SILVER & GOLD CURRENCY AND MINERS David Morgan interviewed by Cambridge House Live

SILVER & GOLD CURRENCY AND MINERS David Morgan interviewed by Cambridge House Live


(text on screen): In association with Financial Post FP financialpost.com Cambridge House Live Bridgitte Anderson, anchor, Cambridge House Life: Welcome to Cambridge House Life. I’m Bridgitte Anderson and I am joined by David Morgan, the creator of Silver-Investor.com and the author of The Morgan Report. Thanks for joining us. David Morgan, The Morgan Report: My pleasure. Bridgitte Anderson: You just wrapped up a presentation about the silver market and the myths about silver. Let’s start there. David Morgan: OK. Well, one of my favorite (it’s kind of a rant); I went off on one that really infuriates me, and that’s “silver is not money.” Because the words “silver” and “money” are synonymous in many languages, so it’s like saying “money isn’t money” or “silver isn’t money” wouldn’t be understood in a Hispanic language or Latin-based languages. Secondly, silver’s been used as money more places more often for longer periods of time than gold has. Gold certainly is money historically, but it’s usually nation state to nation state transactions. But the merchant class or “the people” use silver in their transactions on an honest money system, and it’s always been that way. That’s not to say that silver doesn’t have an industrial component. I fully acknowledge that. But, regardless, silver really is a monetary metal. Bridgitte Anderson: So, what is the outlook for silver? David Morgan: It’s very bullish, but it’s very volatile. It’s always been that way. Silver is a small market relative to gold, it doesn’t have as many fans as gold, and is sort of the “underdog metal.” It’s misunderstood. So, because there’s so many dynamics in the silver market, the price can be pushed around quite easily up and down, and I expect to see more of that as a financial system continues on the path that we’re on. But due to the fact that it is a wealth-preserver; it has every attribute that gold has: It’s divisible. It’s recognizable. It’s fungible. Everything that’s hit on a classic monetary standard is equal to silver and gold. I see, as things unwind further, there’ll be more and more people waking up and seeking something that has those classic values. So, silver, I think, is going to have more demand going forward. Bridgitte Anderson: You’ve been following silver for a long time. You’re a real fan. What’s the interest there? David Morgan: Well, a couple of things. One, when the bull market took place from the early mid-60s through January 21st, 1980 (we just celebrated the 32nd year of the high in gold yesterday) and that was January 21st, 1980, where we hit 850 on the spot market and 875 in the near month, that is the all-time high in real dollars, even though today we’re at $1600 gold. In real terms, we’d have to be about $2500 to be in real, true new highs. So, when that took place, silver that year went from roughly $6 to 50 in one year. And that’s something that I haven’t covered recently, but that 90 percent of move usually takes place in the last 10 percent of the time. So, the people that come to me and say, “Well, David, I really love your story. I love the silver story and I think you’re making a lot of sense, but I’ve missed the move” don’t know how markets move. Because the greatest upside to silver comes in the last portion of the move. And it’s not only silver. That’s true of the tech wreck. That was true of the housing bubble. It’s true of most markets. It’s especially true of silver for two reasons: There’s no competition for anything on the planet like there is for saving or preserving wealth. And the fear factor is much more motivating than the greed factor. This time, I believe it’ll be a worrisome overlay or overtone, because people say, “You know what? This thing isn’t working. My retirement isn’t gonna help me. It’s going down, not up. My housing prices are going down. My real estate portfolio looks bad. Stocks aren’t doing it for me.” And they start to turn to the asset of last choice, which is gold and silver. Bridgitte Anderson: OK, so any correlation to your outlook on gold, then? David Morgan: Yeah, I’m very bullish on gold, and I think everyone should own both. Especially the older you are. Silver is volatile, so if you’re 60, 70, 80 years old, you should have mostly gold waiting in your portfolio, not silver. If you’re younger and more aggressive and you can take the risk like I can (I’ve got ice water in my veins), certainly then (because I’ve been in silver so long), then you can certainly ride the silver bull. But it is a tough ride. It’s like riding a bucking bronco in a rodeo versus getting on the biggest, baddest Brahma bull you’ve ever been on. You want to ride that bull, you want to ride that silver market, go ahead. But it’s not an easy ride. Bridgitte Anderson: OK, and what about gold? How high do you think it’s going to go? David Morgan: I think minimum we’ve got 2500. That would just be par with the 1980 high. In 1980, we didn’t have near the problems that we have now. It was basically a problem within the United States and an inflationary-based problem. We had 13 percent inflation officially, Volcker came in, pushed it into straits well above 17 percent on the short term, and it, you know, caused the markets to collapse in gold and silver. Now it’s a global problem. It’s pervasive throughout the entire system. We all are interconnected. And we have six times the money supply in just M1. I think this problem is so bad this time (and not that it’s the end of world, not that production stops, not that there’s gonna be a massive failure, but there are going to be failings within the system, and it’s mostly financial.) Remember, if everything collapses, all the wealth stays in place. No roads blow up. No oil wells go away. All the corn doesn’t evaporate. All the real wealth stays in place. You know, paper money is not wealth. That’s the system that implodes. So, what happens is there’s a restructuring of the system to redistribute the wealth, hopefully more honestly, throughout the financial structure that re-emerges. Bridgitte Anderson: Do you see that imminently, then? David Morgan: I see that happening within two to three years. I