Canada’s Dr. Doom Likes Silver

Focus: COMMODITIES

Gordon Pape Image Gordon Pape Editor and Publisher, The Income Investor and the Internet Wealth Builder

If a well-respected market analyst hates everything but one sector, it pays to know what that sector is, writes Gordon Pape of The Canada Report.

Money manager Eric Sprott has gained a reputation as an implacable bear, Canada’s version of Nouriel Roubini (aka Dr. Doom).

In fact, that has not always been the case. Back in the 1980s, Sprott was bullish on the stock market. But that’s ancient history. Since 1999, he has been Canada’s highest-profile doomsayer. To hear him tell it, the markets are in long-term decline and everything is going to hell.

He was in his usual end-of-the-financial world-as-we-know-it form when he spoke to an audience of financial professionals in Toronto recently, at the kick-off of his company’s annual national road show. In a presentation titled "Mania. Manipulation. Meltdown."

Sprott predicted the collapse of almost everything. "There is nothing positive in Europe," he intoned, noting that the continent’s banking system is only being kept afloat by massive 1% loans from the European Central Bank.

China has shown negative manufacturing growth for five months in a row, which has not happened in recent memory. A hard landing could be in the cards.

The US is weighed down by an impossible debt burden of $100 trillion in present value terms when Social Security, Medicare, and public sector pensions are factored in. He quoted a recent report that predicts a US recession by mid-year.

As for the stock market, he points out it went up in the first quarter on decreasing volume. "It’s a BS rally," he tells the audience, who would like to believe it’s anything but. "We have a system that is breaking down," he concludes.

What’s the answer for the investor who, after listening to all this, is in a state of near-panic?