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Monthly Wrap Up

Gold Price in 2024 with Eric Sprott

Eric Sprott and Craig Hemke

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Buckle up for a riveting ride with Eric Sprott, our community's financial luminary, as he tackles inflation, naked shorting, interest rates, and the precious metals market. Joined by host Craig Hemke, they not only dissect today's financial landscape but also serve up a tantalizing preview of what's in store for 2024, offering essential insights for navigating the economic rollercoaster ahead!

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

Craig: Merry Christmas, and happy holidays from Sprott Money News at sprottmoney.com. It is late December, 2023, a very interesting year in the precious metals, and the markets in general. And here with us to wrap it up is our old friend, Eric Sprott. His name's on the company, so I figure if he wants to talk, we're gonna have him talk, Eric, nice to see you, my friend.

Eric: Hey, Craig. Always wonderful to be with you. And again, let me compliment you on the work that you do, that helps promote the things that we're all interested in. You've done a great job.

Craig: Well, I appreciate that. You know, I write something every week at Sprott Money, so people can always go there. Are you a member of my site, or, I guess, as a retiree on a fixed income, you gotta watch your...

Eric: Trust me. I see everything you write.

Craig: Okay. All right. I mean, it's, I know that $15 a month might kind of, means you gotta cut out one trip to the Golden Corral.

Eric: There you go.

Craig: All right. Well, anyway. And, hey, by the way, in case you didn't notice, I am wearing my Christmas sweater for you, Eric.

Eric: [inaudible 00:01:07]

Craig: Yeah. Look, it even [crosstalk 00:01:09] even has my name on it. Look at that.

Eric: Hey.

Craig: Yeah. So, I notice you're not wearing a sweater today. You are presently in the Turks and Caicos?

Eric: I don't think I have a sweater down here, to be honest.

Craig: Yeah. I was gonna say. You'd look awful funny walking around in one.

Eric: I would. Particularly that one.

Craig: [inaudible 00:01:28] Well, all right. Well, we might as well get started. Again, just a reminder. All this content, I mean, this will be the last thing I would imagine I'll record this year here at Sprott Money, but all of the monthly "Precious Metals Projections" that we do, early in the month, with Chris Vermeulen, the "Ask the Expert" segments, that are usually in the middle of the month, these, late month, Monthly Wrap-ups, or in this case, Yearly Wrap-up, all of that is brought to you free of charge. Okay? It's not free to produce, that's for sure, but they put it out there for you free of charge, for your entertainment, education, information. So, give Sprott Money a thank-you. Either go there, sprottmoney.com, buy yourself some sound money, no doubt about it. Store it there as well. You can go to the site. You can actually just give a...pick up the phone and talk to a human being, at 888-861-0775, or give them a like or a subscribe on whatever channel you're watching this. That helps them out too, so give some of us a thank-you. It's the holiday season, right? We're supposed to be spreading goods cheer. All right, my friend. Well, in terms of spreading good cheer, where should we start?

Eric: Maybe you should start about, and we'll talk about how depressed I am about everything.

Craig: Right. Let's start with the big picture. We had another year of just, societally, politically, it seems like it just doesn't get any better, and I'm sure you've got some thoughts on it.

Eric: Well, you know, as I reflected on what has transpired, the one thing that crosses my mind the most these days is the level of lying that happens. And of course, I'm brought to that when I see, and kind of follow closely, what's happening to vaccines, and how they were propagandized as being safe and effective. Neither true. The information on the negative impacts, the impacts of these vaccines, is never displayed. The excess deaths, that died suddenly, things that there's never any reason that the person who died suddenly died suddenly, and I think we all kind of have a very serious feeling of exactly what happened. I was, read something recently where a particular doctor said that, you know, if you wanna live a healthy life, stay away from the hospital, and stay away from the medical community. And he went on to say how the most prescribed drug in the U.S. are these statins.

Craig: Yeah.

Eric: And how they've now proved to cause dementia, cause problems with your arteries and things like that, that they're supposed to solve. And I was never aware of that, and I actually had been using statins. I stopped using them about three [inaudible 00:04:21] ago. Just thinking that, you know, that this one-in-a-million guy is probably got the right answer, okay?

Craig: Right.

Eric: And of course, no, very few people will speak out on these things, but I really appreciate people speaking out on these things, because normally, they have to have the soundest of reasons to do it, because they know they're gonna get laughed at, and ostracized, and gaslighted. On that same vein, there is a doctor... I think it's Mike Yeadon, who basically said, look... And he was 30 years at Pfizer. And the guy in charge of getting drugs approved. And he said, "When I see that foreign drug companies all approved a drug with the same spike vaccine in it, which they all should have known didn't work, I now come to the conclusion this was orchestrated, for depopulation." It's a place I haven't gone personally, the depopulation story. But the more I read, for example, John Kennedy Junior, he has a wonderful book out, with "The Real Anthony Fauci." And he just describes how, you know, this setting up of the pandemic started, like, 20 years ago. And they even had a test case, a specific test case, about a month before it happened, it happened exactly like the test case. You know, it's just, it was so orchestrated. So, it bothers me.

