Harsh Market Correction

Craig: Welcome back. Sprott Money, sprottmoney.com. It is time to wrap up the year. Can you believe that? 2024 is almost over. This is your "Monthly Wrap Up." It's your yearly wrap up. I'm your host, Craig Hemke. And since it's Christmas time, we figured we'd hear from Santa Claus himself, from the Great White North. Eric, you got this beard going, brother. How you doing? Nice to see you.

Eric: Yeah. I did it for you, and the listeners, you know, wanna look a little Santa Claus-like. [crosstalk 00:00:36] I wish I could have been a little more Santa Claus-like last year.

Craig: Right, right.

Eric: That was a tough thing.

Craig: Well, you know, and old guy retirees like you can make a few extra bucks by putting on that red jacket and going down to the mall, you know? So, if you need a little extra income, you always have that.

Eric: Yeah. Always need extra income. Yeah. [crosstalk 00:00:55] Well, actually, I should mention, you know, it's been not...it's been a great year to own the metals. I mean, it's just been staggeringly productive, right? But it's been an awful year to own the securities, which I'm sure we can talk to later. But gold and silver have been great. Of course, we benefited massively by the central bank buying. And I think, by government irresponsibility, which I think is becoming more and more of a theme here, you know, you see... Well, you see what happened in our country recently, you know, where the finance minister resigns, and the currency's getting beat up here. Our deficit was supposed to be $40 billion. We do... It's announced as $62 billion. Just a slight miss, right? Oh, my god. So, and that is going on throughout the world, whether it's France or England or Germany, not so much Germany, because they don't have a big deficit. But there's... Brazil's now got...under the crossfire of the currency going down. And of course, pretty well all currencies have gone down versus the U.S. dollar. So anybody living in any country outside of the U.S. would benefit materially by owning gold.

Craig: Right. I just put my glasses on, so I could remind myself of the number. Two months into the U.S. fiscal year, the U.S. has already run a $624 billion deficit, in two months, $367 billion in October, I'm sorry, November alone.

Eric: Yeah.

Craig: It's just, the madness.

Eric: Yeah. While we're on that, I should say, I would say one of the big worries that the market might have here is if these 10-year yields keep going up, and we've gone up quite a lot here in the last little while, and of course, we're up something like 80 bips from the day they announced the first cut. And we're almost back to the highs for the year. And I was sitting here thinking, well, geez, and some people even talk about 5% and 6% now, some people in the financial community. They can sort of see it coming as, you know, you gotta fund this stuff. I just think, you know, like, if it went up 1%, that's $360 billion more in deficit.

Craig: Right.

Eric: One percent.

Craig: One percent.

Eric: We already got a deficit that's out of sight, and that's when you kind of hit the Minsky moment, right, where your debt is all of the problem, and you can't pay the interest. And I would say we gotta be very close to that in the U.S., not that the markets...well, the stock market's not caring, but the bond market's caring. For sure, it's caring.

Craig: Eric, that's a little bit of the paradox of this year, in that, on the surface, you know, if we go back to January, and I talk about the dollar index has gone from 100 to 107 over the course of the year, and rates have gone up, and they've gone up significantly since September. On the surface, you'd look at that and go, "Oh, had to be a bad year for gold." And if we're talking about rates going even higher, you'd think, "Oh, boy. It's gonna be a bad year." But it's been the opposite of that. What is the key driving...what has been the key driving factor this year?

Eric: Yeah. Well, I think it's just the physical market, you know, when you get these central banks... Look, I go back 25 years in this thing, and back in the olden days, I mean, the central banks used to sell probably 800 tons of gold. Now they're buying 800 tons... Not 800. That's wrong. Sorry. Let's say... What do we produce? Yeah, 2500. Yeah, okay. It could be 800. They used to sell that much. Now they buy that much.

Craig: Yeah.

Eric: I mean, how do you fit that in, you know? Like, that's probably a change of, like, 20% in the market here. So, that is by far the biggest thing, and I think there's also a move afoot by big investors, both institutional and individuals, high-net-worth individuals, where they are, in fact, buying gold. They see where it could work. Who's the fellow from...that used to work with Soros? Druckenmiller. You know, he came out [inaudible 00:05:07] I think the bond king came out in favor of gold, recommended gold. There's all sorts of people that are now including gold in the discussion. And of course, that's a big factor, because gold, I mean, the weighting of gold in the whole financial arena's only, like, half of 1% here, so if anybody thought for a second that it had a position in a portfolio, oh, my god, the amount of buying that would take place would be dramatic. And we might be seeing that, Craig, in the sense that, you know, we had a rather interesting weakness last week, where, back on Wednesday of last week, it was becoming apparent to people that there was some congestion in the physical supply of metal, on the COMEX, in both silver and gold. And then we had the tamp-down on Thursday and Friday. But gold was trading at $2760 at the time. Was almost at a record high, for God's sake, [inaudible 00:06:11] the March contract here. And all of a sudden, they got bombed.

But I've actually spent some time looking back at the last week, and I noticed, and I know this is an area that you're way up to speed on, probably more than me, but the amount of gold that was settled in the week, by exchange for physical, was 35,000 contracts, settled, on the EFPs. And we had 5.6 thousand contracts, 5600 contracts, settled by actual deliveries. So, we had contracts representing 40,000 contracts in open interest, that was settled in some physical kind of way. The open interest only went down 28,000 contracts. And I find it interesting when I look now at, both in the case of silver and gold, and you look and see how you shrink the open interest. And when you have to shrink the open interest, just by delivering, in other words, you become a physical exchange now, none of these contracts are gonna disappear unless somebody delivers something. We're not gonna get away with the paper stuff anymore, I don't think.

Craig: Yeah.

Eric: So, I think it's quite noteworthy what happened in gold and silver. Silver last, let's see, month to date, has had deliveries of 45 million ounces, 47 million ounces. And that's...and they still have an open interest of a million and a half ounces in the month. So we're gonna, we're actually gonna touch about 50 million ounces of deliveries on the COMEX. Well, 50 million times 12 months is 600 million ounces. We only mine 800 million ounces. We can't be sending the production to the COMEX, okay?

