David Morgan: $50 Silver Breakout & GameStop-Style Short Squeeze Ahead
Summary
Silver Market Outlook: David Morgan predicts silver prices could reach the high $40s or slightly over $50, with potential for a breakout after consolidation.
Investment Demand: The silver market is tiny compared to gold, representing only 0.2% of the financial system, making it potentially valuable if investment demand increases.
Industrial vs. Monetary Use: Silver's dual role as an industrial and monetary metal is highlighted, with industrial demand now constituting about 60% of the market.
Market Dynamics: The silver market is largely influenced by derivatives and futures trading, with significant control by large mining companies that treat silver as a byproduct.
Investment Strategy: Morgan advises starting with physical silver before moving to equities, emphasizing top-tier mining companies and a diversified approach across different mining sectors.
Price Levels: Key price points for silver include $50, which has historically been a resistance level, with potential for significant price movement if surpassed.
Retail vs. Institutional Demand: While retail demand for silver is currently sluggish, institutional interest is increasing, which could drive future price movements.
Market Comparisons: Silver is compared to gold, with differences in usage and market perception, and the potential for a GameStop-style short squeeze in the silver market is discussed.
Transcript
I see silver getting into the high 40s, maybe a little over 50, stalling out, and then regrouping and pushing past it. And once that takes place, whether it's 3 weeks or 3 months, once the market recognizes that, we're off of the races. Greetings and welcome to our Wealthy on Show. My name is Trey Reich and we're here today with David Morgan, publisher of the Aonomous Morgan Report, which to my knowledge is the market's leading publication dedicated primarily to silver markets. David, do I have that right? Oh, pretty much really. The Morgan Report, we've covered all the resource sector really from the inception. Silver is my specialty, you could say. But, uh, obviously we take a hard look at silver and gold, but we were first, for example, uh, Trey, on the rare earth elements. We wrote about it before anybody else, although others claim to be first. We were actually first. Looked at the battery metals. We've got a new one that uh, is a mineral resource that very few people know about that's critical to a high-tech society. We just put put out for our members only. and we just did our first uh public interview uh with a company CEO that's exploring for that uh mineral in the United States. So it's much broader. The subset of the market report is money, metals and mining. So that kind of covers it. Look at the global macro on on the monetary picture. Uh metals, all metals pretty much base metals as well. And mining of course is where our specialty is really which is defining equities to build wealth and preserve wealth looking at a riskreward profile that is absolutely much different than almost all other writers out there. So long explanation but thanks for giving me the opening. No and our producers as you know have us here today to talk about silver. Uh, and I know that that's certainly one of your primary passions over the past couple of decades. And having watched a couple of your shows and, you know, talked to most people about silver in the normal way, um, I thought I'd come at it with a different view because I've been doing gold now for about 25 years. So my question to you is given all the asset classes that are out there and the raging bull market that you and I continue to watch in industries and stocks like Nvidia, what is it about silver that has captured your imagination for so long? Well, when I first got interested in money and how it works and I was self-studied as a very young man and found out how the banking system worked, what Frank fractional reserve banking meant and how they basically produce it for free or next to nothing. I started to look at the gold market because that's something that you kind of associate with an alternative to a fiat system. And I was pretty involved as a young man in the gold market from a futures aspect and also mining equities. And after the 1980 runup with the hunts, I really hadn't looked at silver that much. And when silver outran gold there at that final blowoff manic top, I started asking one big question. Why were the hunts so interested in the silver market? And I started looking at it more and more. So, I've been looking at silver for a very long time. And I think that the main thing about silver that intrigued me from the beginning was it was a dual metal that there were essentials that silver would only fill. You could only use silver in certain applications. You couldn't some cases substitute gold or maybe platinum or something. But they were on economics. Silver was far cheaper and therefore it was the only choice. So it was the industrial side and the monetary aspect that drew me to silver and then studying about the most prolific writer in the early late 70s uh into the 80s and that was Jerome Smith. And I actually have a copy of the original book, which is really a paper booklet called Silver Profits in the 70s. And purportedly that was something that one of the Hunts or both the Hunt brothers read that actually got them intrigued with the silver market. So I think it was just a f those two things, but I'd say primarily more from a oh a personal aspect is for one reason or another which I can't articulate. Trey, I've always been for the underdog. I've always been for the guy, you know, the movie with Secretariat being a smaller horse but winning, you know, the Triple Crown and, you know, uh I think it's Rudy who was an undersized uh football player and you know, just put in at the end. But