And of course, when I look at other economic data, do I believe the inflation data? No, I don't believe the inflation data. When I see shadow stats reporting that inflation's still 11% across the board, when you look at, you know, try paying your insurance bill this year, your health insurance bill this year, your electrical bill this year, your internet bill, anything. I mean, it's, there's no way it's 2%.

Craig: Right.

Eric: And of course, the fact was that we probably had, you know, three 10s in a row, where our salaries never went up for those years, the last three years. Now, these salaries are finally going up a little bit. We didn't make up for the 30% we fell behind in the last three years. So, people are struggling. I think they said that the number of people living paycheck-to-paycheck, something like 64% in the United States, which I fully believe. And yes, you get these data come out that say things are good. Luckily, there's also some reality. It's actually, today, we had FedEx come out and say their revenues were down 3% year over year. You know, when your revenues are down 3%, I'm gonna guess that the shipments were down a lot more than 3%. Because their prices were probably up. So, and I don't know the data. It just came out an hour or so ago, but... And I use FedEx as a representative company for the economy. And so, I don't believe the economy's strong. I think, you know, if oil continues to rise here, it's already gone up 10... Gasoline's gone up 10% in about the last two weeks. Now, I'm not saying it's happened at the pump, but it's happened on the COMEX.

Well, and imagine if we start getting energy going back up again, what's gonna happen [inaudible 00:07:32] poor old consumer, who's benefited a lot by prices [inaudible 00:07:36]

Craig: Right. Right.

Eric: Anyway, I just, I get so upset with, that we've been lied to. And of course, one of the more recent lies is this gentleman, Mr. Webb, who's written about how, when you think you have a secure asset at a bank, you don't. There is no such thing that you have at a bank that's now secure. Most people don't realize that probably, but they changed the rules around, such that, you got assets at the bank, you think, you know, "I can go cash in my certificate of deposit and get the money out." If there's a bankruptcy, you can't.

Craig: Right.

Eric: It just gets thrown in with everything else. And that is depressing, because, you know, people work hard to save. And meanwhile, the bankers are just playing the casino game all the time, and when they go down, which they essentially did in '00, as they essentially did in '07, '08, they get bailed out.

Craig: Yep.

Eric: And the public has to pay for it, one way or the other, whether it's through higher inflation, or, you know, they seized your house because you couldn't make the payment, and now you've got to start all over again. And of course, no bankers ever go to jail.

Craig: Course not. Course not.

Eric: Yeah. [inaudible 00:08:50] fines, but that's the cost of doing business. And maybe while I'm on the cost of doing business, when I... One of the other things that of course is occupying me these days is this naked shorting that obviously goes on.

Craig: Yes. Thank you for bringing that up.

Eric: And, you know, we've had JP Morgan, Goldman Sachs, Citadel... I'm probably forgetting one or two companies. Maybe Wells Fargo. I'm not sure who it is, but, who got fined for mis-marking hundreds of millions of trades. Hundreds of millions. Over 5 and 10 years. And the guy pays a fine of $5 million, or $6 million. Are you kidding me? Like, think of...

Craig: [crosstalk 00:09:30] get it.

Eric: ...a hundred millions of trades, a trade's 100 million, a hundred shares. Oh, my god. We're talking about billions of shares.

Craig: Yeah, yeah.

Eric: [crosstalk 00:09:40] and the guy pays a $5 million, $6 million fine. It's just absolutely ridiculous. So, and that, unfortunately, deeply affects the exploration companies, because you have nothing to fall back on. Like, you can report good news, but if your stock just gets pounded, everyone starts doubting the news. And it's easy to sow doubt. What, particular when the stock price is going down. So that's a big problem. It's something I'm trying to spend more time on, and right the wrong. I think the regulators have acted very callously here, knowing full well what's going on, but then again, when I look at the history of the bureaucrats and what they do, the fact of they do nothing other than dip their fingers in the well. So, what are you gonna do?

Craig: Yeah. It's all part of the prevailing corruption, really, at every level. And again...

Eric: Yeah. No, other than that, Craig, everything's perfect.

Craig: Everything's great. Hey, and I should warn everybody, I'm fighting a little bit of a bit of the crud, so if you see me, if I have to, like, duck out of the way and I bring this up, or take a sip of water, I apologize in advance for any coughs that get through. But anyway, Eric, back to the lying liars, because that has had a direct impact on how the precious metals have done this year, because the Fed and their Fed governors have played this rhetorical game all year long. You know, "Higher for longer. Higher for longer." And everybody knows that they're full of it. And so the market starts pricing in interest rate cuts for next year, and then all you get is, like, one data point that's one tick higher than what was expected, and, you know, everything, "Oh," your rate hike odds go down, and gold goes down. And even just recently this week, go back to, it was just a week ago, the December FOMC, and Powell comes out and says, "Oh, yeah. We're adding a rate cut for..." They're admitting that rate cuts are coming. And then, but the market goes crazy, so they roll Williams out, from New York, not even 48 hours later, to completely contradict him.

