Gold….The Ultimate Triple-A Asset

Posted by Eric Sprott & Maria Smirnova - Sprott Asset Mgmt

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“We first invested in gold in 2000. At that time there was little interest in the sector: central banks were sellers of reserves and big mining companies hedged out their gold production. The situation is vastly different today. This year European central bank gold sales are setting a record low since 1999, with only 140 tonnes sold so far out of the 500 tonne maximum.1 There is new demand from ETF’s, such as the SPDR Gold Trust, the iShares COMEX Gold Trust and the Central Fund of Canada.There is also high profile institutional demand. Greenlight Capital Inc.’s David Einhorn, for example, recentlystated that the US$5 billion hedge-fund firm bought shares in the SPDR Gold Trust, making it its biggest holding (he subsequently switched out of the shares into physical bullion). Northwestern Mutual Life Insurance Co., one of the largest life insurers in the U.S., bought US$400 million of gold for the first time in the company’s 152-year history. Northwestern’s CEO was quoted saying that “the downside risk is limited, but the upside is large”

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