On November 30, Eric Sprott, chairman of Sprott Inc. and one of the largest holders of physical silver and silver equities globally, issued a call to action to 17 of the world's largest silver producers to limit the sale of the metal until prices increase. In this Gold Report exclusive, we asked the activist investor and insiders what impact such a declaration could make in one of the most volatile subsets of the resource sector.
In an open letter to silver producers at the end of November, Sprott Inc. Chairman Eric Sprott cited an overleveraged banking system, weakening dollar and increasing demand as reasons to hold profits in silver rather than selling all production and putting the proceeds in the bank. "Given the current environment, we see much greater risk holding cash in a bank than we do in holding precious metals," Sprott said.
Interviewed mid-December Sprott, who is a major investor in physical and silver equities, explained why he wrote his letter. "I have always liked silver because I look at the physical supply and demand metrics and they scream that silver should be higher. But the price is being kept down by paper silver traders who are abusing the market."
As proof, Sprott pointed to the day last April when silver hit $50 an ounce (oz) and then immediately dropped $6/oz in 13 minutes when almost none of the markets were open. "A billion ounces of paper silver traded that day. The mining industry only produces about 700 million ounces (Moz) a year. The major financial institutions, which had been shorting silver for a long time, refused to let silver break $50/oz so they manipulated the market to keep a lid on it," Sprott charged.
http://www.silverseek.com/article/sprot ... ikes-chord