Eric: Yeah.

Craig: But that has made for a challenging year, the lying liars. How would you summarize the year that we've had, in the metals?

Eric: Well, the one thing I would say, and I mentioned it to you in our chat ahead of this, you know, we are, in the case of gold, we did hit new highs, across the board, okay? Which, to be commended, so that's great. It was unfortunate that on that Sunday night when it all happened, it blew up the next 12 hours, which is, of course, the old rinse, repeat thing.

Craig: Right.

Eric: But gold's hanging in there. It's within a hair of a closing high here. Closing high. You know, that high that we had at $2150 or whatever, it was not a closing high, because it got bombed that day. But that's done well. I think the biggest disappointment is silver, that it would still be languishing around $24, knowing everything that we see in silver, including, you know, the Silver Institute coming out and saying that there was a deficit of whatever the number was, 243 million ounces, in a billion-ounce market. Like, how do you justify that, for God's sake?

Craig: Right.

Eric: There's been some commentary by a group called the Silver Academy, that says, you know, when the Silver Institute comes out with their 2023 results in April of next year, the next day, they'll print their report is what the real numbers are with silver, and I suspect that [inaudible 00:13:11] to something [inaudible 00:13:13] that there's way more consumption... When you look around at solar, and electric vehicles, I mean, how can there not be significantly more consumption, particularly when you realize, and I think that's a truism now, they use twice as much silver in an ordinary panel now, because they found out, if you load it with more silver, you get that much more energy. And silver is not, it's not that big a cost in a solar panel. When you think of how much it takes to make it, bring it over, install it, oh my god, that silver cost is, like, probably not even 5% of it. So, if you put the twice the silver in, and you get, you know, 50% more for silver...sorry, electrical production, it's well worth it. And that's what's happening, and there's numbers suggesting that we might be using 200 million ounces of solar now. And, you know, 5 years ago, or, sorry, 10 years ago, we were using 0. That's 200 million, that's a 20% stake of the silver market that hasn't grown in that decade, in terms of production. Somehow, that guy can just come in and buy it.

What about the electric vehicles that didn't even exist before? All those uses, that are quite significant, and yet somehow, you know, we say that supply and demand, somehow, are staying in balance, okay? Somehow.

Craig: Right.

Eric: God knows. Now, of course, as you and I both might imagine, it's staying in balance on the paper COMEX market because there's a guy with deep pockets can sell all the paper silver he wants, and keep it under control. But I suspect that that's gonna break here, and I've sort of worked on the thesis that Michael Oliver has, a great market analyst, who writes the momentum structural analysis, and of course, his suggestion is that, you know, when gold goes into a bull market, it typically goes up by six to nine times, something like that. And we started this one in January '15, at $1050, so it probably goes to $8000. It goes to $8000, and you use the normal ratio of silver to gold, well, silver's gonna go to 200 bucks, okay?

Craig: Yeah.

Eric: And I believe that. I believe that's what can happen here. And of course, you know, it's not that it has to go to $200 to be a winner. It can go to $50 and you're a huge winner. But I think it [inaudible 00:15:36] going there, and I think the risk here is de minimis when you see the data. So, I'm a huge believer in silver. I own a lot of silver. I own silver options. I think we're gonna see some fireworks here. Well, we nearly saw fireworks two Sundays ago. Then it got, you know, tamped down. One of the favorite words, right, them to tamp it down. I can't believe that the COMEX, head of the COMEX said, "Well, tamped down the gold price [crosstalk 00:16:08]"

Craig: Right. Right.

Eric: Are you kidding? You what? [crosstalk 00:16:11]

Craig: That was the head of the CFTC.

Eric: It was the silver price increase, wasn't it? Yeah. When it got to [inaudible 00:16:16] bucks there.

Craig: Yeah.

Eric: "We tamped it down." Yeah, well, [inaudible 00:16:20] for? You're there to tamp it down, aren't you? Yes. But he thinks his job is.

Craig: Let's talk about price, because you're right, all the physical fundamentals argue for a higher price, particularly of silver. But yeah, you know, it's not so much the physical supply/demand as it is the derivative supply and demand. I've written about it, you know, on these Sprott Money articles, probably three or four times this year. Whenever, this year, at least, price has gotten between $25 and $26, there's been a huge rush of new shorting from the banks. And you look at the Commitment of Traders Report. It spikes. And then shortly thereafter, you get this wash-out, and then they cover all those shorts back up.

Eric: Yeah.

Craig: So, my question for you, though, because I've been...interviews that I've been doing, I've been trying to, you know, counsel a little bit about maybe silver will be better next year, because I think gold's gonna break out, and we can talk about that next. But if gold goes to $2300, you mentioned the gold/silver ratio. Is the gold/silver ratio gonna go to 100? I mean, almost by osmosis that silver has to go up, doesn't it?

Eric: It would be [inaudible 00:17:19] It's ridiculous that they're produced in, what, in a ratio of 12 to 1 or something?

