Male: You're listening to "The Weekly Wrapup," on Sprott Money News.
Craig: Well greetings once again to everybody at Sprott Money News and sprottmoney.com. It's Friday, June the 28th, that means it is the last day of the month, it's the last day of the second quarter, last day of the first half of the year. I am your host, Craig Hemke, and joining us for this special day is Eric Sprott himself. Eric, how are things on your end today?
Eric: Hey wonderful, I'm in Montenegro, it's quite late at night, I'm actually really having a glass of wine now and celebrating the week that was and of course, the month that was which was absolutely spectacular. So lots of good things to chat about.
Craig: No doubt about that, Eric. And before we get started again, it is now officially summertime. I know its summertime in Montenegro, it's summertime where I am and that means it's time for the Sprott Money Summer Sale. You can, of course, find all types of wonderful coins and bullion bars for sale at the sprottmoney.com website. Just go there to check it out. Of course, you can call us at 888-861-0775 for more details and full updates on what we're currently offering.
Eric, what we're offering is a lot of stuff that's higher in price than it was just a few weeks ago. Even though this feels like a volatile week because we've given some gains back here late in the week, gold's still up 1% on the week, $13, $14, as we go to wrap up the week with silver about unchanged. What are your thoughts on the week that was?
Eric: Well, you know, it's been spectacular. I mean, I guess we got up to $14.30 and yes, we're going to close around $14.10. It's the end of the month, we had a great, great, great month. We shouldn't forget that, okay. To think that gold is up to $135 from four odd weeks ago, that's spectacular. It's changed everything, the way people get gold, the way people look at shares. Hopefully, in due course, the way they look at silver. So it's been spectacular and I would guess with the technical strength, with the universal interest, that we should go higher.
The steel companies deal with the commitment of traders and balances for revenue. Commercial's gone quite a bit short. It'd be interesting to see exactly what's been [inaudible 00:02:29] this week. But it's not a constructive position in it. And of course, the one vote we have is that we get what's called a commercial signal tell, where commercial's all piling on the short side and below net. Which, of course, we love that. But the jury's still out on that but it's been a great week.
Craig: And it has been an interesting week, I have no doubt about that. I wonder what your thoughts are going forward? We're going to turn the corner into the second half. And of course, by the end of July, we'll have that next FOMC meeting where now it almost seems a fait accomplish that we're going to at least get our first rate cut. What will you be looking for as the new month begins?
Eric: Well, you know, rate cut or no rate cut, the fact is that the Fed's done a 180. I mean, they were tightening, they were raising and then all of a sudden, the market crashes into the December close there, the December low. And then the Fed does a 180. And in fact, not just the Fed, how about the ECD? I mean, they seemed even more ridiculous. "Well, we're going to do whatever it takes, okay?" Well man, I only got zero interest rates or negative interest rates and they're going to do whatever it takes? What does that mean?
You know, we get to this thing where you know, people have money in the bank and they have to pay the bank to keep the money in the bank. And they're going to look for other things to invest in that are bonds, or stocks, or gold, physical things. All those things lead to people making big decisions. We don't need many making decisions in favor of gold.
So one and a half of 1% of people's portfolios today. So if, you know, another half of one percent of people decide they should own gold, you double the demand but over a very, very short time frame. And I would even point out that, for example, last Friday we put 35 tons in one day into the GIB. And it's a staggering, staggering kind of number.
And it's just that people are looking at what's going on and if it isn't people, the computers are looking what's going on. And as you know, so many times I rely on the computers more than the people because computers see what's going on. And they see that gold that's technically worth more, they see the volumes, they see the gold stocks coming up.
They're blurting out at the end of the day to the portfolio managers, "Gold stocks, number one, gold, number two, silver stocks, number three." And they have to make decisions. And most of those people would never even think of looking at gold stocks and silver stocks and the precious metal. But that kind of kicking out by the computer tells them to start looking at it or at least take some action in it. And of course, as we know, between the algos and other machine-oriented decision-making processes, alternative intelligence, things like that, people go there. So we've seen a lot of action and I suspect it's likely to continue here.
Craig: Eric, I want to ask you a couple of the questions that have come in this week from folks who are Sprott Money customers but other folks that just follow us in these weekly conversations. You mention the GLD and how it added 35 metric tons last Friday to its portfolio of allegedly gold though we can probably debate that as well. But they added 35 metric tons last Friday which was the biggest one-day addition since 2009.
One of the questions we had this week was from someone who wanted to know maybe would you ever consider taking a big pot of money and buying a whole bunch of one of the old Sprott funds, the PHYS or the PSLV to add a whole bunch more metal to those funds, does that ever cross your mind?
Eric: It does cross my mind. One of the things I did I think two weeks ago now is I bought, put another $10 million in the Sprott Physical Silver Equities Fund, so not the Silver Equities fund. Because as you know, silver's been underperforming gold. But I think silver's going to blast, it's just going to blast. It would take so little money. It's kind of surprising to think about you know, the 35 tons which is like a billion dollars into the GLD in that one day. One day, one day.
A billion dollars into silver, oh my God, it would be incredible. And I think it's going to happen and I think about it all the time. And I think about buying, yes I just think about buying the Sprotts Silver, the Physical Silver Fund. I haven't yet and of course, the reason I probably haven't yet is because there's a little more return in the equities.