the coach said if anybody had as big a heart as this guy does, you guys would really kick butt, you know. Anyway, and and silver's the underdog metal. It's been the people's money for a very very long time. But yet it was dissed by the bankers basically in the crime of 1873. And the book um by Frank Balm, Wizard of Oz, is all about the meaning of the yellow brick road and how the banking establishment in the east to the emerald city was taking over the monetary system on a mono metallic standard and dissing silver which really put hardships on on the silver market and primarily on the workingclass miners and tavern owners and railroad builders and all that out in the west of the United States. As part of our silver focus this month, we're bringing you top tier research in a free silver investment report, which you can obtain a free copy of by clicking on the link in the description below. And if you're looking for a simple, secure way to invest in physical gold and silver, check out Hard Asset Alliance at hardassetsalliance.com. Speaking of silver, Wealthon will be on the ground at the SP Resource Finance Global Silver Conference this October in Toronto where Eric Sprat will deliver the keynote address. It's going to be a major event for silver investors. Stay tuned for more details in the weeks ahead. Interesting. That's fascinating. Um why I think silver and gold are very commonly uh perceived as linked at the hip sort of like oil and gas or salt and pepper. Uh and this is just my view from having studied silver not as much as you have but enough to be dangerous. What I have found is that you know on a molecular basis or a weight basis or in terms of end uses uh I would make the case that silver and gold are actually more different than they are the same. So I don't want to put words in your mouth but can you talk a little bit about the differences and the similarities between gold and silver that most people may not uh have a feel for? Sure. first is if you go back I'd say five years or so the correlation the gold to silver is about 85%. It's not that high anymore. You're seeing silver and gold um part ways I would say where I don't know the exact correlation now it's probably below 80. But I think one of your points is a speech that I gave uh years ago and I said what if silver were treated like gold? And the first thing I looked at was the semantics around the two metals. So if you use the word gold, so much positivity is given around the word gold like the gold standard. Almost everyone realizes the gold standard is the standard, the best standard, the ultimate standard. But if you look at things around the silver market and you use the word silver in the vernacular for silver, you have junk silver. Now junk silver is what many call constitutional silver which is 1964 or older 90% silver coins minted by the US government. Now other governments minted silver coins as well, but it's specifically referring to silver. So why the word junk? I mean junk has a negative con connotation. And also when you look at what the price mechanism is for selling silver back, it's usually referred to as what's the melt value or salvage value, not used as much, but the melt value. Well, melt value is like you melt something down to the bare minimum to get, you know, whatever you can take more or less. So these connotations around the two words are very different. you have a lot of negative connotations. Now there are some positive ones and in that lecture I talked about a silver lining but even there you're looking at like well something wrong something bad something not copacetic but there is something there that's silver that's some somewhat good or maybe something but it's it's housed within a context of silver lining meaning that overall something isn't quite right but there might be something positive whereas you go to you know the golden rule that's the number one best thing take care of everything you live by the golden rule you're holding yourself and others to a very high standard so that's something that I just you know put on the thinking hat you might say and started to contemplate and then next on that on you know the use I mean gold really has two uses it's money and jewelry whereas silver has more uses than any other commodity in the on the planet other than oil. Oil has more uses, but silver has second most. There's more patents filed on silver than any other element on the periodic table, but again, oil has more patents. I mean, it's used in plastics and you know, so many things. I won't go into it all, but it is a very useful metal. So really if you look at something of what its use state is, if you have an automobile that uh could uh could fly and could uh be a boat and also travel on the ground, that have three uses. Uh whereas a standard automobile could only go on the ground. Then that one that could do three things would be more valuable and usually cost more than one that only had one function. But silver has thousands of functions and yet it's priced at you know over 180th the price of gold at the current time. So there's lots of ways to look at it. And lastly is what I said earlier and that is the last part of the silver market that's changed is its monetary aspect. There's not very many that look at silver officially as money. And the end of the lecture I said well what if silver were treated like gold? That would mean it would be used as a rear a reserve asset by the banking establishment and it has is not and has not been for well over a hundred years and because of that fact it doesn't have that underlying buying pressure that gold has enjoyed basically throughout all of history. Great uh answer and uh I agree with everything you've said. the the one uh sort of aspect that I would ask you to highlight for viewers to get a clear picture of is I think it's commonly misunderstood