Craig: Something like that. Yeah.

Eric: What's with this 80-to-1 price thing?

Craig: Yeah.

Eric: It's so ridiculous. And of course, one of the theses being advanced, particularly by the Silver Academy, is that because there's so much silver used in the military arena, and they stopped publishing their silver consumption data in something like 1996, that there is a mandate to keep the price of silver down, because it's used a lot in missiles and [inaudible 00:17:54]

Craig: Right. Right. Mm-hmm.

Eric: You know, all sorts of submarines and airplanes and things like that. So, and I think that that's probably true, that it, you know, there's a real undersupply of silver here, that's being covered up. You know, Ted Butler's covered this, in terms of the COMEX, and how oversold it is, and how, when it breaks, it'll break big, and I just... He's a guy who studies the COMEX much more than I do, but I think he's for sure on to something there.

Craig: Well, let me ask you this. Here's another little pet theory I've been working on for the last couple of months. [inaudible 00:18:31] gold is, you know, I mean, we got a couple trading days left to go. But gold's up about 11% year-to-date. Anybody can cherry-pick dates, but if you go back to the beginning of this century, 23 years now, gold has averaged about a little over 9% in dollar terms, annualized. So, we're right, we've had an average year. What has perplexed some of the generalists, and the technicians and the like, is the disconnect between gold and real interest rates. You know, it was always real interest rates that kinda were the... You know, not just inflation, but it's real interest rates that gold are most closely correlated to, and they go like this, like this, then all of a sudden, they go like this. I have thought that the reason this has happened is because central bank physical demand, and other physical demand for gold precludes the banks allowing the price to go down to, like, $1200, because there wouldn't be any physical left at all, at that point. What do you make of that?

Eric: Right. Well, there's no doubt that the banks control the price of gold.

Craig: Yeah.

Eric: It's, the funny thing is that when you see the gold price go down, you know, 1% in a minute, which we see many, many, many, many, too many times, okay?

Craig: Yeah.

Eric: First of all, what guy selling would want to do that, and try to maximize his profit, okay? Nobody would do that. You wouldn't knock it down that much in a minute. So, we know that it's purposeful, and it's because they have this ongoing short position in both gold and silver, and they know they have to protect it, and maybe they've got the cover of the central banks for that matter, because even the central banks don't wanna have gold racing up dramatically.

Craig: Right.

Eric: Imagine if gold do what Bitcoin had done.

Craig: Right.

Eric: Oh, my god. Where would the currency be? I mean, we have a very weak U.S. dollar here, that looks like it's breaking down. And some of the people that I listen to believe that it will break down, and is likely, likely to go to 70 cents on the dollar [inaudible 00:20:30] 70 cents [crosstalk 00:20:32]

Craig: Dollars.

Eric: Well, that in itself would cause gold to go to $3000, so... And, you know, it's funny. One of the things I do look at is the U.S. debt clock. You know, that ticks over a million every 40 seconds.

Craig: Yeah. Yeah.

Eric: A million dollars every 40 seconds. Or is it...? Yeah. And, I mean, it's just, it's exploding, and there's no, there seems to be no care as to how much money's spent, on anything. So, we're gonna... It may very well be that we again will have auctions that fail. And God forbid we have an auction that fail, and notwithstanding what the dot plots show, the auctions show that people want higher interest rates.

Craig: Yeah.

Eric: I think that's likely to manifest itself.

Craig: But we can't afford it. I mean, that's kind of the paradox of the whole thing. I mean, we've already exceeded now, this year, a trillion dollars a year here in the U.S. just to service the existing debt.

Eric: Yeah.

Craig: You know, so, with that math the way it is, where do you stand on this higher-for-longer stuff that the Fed has been peddling all year long? Do they eventually...is it all just rhetoric?

Eric: Well, of course, going back to the last Fed meeting, that higher-for-longer stuff sort of disappeared, right?

Craig: Yeah, yeah.

Eric: I mean, it was always a threat. I think that, you know, in their heart, they'd probably like to get rates down, because we are heading for a pretty tough economic situation here.

Craig: An election year, too.

Eric: And they know it. And these rates being as high as they are, they're just killing people who have to refinance a mortgage, and that's why nobody will sell their house, right? They all got these nice, low mortgage rates. Nobody wants to sell [inaudible 00:22:18] can't afford to sell, which is a funny sort of thing. I can't afford to sell. Well, I can afford to sell if I don't have to live somewhere.

Craig: Right. This is a slight problem that you might have.

Eric: Yeah, right. Anyway. It's, I think it's gonna continue to weaken here, and we have to be aware of the likelihood of failed auctions here. And then we saw that when Yellen sort of changed the terms of the auctions, and, you know, changed the amount we're gonna do long to short, and this and that. They knew there was a problem staring right at them, because who wants to buy the bonds anymore?

Craig: Right.

Eric: [crosstalk 00:22:58] it's hard to [crosstalk 00:22:59] more than a few fingers of people who really wanna buy bonds.