Craig: Right.

Eric: So, I think there's lots of signs of physical tightness. We see it in the cost to borrow SLV shares, GLD shares, GDX shares. We see it in the decline of the number of shares that's available for borrow is going down sharply. So there's lots of signs that the tightness that a guy like me would have imagined for the last 20 years might be manifesting itself right before our eyes here.

Craig: It was odd, because by the middle of last week, while that December contract is in delivery, all of a sudden, there was a spread from spot to that contract of, like, $12. That should not happen. There should be an immediate arbitrage of some kind to keep that from happening. And then you get this action, Thursday and Friday, that dropped price below the 50-day, and spread evaporated on it. Anyway, we don't need to get into the weeds with that.

Eric: Well, you're right though.

Craig: So it has to [crosstalk 00:09:09]

Eric: I'll tell you one other thing, Craig, that I've been watching is, every day, the demands for deliveries rises. In other words...

Craig: Yeah.

Eric: ...you know, a guy might, they might take delivery of 100, but they say, well, what's the open interest? Well, the open interest went up 200, which means somebody bought 300. The net new claim. And those claims, as I say, was, like, the 5,600 contracts, new, new contracts, just in the last week. So, somebody's in there buying it who needs immediate delivery.

Craig: Yeah.

Eric: And of course, there's discussions it's somebody out there short big-time. We've had certain bank names thrown around. You know, what's interesting, while we throw these names around, and I don't think it is, it's certainly not JP Morgan, but I should do, I'm doing a bit of a roundabout here, but I've been spending a lot of time this week doing research on the JFK assassination, and sort of the confessions of some people who were involved, and they say they were involved, and they fired the shot, from the grassy knoll, and there was a couple of other guys, mafia guys, all coordinated by the CIA, by the way. And [inaudible 00:10:27] one of the thoughts I had out of that, oh, my [inaudible 00:10:30] they finally fess up, right. They finally tell the story. And I thought, you know what, I'm gonna go back and listen to Chris Marcus's interview of Bart Chilton. I've heard it before, okay.

Craig: Yeah.

Eric: But I thought I'd go back and listen to it again, and see exactly what he said. And of course, I think, for Bart, I believe was a bit of a bedside confession as well, because he died very, very shortly after that. And I think he probably knew he had a terminal illness. One of the other guys who was commenting about the JFK thing, he gave a big, long interview. He died nine days later.

Craig: Yeah.

Eric: They kind of know they're going, so let's get [inaudible 00:11:13] okay? And the words that resonated, I actually wrote it down here. Bart Chilton says, "A lot of evidence would lead to manipulation." Now, he said they didn't have enough to charge them, but there's that, no doubt in his mind that a lot of the evidence would lead to manipulation. And had they had the proper rule set, which they didn't have then, then we could have charged, in that case, JP Morgan, I believe, with manipulation, okay? And we've all, you know, talked about this over and over and over again. We've all believed this manipulation. We see the fines for manipulation. But to hear, you know, Bart Chilton say, "Yeah, it went on for a long time..." And by the way, I think that examination they had went from, like, '08 to 2013 or something. A long, long, long time.

Craig: Yes.

Eric: So, it was interesting. And the one thing that makes me... And I also, of course, I read about conspiracies all the time, and I almost feel like I'm in them all the time. But the one guy was saying, well, you know, pretty well, all the conspiracies come true now. Like, it's everything. And I don't know what the conspiracy is with the drones, by the way, okay. They're [crosstalk 00:12:32] around New Jersey or whatever. All sorts of people have all kinds of conjecture. But it's, again, yet again, bizarre, right? We would we have all these drones flying all over the place?

Craig: Well, even with all that in place, in the management of price, we have had a great year.

Eric: Yeah.

Craig: Really the best year in gold that we've had, well, since 2020, and beyond that, 2010.

Eric: Yeah.

Craig: Silver, though, is an interesting animal, Eric. I wanna get your thoughts on this. There's only two commodities that have yet to exceed their all-time highs. Everything, I mean, you go down the board, and they all have, except silver and sugar.

Eric: [crosstalk 00:13:14] Oh, my god. Yeah.

Craig: Yeah. So, all right. So, as we roll into the new year, I've been, I wanna get your thoughts on this. I've been asking everybody on my site to keep an eye on about $30.85 for the spot price of silver, because there have been years, obviously, where silver has gone up toward $50.

Eric: Yeah.

Craig: But it is... The highest annual close...

Eric: Annual close. Yeah, yeah, yeah. Yeah.

Craig: ...is $30.85, from back on Christmas Eve of 2010. Do you think, when we talk about big money, you know, and bigger institutions, and family offices, and hedge funds and the like, would anybody even find that chart and look at it and go, "Whoa. Look at this. [inaudible 00:13:56] a breakout on the annual chart." Is that important or not?

Eric: Well, I think they, say if it was above that, you know, this huge cup-and-handle thing, right?

Craig: Yeah.

Eric: [crosstalk 00:14:04] it's gonna go to the moon again, which I believe should happen. In fact, when I look back at silver, and when I think that silver is produced... I think it's, like, only, it's probably less than 10 to 1, produced, less than 10 ounces of silver for every ounce of gold. But the price is 80 to 1. And it just makes no sense. It goes back to your comment. Like, how can these two products be trading at the kind of values they're trading at, with all the information we know about them? And I fall back on that, you know, used to trade 15 to 1 when it was a currency. It's produced 10 to 1. I can't imagine it's gonna stay at 80 to 1 here. And I honestly believe, here's the whole conspiracy thing, that they use silver to control gold. You know, it's easier to knock down, and make it quite violent, by the way, because it takes no money, right?

Craig: Yeah.

Eric: We talk about the major banks just doing the bidding of whatever the Federal Reserve or the Treasury. And that's, in fact, what's been going on for these 45 years that I've been involved in it. They have kept pressure on it. And the only question is, does it end? Do we have enough hard information on silver to end it? Of course, you would know all the data as well as I do. I mean, we've had a shortfall of about 200 million ounces for the last four years.

Craig: Right.

