“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)


"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat


Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


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Wednesday, December 11, 2013

Gold and Silver Decline yields a Victim

There is a devastating story that came down the Dow Jones wire feed today detailing the woes of Eric Sprott and the impact of the consequent severe market losses to his flagship fund. That fund is down more than 50% this year alone!


It should be required reading for all investors/traders.

http://online.wsj.com/home-page?mod=djnwires

The article goes on to state that Mr. Sprott had under management some $3billion in 2008. That has fallen to about $350 million due to a combination of both redemptions and losses.

Here is where the impact of these enormous losses makes itself evident. The investment company, Sprott Inc., is phasing him out of the investment decisions. By the end of next year he will no longer make the firm's investment decisions.

To add insult to injury, the CEO of the company, a Peter Grosskopf, stated that Sprott would be handling "chief cheerleader duties" in addition to remaining chairman.

Furthermore, the article stated that Sprott Inc,. had already added co-chief investment officers to all of the funds. They obviously knew where they were going with all this.

Lesson to be learned - LISTEN TO THE MARKET and ignore everything else!


http://online.wsj.com/home-page?mod=djnwires



25 comments:

  1. The "Godfather" of precious metals. LMAO

    ReplyDelete
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    1. This comment has been removed by the author.

      Delete
    2. I wonder if the entire GOLD and SILVER market will tip over now on this news?

      Sprot is a big name in GOLD and SILVER. This market is largely news driven. Just wait now as THE GOLD AND SILVER COMMUNITY get this information.

      All these symposiums, conventions, and meetings this guy was the keynote speaker. At one point in some video I remember him saying to go "ALL IN" in reference to GOLD and SILVER. I guess he did:

      Sprott Getting Crushed in GOLD and SILVER funds

      This really could be a bad scene now for GOLD and SILVER. I don't even think it matters what the MACD, Bollinger Bands, VWAP, Fibonacci retracements, or any other STUDY or TRENDLINE CONFIGURATION you can throw at it. Perhaps this news could cause some problems and even ignite capitulation?

      Delete
  2. If anyone can pdf the article and post it here, much appreciated.
    I followed the various Sprott funds for years and made great money in his precious metals fund for several years a few years back. But like all pm funds, they've become a disaster. The thing I've always found strange is that Sprott funds do have legal authority to short, so why did they not do that as a strategy when we can all see the markets are what they are? A puzzle for sure.
    I still hold his bullion funds as they have real bullion stored in private non-banking system/non-gov't (Canadian Mint) and it ebbs and flows with bullion price. His pm fund was + 74% in 2010 (the last good year in a long run) followed by -28%, -20% and -52% current year to date. Of course these are all pm stocks in these funds so we know how they've done. You'd only break even in his pm fund if you invested in 2003....10 years.
    Eric Sprott is an honest guy who has worked hard to serve the industry as a whole. He has donated millions to an Ontario uniiversity plus many charities....really too bad this has happened....but it is what it is.

    ReplyDelete
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    1. Chuck;

      Yes, it is sad to see this happen to anyone especially someone who is indeed generous with their money. It is meant not to disparage him as a human being therefore but to serve as an illustration of how even the best and most seasoned of investors, etc. can misread markets and let their own biases make them fail to recognize when they are wrong.

      He may still be proved to be correct in the long term but that is little consolation to those investors who trusted their capital to him to manage.

      He violated a cardinal rule of investing/trading which is to KEEP YOUR LOSSES SMALL....

      Very sad.

      Delete
    2. Elijah

      Not so funny really. Name one prominent trader, investor, CEO etc. who is involved in the gold industry who is not wearing their ass for a hat right now.
      Let's face it, many of these people are self made millionaires and billionaires which is a hell of a lot more than I can say for myself.
      How they mis-read the markets to the degree that they did also has me baffled.
      I suppose when you get wave after wave of redemptions on your funds what can you do about it?
      Eric Sprott may well be proven right at some point in the future. Even Martin Armstrong has stated that once the gold bull resumes…there will be very few who will be there to enjoy it (Jim Sinclair has also said this many times)

      Delete
    3. Dean we were thinking the same and typing around the same time, see my briefer comment below. And yes I don't mean disrespect to Mr Sprott, way wealthier than I will ever be.

      But wasn't he also duped in some Timminco scam??

      Delete
    4. Dan that's exactly it. I wasn't into trading during the .com bust and wondered how so many people could have been taken in and crushed.
      Well now I know what it feels like to be living in an environment of a pumped up bubble and not being able to see it for what it is.

      A good reminder of how easily the mind can be influenced to believe something until you snap out of it and wonder.....what the heck was I thinking!

      Delete
  3. Everyone was used to say he is smart money. LMAO. He should be fired long time ago! The next is David Morgan.

    ReplyDelete
  4. I wonder of Eric King subscribes to the WSJ and ia aware that Sprott has dropped from Billionaire status to Millionaire status; he just published a missive by a Rick Rule introducing him as billionaire Sprott's business partner.

    http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/12/11_Spectacularly_Bullish_Gold_News_We_Havent_Seen_In_3_Years.html

    ReplyDelete
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    1. This Sprott news is going to really shake GOLD and SILVER. This is going to separate the PUMPERS from the DUMPERS now.