how tiny the silver market is in compared to gold both for bullion itself for mining for silver equities for the market cap of all of those groups. Can you talk a little bit about just how small the silver market is and why that makes it so potentially valuable if if we turn certain inflection points? Great question. Boy, you hit the nail on the head, Trey. So right now the gold market represents approximately 1% of the financial system but the silver market represents 02% of the financial system. And to go further to your point right now there's approximately $6 trillion dollar of liquidity in the global financial system. That's parked basically saying, you know, what do I do? I might be in a tea bill or in cash. And so I suggest that as things unravel further, if 1% of that 6 trillion went somewhere and it went into silver, what would that mean? Well, 1% is $60 billion. The silver market is approximately $30 billion. It's more than that now, but I'm going to use 30 to do the math in my head. On an annual basis, that means all the mining and recycling, which is about 120 million ounces, 150 million ounces, that total recycling and mining globally is 30 billion. Well, we've got 60 billion. That's just 1% of that money that may want to find a new home, which represents approximately two years of total silver supply. And I would argue that as things unravel further and we get an asset allocation model that shifts from equities and bonds, not drastically but noticeably into hard assets be the commodity sector at large and primarily the money metals that it's not out of uh thinking that 1% could move into the silver market. So if you have that kind of money moving to the silver market, you can realize what the price movement could be in that market. And obviously time will tell, but it would not take very much uh for that, you know, for that reality to take place. And even if I'm wrong, take it down to a half or a quarter. So 30 million moves, excuse me, 30 billion moves into the silver market. even 15 billion is in the silver market. Even those extraordinary small numbers relative to the money that's going to seek, let's say, a safe haven if things start to unravel further certainly would could and I think would put a real big squeeze on the silver market. And I assume a important component uh of your newsletter is equities that are investing in silver. Is that correct? So, silver and others. I mean, like I said, we just did one on Florespar, which is something that's, you know, people don't even know about it. And we have uh done well in the uranium sector. We've done well in um the gold and silver miners. We have uh one lithium project which is not doing that well. We have a copper opportunity in Montana that I visited. I visit mostly smaller equities or smaller companies that are in the equity side. Uh one high-tech company. So we spread it around between top tier, mid-tier, uh junior producers and pure speculations. And we wait the portfolio. But finding a pure silver project is almost impossible. We do have one on the mine which is primarily almost 100% silver but in most cases like you take Pan-American which has been on our list for a long time and they are a primary silver producer but you look at the amount of gold, lead and zinc that they produce to their bottom line. They're really a poly metallic miner with silver being their key to the bottom line but not by much. Take another company like Heeka which is you know several mines throughout and uh depending on the price of gold they're either a gold miner or a silver miner. Right now they're a gold miner because the price of gold is you know at such a multiple of the silver price. I you've answered sort of my next question indirectly which is the relative dir of silver equities. It has to do, I think, a bit with how it's found in the Earth's crust in terms of being a primarily a byproduct metal. Do you have a couple of lines that outline that for folks? Yeah, really for primary silver producers, there's probably about five. Now, there's all kinds of explorers and junior mines, you know, or that are producing silver. Well, let's take the majors. I mean two of the biggest companies in the world BHP broken properties and RTZ Riointo you've got massive conglomerates I mean these are mining houses par excalance and they produce a lot of silver but if you look at the bottom line the percentage on their overall mining activities is minuscule and so these people really don't care about the price of silver they care more about the price of copper copper or lead or iron ore or whatever. And so silver is basically something they use as an accounting uh situation where they just basically more or less on an accounting basis write it off and just use it as a credit to their other uh expenses. And so they really don't care what the price of the silver market yet they mine a great deal of it. So that's part of it. And the other part is uh how silver is used in a management capacity. What I mean by that is on that bookkeeping entry. A lot of these bigger mining houses just give what's called their book or their entries on their ledger into the bullion banking system that takes advantage knowing of how much silver they're going to get in physical form and then making multiples of that to put into derivatives market which is really what the silver and gold markets are at this point from the futures market. I'm not trying to lose anybody. I'm just answering your question Trey. You take what's real and you make a derivative out of it and then you put it into the main market that actually establishes the price for that commodity, be it silver, gold, oil, or what have you. I'm talking metals right now. And that gives them a distinct advantage because they're getting something basically at cost and able to use what they have as a reserve if they're called