Sprott On Economic Fundamentals (and Gold)

By: Ian Campbell | Tue, May 1, 2012
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In a recent article Eric Sprott and David Baker express the following opinions:

Concurrently, Sprott and Baker say:

Sprott and Baker have rather nicely summarized economic matters in a way that most thinking people who follow macro-economic reports and announcements closely likely agree with. Their comments on physical gold should be considered in the following contexts:

Assuming no radical positive change in the European, and American macro-economic prospects, while traders taking profits and losses in 'paper gold' products may continue to create gold price volatility, over time if Sprott and Baker are right about physical gold demand overtaking physical gold supply, the physical gold price ought to trend upward from where it now is.

An important question is whether one is a trader of paper gold looking to make short term profits by timing the market, or a holder of physical gold as a safe haven - or is both a trader who looks to time the paper gold market volatility, and concurrently hedges his/her bets by owning physical gold.

Neither physical or paper gold 'are for' those who don't believe they understand gold and the gold markets, or for those don't have the stomach for gold price volatility in circumstances where the physical gold price does not appear to behave logically in the short term.


When Fundamentals No Longer Apply, Review the Fundamentals
Source: Sprott Asset Management LP, Eric Sprott and David Baker, April 2012
Reading time: 5 minutes



Ian Campbell

Author: Ian Campbell

Ian R. Campbell, FCA, FCBV
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Through the Economic Straight Talk Newsletter Ian R. Campbell shares his perspective on the world economy, the financial markets, and natural resources. A recognized business valuation authority, he founded Toronto based Campbell Valuation Partners (1976), Stock Research Portal (2007) a source of resource companies market data and analytic tools, and Economic Straight Talk (2012). The CICBV* annually funds business valuation research in his name**. Contact him at icampbell@srddi.com.
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