      Delete
  5. What is disturbing about all this is so many big money managers with years or experience and success were just wrong this time, no matter how much they blame the invisible manipulation monster.

    Does anyone know if Jim Rogers got this right or was he calling for lower gold AFTER the fact?

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  6. Rogers is spread evenly amongst most all commodities. What I find interesting is that Sprott was as articulate as Sinclair as a constant in gold. They have without intention down brought a lot of others with them who followed their correct calls for ten years. This is what hurt my positions their track record of being right through all the corrections. The lesson is no one is right forever. Gold bears should keep the same thing in mind as well.

    ReplyDelete
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    1. Concord

      Well put, no one is right forever. We are seeing it right now in US equities. Despite the warnings we know that at some point in the next two years the probability of a vicious correction are high.
      This does not deter the equity Bulls.

      Delete
  7. Rogers has said he bought gold as it declined and would buy more when it gets to 900. He thinks then all gold bugs will be out. He has held gold throughout the gold bull market that preceded the drop.

    ReplyDelete
  8. Thanks Dan, gutsy to post. @Prophet Elijah--re scams...it's not uncommon to see seasoned investors get taken...not so long ago that John Paulson was duped by Sino Forest.

    This "shaking the tree" as Armstrong say, is probably necessary. Although it's painful to read about, it may be show that we are closing in on a bottom...I.e. if the best & the brightest are defeated, how many 'stronger hands' need to have their hands pried free?

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  9. I don't know if this is a fair comparison but take a look at Warren Buffet.
    Berkshire took over a 50% decline from 08 to 09.
    Warren didn't see it coming…or maybe he did…even if he did see it coming what could he have done about it? Tell everyone that a big correction is coming and he is shorting the very stocks he holds? Disaster.

    ReplyDelete
  10. https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20131115/RBSTREETWISESPROTT1114GLOBEWEBATL

    Hi Dan/ Board

    This is old news being re-run (with a bit of spin?) The original article is far more balanced. The original article - see above - is posted on Eric's own blog!

    WSJ spins old news and we see a mini-smash on gold...nah, surely not.

    DYOR.

    ReplyDelete
  11. China and now India are ramping up buying who gives 'a' if this or that fund is in trouble the premium Indians are paying overnight is $120 above London spot, the whole US including the FED is technically bankrupt already. Don't worry about the Gold it isn't going away. The last extreme in the Gold Dow was 45:1 we are now at almost 13:1 this cycle won't finish till at least 1:1. So pick a number I would say Gold out performs DOW by a country mile.

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  12. Thanks Dan & Dark Lord.

    This was certainly news to me!

    Suggest spin works both ways and the truth is somewhere in the middle. Cannot deny gold/silver bugs have been fried over last two years. Myself included! Still holding to the sit tight be right mantra..could be a long wait....

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  13. From the original article:

    "The company has been "building a team around" Eric Sprott as a way of succession planning, and Mr. Sprott will cede daily management of his flagship funds by the end of 2014, the company said in an earnings call with analysts Thursday."

    So Eric is to hand over the investment reigns by the END of 2014. This is a far cry from the way the WSJ article reports, which alludes to him being ousted.

    And if was breaking news, why did Eric post it on his own blog on 6th Dec.?

    People must draw their own conclusions. I have drawn mine.

    Notwithstanding Dan's excellent advice regarding price and money management over the time I've been reading the blog, I wish good luck to jasa, and any other gold investors who are in pain right now.

    TDL

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  14. Thank you Dan great find I also have something that may be of interest to you sir...

    N. Korea sells gold in sign of imminent economic collapse: source

    http://english.yonhapnews.co.kr/northkorea/2013/12/11/33/0401000000AEN20131211004100315F.html

    Bottom line folks NEVER! marry an investment and NEVER go all in!..

    ReplyDelete
  15. http://www.huffingtonpost.co.uk/2013/12/11/north-korea-gold-china_n_4424394.html?utm_hp_ref=uk

    Bill,

    The Huff repeats the story almost ad verbatim.

    http://en.wikipedia.org/wiki/Gold_reserve

    2000 tonnes!?!

    This cannot be correct. Is it another example of sloppy journalism?

    TDL

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  16. From the WTF files!

    http://www.dol.gov/opa/media/press/eta/ui/current.htm

    In the week ending December 7, the advance figure for seasonally adjusted initial claims was 368,000, an increase of 68,000 from the previous week's revised figure of 300,000. The 4-week moving average was 328,750, an increase of 6,000 from the previous week's revised average of 322,750.

    ...

    The advance number of actual initial claims under state programs, unadjusted, totaled 461,422 in the week ending December 7, an increase of 146,241 from the previous week. There were 429,188 initial claims in the comparable week in 2012.

    ReplyDelete
  17. PSLV market cap is just over 1B today, PHYS is just under 2B.

    ReplyDelete

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