out and have to produce the physical metal itself. But they can make that quantity let's say manyfold over in order to use algorithmic formulas that actually help them to trade a great quantity of something that really on a physical form doesn't have nearly that. And and one feedback loop into the supply demand situation for silver is because these behemoths make a lot of it, mine a lot of it, and it's not really something they spend a lot of time on with capital expenditure planning, etc. It sort of puts a cap on silver mine development. Right. Right. Yeah. As you said, Trey, I think he gave us I mean, it's about 70% of the silver that comes above ground as a result of other mining activity. So, if there were anything else out there like say wheat or uh corn or whatever and it was a byproduct like silver is, then those farmers that were growing, you know, X and they just got wheat as a byproduct. They didn't care about they only cared about cared about crop X. probably a corny analogy, but I'm gonna continue with it. You say, "Okay, well, get rid of it." You know, those guys want this stuff. Get them in here. Take it away. How much are they going to give us? Okay. All right. That's good enough. And that's the majority of the market. You know, if it's 7% now, you know, someone might pay attention to, but since it's 70%, it's more than, you know, a primary silver producer makes, right? Then they really have a lot of power over the market as you're indicating, right? So switching gears a bit, we were talking earlier about the complex nature, well more complex than gold's nature of uses for silver in terms of demand and the industrial demand and I think we've all read a million articles about photovalttaics so we don't have to go there and all that type of thing and and uh you know it's uh antibacterial qualities and all the stuff we've read. But my question to you, always trying to have a little bit of a different spin on this. Uh would you agree that even though industrial uses have been very stable and led to this supply deficit for the past four years that when silver really takes off, you really need that investment demand to to get it rolling? Do you agree? Absolutely. Okay. the all you know I've said this before but you know people are listening this for the first time or it's good to review I mean always review the fundamentals all markets move at the margin so the industrial use has been climbing steadily for decades you go back 25 years and the silver market from industrial use was 35% of the market today the use for industrials is about 60% of the market some say even higher So it's almost doubled in the last 25 years. What's interesting about that comment, if you go back 25 years ago, all the silver bought above ground was about 550 million ounces in a given year. Now it's 850 million ounces. So think about that. The silver industrial use is 60% in the market. We've increased the amount of silver over the last 25 years by 300 million ounces. So that shows you how much physical demand there is for silver on the industrial side. However, at the margin it is safe haven or monetary or investment demand and that's what es and flows. So the margin is that and when that increases you'll see the silver price move. For example, back in 2020 Scott Meanard who ran was a chief investment officer Yeah. said that his main investment for that year would be silver. And the Blumer guys interview him at Davos just about fell off their seats. And I cannot prove it, but I can prove the number. But in 2021, 300 and over 300 million ounces of silver were bought through the ETFs. 200 million is the normal average these days for silver on the retail side. So that's something like a total of 350 excuse me 550 million ounces of silver bought for investment purposes uh institutional and retail combined. That as I said was the total silver supply in the year 2000 and that all of it was for investment demand. Well that took the price up substantially higher as you may or you probably know Trey but maybe some of the viewers don't. Uh Mr. Mayard passed away some time ago and a lot of that silver in that in those ETFs was sold back uh into the market and we haven't had that kind of a demand on the investment side from institutions in a very long time but that doesn't mean it won't get there as I said earlier with the silver market being such a small amount of silver available versus the amount of money slloshing around that may look for an undervalued value asset It's been money for, you know, since the beginning of time. Almost. You dovetailed into my next question, which in watching one of your uh recent interviews, you differentiated between in measuring investment demand, retail demand and sort of coins and premiums and institutional demand. And at least a couple of months ago, I think you were making the case that the actual retail sector is a bit soft in terms of demand, but that the institutional half of the equation was starting to pick up. Is that still the case? Yeah. snapshot right now and you know as having a finance degree which it just means I have but you know these are terms that we use and you know when you do a quarterly you're taking a snapshot of that first quarter second quarter what have you because things do change but right now yes the retail demand for silver is is sluggish uh actually is probably more sales back into the market than there are new buys but on the institutional side it's the opposite that we're seeing a lot of demand for silver. And as I expressed in those previous interviews, a lot of um a lot of people that are not that sophisticated at the beginning hear about the retail silver market, which is substantive, but people will say, you know, we're running out of silver or we're very tight in the market. Well, they're being very truthful in that sector. So in the retail sector