Sprott: “We have the Chinese coming in and buying an extra 1,500 tons (of gold). We will have a GLD metric that could be as much as 1,000 tons just this year, year over year. The Indians haven’t changed the laws yet but I think that will be forthcoming, and they can get back into normal buying mode....
“We know that production is likely to fall off because of the lack of financing, the difficulty of getting projects approved, the unwillingness to go into projects, and the massive decline in exploration.
So if you look at it from a longer-term perspective, you can see that all the catalysts are in place. In terms of the immediacy of something, it’s going to be a failure to deliver. I don’t know where it’s going to occur, but it will be a failure to deliver somewhere.”
Eric King: “It almost sounds like you feel that failure to deliver is imminent.”
Sprott: “It’s hard for me not to think it’s imminent. When I got into the gold market back in 2000 I read Frank Veneroso’s gold book. He suggested that the central banks, who said they had 35,000 tons of gold, probably only had 18,000 tons.
And I see data every year that suggests demand might exceed supply by 2,000 tons. So the metal can come from only one place -- (Western) central banks. That’s why I wrote the article in 2012, ‘Do They Have Any Gold Left?’ Then you see data points out of the U.S., where the U.S. is exporting 40 tons of gold one month, and the U.K. is exporting 112 tons to Switzerland one month, and the U.K. doesn’t even produce any gold -- so where is this gold coming from?
These numbers all reek of the suppression of the gold price and tell you the game will have an end date. I think we might be very close to that end date now. I know lots of your readers and listeners will have seen a comment by some reporter from Bloomberg who suggested that the Bank of England's vaults were empty now. [LAUGHTER.]
And I suspect that is very close to the truth -- that the supply is dwindling, and someday they just give up on it. Like they should be giving up on the policy of money printing. They accomplished nothing. We’re so misguided on all this stuff. It’s not working. All we’re doing is piling on the debt. Well, there is a cost to debt and that cost gets bigger all the time.
A lot of the policy to keep the gold price suppressed is not going to work. How could anybody honestly believe that inflation is only 2 percent? It’s so ridiculous, and even the public is now realizing it’s ridiculous. The central planners have played a game that hasn’t worked, and there will be a price to pay.
When you see a bank goes down, what’s the first thing you think about? ‘I want my money out of the bank. Where am I going to put it all? I better put it into something real.’ We keep hearing that the bad loan problems are getting worse, the trading volumes for the commercial banks are going down, the spreads are narrowing. And I would never have my money in a bank. They are so levered and risky.
It’s funny that it doesn’t strike people as being risky, but when you put your deposit into a bank, you’ve lent your money to the bank. If the money is lent to someone else who is not going to repay it, you are going to be on the hook for it. We just had the German government approve of bail-ins in that country. So we are all set up for it. Everybody knows there is going to be a problem in the banking industry because it’s just way too levered based on any normalcy in banking. So our day will come.”
at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/7/15_Billionaire_Sprott_-_The_Bank_Of_England_Gold_Vaults_Are_Empty.html
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