me on it, a way to celebrate. You're kind of like me so.

Anyway, yeah. Been a interesting week, and as we discussed last week, maybe we'll get confirmation of that this afternoon, we get the traders report. I thought, "Oh, that's just [inaudible 00:01:54] down with the shaking of the tree and run the stops, because there was no other way that they could stop the train and buy back contracts. But broke down, they would be [inaudible 00:02:09] of all these [inaudible 00:02:10] orders and be able to buy back contracts. So when we get traders report tonight, we'll see how successful we were, but that's what the whole thing was, and hopefully, we're going to find a base here and start the move back up, because I think the physical demand is going to win the day here.

Craig: We're heading into a volatile week next week, that's for sure, with the FOMC meeting coming up next Wednesday where we saw what the ECB did yesterday with cutting rates and restarting some QE. With the U.S. economy where it is, what do you expect out of The Fed next week, Eric?

Eric: Well, I expect continuing decline in interest rates. As you know, your president suggested that that [inaudible 00:02:57] go to zero, if not last quickly negative interest rates. That should get it focused quickly on, how do you preserve yourself in that kind of environment.

So no, I expect that the rates will go lower and that that environment will be wonderful. I was sort of coming up with a steep thesis for why we might be going [inaudible 00:03:25] particular, it struck me that, you know, home sales have been going down. Well, that's funny because [inaudible 00:03:36] home sales are going up, what am I missing here? But the first thing I won't do is something [inaudible 00:03:44] talk about [inaudible 00:03:45] before that maybe the inflation rate is a lot higher than what is being fed to us, and you know I use something called the Chapwood Index, which suggested inflation is like somewhere between 8% and 10% every year for the things we have to buy.

And, you know, you give it the past...and you [inaudible 00:04:06] that's growing at 10, and the guy's wages are going up by 2, and/or the guy indexing by 2 but it's got to go up by 10, you know what? You get ground to a pulp in time. And interestingly, there was a report that was sent to me by my good friend, who lives in the Long Island area, fellow bear by the way, and it had to do with bankruptcies, medical bankruptcies, and that there's half a million medical bankruptcies a year, which I found stunning because you know what? That's 5 million in 10 years, okay? And that's a lot of bankruptcies. I was reading that 10 million people a year, 10 million, get medical bills that they can't pay.

Now, you know, you give that 10 years, you get 100 million people. That's a third of the population, and these sorts of things would cause people to not be able to afford things. Plus, as people are passing away...of course, their greatest expenses are arriving into their life, and I suspect that the hospital's ending up with most of the dough, most of the savings that they had, and therefore, not being passed on to their offspring. Anyway, I just think... And we read that, you know, something like 70% of people are living paycheck to paycheck. No wonder they can't afford a house. When you can't even think about buying food, how you going to buy a home or a car?

Craig: That's exactly right. That's all part of that economic funk I've heard you talk about in the past.

Eric: That's what I think has happened. We're in a funk here, and it's... You know, when I saw the car sales in India, what is going on with India? Car sales going down 35% in a month and...well, maybe they're experiencing the same thing people here do. The costs are just going up, and all of a sudden, the rubber meets the road and you can't make it, so.

Anyway, that's... And of course, the result of all this...which I should go to the conclusion. The conclusion is that the powers that be probably are very, very aware of this. How can you not be aware of it? And therefore, we pass policy, "Well, man, we just got to keep cutting interest rates," which we've been doing now for...how long is it? Thirty years? A"nd printing money and hope that, you know, we can [inaudible 00:06:27] here.

So get ready, going forward, which is all going to be very conducive to people needing to diversify assets because of that paradigm shift, and we're going to have to continue looking at buying gold and silver.

Craig: No doubt about that. Speaking of assets that folks need to buy, it's probably time we should talk about a few of the miners that have been sent in this week. Again, we get a list every week of people looking for Eric's opinion. If we don't mention any company that you send to us, it's because Eric didn't have an opinion. So we go through them all and then try to pare the list back to save some time. I got a handful of them for you this week, Eric, for your commentary. The first one is something called Moneta. Do you know something about Moneta?

Eric: Moneta. Some people... Moneta, Moneta.

Craig: Tomato, tomato.

Eric: But before I do, I want to [inaudible 00:07:19] talk on this podcast, but Sprott Money has being restricting allocation of silver coins by our primary supplier due to an influx of interest in silver. Everyone bear that in mind, okay? And of course, I've been of the view that, how can these guys keep supplying silver like this, between the silver that's going into the ETS, between the silver that's going in the...there's no way, Josh. This cannot be happening. There's going to be a restriction again. I've already said it before, including last week, but I suspect there'll be [inaudible 00:07:56], okay, which I believe it will be, and it's just because of the data [inaudible 00:08:01].

The other thing is, my daughter, Larisa, wrote an interesting article that's available on Sprott Money about, you know, how the trust in the system is breaking down. Trust of government. Trust in banking. The trust in the medical system where you pay so much more and you get nothing for it. You don't get anything more. And then your health gets worse.

Okay. Having said that... And by the way, there's a lot of companies at Beaver Creek. These smaller companies and some of their presentations are available, so anybody that interested in some of these companies, you can go to their website and see if they have their presentation Beaver Creek. Yeah, okay. So, Socamont [SP], the small company drilling in [inaudible 00:08:45] had some interesting results. Trying to tie them together. They announced, think it was yesterday, that they had some drilling completed at another property, Parks Brook, I think it's called. And some of the asset rush , but we don't have the results. We don't have anything constructive or factual that I can add to the discussion. In all, they'd have pretty good results, so if they can keep [inaudible 00:09:16], it could be very exciting.

Craig: Was that Moneta or Socamont?

Eric: Oh, sorry. It's Socam-...my apologies.