Craig: Let me ask you this one. Because I'm the host. I get to ask my favorite questions. I, you know, I write... I've been...I wrote again this week at Sprott Money how I write this annual forecast every January. And I do it because the trolls love to pick at it, but also, it holds me accountable, allows me to go back, you know, and go, "Okay, what did I get wrong? What did I get right? And what was I actually thinking, back at the first of the year?" And I thought... I feel like I'm six months ahead. I thought the Fed would run out of liquidity, they'd start cutting in the back half of the year, and gold would break out and go to $2300, and now it's like we're six months behind. That said, I'm wondering if the key thing that I missed is this reverse repo excess reserve account.

Eric: Mm-hmm. Ya think?

Craig You know? Because it got to $2.2 trillion or $2.3 trillion, sitting there in that overnight excess reserve account, and it's down to, like, to $700 billion now. Do you think the Fed has been able to play these rhetorical games because they knew they had that little slush fund of quarantine COVID dollars sitting there?

Eric: Well, I look at it, and I use the same kind of analogy, but I actually think, rather than the central banks having to do that, I think what they knew was that the consumers had saved $2.1 trillion during the pandemic, okay?

Craig: Yeah, yeah.

Eric: Because of all the handouts, and then all the, you know, reducing their expenses. So all of a sudden, their balances blew up. And that $2.1 trillion effectively disappeared, I believe, in October of this last year, of this year, okay? And all of a sudden, now the guy's [inaudible 00:24:40] because they were spending $100 billion a month out of those savings. That's a lot of money, when it comes to the U.S. GDP. So, that's ended. You had the student loan repayment started again in October. So all of a sudden, the negative impact of vanishing savings has hit home here, and I think we see various data, personal data, that suggests that the spending habits of the consumer have changed dramatically already. I mean, we used to have double-digit retail sales. Now we're lucky if we get a positive. And, you know, we get lots of information from stores that things aren't going as well as they would like, so I think that it was the savings that the consumers [inaudible 00:25:25] that got us through the thing. Didn't matter what the Fed reserve policy was. They still had money to burn. And they burned it. And of course, the credit cards have exploded, the demand for loans has exploded, not that the banks are giving any loans anymore, but they would take them if they could get them.

Craig: You know for certain that's going into 2024 macro cast, I can tell you that, as Eric Sprott told me, with embedded link, back to this. And I, that is definitely a big part of the thing too. Now, so, as that's all dried up, the reverse repo has dried up, we now are entering this year where, [inaudible 00:2602] a 50/50 chance, the market says, and the first rate cut in March. Even the Fed goons, they don't...they got one says "No rate cuts." They got one that says six. They don't know what the heck they're doing. What do you think's gonna happen, and where do you think... I mean, we're gonna have another 11% year in gold and 2% year in silver next year? What do you think?

Eric: I hope not.

Craig: Me too. Goodnight, everybody.

Eric: No. We gotta be looking for more than that. You never wanna be in this space, Craig. You got 11% or 2%, okay?

Craig: Yeah.

Eric: It's too much of choppiness to even think about something as anemic as that.

Craig: Yeah.

Eric: No, I think we'll have a great year. I believe that gold has already shown how explosive it can be, Sunday two weeks ago. I mean, that dramatic... We were up... God, were we up, like, 100 bucks at one time? Yeah, we...

Craig: Yeah, it was about $60.

Eric: Yeah.

Craig: Like it matters.

Eric: [crosstalk 00:26:59] $60, you know, that was just incredible. Sorry. Yeah, yeah. We're up $60... No, we were down $100.

Craig: Yeah, and reversed. Yeah.

Eric: But I think we'll see that again. Everybody in the world should want to own gold. We have these countries that are all going bankrupt, and Argentina devalues their currency 50%. I mean, to think that if you would have owned a precious metal in lieu of the Argentinian peso...

Craig: Right.

Eric: ...you would have solved nothing.

Craig: Right.

Eric: Nothing. Come on, world. Wake up here, okay? And what if the U.S. dollar weakens here? I mean, you gotta have gold. If, for example, there's another banking crisis, and all your secured assets become unsecured, you've gotta have something to turn to, that's in your possession.

Craig: Right.

Eric: You can't trust in the financial system here. We all know that it's, has degrees of corruption. One of the things, when I think about these credit cards, you know the interest rate in the credit cards has exploded this year, right, if, you know, if you're overdue. And first of all, I think the fact that governments allow credit card companies to charge over 20% on a card, there's something wrong with all these people [crosstalk 00:28:16]

Craig: Sinister, yeah.

Eric: [inaudible 00:28:17] there's something wrong with all you people. And now it goes to 30%? And the minute it goes to 30%, that guy's not gonna make it, okay? You can't pay 30% interest and think you're gonna survive. It's just a big hole that gets bigger and bigger and bigger, till they come in and repossess everything and you declare [crosstalk 00:28:35]

Craig: Yep. Yep.

Eric: And what is wrong with our world that people could think this is normal? It's not normal.