really don’t think it could go more than three more years, but I’m willing to admit I’m wrong and we’ll have to wait and see. Bridgitte Anderson: OK, so when you look at what’s going on with gold and silver, taking a look around the room at some of the junior miners then, what’s the trickle-down effect, and where are the opportunities? Where should investors be looking? David Morgan: Well, I’m very opinionated in this space, as you know. I think the real opportunities are in your mid-tier growth companies that are producing already. Because they have a way to increase their production. They have a way to get their capital costs down by being better performers. They have assets that they can go and mine certain areas that are richer grade or less-rich grade. So, they have a lot of variables in that space to increase their bottom line without the price of gold and silver increasing. Bridgitte Anderson: Just to interrupt, too: You know, when you look at the price of gold and silver stocks, they don’t move in lockstep with gold and silver all the time. Rarely, in recent years. So, why is that, and do you see that changing? David Morgan: I do. And you’re right. They primarily haven’t because almost all equity investors, these Section 7 licenses in the United States (and I don’t know what the equivalent is in Canada), are restricted from buying a commodity. That changed. It changed when the ETFs were started. So, now an equity investor that manages money that can only buy a stock could buy a stock but actually is buying a commodity. That’s true of the SLV or all the other silver ETFs and the gold ETFs. Well, a guy that’s managing money that wants exposure to silver doesn’t necessarily want the risk in a silver mine. Even the best silver mine in the world, or the best silver mining company that’s globally based. So, it’s much easier for them to go into an ETF and get the exposure they want with not nearly the risk that they had in the past. The only way for an equity investor to get silver or gold exposure in the past was through the mining equities. They don’t have that problem anymore. That’s number one. And the follow on is, well, does it represent opportunity now or not and the answer’s yes. They are very, very undervalued. In fact, Wall Street, in my humble opinion, really doesn’t see the future very well. If you look at the gold price on an average basis, and the silver price on average basis, and you take that to the bottom line and look what a quarterly income statement would look like, and the balance sheet structure, you could see a lot of these cases you’re gonna have great, massive profits coming down the road. And if you anticipate that, you should be buying now. Because those profits are pretty much locked in now. But that’s not the way Wall Street works. Once they see record earnings, quarter after quarter after quarter, and three quarters go by, then they’ll put it on their buy list. Well, my people have already been in those stocks for two years. Bridgitte Anderson: Any jurisdiction that you look on more favorably than others? David Morgan: Oh, yeah. That’s a problem. I was big in the South Africans in the first bull market, but I’m old enough to have been there and I do not like South African generally. I look at everything on an individual; by individual case-by-case basis. I don’t want any of my members coming back and saying, “Well, David, you said this on TV.” But generally speaking, no, I’m risk-adverse. I do not like the Russian atmosphere. I like their assets, but not the structures of deals that were done and didn’t work out well, Dukat being one for Pan American. There’s another one with Silver Standard. They both got burned. South Africa, I’m very tentative on. And then, of course, even some of the South American countries: Venezula, obviously, and then you’ve got this problem with Argentina that’s surfaced recently. And you can’t blame them. I mean, there’s a book out there called Resource Wars, and if you read it you’re gonna see that people in these nation-states are gonna covet assets that are real that are true wealth. And you can’t blame them. It’s in their property. It’s in their back yard. What do you expect them to do? As things unwind further, you’re gonna, like, sell your best asset for some piece of paper from somebody, you know, that has a smile on their face? Bridgitte Anderson: What’s your advice to investors when they’re looking at the junior mining sector? David Morgan: The junior mining sector is spread out, but not too much. I don’t like long lists. I’m a fan of William Murphy that started Investor’s Business Daily. He has a statement that he says, “If you can’t pick six stocks and get it right, you don’t know what you’re doing.” I pretty much agree with that. It’s really hard to do that in the juniors. I’d pick about 10. But you’ve got to do your homework. You’ve got to do, you know, your best effort. And it’s really hard to find juniors, because juniors that are explorers because no one’s got that magic, you know, x-ray machine that you can look down and see if the asset is there or not. But there are juniors that have different models of things that are not necessarily just the resource base. For an example, one that I have liked and held for a long time, is a drilling company. A drilling company is like in the 1880s or so when you were having a gold rush you were selling picks and shovels. Those guys were guaranteed riches, while these other fools are out there breaking their back for 12 hours a day looking for gold, some found it; some didn’t. But the guy selling picks and pans and the shovels did quite well. That’s a drilling company. So, that’s one of our juniors, as an example. So, I’m well-known to be a thinker outside the box and that’s just one example of what we look for that’s a junior company that might have great upside with not much risk. I’m pretty risk-adverse. Even though I’m a silver bull, and I’ve ridden it for a long time, in the portfolio the best I can do and I try to keep the risk low. Bridgitte Anderson: And research. Thanks very much for joining us, David. I appreciate your time. David Morgan: I appreciate it. My pleasure. Thank you. (Text on screen): Cambridge House International A production of Cambridge House International Copyright 2012