Eric: We'll be going into the fifth year of at least 200 million ounces. The progress on silver has been incredible, with the solar thing. and of course, the solid state battery that Samsung has brought out, which has a kilogram of silver in it. Oh, my god. If that... And I think it makes a lot of sense that that will revitalize the EV industry, that needs to be revitalized, by the way, because, you know, the only lasting 600 kilometers or 400 miles, and the time it takes to charge, and the fact that there aren't enough charging places and all that stuff was... And the cost of repairing it, all the other issues to do with the EVs. You need something that goes longer. The solid state battery only takes nine minutes to charge. I mean, it's like having a cup of coffee. And so, I think that could be very, very important here for silver going forward. And, you know, that shortfall could go from 200 million to 300 to 400. I don't know how, where they're gonna keep getting the silver from. And as we see, I actually think that this, a lot of the silver that was delivered into both gold and silver were from the ETFs, the Western ETFs, where the participants, the agents, the authorized agents, were buying these ETFs, and redeeming the silver. So, it looks like nobody cares about silver. Well, you know what? Somebody did care about silver. And it worked beautifully, right? "Oh, look. Nobody wants these ETFs." And of course, they're the guys buying them anyway. So, I think we're set up for pretty good times here.

Craig: Andrew Maguire has thought that for, I think, as long as I've known him, that those ETFs were set up just as a flywheel. That's why they're custodied in London, so that any time there's a shortage and a need of immediate metal, they can just basket some shares together, short them, and boom.

Eric: Yeah.

Craig: [crosstalk 00:17:26] right out of there.

Eric: You know, it's funny that you'd mention Andrew Maguire, who I've spoken to many times. But Bart Chilton mentioned Andrew Maguire. Because Andrew Maguire was talking to Bart Chilton all the time. Well, lookit. "Here's when they're gonna hit it," and sure enough, 70% of the time, they did exactly what Andrew Maguire said was gonna happen, okay? Now, it's interesting. He also mentioned Ted Butler, you know, when the... I've been a subscriber to Ted Butler forever [inaudible 00:17:52] unfortunate passed. And it just seems awful to me that, you know, it's probably just about to happen. And Ted, of course, is writing about it for 25 frickin' years. It's like, be like you and I popping off right now.

Craig: Right.

Eric: And all of a sudden, [inaudible 00:18:09] goes crazy.

Craig: I can tell you, if silver ever does take off, I might have a heart attack, it'll be so [crosstalk 00:18:15]

Eric: Yeah, right. [inaudible 00:18:17]

Craig: Well, and again, so, what... It may not get anybody's attention if we, you know, just say, by chance, silver does finish the year at $31 or $32 on the spot price, with that higher price. But what would it mean to you? I mean, do you look at those kind of charts, and it would be, like, "Okay, here it comes?"

Eric: I can tell you this. If it closed at, you know, above $30, I'm gonna be very, very, very impressed, and here's why. We got guys out there that are short 500 million ounces of silver [inaudible 00:18:48] They're losing money.

Craig: Yeah.

Eric: You can only delay the non-recording of this stuff so long, although I gather banks might be allowed to not record losses these days, for whatever reason, okay?

Craig: Yeah, right.

Eric: But you can rest assured that, in both in gold and silver, the losses are staggering. I mean, they gotta be, like, $20 billion that they've lost this year, being short those two metals. You know, we're up $800 in gold here on, what are they short? They're short about $70 billion worth or so.

Craig: Yeah.

Eric: You know? Thirty percent. There's your first 20 million.

Craig: Yeah. So, let me ask [crosstalk 00:19:29]

Eric: So, the point I was trying to make is that year-end is very worrisome to a guy who's long gold and silver.

Craig: Yeah.

Eric: Because of the underlying desire for those guys to knock the price down at, for year-end.

Craig: Right.

Eric: So, it would be even more impressive if we could ever mount a rally here, just before year end. It would be most impressive.

Craig: Gonna ask you about that in a second. I want, back up, though, to this notion that the banks, a lot of folks out there that understand how this works are like, "Oh, boy. They're gonna come smash price," or "The markets are gonna collapse, and gold's going back under $2000," and that sort of thing. It would seem, as long as that central bank bid for physical continues, almost puts a floor under how far it can be driven lower. Would seem that way. Does it seem that way to you?

Eric: Yeah. Well, you know what? Whenever I see a smash, I always think of India.

Craig: Yeah?

Eric: They're the real buyers of silver and gold, right? In particular, they've gone crazy on silver this year. Absolutely crazy.

Craig: Yes, they have.

Eric: And as you pointed out in our earlier discussion, here's, theoretically, China buying 55 tons of gold in October?

Craig: Yeah.

Eric: Yeah, [crosstalk 00:20:42] We only mine 70 tons a month. You know, like, it's crazy. So...

Craig: Yeah. So is that, like, the floor, in a way? Can that, could you, I mean, if the banks, yeah, they wanna wash all the specs out and cover all their shorts and get price back down, but if they risk kind of a physical rush, you know, with physicals on sale, because they gotta, you know, they gotta match those orders, paper price versus the physical price, does that put a floor under things? Do you buy the dip?

Eric: And, well, a thing I find interesting about China and India, it's not always for the central bank, either, right. They're not buying silver for the central bank. And I think in February, they bought 77 million ounces in one month, in February. [inaudible 00:21:22] And this last month, they bought, I think it was 22 million ounces, which is still a fair chunk of change. I mean, that would imply about 250 million ounces in an annual mine supply of 800.

Craig: Right. Right. Right.

Eric: And it's not the central bank buying it. It's somebody buying it who's gonna be producing solar, or solid state batteries, or any kind of other electrical things. So, China and India are really the industrial centers, right, where they make things. So that's where the silver's likely to go. And I think these guys are, they're opportunists when it comes to price, for sure. The Indians in particular. So, I was very happy to see them buying a lot in November, and hopefully, with the price even a little bit lower here, they're probably in buying right now.

Craig: Yeah. So, my other question about a year-end rally, here we are. It's the middle of December. A lot of the mining shares dropping, as they almost always do, Eric, on what seems to be tax loss selling. And I just noticed yesterday, that darn Newmont, it's all the way back down to $39 a share, which is where it was in early April.