Craig: That that's okay. Yeah. You're right. You're right.

Eric: So, anyway, I thought your key question was gonna be how many bonds do I own, and I already had the answer written down. It's zero.

Craig: There you go. Yeah, I figured as much. Old diversified Eric.

Eric: [inaudible 00:28:59]

Craig: But, and I do know, and, I mean, you're in there buying physical metal, all the time, just like all the rest of us. Because, I mean, we're preparing for this mathematical certainty. So, as we get into next year, it certainly seems like we're gonna have a good year.

Eric: Yeah.

Craig: You know, it's hard to imagine that rates are gonna stay where they are, you know, and the Fed will be cutting, and we should be rallying. In our remaining time, though, let's have a...let's discuss for a little while the mining shares.

Eric: Sure.

Craig: Obviously, you are a legendary Canadian mining investor.

Eric: I'm less legendary by the day, I should add.

Craig: Right. Right. They always say that when you get old, there's always a legend.

Eric: There you go.

Craig: And somebody called me a legend the other day. I was...somebody was interviewing me, and they said, "Joining us today is the legend, Craig..." And I'm like, "Whoa. Time out. Wait a second. I'm only 57. I don't wanna hear this 'legend' stuff." Anyway. I digress. It must be all the cold medicine I'm on.

Eric: Yeah. There you go.

Craig: Let's talk about the mining shares, because obviously, you know, back when you had more time, we used to talk about them on a weekly basis.

Eric: Yeah.

Craig: And I know people are dying to hear just some of your thoughts as we come out of this year. The GDX has ramped up nicely, now that tax loss selling is behind us.

Eric: Oh, yeah.

Craig: I asked Bob Thompson last week, your friend and mine, if the generalists are coming down and knocking on his door at Raymond James yet, you know, looking for some names to buy. And he said, "Not yet," so we're still probably early stages of this. Let's start from the top and work down. I know you don't buy a lot of major producers, but how do you feel about them as this gets started, next year?

Eric: Well, one of the things that's been disappointing about the major producers is they haven't really been able to maintain their production. You know, their production just... And I'm thinking of Barrick more than anybody else, and they were always the superstar, 20 years ago, when I first got into the, wanting to own serious amounts of gold stocks. I never did own Barrick. And every year, their production seems to disappoint.

Craig: Yeah. Yeah.

Eric: And if I'm not mistaken, I think they've gone from 8 million ounces in the, you know, the beginning of this century, to, like, 4 million ounces. And it's a bit of a statement about the gold business, hard to find things, and develop things, and the cost of developing is incredible. So you have to take [inaudible 00:31:28] and if you make a few mistakes along the way, they can be devastating. So, I rarely ever looked at a producer. Yes, I was in Kirkland Lake Gold, that was a producer, [inaudible 00:31:38] because of the exploration success in Australia that I was there. So, I still look all the time at all the results that come out. There was actually an interesting result came out of a company in Australia, just south of the Swan zone. They had, I think, 5 meters of 116 grams. And I'm trying to... It was a... Great Pacific. I think it was called Great Pacific. But it's exactly south of the Swan zone, in Fosterville. So maybe they found an extension of it down there.

Craig: Isn't that the old Fosterville South?

Eric: Yeah. Used to be...

Craig: They... Yeah, they renamed the company to that, Great Pacific. That was one that I remember we talked about back in the day.

Eric: Yeah, yeah. Yeah. And then they went to Papua New Guinea, but they continued drilling in Australian. Gonna be their last hole in Australia. They [inaudible 00:32:27] Or they had a good one, anyway. So...

Craig: Yeah. Okay. How about, as we look, I mean, let's kind of just keep working our way down in market cap.

Eric: Yeah.

Craig: Juniors, you would think would benefit pretty quickly as price rallied next year.

Eric: Well, I think they're going to. I mean, we've seen some very, very nice increases in some stocks. I mean, I can think of, for example, Jaguar, which, the company, of course, I own 50% of. But I think it got down to $1.10, and it's been as high as $2.20, in about six weeks. So, 100% increase. They had a good quarter. They earned... That's the funny part. They earned $0.05 U.S. in the quarter, the third quarter, and the stock was $1.10.

Craig: This is a P/E ratio of 5.

Eric: And maybe... That's U.S., by the way. I'm giving you a Canadian price but U.S. earnings. And I think they should obviously do better this quarter, with what has happened to the price of gold. So, you know, that could end up being a very inexpensive stock to buy here. Lots of the exploration companies have done well, and better. I mean, most of them are up 20%, 30%, you know, off their ridiculously low bottoms here.

Craig: Yeah.

Eric: And I don't even know that there's been much new buying coming in. I think there's very little. Thank God we've seen some action on the corporate front, where there's been takeovers of a company called Osino. There's been an investment by Anglo and G2 Gold. Barrick put some money in, I think it was Heliostar. But you can see that the purse strings are kind of opening up a little, for some of the people in the industry to go in. And that's really good if, that they do that. It takes the pressure off the existing shareholders have to keep funding these things, and which, I am one, and I feel these pressures, right?