46 Comments

  1. @acuriousbeast so there you are!….
    Whatcha reckon to metal move in the last couple of hours? I'm guessing it's petro-dollar related via India china iran oil thing. $ has dropped a bit too, but maybe that is caused by iran thing. Any guesses?……… oh wise one?

  2. Good interview but what happened to "the dollar is collapsing now" to the dollar only has weeks left" to months to now "two to three years". My silver is gathering dust! Ready to cash in at $1,000 an ounce! There is ten times more gold than silver in the world, gold has almost no industrial use and gold is 98% of the dollars of precious metals. Meaning silver is only 2% of precious metals! That is crazy! Can TPTB manipulate forever? Seems so.The world is awash with gold – not silver!

  3. @zalida100 Release of the corrupt, illegal, unconstitutional FOMC meeting notes…..looks like more printing of fiat paper. Gotta grab the silver now before the collapse shifts into overdrive.

  4. God whoever left the volume up on the speakers in the room should be slapped. Awesome interview but very hard to listen too because of the bad audio feedback.

  5. @w0tm Gold does have industrial uses, in fact it can be used for many of the same things silver is used for. We use silver just because it costs so much less per ounce than gold does. So silver is cheaper, why? Because it must be more common/easier to obtain or else we would use gold.

  6. Silver is not money, it's a commodity. Nothing could be more basic than that. If your local store or Home Depot won't accept it, it's just silver.

    You can also use cowrie shells, pieces of paper, bags of corn, salt, or a bag of shit as money or a token of exchange. Silver is a not defacto money and can only serve as money only on the condition that people accept it. People are little hair brained in their understanding.

  7. @JaaMizzou22 I'm dumb as post in 99% of everything but I do know metals. I did metals research for AEC for years. Would like to see list of uses of gold plus where gold can substitute for silver. I often receive e-mails saying "no problem is we run out of silver – we'll use gold – must be better as it is 55 times more expensive. Wish that was true. If you have time please send list to [email protected] I keep an open mind and would like to see it. I am always learning.

