Today billionaire Eric Sprott told King World News that the demand for physical gold is now overwhelming Western central banks.  Sprott also said orchestrated price smashes in the paper gold market have been used in a desperate attempt to frighten investors and keep a further groundswell of demand from coming into gold.  

This is the third and final in a series of interviews with Sprott that has now been released which reveals the increasingly desperate situation Western central planners face as we head into 2013.

Eric King:  “What has you worried going forward?”

Sprott:  “What has me worried as an investor is that we are up against some powerful forces.  I look at the minutes of the (Fed) meeting as, okay, here they go, they are trying to force the price of gold down.  It’s a fight every day.  I mean it’s trench warfare.  And maybe they can convince people that they shouldn’t own gold.  They are trying their damnedest.  

Luckily we have many allies on our side these days that weren’t allies before.  We have the Chinese buying, the Russians buying, all sorts of countries are buying gold, and in large quantities.  We see the American public buying gold, Canadian public, Europeans (also) buying gold and silver….

“It doesn’t take many people to think that there is something wrong with the system and want to move into gold, when gold represents less than 1% of all financial assets.  It doesn’t take much of a turn by the people who own the other 99% to (dramatically) change the price of gold.

We’ve had some great thinkers who have come around.  I refer to Bill Gross, Kyle Bass, Ray Dalio, I mean there are a lot of people realizing it’s the time to be in gold and silver.  I think they are acting it out by the way (by purchasing physical gold and silver).

The Western central banks have for sure been supplying the gold, and they are probably in a jam.  In fact, I almost look at those minutes that came out as recognition of the real problem they are facing, that the demand for physical gold is just overwhelming them.  And they have to keep this volatility in the market so that there isn’t a groundswell of interest in terms of buying it.  

But I have no doubt the physical story will win the day, ultimately, and it’s not very far away.  I was not surprised to see the US Mint halt sales in mid-December and say they wouldn’t start them again until January 7th, which is what they do when things get tight.  But I would imagine you’ve had people telling you the markets for silver and gold are tight, and there is no way they can’t be based on all of the work that we do. 

But we have these forces at work in the paper market that want to make us think there’s no upside here.  I can assure you there will be plenty of upside.  We’ve gone up 12 years in a row, and with a weak year last year, I suspect we’ll have a way better year this year.  And some day it will break (massively to the upside).  

You see all of the concerns, whether it’s the people in Australia, Austria, Germany, ‘Where the hell is our gold?’  We’ll find out that the gold is not there.  I don’t think they (central planners) know where their (other countries) gold is.  It’s probably been sold would be my guess.  Our analysis says that gold was leased and sold into the market.  And someday, when some country goes to repatriate it, they are going to find out it’s not there.”

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