Craig: Right.

Eric: [crosstalk 00:34:14] and they all need money.

Craig: And they're all...

Eric: Where's this stuff coming from? I'll call Craig.

Craig: Yeah, right. Right. Craig's got about $5 grand laying around. He could buy a couple [inaudible 00:34:28] Do you think, in terms of just, you know, we always talk about the generalists, you know, the hedge funds, looking at the sector as value, and starting to come in. Do you think, you know, gold moving to new all-time highs, finishing the year at an all-time high, if we can in a couple of weeks, do you think that would get some attention? Would get some...?

Eric: I'll tell you what'll bring attention. Not the analysts, not the hedge funds, but the computers. I always rely on computers. The computer says to the portfolio manager, "Hey, you know, the number-one performing group is GDX." He said, "Well, what [inaudible 00:35:04] GDX? What's a gold [crosstalk 00:35:06]"

Craig: Yeah. What is that?

Eric: What? Gold?

Craig: Yeah.

Eric: "[crosstalk 00:35;09] you guys recommended some, and actually, big guys recommended it recently. Maybe I should be looking at that."

Craig: Yeah.

Eric: "To get me some, some of that GDX, whatever it is."

Craig: Yeah. Whatever that is.

Eric: So, I'm pretty certain that half the time, the computers are just screaming, "This is the number-one performing group," which it would have done this last week, by the way, in the last five days. I mean, I think the GDX went up 10%, you know, in two days.

Craig: Yeah.

Eric: Well, you know, the computers know that.

Craig: Right, right.

Eric: Maybe AI knows that. And by the way, I don't know if I said this on to you before, but I saw [inaudible 00:35:44] comment where somebody asked AI, "Well, you know, in a really lousy market, what should you invest in?" And the AI said, "Well, you should invest in gold and gold shares." And of course, you know, as you said, from [inaudible 00:36:02] these stocks, and commodities, have gone up 10% a year, every year. Every year.

Craig: Yeah.

Eric: That's [inaudible 00:36:12] And of course, when they really get going, I remember in '00 to '08, I mean, I think the stocks went up 1400%.

Craig: Right.

Eric: Fourteen hundred percent. And it would surprise me for that to happen again? No, it would not

Craig: Yeah.

Eric: [crosstalk 00:36:28] surprise [crosstalk 00:36:29] happen...

Craig: Yeah. Yeah. And you remember the '70s, obviously, too.

Eric: Oh, yeah. Oh, my God, where stocks would go up 50 and 100 times.

Craig: Yeah. Yeah. No, that's out there. I mean, I know we've all been kind of playing this waiting game, but at least we're starting this shift in monetary policy from record highs already. So, maybe it can kind of... And when we last spoke, in April, you talked a little bit about Newfoundland. You were getting ready to head up there, I think, for some conference or something, if I remember right.

Eric: Yeah. Well, I had to give a speech to, I think it was the geologic group in Gander, and I had a fun time doing that, and discussed why I thought that Newfoundland would be a great place to discover large amounts of gold, and New Found Gold continually comes up with these huge drill hole announcements. There hasn't been one for the last five or six days, but they've done very well. It looks very [inaudible 00:37:29] I mean, they have 100 kilometers of structure here. They've explored about 5 kilometers, and they hit all over the place in the 5 kilometers. Stock hasn't done very well. But like most explorers, they always need money. So you gotta do these issues. Every time you do an issue, one, you do the issue at, you know, 7% or 8% below the stock price, and then of course it collapses anyway. And you pay the guy a big fat fee for raising you the money.

Craig: Yeah.

Eric: So, when New Found did their last issue, they raised $56 million. And I know there's investors who lost that much money because of the price depreciation.

Craig: Right. Right. You just written them a check. Say, "Here," you know... Don't even say anything.

Eric: Yeah, "The idiot participated in the issue."

Craig: Right.

Eric: Oh, boy. Our day will come.

Craig: Well, that's right.

Eric: [crosstalk 00:38:25] what's going on there.

Craig: Another name that I know you still follow, just for old times' sake. I [inaudible 00:38:33] three, six years ago we were doing these. You were talking about a company called Free Gold. Is that still on your radar? You mentioned that earlier.

Eric: Yep. Yeah. Very much on our radar. They've announced they have a resource of about 20 million ounces.

Craig: Oh, jeez.

Eric: [inaudible 00:38:47] well, what am I gonna do with that, right?

Craig: Right.

Eric: Nobody pays for that anymore, but I think they will. And of course, the 20 could become 30 very quickly, based on the drilling results they've had. I don't think that the market's savviest people in the world, and of course I say to CEOs now, in the mining companies, "Look, you gotta understand the capital markets here. Don't give a shit about the rocks. Let's figure out how you're gonna survive here, and not have your share price keep going down."

Craig: Right. Right.