Eric: Right.

Craig: Do you think there is a little Santa Claus rally, as sometimes happens in the mining sector, here in the [crosstalk 00:22:46]

Eric: Well, after you get by the last day, you can, you have to take your loss for tax purposes, they normally rally, okay. In fact, they rally before that.

Craig: Yeah, usually.

Eric: Because the selling is pretty well done, [inaudible 00:22:58] How many guys are gonna wait till the last friggin' minute to sell something?

Craig: Right.

Eric: So, we can't be far from that. We don't have many trading sessions left in the year. And normally, it's just around this time of year, is, they start to rally. So, and I think they probably will. Been a horrible year for the stocks, even though the fundamentals have been quite impressive, you know, fundamentals of the price of the products they sell.

Craig: Right.

Eric: So, but it's been horrible to be an investor. I mean, I see it all the time. You know, stocks'll get a nice rally because gold's going up, and then even while it's still up, then they just start hammering it. And one of the things I really worry about, speaking of conspiracies, is I really believe that the naked shorting has had a hell of a negative impact up here in Canada.

Craig: For sure.

Eric: That just, they haven't really formulated rules to kind of deal with it, and you keep reading about it all the time. Guys that are, you know, cases being filed, particularly in New York City. In fact, there's one filed against two big Canadian banks. I think it's for $700 million, where some biotech guy up here says, "Well, these guys were naked shorting my stock." I know nothing about the case, but would I understand that happening? Yes. And I think what they pick... They pick on people, companies, where you gotta spend a lot of money, and a lot of time, before your product's available for you to make revenue. And what are the two things that do that? Biotechnology and mining.

Craig: Mining.

Eric: They just take so long before you can ever get a penny. And they just know if they hammer it down, they probably... You're gonna be doing an issue. We'll just buy it down here because we're gonna take it down there. So, it's a big worry of mine.

Craig: For sure. And that's, I know you worked hard in the Save Canadian Mining [inaudible 00:24:48]

Eric: Yeah.

Craig: ...you know, and that's something we're all grateful for the work that you and everybody at that organization are doing. I'll get back to mining in a...we'll talk more about shares here in a minute. Let's, regarding the metal... I mean, again, because like you said, we should all be feeling pretty good about ourselves, right? Gold's up 25% year to date. Silver's up 30%, but it's those darn mining shares that leaves everybody... What... For gold, as we're recording this, we're a couple hours away from the December FOMC meeting, and Jerry having his press conference and all that kind of stuff. Would you expect? What are you hoping for? What do you think gold's gonna do and silver's gonna do next year?

Eric: Well, I think if you use the physical part, which we spent a lot of time talking about, whether it's the COMEX or the LBMA, I know that a fellow named David Jensen does a lot of work on the LBMA, and how much the inventories have gone down. Lots of people, of course, look at COMEX, as both you and I do. But I would say that all the evidence... You get away from the need of banks to have a price at a certain level, you can get away from that. In other words, I would say this. Just getting into 2025 is gonna take the lid off gold. Because there's no reason for them to hold it yet. They have no... They'll be finished their quarter, finish their year. It runs hard when these banks get out of the way. You can see it. So, I'm pretty sure, you know, if you and I were talking January 31st, I'll bet you gold will be up couple of hundred bucks from where we end the year.

Craig: Seasonally, the best, one of the best months of the year anyway. Late December, and then into January, seasonally, the second-best month of the year, on average.

Eric: Yeah. Yeah, no, there's lots of reasons for it. You can see what the banks do, okay? And it just, incredible. And I would say the tamp-down last week, it was getting out of control. The physical claims on the commodity exchange were getting so high. They had to do something. And I do believe that, you know, it's all part and parcel about why the hell do we keep rates down if it looks like inflation's going crazy, and it looks like inflation's going crazy if gold goes crazy and silver goes crazy. So, we can't have that.

Craig: And anybody, if anybody watching us, just pull up a daily chart of the front February gold right now, and put the 50-day moving average on it. You'll see this is the third time that price has been busted back below that 50-day moving average with force. It gets the machines, the hedge funds that are run by machine, to just start dumping, to that technical indicator, and then, problem solved, at least temporarily. You're right. And we'll see what happens as we get into [inaudible 00:27:39] I don't know what Powell, as we record this, I don't know what he'll say. How do you feel about the U.S. economy? Is it gonna be weak enough that, or will it be weakening in 2025, that there will be more rate cuts in what's gonna be intimated here later today?

Eric: Well, the big plus for the U.S. economy has been all the money that people are making in the stock market. I mean, we're talking huge, huge, huge amounts of money.

Craig: Yeah. [crosstalk 00:28:07]

Eric: And so, now you have the bifurcation, where the guys in the market are making fortunes. And of course, the guys down there are getting clubbed like a baby seal. But I think that the underlying economy is not nearly as strong as the data would suggest. I've never believed the Bureau of Labor Statistics numbers, you know, that we have all these jobs created all the time. I just don't believe it. And of course, the household survey says we've lost a million jobs this year. And the other guy says, well, we're up two million jobs. Well, who am I to believe here? You know? And yet, I think we'll start to see the claims move up here. There'll be more job losses. Maybe we'll find out, you know, once we get through year end, there's typically a lot of layoffs, because guys realize, "Oh, we're not making it." Heaven forbid that rates go higher. I mean, rates going higher is a killer for small business. I mean, it's just the worst thing. They've had no break on anything, right? Now we got these, some of these huge cost increases, like insurance. Oh, my god. It's, the increases in the cost of insurance, for everybody, whether it's health, car, home. Crazy.

Craig: Yeah.

Eric: And those are big bills people gotta pay.

Craig: Right. Precisely.

Eric: And then even the PPI and CPI are starting to blow back up here. And it's, the same thing's happening in Europe, or the CPI seems to be moving back up. And looks like we're not going down anymore. Let's put it that way. We'll be going up here.

Craig: And, Eric, where does the money come from? I guess that, [inaudible 00:29:40] $624 billion in deficit, in just the first two months alone, there's this perception since Trump was elected that all of a sudden, everything's gonna get better, because the DOGE Committee and all this kind of stuff. Is that rooted in reality, or is reality more, "Hey, this is gonna get, you know, gonna continue to grow exponentially?"

