Silver is going to 'skyrocket' – Eric Sprott

Summary

In this engaging interview at the 2025 PDAC conference, industry titan Eric Sprott discusses his journey and success in the precious metals market, particularly in gold and silver investments. He reflects on his early recognition of gold's potential, shares insights on the silver market's growing demand, and forecasts significant price rises for both metals. Eric also touches on his investment strategies, highlighting his belief in the undervaluation of many mining companies. With a keen eye on market trends, he predicts a strong year ahead for precious metals, driven by increasing demand and ongoing market imperfections.

Takeaways

• 😀 Eric Sprout is a well-known figure in the mining investment space, particularly for his success in the precious metals sector, including gold and silver.
• 😀 His initial interest in precious metals arose in the late 1990s when he identified the vulnerability of the stock market, particularly the NASDAQ, and saw gold and silver as a safe investment.
• 😀 Sprout's investment strategy in precious metals paid off significantly, with gold stocks rising 17 times between 2000 and 2011.
• 😀 Despite a market downturn in the early 2000s, Sprout’s investment in gold and silver stocks continued to thrive, showcasing the benefits of long-term investment and patience.
• 😀 Sprout's belief in the undervaluation of many smaller mining companies leads him to focus on high-risk, high-reward investments in the junior mining sector.
• 😀 He emphasizes the importance of finding undervalued companies and being patient, often holding investments for the long haul, with the belief that their value will grow significantly.
• 😀 Sprout has a strong belief in silver’s future, predicting a significant price increase due to a deficit in the market and growing industrial demand, particularly for solar energy.
• 😀 He suggests that the gold-to-silver ratio, historically much narrower, will likely contract as silver’s value catches up with gold’s, possibly reaching levels like 12:1 or 7:1.
• 😀 Despite some issues in the silver space, such as delays in physical delivery, Sprout remains optimistic, believing that the market for silver is primed for growth once certain resistance points are breached.
• 😀 Sprout has a particular interest in companies with no broker coverage, seeing them as opportunities for significant value growth, and is an advocate for companies in the silver and gold sectors.
• 😀 In terms of future investors, Sprout mentions firms like Crescat Capital and Quinton Henning’s involvement, indicating that new, active players could rise as significant contributors in the mining investment space.

Q & A

What initially inspired Eric Sprott's interest in precious metals?

Eric Sprott was initially drawn to precious metals, particularly gold and silver, after he predicted the vulnerability of the NASDAQ and other markets in 1999. He concluded that gold and silver would be key to surviving an impending market downturn.

How did Eric Sprott's investments in gold perform during the early 2000s?

Eric Sprott's investments in gold performed exceptionally well during the early 2000s. Between 2000 and 2011, gold stocks increased by 17 times, with Sprott himself seeing significant gains, especially from gold and silver, which led to one of his best performance years.

What drives Eric Sprott's continued success and investment strategy?

Eric Sprott's continued success is driven by his ability to identify undervalued opportunities in the precious metals sector. He seeks value by focusing on smaller companies with significant upside potential, particularly those trading at low prices compared to their net asset value (NAV).

Why does Eric Sprott emphasize patience in his investment approach?

Eric Sprott emphasizes patience because the value of his gold and silver investments has grown significantly over time. For instance, his purchase of gold at $230 per ounce in 2000 allowed him to see a 30% return on the original investment years later, highlighting the power of long-term holding.

What is Eric Sprott's outlook for the silver market?

Eric Sprott believes that silver prices are set to skyrocket, with potential targets reaching as high as $250 per ounce. He argues that silver is undervalued and is poised for significant growth due to increased industrial demand and ongoing supply deficits.

How does Eric Sprott view the gold-to-silver ratio, and what does he believe it should be?

Eric Sprott views the gold-to-silver ratio as historically skewed, with silver underpriced compared to gold. He believes the ratio should contract, potentially going back to a 15:1 or 12:1 ratio, and may even overshoot, due to silver's relatively limited supply in comparison to gold.

What challenges does the silver space currently face, according to Eric Sprott?

The silver space faces challenges such as supply shortages, difficulties in physical delivery, and market manipulation. Eric Sprott notes that some dealers and banks are having trouble making deliveries, and there's concern about the manipulation of silver prices over the last 50 years.

How does Eric Sprott assess investment opportunities in junior mining companies?

Eric Sprott assesses junior mining companies by evaluating their drill results and understanding the value of their ore bodies. He prefers companies that are undervalued, especially those with no broker coverage, as these may present significant opportunities for growth.

What is Eric Sprott's strategy when increasing his stake in mining companies?

When increasing his stake in mining companies, Eric Sprott typically invests in companies that he believes are undervalued and have substantial upside. He may increase his position over time, but he doesn't plan to sell his holdings unless a strategic buyer comes in or a company is taken over.

What is Eric Sprott's general outlook for the precious metals sector by the end of 2025?

Eric Sprott believes that by the end of 2025, gold will be trading well above $3,000, and silver will exceed $50 per ounce. He expects the stock prices of junior mining companies to rise by 25-50%, driven by these price increases in gold and silver.