bill murphy of gata says the specs have been cleaned out (again) and eric sprott expects the silver-to-gold ratio to reach 16:1 or even 10:1

Right before I went over to our GATA get-together at the Lion’s Pub in Vancouver, I checked the markets again, only to watch another PLAN C Access Market bombing by The Gold Cartel, one which had the prices of gold and silver reeling on the downside. Their attack has been a relentless one that has been on-going around the clock. The information sent our way from London on January 5 that the French led G-8 was going to bomb the gold and silver markets could not have been more on the money. It has been a one way street since then.

If the goal of The Gold Cartel was to flush out the gold and silver spec longs so they could cover short positions before the mega moves higher coming this year, it has worked. The following open interest numbers for yesterday are stunning to put it mildly. Never seen anything like it. The gold open interest fell 81,752 contracts to 498,998. The orchestrated cabal takedown has sent a hoard of longs to the sidelines. The silver open interest drop, down 5368 contracts to 128,228 was very large, but nothing like what happened in the gold pit.

Dave from Denver…

going back to Sept 2008 on a daily basis,

the largest one-day o/i drop for gold was -28,254 on November 24 2009.

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Such a drop in gold is stunningly bullish for the weeks ahead. The market has been cleaned out. The COT report on Friday ought to be a very interesting and telling one.

Eric Sprott gave his usual superb presentation at the Vancouver conference and had the standing room only room drooling about silver. The supply/demand situation is so stunningly bullish that Eric has it as the investment of the decade. I could go on and on here, but at minimum he expects the gold/silver ratio to return to its historical norm of 16 to 1. And at some point Eric thought it might possibly overshoot to 10 to 1.

The technical analyst who Eric respects very highly, and one that Eric brought to the attention of the attendees, is looking for $2100 gold in the late spring. The gold/silver ratio won’t drop to 16 to 1 overnight. However, if silver does what Eric thinks it is going to do in the months ahead, we’d be looking at $130 silver. If the gold/silver ratio dropped to 30 to 1, we are still looking at $70 silver, should gold make a move like his top tech guy is predicting.

If there ever was a time to pick up silver on the cheap, compared to where it is going to go, this latest drop ranks at the top of that heap.