Eric: Well, I think he's gonna, he could very well have a tough time. I don't know that, I mean, his margins in Congress and the Senate are so small, that if you get one or two guys tipped the other way for some reason. As I said it, "for some reason." Well, who's paying me off here, you know? It's an awful thing to say.

Craig: Right.

Eric: But you know what happens, right?

Craig: Right.

Eric: You think of those lobbies, the military industrial complex lobby, the pharma lobby, the health care lobby. Oh, my god. I hate to think of it. And we see the amounts they spent. Somebody's getting it.

Craig: Mm-hmm. Mm-hmm.

Eric: Yeah. Oh, speaking of that, I find it quite funny, and I guess in a way ironic, that President Biden has pardoned at least 10 individuals who scammed the public in the financial arena. You know, and some of them as much as a billion and whatever. And all I'm thinking, okay, let me figure this. Why would he do that? Well, they probably still have some money left. Maybe he can get some of it.

Craig: Why wouldn't you think that?

Eric: You're not gonna let the guy go to jail who was smoking a dope 15 years. He's broke. Those other guys, yeah, we'll let those guys [crosstalk 00:31:20]

Craig: It truly is remarkable. And again, hey, look, I'm an American. I'd love to see them, you know, try to get things under control and fix it. I just don't think it's fixable. But we'll see. All right...

Eric: Yeah. Hey, I forgot to mention, you know, when you talk about gold going up 40% or 25%, heck, if you're a Canadian, it went up more than that.

Craig: Dang straight.

Eric: Like, a lot more. [crosstalk 00:31:47]

Craig: No doubt. Right. Exactly. So, it's doing what you want it to do.

Eric: Yeah. And most people in the world, right, ex-U.S., they've all done well by that.

Craig: Right. I'm away from my office as we're recording this, but I have, I like to show people, you know, this is a piggy bank, Eric. It's the shape of a London bar, but it's a piggy bank.

Eric: Right. Yeah.

Craig: Okay. You know, if you go back to when Nixon closed the gold window, you could have bought one of those London bars, 400 ounces, for $14,000.

Eric: Yeah.

Craig: Today, it's $1.2 million. The bar hasn't changed. [inaudible 00:32:26]

Eric: I got a funny story for you. I have a lot of these, okay. That's a silver coin.

Craig: Yeah.

Eric: And if you're in Canada, and you want to buy it from Sprott Money, probably costs you, in Canadian dollars, 50 bucks.

Craig: Yeah.

Eric: I give these out quite regularly, and I give them to somebody and says, "You know, this is worth $50, but it only cost me $5." Because I bought it 25 years ago.

Craig: Twenty-five years ago. There you go.

Eric: For nothing.

Craig: Yeah. Right.

Eric: Think of that gain over time. [crosstalk 00:32:55]

Craig: Well, so it's doing what it's supposed to do, the metal is, particularly gold. But like I said, the shares have just been... It's... So, anyway, let's, before we get to some individual names, I know we need to discuss, [inaudible 00:33:09] 37,000-foot view of the sector, it seems, at least to me, that one, nobody cares, right? I mean, there are some of these cryptocurrencies you've never even heard of that have a larger market cap than the GDX. So, there's that. There's also, as we record this, what, the value sector of the U.S. stock market has declined, like, 12 days in a row, and it seems like the mining shares are now value instead of growth. I mean, they're not growth.

Eric: Yeah.

Craig: What changes it, Eric? How do we get the perception to change, and the people actually want to own these things as a long-term investment?

Eric: Yeah. Well, I can tell you that I follow Michael Oliver very closely. He's a wonderful momentum guy. He basically says, you know, if the market starts to break down, the stock market starts to break down, now where's everyone gonna go? I mean, I don't see them going to bonds. I think if the market breaks down, the crypto will break down too. There won't be many choices of where to go, and gold and silver will be a primary one. It's already shown, it's outperformed most things this year, okay? So, the computers know that gold and silver are doing well, even though no one ever recommends it, so I think the market breaking down would help. And I think the big fear in the market today should be, well, is AI economic... You know, as these guys build out their $100 billion facilities that are gonna suck up more energy than you can imagine, and more water than you can imagine, and they say it costs 10 times more to search on ChatGPT than on Google. Ten times more in cost, because of all the energy needed to answer a stupid little question, right? Like "What's the favorite name of a child in India," right? And you got this computer that takes up, you know, [inaudible 00:35:09] this whole building, you know. And [vocalization 00:35:12] You know, "It's Imran." Whatever.

Craig: Right.

Eric: And I do... And, so, for example, I watch Nvidia. And Nvidia's in a correction now.

Craig: Yeah?

Eric: Okay? And then Michael would suggest, I don't know whether he'd use the weekly close or not. We've not closed the week, but at the price of trading at yesterday, he would have said it's broken down. Okay? Now, if the whole thing starts falling apart because nobody's figured out how to make money from it, even though it's a wonderful thing, because it does things faster, but how do you make money? Where are we making the money here? I gotta be able to charge somebody. And maybe those people I wanna charge can't afford to pay for it. Well, we know half the population can't. And maybe half the businesses can't. So, we'll see how that plays out, but I wouldn't be surprised that Nvidia and the whole AI thing comes under pressure. And this would be like me saying, you know, "I don't think that Mag 7's gonna do as well..." I was saying this back in June, "I don't think the Mag 7's gonna do as well as the market," back in June. Well, it hasn't. Funny thing, hey? All of... It was Mag 7. Now it's AI. And each of these things, of course, detracts a lot of money, from the whole market. Well, if it finally rolls over, and they don't wanna own a Nvidia, and they don't wanna own Microsoft, they don't wanna own Amazon, okay, maybe we'll have a chance.

Craig: Is that what it's gonna take, you think?

Eric: I think so.

Craig: [crosstalk 00:36:45] I saw a thing last week. There was one day last week where that Mag 7 or Super 8, or whatever the heck they call it these days, the market cap of just those eight stocks went up over $400 billion in a day.

