The frightening black swan nobody is talking about – Eric Sprott

Trading floorToday billionaire Eric Sprott spoke with King World News about his greatest fear.  Sprott literally shocked KWN by saying, “My biggest black swan, Eric, is that I think I’ll be right one day.  My worry is that one day they just shut everything down.”

Sprott, who is Chairman of Sprott Asset Management, also added, “They (central planners) say, ‘You know what, we just can’t keep this up anymore, the whole Ponzi (scheme), we just can’t do it and we shut it down.’”

Sprott went on to say that all of the markets would then “freeze.”  But first, here is what he had to say about the ongoing ciris in Europe:  “It’s beyond the ability of governments to deal with all of these weak countries.  There are only one of two answers:  Yes, someone could print as much money as they want.  Maybe they could print $5 trillion and say, ‘We’ll back up all of the banking systems.’”

“And then one could maybe say the problem is solved.  Of course the problem is, if they print $5 trillion, everyone knows they can’t back it up with anything.  Then you will lose confidence in the currency and you will go into hyperinflation because people will realize that real things are safer than paper things, including bonds and stocks and things like that.

So there are only two choices, they’ve got to print or there are going to be some defaults, which is the natural offspring of a Minsky moment….

“Sooner or later you have to write off the debt or you have to inflate it away.

If they inflate it away, then the reason for gold and silver to go higher will be incredible.  If they deflate it away, the need for people to take their money out of banks so the depositor doesn’t lose money becomes all that more apparent.  And where do you put that money you take out of the bank?  Well, the logical thing is to have it in gold and silver.”

Sprott had this to say regarding the latest Sprott Silver Trust offering:  “We thought the timing was good in the sense that the silver price has been in the doldrums and there would be some underlying interest in the metal.  We were happy the announced offering reached the target of $200 million because the issuing market is not very robust these days.

So we were quite happy with the results.  And initially it will allow us to buy seven million odd ounces of silver, which we haven’t bought yet, but it will certainly help the silver market.”

Sprott also added:  “We’ve had nine takeover bids amongst the (mining) stocks in our portfolio in the last four months.  The premiums probably averaged 40%, and most of them were cash bids.

So you can see the producers are coming into the game and paying a fat premium here.  It really improves liquidity in the area and I hope the trend continues.  We have lots of inquiries on various things we own, so I think there is an underpinning for the shares that will prove to be quite successful.”

Eric King:  “The London Trader described the demand as, ‘relentless’ coming out of there (China).  And every single day (at the fix in London) on gold, and on silver now, they are taking up massive quantities.”

Eric Sprott:  “Good.  And so they should.  If I had a delegation from the People’s Bank of China in here I would say, ‘Look, you’ve got to get rid of that US paper and you’ve got to buy gold.  There is no way on earth that you could possibly believe the purchasing power of those dollars, given five or ten years, will be anything like the purchasing power of gold.  There’s just no way that could possibly happen.’”

Sprott stunned KWN by speaking about his greatest fear: “My biggest black swan, Eric, is that I think I’ll be right one day.  My worry is that one day they just shut everything down.   They say, ‘You know what, we just can’t keep this up anymore, the whole Ponzi (scheme), we just can’t do it and we shut it down.’  All of the markets freeze, and the stocks that you are short are never allowed to go where they were.

They might cease gold trading, in the normal sense, or maybe they will even outlaw gold trading.  But that’s my biggest worry.  Because everything else, everything that one would theorize and watch, in practical terms, all (of it) argues for gold and silver to win the day.  So just stay the course.”

Eric Sprott

The written portion above is just a small part of this extraordinary interview with billionaire Eric Sprott.  Sprott covers global markets, gold, silver, his greatest fear, what investors should be doing right now, what to expect next, the mining shares and much more.  The KWN Eric Sprott interview is available now and you can listen to it by CLICKING HERE.