  8. @TWSceptic You are correct. Semantics. Actually, NO ONE knows what there is under ground. I should have said ABOVE ground. Although IMO numbers are fudged to meet needs of illegal market manipulators. IMO there is far more than ten times gold vs silver ABOVE ground but I can't prove it. Just rumors plus watching the tricks of banksters and other crooks. I believe there is far more gold above ground and it is in hands different than claimed. ie NOT much in Ft. Knox or LBMA

  9. @nayanmalig patience 26 to 33 in a month is not bad. Dam about to burst (IMO). JP Morgan who is behind the market manipulation is out of bullets. If they slam silver again but lose they will go under and take Wall Street with them. Rumor is they are still short HUGE numbers on silver. Will take Obama to save them with taxpayer dollars. That WILL happen.

  10. @jamesarongray just curious what source you use for stockpile of industrial silver? Major users reporting silver bars they are receiving are date stamped AFTER their order date. No users are hoarding that they will admit. Public companies would have to show that in their financials on balance sheet. Largest silver mine in world just got shut down for remainder of 2012 – safety problems. Usage is now 35% higher than mined numbers. Numbers have fallen for five years in a row.

  11. @nld1960 I'd wait for a better Gold/Silver Ratio as recently it has widened to about 55 and just a few months ago it was around 30.

  12. @nld1960 I already sold all my Silver, now only in Gold. But I would change some Gold for Sivler if ratio goes to 55 again. Perhaps have a position of 80% Gold 20% Silver. In your case it depends on how soon you would need to use the wealth you have stored at present in metals. If you can wait for a few years I don't see nothing wrong in having a percentage in Silver.

  13. @w0tm You must be dumb as a post as a simple google search of "uses of gold in industry" results in a number of sites that gives some applications including: electronics, computers, dentistry, and some medical cures. There is silver in keyboards and I'm pretty sure that it is because of the similar molecular make up of Ag and Au that makes them similar and interchangeable in some applications. Silver is simply cheaper per ounce so it is used much more often as I said before.

  14. @JaaMizzou22 You simply repeated what you said the first time. I will wait for list. I did PhD level research for AEC on silver and gold. Gold tarnishes less than all other metals, is used in a few medicines and retains heat in windows used in space shuttle. All I can think of! Silver is used in more individual separate applications than any other mtl other than oil (NOT qty – separate applications). Gold is #4 in electrical resistance. Silver is #1. List is VERY long.

  15. @JaaMizzou22 All you did was repeat your 1st post I'll assume you have no clue unless you send me list of uses for gold and why it is better than silver.Medical is <50 oz total per WGC! Far less than 1% of gold is used in industry. Almost none in dentistry these days with porcelain amalgam far superior as filings.I owned 5 electronic companies and sold for hundreds of others.Everything from military to consumer.Other than paper thin gold flash for decorative surfaces gold was zip!

  16. @w0tm That's very likely. Bloomberg has a JP Morgan ad with their CEO Jamie Dimon appearing personally & lying his damn head off. now we KNOW it's bad.

  17. @w0tm Do the google search I suggested previously and you can find your own applications. I listed some of them for you. Gold can be leafed thinner than silver so even if it is more resistant to electricity you can make it thinner so there is less material to travel through which decreases the resistance. And you are proving my point. You said that less than 1% of gold is used in industry. Proving that it does have industrial applications. Right now gold is ~50 times more expensive than silver

  18. @JaaMizzou22 so they will only use it if it is absolutely necessary. But imagine if silver was more expensive, then they would substitute it for gold in as many applications as possible…. And talk about repeating posts lol.

  19. @JaaMizzou22 This is silly. I won't respond again. You're wasting my time. You have no knowledge of electricity, Making gold paper thin would make it impossible to conduct current (amperes) above a miniscule amount.It would "burn out" like a micro-ampere fuse. Yes, gold does have some industrial and medical applications. I said it did when you need to lower tarnish problems (ie sensitive electronic connections). Even that will soon end. Now less than >.1% of gold mined annually..