Eric: Yeah. Ridiculous. [crosstalk 00:36:58] I can tell you that.

Craig: [crosstalk 00:36:59] the X market cap is $14 billion.

Eric: I know. It's crazy. Yeah. [inaudible 00:37:06]

Craig: So, okay, and then, to the smaller companies, you know, like you said, I mean, they kind of burn through a lot of capital as they try to drill all their holes and prove up what they have, and that kind of stuff. I remember, you know, we talked five, six years ago, you know, when gold was $1,500 or $1,600, it was like, "Well, boy, if, $2,500 gold, a lot of those things become economical." And, well, here we are. And yet...

Eric: And by the way...

Craig: ...the stocks are still down.

Eric: And by the way, Craig, they are all economical.

Craig: Yeah. So, what's the deal?

Eric: Okay, well, the problem is, you've gotta get there, right? In other words, you've gotta get your resource, you gotta do your PEA, you gotta do this. You gotta raise the money to finally get there. And any time you say to someone, "Oh, well, that's gonna take, you know, four years to get there," "Okay, excuse me. I'm gonna go... I'll go buy some Nvidia calls." One-day calls.

Craig: Right. Buy some [crosstalk 00:38:03] coin.

Eric: I'm gonna find out how much I make in a day. I can't be waiting four years for this.

Craig: Right.

Eric: Because you really need someone else to come along and support the thesis that it's of value, okay? So, we need the companies to come in and buy some of these junior guys. And we had one where somebody bought, was it, O3 Mining here in Canada? It was Agnico that bought it. Which is good, because they're in the exploration development time of the cycle. But obviously, somebody in the business realized, "Okay, this is good value here." And when I look at stocks that I own where, you know, I can buy an ounce of gold in the ground for 10 dollars Canadian?

Craig: Yeah?

Eric: Ten. That's gotta be ridiculous, man. And I'm imagining it's gonna go to $100, U.S. So, I could make 15 times on my money if it just got back to normal. To normal. Wow.

Craig: Right. So, you see this, I see this. What gets other people to see it? Even, higher gold price? Is it, like you said, getting out of growth...this idea that these growth stocks are dead for a while, we gotta invest someplace... What's gonna finally...?

Eric: Well, I think the fact, as I say, the computers see it, okay? They don't see the stocks going up, but they see the metals going up. You know, you're a big fund manager, and you ask the compute... "Well, what went up yesterday?" Well, gold went up yesterday. "Well, what's the best-performing asset?" Gold's the best perform... "Well, we don't wanna own any." "Well, maybe we should own some," you know?

Craig: Right.

Eric: [inaudible 00:39:34] move around. And then, you know that, as gold goes up, sooner or later, the underlying stocks are gonna go up. When you do the contrast, like, I think the HUI index is, like, half of its high. And the high was when gold was $2000. It's $2600 today.

Craig: Yeah.

Eric: Like, it's just impossible to imagine that could happen. So, I think our day comes, and when it comes, I think it'll be fast, very fast, and [crosstalk 00:40:04] the market starts getting jittery.

Craig: Let's talk about some of the individual names. I'll start you with one, because I know, on my site, a lot of folks have been, like, "What is going on in Newfoundland?"

Eric: Yeah.

Craig: What's going on in Newfoundland?

Eric: Well, first of all, I put a lot of credence in the fact that these naked shorters, and guys around them, you see the closes every day, it's down two or three cents right in the last minute of the trading. I think they've had a big hand in this. Doesn't matter what you announce. It really doesn't matter. If they wanna knock it down, they'll knock it down, right [inaudible 00:40:40] wasn't that good. But, I mean, the announcements they've made of the sampling they've done on-surface, I mean, it just blows your mind to think how good it has been. But the market doesn't [inaudible 00:40:55] Now, a fellow named Paul Huet is now the chairman, as of yesterday. Okay, yesterday, Paul ran Karora. I was a major shareholders of Karora. I would call myself an [inaudible 00:41:10] Oh, I had Paul working for me on a ore body that I own 40 percent of in Idaho. And so I'm very happy that he's gone in as chairman of the company. I think he will single-handedly bring it to more prominence. In other words, get out there and start talking about this thing. I think one of the weaknesses of the former chairman was he didn't like to present anywhere. Well, you don't present, what the hell you think's gonna happen to your stock? Particularly in this environment, right, where everybody can, you know, trounce on you. So, I think they've got a wonderful deposit there, and I'm hoping, between Paul Huet being chairman, for us trying to do something about the short, the naked shorting, which we work on all the time, that we will end the blight for New Found Gold. So, that would be my summation.

Craig: [inaudible 00:42:07] change of government up there help at all?

Eric: Yes.

Craig: Just leave it at that. Let's hope so. It couldn't hurt, I guess.

Eric: I'm just thinking, it can't be any worse.

Craig: Yeah. All right. Another one that comes to my mind, at least. I remember the last time we spoke, we talked about Freegold.

Eric: Yeah, okay.

Craig: And it bounded, it rallied. And now, of course, like [inaudible 00:42:30]

Eric: Just fades, right? Like, you're only as good as your last announcement, and then if you don't have another one, where people can have conviction, of course, everyone loses conviction so fast, [inaudible 00:42:41] They look at the stock going down, "Oh, by god." Anyway, I'm a huge shareholder of Freegold. I think I might own 30% or 27%. That was the example I gave of a stock that was probably trading for less than 10 bucks an ounce now. Their last 43-101, they said they had 22 million ounces of resources. But, they said that by saying, "Well, we're only using 72% recovery on the gold we know we have, but it's likely to be 90%." Well, at 90%, they got 30 million ounces, okay? And I think they're gonna go from 30 to 40 when they come out with their next one, and I think they'll go from 30 to 60, based on, okay, just keep moving along. We see the stuff in surface. We gotta drill it. The deep drilling takes time and money. But we'll have a huge, huge deposit there. So, I mean, I still own every share that I ever bought, and I like it. And I'm gonna mention two new names to these podcasts.

Craig: Yeah. Lay it on us.

