A return to gold and silver as fundamental money is a sign of the times in this regard.

January 14, 2012 – Eric Sprott, Senior Portfolio manager of the Sprott Canadian Equity Fund and Sprott Hedge Fund, persistent champion of gold and silver, and notorious critic of the financial system, has recently declared “the financial system is a farce.” These words also came from Sprott in October 2007 and September 2008, interestingly, but the very direct message highlights a sentiment among smart portfolio managers. They are as fed up with the system as anyone. A return to gold and silver as fundamental money is a sign of the times in this regard.

Sprott’s Fund famously placed an order for $1.5 billion worth of silver bullion in the fourth quarter of 2011, a move that they tried to keep quiet. Of course, frontrunners got wind of the massive purchase and it literally swayed the market. As Sprott writes of Washington iniquity, inefficiency, and stupidity, he is making major moves in buying gold and silver. This makes him a good manager. Never wait for an external savior and never wait for the government to make a decision for you.

Sprott has done this, leaving behind the bureaucracy of fiscal policy for the value of precious metals. While many see QE 3 taking place in some form in 2012, there is no doubt that the price of precious metals will increase in value. That is why even major banks like Goldman Sachs, Credit Suisse, and JP Morgan have declared 2012 to be the year of gold and urged their customers to buy.

The position the Canadian billionaire has taken on silver is interesting, given he is such a big fish in the pond. Recent concerns stemming from the collapse of MF Global, disputes of rehypothection, and the menace of backwardation signal there is more happening in the silver market than meets the eye.

Historically, silver is the coin of the realm, dating back to the 1800’s when the silver dollar and silver coin was the method of exchange in the newly formed United States. While both gold and silver are sure to perform very well in a long-term bull market, the affordability of silver now coupled with these fundamentals make it a very interesting buy.

Shannon King

Senior Staff Writer –

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