  20. @JaaMizzou22 Also making any metal smaller/thinner does not lower its resistance – only its ability (or lack of) to carry current. This is taught in high school electricity shop class (where offered). As an aside some dentists offer to replace gold fillings for FREE with porcelain if they can keep the gold.Some dentists now ONLY do this. VERY profitable. Use of gold in dentistry is now a negative number. New type of silver coating is 99% tarnish free.Will end gold to lower tarnish

  21. @w0tm HELLOOOO!!! you are proving my point with your dentistry thing. Look at my first post. All I said was that gold had uses… and we would use it more often if it were cheaper and you counter by saying we don't use gold that much because it is expensive. And my knowledge of electricity doesn't really matter because all i'm doing is pointing out that gold has industrial uses.

  22. @JaaMizzou22 I wrote I wasn't going to respond again but I care for all human beings. With all due respect I would encourage you to seek professional help. You are not "playing with a full deck". To repeat again dentistry is now a NEGATIVE user of gold as virtually all dentists used porcelain based amalgam to fill cavities. Some actively advertise for older people who might have a mouth full of gold filings.They replace the gold with porcelain if they get to keep the

  23. @w0tm OMG if gold cost less than porcelain they would use gold instead. Just like how if gold cost less than silver they would use it in many of the applications they currently use silver for. That and gold has industrial uses is all I said in my first post

  24. @JaaMizzou22 gold to sell it! There ARE a few industrial uses of gold but they are decreasing and are already WAY below 0.1% of all gold mined each year. This began by you claiming gold could replace silver. It cannot. Read the exchange of comments from the first one then seek professional help. You do need help. I hope you find it. I care for all people.

  25. @JaaMizzou22 IF gold was a penny an ounce it would replace MANY metals. I won't hold my breath waiting. Probably not porcelain amalgam in dentistry. Dentistry has discovered metal fillings leaches into the body's system over decades causing metal poisoning in the body. I had the metal removed from my teeth, replaced by porcelain then went through treatments to remove the high level of metal poisoning that WAS in my body. I felt much better with the metal poisoning removed.

  26. @w0tm You side with me again. Gold would replace many metals as you say. Are you saying there is no possible applications that gold could replace silver in? I think that is very unlikely. Making my original statement of gold could be used instead of silver in many applications and would be if it was cheaper than silver. Why do you think the industrial uses are decreasing? well I'll tell you why. its because the cost of gold is going up and people are turning to porcelain, etc.. as you stated.

  27. @JaaMizzou22 My LAST Response. This has to be the silliest exchange I have ever had. If gold dropped to a penny a ton it would used to build everything from truck bodies to nuts and bolts. When that price is reached I will be aware of it and we can continue this. in the meantime you need to fine someone else to have an inane conversation with. You're finished with me. Porcelain is now used in dentistry for HEALTH reasons – not cost.

  28. @w0tm Finally! we agree! If gold was cheaper than silver it would be used more in silver and thus it has industrial uses! It took a while but I knew you would come around. If you have any more questions just let me know!

  29. @JaaMizzou22 Well, I'll reply again. You should have a carnival act or be a fill-in for Jay Leno. Bulletin: "Quad Trillion ton gold deposit discovered. Gold now cheaper than dirt" Don't tell anyone before I can unload my gold. Silver would STILL be used for electrical applications due to resistance. Computer of gold would run slower than Atari Pong game.

  30. @w0tm I still don't get your unyielding "gold cannot be used in any electronics." Do a simple search and you will see there are a number of sites that say that gold is used in electronics. """Gold wires the internet. It is the material of choice in numerous electronic applications, especially telecommunications, information technology and other high performance and safety critical applications. The single largest industrial application for gold.""" got that from one of the many sites

  31. @JaaMizzou22 You're writing things I never wrote. So just write whatever you like. Gold is used when tarnish is a problem – period. Not common.

  32. @w0tm first you say that gold cant be substituted for silver in anything then you say if the price was right gold can be substituted for anything. And thats exactly what I said. If the price is right people would use gold instead of silver in everything they could. You have been begging for industrial applications for gold then I give them to you and you say you never wanted them? What point are you trying to make?

  33. @Braun09tv don't know – I've seen gold, silver, Dow etc. compared with everything from phase of moon to days where temperature averaged 56 degrees. I pay no attention to such things. Numbers and dates are just numbers and dates.

  34. @gueo224s No joke! There is a guide to what you have to do after America collapses, I'm buying that stuff, I don't want to dye just for saving some coins, I can't post the link here but if you go to my profile the link is on the description

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