Eric: One is, it's called Cerro de Pasco. They have a mine. I think it's Peru. [inaudible 00:43:50] is in Peru. I think it's Peru. It's not a mine. It's an old tailings operation. It was a mine that was producing probably 400 years ago. And they got these huge amounts of tailings there that they've now been given permission that they can treat them. And they have something like 50 grams of silver. They have some gold. They have about 1.5% zinc, about maybe 0.7% lead, something like that. They got some copper. They got all these metals in there. And of course, there's no cost of mining, right? This stuff's already...

Craig: Yeah. Where is it?

Eric: I think it's in Peru. Is it in Peru? [crosstalk 00:44:33]

Craig: What was the name again? [crosstalk 00:44:35]

Eric: Cerro de Pasco. CDPR is the symbol in Toronto. Cerro de Pasco.

Craig: Okay. Interesting.

Eric: I'm gonna mention another one, which is a very odd story. It's called Aftermath Silver. And I owned it quite a while ago, when I was buying some of these junior silver stocks. And they said they had resources of 140 million ounces of silver. Not bad for what was probably a $20 million market cap company at the time. It's now, I think, about $140 million Canadian, so call it $100 million U.S. But when I was looking at it recently, they had a presentation that I'm reading, and they said, "And the value of our ore is as follows, comes from the following metals:" I'm rounding, "25% silver, 45% manganese, and 25% copper." And I thought, "Hold it, now. If you're telling me you got 140 million ounces [inaudible 00:45:36] silver, and it's only 25% of the ore, that would mean that 100% of the ore would be worth over 500 million ounces of silver. Now, you can't actually do it that way when manganese is the major element. You can't put it as silver equivalents, okay, but I'm just doing that for math purposes, okay? And the funny part was, when they valued the manganese monosulfate, they were valuing it at $500 a ton, but the fact is that it trades around $2,000 a ton. So the 40-odd percent that was in manganese monosulfate was substantially more than that, because the price is quadruple that. So, I just think that... And manganese monosulfate, here's where it's used in. Electric cars.

Craig: Hey, how about that?

Eric: How about solid-state cars? Solid-state... Yeah. So, and it's essential, and 98% of it's produced by the Chinese. And this is in Peru. And it's gonna get developed, and it probably get processed maybe in the States or Canada. But I bet you if they said, "Well, we'll turn it into manganese monosulfate in the States," they might get a hell of a handout from the Department of Energy or somebody, you know? Because they wanna bring that production into the United States now.

Craig: Yeah, yeah, yeah.

Eric: Critical production. Like, 98.5% comes from China. Ooh.

Craig: You've lamented over the years, [inaudible 00:47:06] we've been doing this for so long now, about how hard it is to find a good silver deposit, and a primary silver producer, and, you know, and with the fundamentals the way they are, and the potential use in EVs, and we all sit back, "I wonder why a company, a user of silver doesn't just buy a mine." You got any silver companies that you're keeping an eye on?

Eric: Well, I've always favored in, for that, Discovery Silver.

Craig: Yeah?

Eric: Because they have, I don't know what the hell the equivalent is, something like 500 million ounces equivalent or something of silver. But it's in Mexico and it's open pit.

Craig: Yeah.

Eric: Open pit in Mexico. And of course, with the former premier, or president, he was against open pit mining, and now, maybe they'll open it up a little, and allow some open pit mining, which then I think would bring a lot of interest back to Discovery. I could mention Chesapeake, which has a lot of silver. Again, low grade. I think it's Chile. But big. You know, I think they've probably said they got 50 million ounces of gold, and whatever, 500 million ounces of silver, something like that. Low-grade, open pit, huge cost, of course, you know, pushing up to billions. So that always works against these guys. They get market caps of $150 million, and they gotta raise a billion to get a mine started. But I think that money is gonna become way more available now when people just look at the economics of these things. And the economics are so good, $2600 gold and $30 silver. There's lots of projects that, where their NAV is probably 5 and 10 times what they're trading at.

Craig: What do you think, Eric? I'm just sitting here thinking while you're talking. I mean, what are the chances we could get, like, private equity involved?

Eric: Oh, yeah. No, I think it's gonna come in. That's what I think's gonna come in. Private equity coming... That's all they care about. They care about the economic equation.

Craig: Yeah. Right.

Eric: Right, so "We're gonna have this many tons, we're gonna produce it at this price, we're gonna sell it for this. We're probably trading at less than one times cash flow." "Okay, I'm in."

Craig: Yeah.

Eric: They'll come in. [crosstalk 00:49:24]

Craig: [crosstalk 00:49:24] seem like it's such a perfect trade for them. You know, we sit here and talk about the hedge funds and the retail, and all this kind of stuff.

Eric: Yeah. No, I think they would come in. Particularly... Like, I mean, you can imagine if gold and silver started breaking out here a little.

Craig: Right.

Eric: I mean, [crosstalk 00:49:40] I mean, my god. The money you could make on these [crosstalk 00:49:43]

Craig: I've even thought, like, a Newmont, you know, which is, and Barrick, which are so inefficient, with their costs constantly rising. You know, isn't that the same for a private equity or a, you know, a BlackRock or whatever, would look at, they'd look at any other public or private company and go, "Oh, look. We could trim, you know, go up in there with a chainsaw, and [crosstalk 00:50:05] "

Eric: Yeah. Yeah, yeah. Yeah. [crosstalk 00:50:07] Well, of course, I never favor the big guys, right?

Craig: Well, yeah. But still.

Eric: I would say, of those two companies, I almost blame them for killing the sector.

Craig: Yes.

Eric: They've been such underperformers. I can hardly begin to tell you.

Craig: Yes. Yes.

Eric: [crosstalk 00:50:23] back in 2000, Barrick was producing 8 million ounces, and here we are in 2024 and they produce 4 million ounces.

Craig: Yeah. [crosstalk 00:50:31]

Eric: After a couple of acquisitions.

Craig: Right.

Eric: It's been awful.

Craig: Right.

Eric: And I even see Newmont selling all sorts of what they call marginal assets, and I think, you know, I think they're crazy to do that, because they don't, they obviously don't believe gold's going to $4000 or $5000 or whatever, right? Well, who the hell would sell these things...