And I have bought quite a number of equities here. I probably bought five different placings of $20 million to $25 million dollars in the last two to three weeks. So I may probably still be on the outs but even as you announced already because I think that's where the leverage is. And of course, I'm looking for companies that are having trouble. Where all of a sudden, the base go into 1400, they're out of trouble. And things are going to get better in a big hurry there.
And I do think about buying those funds, I may yet buy the Silver Equities fund because that's silver is like flying to [inaudible 00:07:54]. Just, it's incredible it's done so poorly. And yet, you know, when I look around to find silver equity, they're the toughest thing to find. So why don't you like silver, right? I mean, it's sold through equities. And it's not that they're at poor valuations because they're never at poor valuations because there's so few of them. That's not to say you don't get your exotic valuations which they typically do when it runs. But I do tend to believe that the silver plates will be at the convention lasting $90 to $550.
I actually give that some credibility. So fine, let's think about how we deploy our money in that area and as I said, I already bought the Silver Sprott's, Equities Fund. I haven't bought the Physical Silver Fund but believe me, it's front of mind all the time, right now.
Craig: All right, well then just one other question for you, Eric, and then we'll begin to wrap up. But another great week in the shares. As you began to tell us several weeks back that the highly leveraged, the senior miners would take off before anybody else in early stages of a bull market and that's been right. And a big producer like Kirk Lake has done really well as of late as well.
Another company though that you've mentioned prominently is Walbridge and I know they have had very well publicized an interesting press release this week. And so the question that was sent in was just any further comments you might have on Walbridge?
Eric: Well, I found it very funny because they put three press releases out the same day which was a Friday. And I, of course, I get on a plane at 10 a.m. in the morning, Eastern time. And the first release is out saying they've got the next two coming out. I'm on my way to Ireland, I've already got them if the market slows. And I'm looking at these press releases, I'm going to tell you, I prefer guided to chartered account. After all the information it gives you, it's very complex. And that first reading, I wasn't sure exactly what I was supposed to think. And I probably spent four hours now looking at those press releases. Okay, "Where does this go? Where does that go? What does this mean, what does that mean?"
And some of the interesting data points that they said was that they had 900 meters of structure going this way, they got 800 meters of structure going that way. They found gold in the sediments, they have a 960-meter hole that for the most part had gold throughout the whole hole. But it's not exited yet. That had five visible gold intersections and another one had a seven visible gold intersection.
And I look at these things on the maps that they have and oh my God, if those things run, this could be one of the greatest things of all time because the dimensions. a vengeance. The 960-meter correlate is about probably 600 meters with not strike, they already said the strike's 2.5 kilometers. That's a kind of a width and because we know the vertical is for sure over 400 to 500 meters so this thing's kind of shaping up and it could be something very dramatic. We just don't have enough known assays to say it. But it looks quite impressive to say the least.
Craig: Well all right, my friend, as we wrap up like we mentioned, the first half of the year is over with and it has been quite a first half of the year. Just any thoughts on your mind as we enter the second half and then begin to look forward to next year?
Eric: Sure, well, you know, we're seeing all sorts of signs of the economy being weak. And we saw the consumer confidence plummet this month. We've seen kind of hunky new home sales. Car sales I'm sure are not holding their own. But there seems to be a Chicago PMI's, we're seeing so many signs of weakness here including, of course, the tenured bond turning down around 2% which is selling at the...Hey, it's not nearly as optimistic as everyone thinks here.
So I think we're in a wonderful position where the Fed will...I think the Fed and the ECB and other central banks will have to act irresponsibly, which they are quite accustomed to doing, which will tell everyone, "You have to own precious metals here because this whole system of banking money and negative interest rates is not conducive to people having their money in via type instruments but better to have the real thing."
So I think the outlook is brilliant for gold. We've had a tremendous month and a half here and I'm very pleased that it held up this week because we got up to 1430, went down to 1400, I think we're probably going to close here around 1410. Which I would regard as very, very constructive. So hey, who knows how far...The article I referred to four or five weeks ago said gold's going to 1450 for sure on the count but probably goes to 1650. And I just keep asking people, "Keep thinking about what that means for the stock valuations if gold goes to 1650?" It'll be absolutely outstanding. So let's leave it at that.
Craig: Well, all right, Eric, we will leave it there just as you said. And again, before we go I want to remind everybody, one of the things we do every month here at Sprott Money is our "Ask the Expert" segment. And as part of that series, the episode for July will be with Danielle DeMartino Booth, who was a one time advisor to the Dallas Fed and this will be your chance to interact with her if you have any questions that you'd like to ask, just email them to use. It's "submissions," the word firstname.lastname@example.org or you can tweet your questions to us at Sprott Money as well. And we'll try to work them in when we record that segment later on in July. For now, it's time to sign off. Eric, I hope you have a great weekend and we'll look forward to talking to you next week.
Eric: Well Craig, I'm here in the heat wave in Europe and enjoying every minute of it. So I'll look forward to chatting on Friday.
Craig: Sounds good to me, my friend. And from all of us here at Sprott Money News and sprottmoney.com, thank you for listening and we'll talk to you again next Friday.