Craig: No, that's okay.

Eric: You thought you... Yeah, because I knew we were going to talk about Socamont and I was using the list, I was talking about Socament. Okay, . That's in Ontario, in the James Kirkland area. They used to describe themselves as having a 5 million ounce ore body with a grade of around a gram a ton or something like that, so it'd be a mine. The new management has decided, "Well, let's focus on where the higher grade is," and I think, I think the number's something 1...I think 3 million ounces of some... like 4 grams of gold, 4 [inaudible 00:10:00] grams, because they think they can mine and generate a much higher grade participated in the financing that we did, so obviously, I'm looking forward to the gold price and the new look and the deposit as bringing them back into favor again.

Craig: One of the companies we talk about quite a bit is Wallbridge. They had some drill results this week. Can you comment on those?

Eric: They did. And I will say...let's put it this way. When I was speaking to the management, I said, "I found the grade underwhelming," because it was. I mean, they're big hole, 234 meters a point for 2 grams, okay? Now, that was the underwhelming part of it, but I will say this: that ore body is getting bigger. They went 300 meters northwest, they went 300 meters to the southeast, they went deeper. The width of the ore body was just the most stunning part of this, to have an ore body that could be, you know, 200, 300, 400 meters wide. That's stunningly large.

It's the oddest... So, what we... And they have all sorts of silver gold there. I mean, if we could get one long hole here of, you know...well, hopefully more than 1 gram, but at least 1 gram, and you kind of know you're zeroing in on a big open pit. The two previous long holes they had, one's around 2 grams, another one was 1 gram, so the 0.4 was a little disappointing, but when you balance it off with the other ones and the ones that come under are very offbeat [inaudible 00:11:44] have there, so... And the stocks demanded some attention just recently, the last couple of days. They were in Beaver Creek, in fact, they're presenting this morning it'll...and I think people are taking big interest in this because they realize they could be very, very large, and of course, if it is, then it'll be an excellent investment.

Craig: And someone was asking about an update on Garibaldi. We haven't spoken about that one for a while.

Eric: Garibaldi. Yeah. Well, they finally came out with some drilling results from this year. It was a stunning, stunning hole. It had something like 7% nickel and close to 4% copper, and platinum, palladium, gold, silver, ruthenium, osmium, iridium, and rhodium.

Craig: That's a lot.

Eric: And it's funny, those last four that most people wouldn't know what the hell they were, those are very rare earth minerals, but they're all good deposits okay? And I've seen some studies of what the gold equivalent was of the roughly 30 meters of inner section and it works out to over an ounce [inaudible 00:13:03].

You don't often get things that were more than $1500 a ton and worth $1600 a ton is very...it looks like it's getting deeper. The one thing that I would say, this stuff doesn't come from nowhere, you know? The fact that you're hitting gold and copper in a magnanimous caliber . This comes from somewhere. There's going to be continuity. I'm sure they're going to find the feed and if they make going to become a very large ore body, and potentially, a very, very valuable ore body, more important than how large it is, so. It looks...and the stock was up almost 10% yesterday on the release of the drill hole. Hopefully, .

Craig: And lastly, you'd mentioned last week that perhaps Kirkland Lake was going to get included on that index on Toronto, and that in fact happened. Any other good news there?

Eric: Well, it did, and of course, their stock's been weak lately. I was actually discussing with my [inaudible 00:14:08], do you think that those probes in the market could drive this stock down so they can all buy it, so that the day it goes into [inaudible 00:14:15], which is Friday the 23rd...the 23rd, Friday?

Craig: Well, a week from today would be the 20th...

Eric: Or maybe...no, it's the 27th.

Craig: Got it.

Eric: Yeah. No, I think it's the 27th. I think I've got the wrong date. Anyway, that normally what happens is as it goes toward [inaudible 00:14:30] gets included in the index, the stock goes back. I said, "You don't think they could knock that down, [inaudible 00:14:35] with it, get it back up for the inclusion date and then reap a big product, do you?" And he's like, "You know, yeah, I think they could do that." So maybe the decline is because they're positioned for the inclusion in the TSX 60, but there is no other news in Kirkland Lake, okay? I mean, they declared another [inaudible 00:14:55] dividend, but there's been nothing else out out of the [inaudible 00:14:57], so I don't know why it's been [inaudible 00:14:59]. I mean, yes, we know the gold price has gotten down here, but that looks like it might be bottoming out, so hopefully, the [inaudible 00:15:08] TSX 60, and it happens, it'll be in a much more robust price.

Craig: Fair enough. Anything else on your mind this week before we wrap up, Eric?

Eric: Really it's just, I think everything from a precious metal perspective looks interesting here. I hope that if we get [inaudible 00:15:27] back up again that people will continue to pour money into gold and silver. Every day, I look at the trading value in the SLV silver trust versus the GLD gold trust, it's four to one. You know, there's $4 going into gold for every $1 going into silver, but for some reason, they trade 83 to 1. I think that's going to be the biggest story. We're going to [inaudible 00:15:53] much, much lower ratio of silver to gold than any [inaudible 00:15:58]. [inaudible 00;15:59] ridiculous how it's been depressed here, and I think we're going to see some big, big things happen in the rest of this year and next year in silver.

Craig: And so, no time like the present to add some physical gold and physical silver to your portfolio. Of course, you can buy some at sprottmoney.com, but you can actually store your metal with us as well at multiple locations around the world for your safety. Again, sprottmoney.com is the website, or you can just call us at 888-861-0775. It should be another interesting week, Eric. I look forward to talking to you next Friday.

Eric: And I look forward to that, too. All the best. Have a good weekend.

Craig: And from all of us at Sprott Money News and sprottmoney.com, thank you for listening. We'll talk to you again next week.

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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.