Craig: Right.

Eric: ...with a positive outlook for gold? And by the way, you can tell the president of Newmont, you know, there's something a lot more important than him? The price of gold, my friend.

Craig: Yes. Well, and again, that's what I mean. Why... You would think, you know, a private equity company, that just looks at the bottom line like that, would go, "Hey. Hmm."

Eric: Yeah, yeah. "I think there's a hell of an opportunity here."

Craig: Well, that would... And, you know, [crosstalk 00:51:19]

Eric: I [crosstalk 00:51:19] that same thing when I'm buying equity, okay? I'm buying the lowest credit on there, when you're buying equity, right? But I'm sitting there, I think, "Oh, my god. When this thing goes into production, the money they're gonna throw off will just be incredible."

Craig: Mm-hmm.

Eric: So, fine. I wait. I'm a very, very patient investor. I rarely sell. I only sell when there's a takeover for one of the companies I own, and...

Craig: Right.

Eric: ...you know, it's been a bit of a tough road here, but it's also working in some ways. I mean, when I look at Freegold Ventures, I mean, when I first bought it, it was 6 cents, okay, and now, it's whatever, 70 cents. They're not bad.

Craig: Yeah. I've, you know, I've explained that to people, too. You taught me a long time ago, you know, what most people... You buy a basket. You buy a whole bunch, hoping that some of them, a handful...

Eric: Some work.

Craig: ...of them works.

Eric: Yeah. Yeah, big-time. Yeah.

Craig: Yeah. But then, you know, the mistake I've always made, and probably most everybody watching us, you take the same approach. I mean, saying me. I take the same approach, and then one goes up and doubles, like, "Oh, take half my money out." No, it's just, where your approach has always been, "That one's working. I'm gonna put more money in."

Eric: [inaudible 00:52:21] Well, if, you know, if you have all the details, and you know why it's going up, yeah.

Craig: Right.

Eric: Exactly. Yeah. Gives you more comfort.

Craig: All right. Well, we've been at this for a while. We should probably begin to wrap up. I know you gotta get back to the, you know, make sure the elves are banging out the toys, and you gotta make sure the sleigh's ready to roll. What else is on your mind? Anything else we haven't covered in this year end wrap up?

Eric: Well, of course, as I said, my overriding concern now is, you know, these, the sort of state of, I hate to say it, but the state of rot. And can we get rid of all this stuff like... And, in fact, I was thinking to myself, you know, maybe the reason that the October-November budget deficit is so high, they know they've lost the election. "We better spend it now."

Craig: Yeah.

Eric: And we better spend it with our Democratic friends.

Craig: Yes. Yes.

Eric: Oh, my god.

Craig: Doesn't necessarily leave me optimistic for next year, in terms of fixing the corruption, and getting the spending corralled. And I would imagine if that continues, we're gonna have another good year.

Eric: Well, and let me go back to what I think [inaudible 00:53:30] such polarity down there, right? [inaudible 00:53:34] my god, the left and the right just can't get along. They hate each other. Which is a big, big problem. I don't know how that's gonna resolve itself. So... But, for our industry, I think we will prosper, and we'll show way better, if people just don't keep throwing money at stocks, just for the, you know, buying one-day options, and, you know, playing the same seven stocks, or eight stocks, or whatever it is, and finding out that, "Oh, Gee, they..." Well, in fact, I saw something where some guy was showing the quarterly sales of Apple, and they've been flat for, like, nine quarters.

Craig: Hmm.

Eric: Well, why are they paying 38 times earnings [inaudible 00:54:14] Come on.

Craig: Right.

Eric: Anyway. We'll see.

Craig: Well, thank you, for all you do. And it has been a heck of a year, and we'll see where we go next. This kind of concludes our calendar here at Sprott Money for the year. [crosstalk 00:54:28]

Eric: Hey, it's all good for Sprott Money. There's selling the coins.

Craig: Right. That's exactly right. And, hey [crosstalk 00:54:33]

Eric: [crosstalk 00:54:33] are going up in value.

Craig: Hey. The holiday gift guide's still on the home page at sprottmoney.com. It's not too late to do some shopping. Again, sprottmoney.com is the company that provides all this information, so make sure you thank them. Get on the list, because we'll have more content coming in January. You don't wanna miss any of it. So, again, but again, go to sprottmoney.com, check out the holiday gift guide, buy some sound money. Anything over 500 bucks, they'll ship it to you for free, and fully insured. How can you beat that? The number, 888-861-0775, if you wanna talk to somebody in person.

But for now, it's time to call it a year, Eric. I hope you have a wonderful holiday season. I have one last question for you. Is this the year that the Bills are finally gonna win the Super Bowl?

Eric: I heard, my daughters were telling me that they saw a survey where the Bills were now America's team.

Craig: Red, white, and blue.

Eric: That would be fun. And I'll go to the damn game, too, if they get in it. That's been a long, hard battle, too, right? The Bills? Oh, my god.

Craig: We're in New Orleans this year, I think, is the Super Bowl [crosstalk 00:55:45]

Eric: In New Orleans. That's a nice place to go to. Yes, Sir.

Craig: You could just jump in the car and drive down there.

Eric: Maybe I'll get to meet you there.

Craig: Hey, you know what? You got a deal. But even though, if the Bills are [inaudible 00:55:58] that means the Chiefs won't be in it. But, you know, we might as well let somebody else win for once. That would only be sporting. [crosstalk 00:56:06]

Eric: Let's see. Fingers crossed. I have fingers crossed for gold and the Bills.

Craig: Hey, you know what? I like that idea.

Eric: Yeah.

Craig My friend, thank you. Again, Merry Christmas to you, your family. Merry Christmas to everybody that's been watching. It has been an interesting year. It's gonna be interesting year next, so keep an eye on this channel, and we'll certainly have more content coming in January. Eric, thank you.

Eric: Okay, Craig. It's always fun, and all the best to you too. Okay.

Craig: Thank you. And from all of us at Sprott Money, sprottmoney.com, happy New Year, merry Christmas, season's greetings, happy holidays, all that stuff, and we'll see you again in January.