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Jim Letourneau's Blog

Investing, Technology, Travel, Geology, Music, Golf. I think that covers it.

The Sprott Silver Squeeze Play

Eric Sprott knows a thing or two about making money in the stock market. He's bought silver in size, a logical defensive investment. He's banging the drum loudly on one of his biggest positions this week.

 

If silver miners were therefore to reinvest 25% of their 2011 earnings back into physical silver, they could potentially account for 21% of the approximate 300 million ounces (~$9 billion) available for investment in 2011. If they were to reinvest all their earnings back into silver, it would shrink available 2011 investment supply by 82%. This is a purely hypothetical exercise of course, but can you imagine the impact this practice would have on silver prices? (source)

 

This kind of "plan" sounds similar to a gasoline boycott chain Email but is it serves Sprott's investment strategies in several ways. Silver bugs LOVE this stuff. Sprott will see EVERY silver deal on the planet. Finally, Sprott has a burgeoning silver bullion business. 

If the silver market starts to run, it can go very far very fast. Some people will be buying and others will be selling into strength. What kind of investor are you?