HardAssetsInvestor

Norman: Well, how long can that continue? I mean, in order for it to go up on pure investment stockpiling, you need a steady and uninterrupted flow of investment money into these precious metals. Wouldn't it reach a point where a pension fund, or these ETFs, or investors in the aggregate, say, "OK. We hold enough right now"?

Perez-Santalla: Well, I think it's reached that point for a lot of them. And a lot of them just don't see the benefit. Remember, buying metals doesn't bring you an instant return. It's only a price move.

Norman: Right.

Perez-Santalla: So you have expenses in holding those metals.

Norman: Right. You don't have a dividend.

Perez-Santalla: Right.

Norman: It's not paying you any interest.

Perez-Santalla: That's correct.

Norman: And it costs you to hold it.

Perez-Santalla: That's why a lot of these firms are waiting on silver. They prefer gold. When silver had reached that area in the $40s, a lot of people asked me, "What do you think?" I said, "Well, you know what? The real currency …" People like to call gold and silver currency, which I don't believe.

Norman: I don't.

Perez-Santalla: But I say, if you want to say which one has the capability of being a currency, it's gold. Try to carry, you know, $500 worth of a metal in your pocket. Gold would be no problem. Silver is going to be a problem. So I said to the people, "Look. I would sell the silver and buy the gold." If they had taken that spread, they would have made a lot of money.

Now, I don't believe in this relativity of finding the spread and trading that spread. I just, at that time, knew that silver was high compared to gold, or felt that, at least. Not that I knew it. If I knew it, I would have played it.

Norman: OK. So now, it seems like, as you said, probably a lot of people got burned. They're staying away. They're more cautious. Maybe we're in a period of sort of flat prices for a while. Gold remains bid fairly strongly, you think?

Perez-Santalla: Yes. Gold remains bid fairly strongly. Look at the world; it's just in upheaval. There's problems everywhere. And people are going to just keep holding onto gold until these issues are resolved, especially with the euro and the U.S. economy.

Last night [June 8, 2011] Australia came out with the poor jobs numbers, which also indicated a global weak economy, which is bad. China is believed to be tightening more. So, if they tighten, there's going to be less demand, less consumption, less profit. Less profit, less money. So, where is that going to lead? And that's what people are waiting to see.