of you know premium coins, silver rounds, silver bars, all that may be very tight and the price is high but that is not truly the total silver market. The real silver market bases the futures exchanges are based upon commercial bars and that's where the price is set. So people, I wouldn't say they're misled, but they may not understand the bigger picture because you really have to put the retail silver market, which is at most 20% of the total into the context of 100% and say, wait a minute, you know, are we having a tight supply in coins and bars or are we having a real silver shortage? And the two are not equal. So, uh, if you were to estimate, one of the great mysteries of silver, all the gold that's ever mined in the world, I tell people all the time, is still with us in some form or another. It's in museums or in teeth or, you know, in non-jwelry, but you know, gold rarely is consumed. And the big mystery with silver is how much silver is above ground. I focus on this because I think that steady above ground stock which I personally believe uh is a lot larger than some people make it out to be is a positive for silver because it gives it that above ground stable stock which led lends to its monetary value. Um not a lot of people approach it from that direction but uh can you give us your estimation of above ground stocks and sort of how you break it down? Yeah, that's a tough one, but it's a great question. So, if we go back, oh, I'm going to just go back say five, six years, somewhere in that range. If you look at all mining activity and what the authorities say, uh, we have this. We have about six billion ounces of gold and about 60 billion ounces of silver mined from time and memorial. So that's a 10 to1 ratio. And I think that's a pretty good ratio because even though you'll hear over and over and over again, even some people that are very knowledgeable about silver, they'll tell you it's 15 or 16 to1, which is not true. The the ratio out of the ground, which I call the natural ratio, at best was about 12:1 back in the 13th century. Anyway, right now the average is probably 10 to1. The current is about 7 to1. So 60 billion ounces according to um uh one of the studies that was commissioned by the silver institute um I think it was Jay Edwards and company if I remember correctly said about half of all the silver ever mind has been lost. So that's coinage that was lost. That was, you know, ships carrying silver was lost. And it was landfills full of, you know, micro amounts of silver in a membrane switch in a uh brand new microwave oven that, you know, those people threw that in the trash can and they're on their 15th, you know, microwave. So what's been thrown into landfills, lost in coinage, or lost at sea was about half of all the silver. So you're down to 30 million ounces. So now you're at that ratio of uh that's much different. So if you go through what what's in that study I'm referring to, you have like religious and art objects which is a huge amount. Then you've got jewelry which is another huge amount. And then you have silverware which on aggregate back before you know we went to steel and you know people used silver not the common folks but let's say the upper middle class or high class was a fair amount and then uh also in that era you know candalabbras a lot more silver artwork and all that. So if you lump all that together, it's a big number. And what's in the silver coinage and um used as bullion for you know silver smiths or somebody that's going to turn that silver in the account. So that amount is probably equal to about what the gold market is which would be six billion ounces. Now if we divide it further I do what's called investment silver. So that is anyone buying a silver coin or a silver bar and anything that's a 99 fine 999 fine LBMA good delivery bar or comx good delivery bar and if you look at that that is about 3.6 billion ounces. So, if you take that six billion, that's a wag wild ass guess, and you convert it to how much silver could I put my hands on for investment purposes, either investment purposes, retail or institution, you can round up to four billion, but it's 3.6 according to the silver institute. So, I'm not making up the number. I can cite the source. Now, if you look at how much of that silver is held in strong hands, it's well over two billion ounces. These are silver government minted coins, silver rounds that are privately minted medallions and silver bars that are 100 ounces, kilo bars, 10 oz bars, 1 oz wafers type of bars that retail investors buy. So that leaves about a billion ounces in commercial bars, which is the silver market, big market, and of that about half of it is in ETFs. So we only have about 600 million ounces in the float which is being eaten up pretty rapidly by the industrial side at 200 million ounces per year perhaps more 250 and if we get a big buyer that comes in for a new use for silver or just to warehouse it so they don't run out and stop a production line that could be eaten up very easily. By the way, as I mentioned, just to reiterate, you go back to Scott Meanard and he bought, you know, 300 million ounces of actually is more. It was like more like 350 million in that one year. Now, I'm not saying it was him. Uh I I'm making an educated guess it was him, but somebody did. It's provable by the inflow into the ETFs. So that happening again by some one or some ones on the institutional side could wipe out the silver market pretty easily in theory. I mean obviously as price rises there'll be people more willing to you know sell their silver. As I said retail's willing to sell their silver near the $40 mark for whatever reason. And I can't go survey everybody that's selling their silver today and ask them why they're selling it because there's a variety of reasons, but we know what the aggregate is. On balance, the