The Federal Reserve may be intentionally trying to discourage investors from buying gold by forcing down the market price for gold bullion, investor and asset manager Eric Sprott suggested to King World News in an interview last week.
“I look at the minutes of the [Fed] meeting as, okay, here they go, they are trying to force the price of gold down,” explained Sprott. “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.”
Sprott, a 40-year award-winning veteran investor owns Sprott Asset Management, an investment firm based in Toronto. “What has me worried as an investor is that we are up against some powerful forces.” Summarized Sprott.
However, Sprott pointed to surprising allies who are, unintentionally helping out gold investors in the U.S. and Canada.“We have the Chinese buying, the Russians buying, all sorts of countries are buying gold – and in large quantities,” Sprott explained. “ We see the American public buying gold, the Canadian public, [and] Europeans buying gold and silver.”
When gold represents less than 1 percent of all financial assets, and people decide that there is something wrong with the current monetary system, it’s natural for those people to want to move into gold investments, he elaborated.
“It doesn’t take much of a turn by the people who the other 99 percent [of all financial assets] to change the price of gold.”
Sprott’s position is that the demand for the yellow precious metal is so high, that Western central banks are scrambling to hang on to it.
“The Western central banks have for sure been supplying the gold, and they are probably in a jam,” Sprott shared. “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.
“We have these forces at work in the paper market that wants to make us think there’s no upside here,” said Sprott. “I can assure you there will be plenty of upsides. 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."
Sprott mentioned great financial thinkers, including Bill Gross, Kyle Bass, and Ray Dalio, who has sided with gold.
“There are a lot of people realizing it’s the time to be in gold and silver,” he said.