Eric: Because it's a problem. Every time you fund, you destroy your market cap. And, I think, because you need the money, you let in weak shareholders, who are there, who ultimately short your stock. It's just a way for them to do it. So, cover the short, because they were, hey, tipped off ahead of time, an issue was coming. And they got positioned, so...

Craig: That's all part of that predatory short selling that you're working so hard to end up there.

Eric: Oh, yeah. Yeah. But I think if the GDX continues to rally here, and it has rallied by, what do I think, 20% I think it's rallied?

Craig: Yeah, yeah. That's about right.

Eric: By the way, when you rally 20%, I think they call that a bull market.

Craig: In everything but the mining shares.

Eric: Right. It's called a bull market. Anyway. So, it's not gonna take too much more. In fact, when I think of the 20% rally in GDX over the last probably five or six weeks, that's probably more than any other group out there.

Craig: Right, right, right.

Eric: Which some computer would probably tell everybody.

Craig: Right.

Eric: So, if we can keep the mo going here, I think the world will come back to gold.

Craig: Yep, and maybe...

Eric: [crosstalk 00:40:31] like Costco selling $100 million worth of gold in hours?

Craig: How about that? And they run out.

Eric: [crosstalk 00:40:38]

Craig: They don't get enough.

Eric: [inaudible 00:40:40] you have to work hard to sell $100 million in a year, and they sell it in hours.

Craig: Right. Right. And they run out. They gotta go get more. They only have it every once in a while.

Eric: Yeah. Well, it sort of shows that there's an interest there, right? And that there's a latent interest, and maybe a latent understanding, "Okay, this is a good thing." When I think of what we sell, which is, when you're buying it, it's an asset that's gonna carry you. It's gonna pay you a dividend, in my mind.

Craig: Right.

Eric: Pretty while [inaudible 00:41:07] of your other purchases are all depreciating.

Craig: Right. Right. As James Turk always corrects me, when I say something like, you know, call gold an asset class or something, and he always stops me and says, "No, it's money. You gotta not think of it that way. It is money. It's an alternative to fiat. And it's protecting you against the devaluation of the fiat." And it's only gonna cost you more. I think we all can agree on that, to, more dollars, and more Canadian dollars, and everything else, to swap it into gold [inaudible 00:41:38] Eric, I meant, forgot to mention earlier, you talk about these other countries and their currency. I printed off a chart, about a month ago, of gold priced in Japanese Yen.

Eric: Yeah.

Craig: It's gone from, like, whatever it is, ¥30,000 to ¥300,000.

Eric: Yeah. It's incredible. Yeah. No.

Craig: So, it's doing what it's supposed to do.

Eric: It's the alternate to the currencies, for sure, and...

Craig: Yeah.

Eric: ...you know, we all, we should all know, and I'm sure, actually, most of our listeners fully understand this, that the likelihood of the currency holding its value is, like, remote.

Craig: Right.

Eric: Even to accept 2% inflation tells you how remote it's gonna be.

Craig: Right.

Eric: You [inaudible 00:42:17] 2% inflation a little bit of runway here, it starts adding up after a while. And that's at 2%. But inflation is really 10%.

Craig: Precisely. Precisely. Well, my friend, it is always great fun to get caught up. I'll be curious to see where prices are, the GDX is, by the next time we speak.

Eric: Yes. I'll look forward [inaudible 00:42:39] think I should look forward to any sort of podcast or interview, because I always, in my mind, imagine the price is going higher. It doesn't happen too often.

Craig: Right.

Eric: But I'll look forward to it nonetheless.

Craig: We'll do it regardless. We'll do it regardless. Well, thanks for all you do for the industry. There's a lot you do behind the scenes that people don't even know about. And it's to all of our benefit, that invest in the shares. And I hope one day to actually see them valued in a place that would make some sense, rather than where they are. Well, I wish you Merry Christmas, Eric, and hopefully some time with your family, and a chance to kind of throttle back for a couple of weeks.

Eric: Hey, Craig, all the best to you, and I mean it when I say this: Get well.

Craig: Yeah. Thank you. Thank you. I hope I muted out all of the different coughs and wheezes and everything else.

Eric: Well, you might have muted it out, but you didn't get your face out of the picture.

Craig: Yeah, I know. It's a real professional operation I got here, Eric. Come on, now. Anyway. And again, on your way out, everybody, all year long, Sprott Money provides all of this content. We'll be right back at it in January. And so, think of them every time you're in the market for precious metal. And be sure, at least, if anything, like, subscribe, so you're always notified when new content comes out. And the way the YouTube and all those algorithms work, the more subscribers you have, the more apt you're to be up the list, you know, on the side of the page. So it does really help. So, hit the like button and the subscribe button, and help Sprott Money out with that. Eric, have a great holiday season, and I hope, you know, I hope you're able to relax and have some fun, and we'll get back at it in 2024.

Eric: We're all hoping for great things in 2024, and I'll look forward to catching up with you again.

Craig: Absolutely. And from all of us here at Sprott Money News, sprottmoney.com, thank you for listening. Happy holidays, and we'll see you again in 2024.

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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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