In outlining the case for a good time to buy gold, Sprott Wealth CEO David Franklin suggests the tide on the yellow metal may have turned with Europe’s new source of cash.
Author: Kip Keen
Posted: Monday , 23 Jan 2012
VANCOUVER, BC – The head of Sprott Wealth pushed a simple message on how dedicated it was to staying in gold.
“Until we see real interest rates go positive we won’t see an end to the gold trade,” said David Franklin, Sprott Wealth CEO, in reference to the caustic effect inflation has in outpowering otherwise miserly gains from rock-bottom interest rates.
Franklin made the comment in the opening hours of the Cambridge International conference in which he outlined what he called the “Sprott thesis” on gold and silver.
In his presentation Franklin made the case that Europe’s liquidity crunch was the main driver behind gold’s sinking price in the past few months. He said, in an effort to alleviate this liquidity crunch, the European Central Bank ECB lent yellow metal to banks who then sold iton the markets to raise the very liquidity desperately craved.
That helped drive down the price for gold.
This gold for cash equation, however, has been rendered obsolete with the ECB’s latest move to infuse life in European banks with a three-year unlimited lending program, Franklin said.
The “selling pressure in the gold market has abated,” he said. “Now is a good time to enter.”
Franklin also heaped scorn on the argument for a surplus in the silver market, pointing out that silver coin sales alone in the US and Canada more than accounted for each respective country’s silver production.