Historic Panic Bottom Ushers In New Gold Bull Market

“We had this unbelievable smash in gold, in silver.  We’ve come off the lows here, but your thoughts on that whole experience and what people had to endure here.” 

Sprott:  “In my mind it was quite bizarre.  I put it down to one of two things:  Either central bank manipulation, which I would fully understand why they would do it, or some technical technical breakdown in the derivatives market which might have caused it.

I would prefer that it’s central bank manipulation because I know that it’s not going to work.  But the fact is that I think we’ve had a historic panic bottom here.... 

“The recovery has been quite impressive so far.  I suspect when we all look back at this a year from now when the price of gold is at record highs, we will look at this smash and say, ‘That was the bottom.’  It’s typically what happens at a bottom.  Everyone panics.

The volumes were incredible, all paper by the way.  But the sheer cleansing of the system, when everyone should have realized that all of the facts, all of the future prognostications of what the central planners are likely to do, and the goings on in the financial system, were screaming at you to buy gold.  And at the same time everyone is panicking out of it.

I think people will rue the day they might have considered that the gold bull market was over because I think we are going to go in to a whole new phase of a bull market here.”

Sprott also added:  “We’ve obviously had a bit of a mini-panic on the buy side here.  People have said, ‘Oh my God, I’ve got to own some gold.’  It’s symptomatic of what’s going on throughout the world.  One thing we haven’t seen yet, Eric, is what did the sovereigns do in April? But I suspect that they will have been significant buyers.

As Andrew Maguire has told you, he thinks something like 1,000 tons has gone from the LBMA over to Asia.  There is no room for people to buy an extra 1,000 tons, which happens to represent almost 50% of the non-China, non-Russian market.  I mean how do you buy an extra 50% more of a market and not have the price go up?  

I think it was Japan where people were paying $500 above the spot price of gold.  So it just shows you that the desire to own it, and perhaps the beginning of a real threat of shortages could have quite a significant impact on the precious metals markets.”