amount of silver sold right now seems to be on the retail side above what's being bought. If you have any questions about how to navigate the current environment, Wealthon can help connect you with a vetted advisor to get a free portfolio review. Just click the link in the description below or head to wealthon.com/free. There's no obligation and it will just take a few minutes of your time. Again, that's wealthon.comfree. So, in because you know the history so well, um if you look at that big chunk that silverware and you know non really expensive jewelry, let's just say in your past 20 years, have there been periods where the price movement has activated liquidation of some of that silver or is it incredibly constant? Yeah, this I think it's Edwards and Associates. I forget the first name. Did this study, it's fascinating. I have it back here somewhere. I reread it every once in a while. What they claim, and I tend to go with, but remember, I'm somewhat biased in the silver market. I really try to be as objective as I possibly can, but there is some bias that's crept in. But they said there in their study, it was quite a detailed study. They thought that the great meltdown happened. They think that in 1980 the smelters are backed up for a year in some cases, even more than that in some cases, that most of the silver um silver wear, silver candalabbras, silver artwork, um you know, mismatched jewelry. That great meltdown took the lion share of it out. And does that mean there isn't somebody that, you know, at the $100 silver isn't willing to, you know, throw in their candalabbras or their whatever? But silver just is not and has not been for the last 50 years anything that anyone really wants. You look at the silverware market. I mean, I've been to many weddings in my life, Trey, and none of them, and some of them have been some fairly affluent people, have gotten silverware as a wedding. Now, that's not true in India. There's some maybe in the UK, but the silverware market's like 4% of the market at best. Jewelry market es and flows. When gold gets very high price, people seem to buy more silver jewelry because it's more affordable. And then it kind of goes in streaks. When the rappers start wearing big silver chains, all of a sudden, oh my goodness, I got to have a big silver chain, too. And silver's affordable. say, "Hey, you know, I could spend a thousand bucks and get this huge amount of silver around my neck or whatever." So, jewelry, I don't count too much, but a lot of that doesn't come back to the market that often, although it could. So, my point is that I think the great meltdown, I agree with that study. Could it happen again? Yeah. But I don't think it did nearly as big as it was in 1980. And you go back to like the junk bag market, constitutional silver. I mean there is not that much of a an amount of bag silver left. So much of this billions of dollars in pure and 90% silver been melted down into 999 fine bullion for delivery into the comx or LBMA. I mean, not saying it's like super scarce, but the amount left is minuscule compared to the billions and billions that were minted at one time. As the fact being that we're primarily on a silver standard at one time in the in the world and then it switched to a biometallic standard and then went to a gold only standard. But at one time, silver was the coin of the realm for almost everyone on the planet. So, if you think about it, if you didn't have silver, you didn't have any money whatsoever. You were talking about silver jewelry, and I'm sure you saw, I think it was about four months ago, uh, the S jewelry association of America or some organization did this uh survey of all the jewelers about what whether gold, silver, diamonds or other categories of jewelry. And they had several categories of questions. You know, where did you make the most profit? What was the most stable demand? How were your Christmas sales? And even though last year was only half of the gold move that we've had, that move from 24 2600 up made silver the more profitable jewelry item in a lot of jewelry stores across the country. So, I'm sure that's happening this year as well. And another thing most people never talk about since we're diamond fairly deep is you know 14 karat gold 18 karat gold 20 karat gold what's it mixed with? Well folks silver. So when you got 14 karat you got a fair amount of gold but you got silver with it. So you know that plays into it too. I mean not to a large degree. I don't want to make a big case out of it, but there is, you know, silver's got so many uses and one is to uh let's say um give you different uh flavors of gold. Excellent. So, going to a bit of a macro level, if we look at 2024, gold was up 27% and I think most people have been a bit surprised that it's up another 28% this year. So that's 27 and 28 for a 62 compound return. Silver lagged a bit in 24 it was up 21% but is now outpacing gold uh in 25 being up 32%. Sorry, a lot of numbers there for a compound return of 59. My point is we're sort of at the same end point but silver seems to be uh shifting into a bit of a higher gear. Is that something you would expect say for the balance of this year and next year to be the case? Yeah, I think that trend will continue. Uh I think it'll be subtle at first as you just indicated where gold outperformed and then silver slightly outperforming gold now. But as we get near the end game, once the masses get into a manic panic buying mode because they perceive the stock market is falling, uh maybe their pension won't be there, a higher inflation rate, regardless of what the official statistics are, and you start to see more and more of the public come into the metals markets. Silver is much more affordable than gold. So you'll see a run to gold initially which you're already witnessing through the smart money big money meaning the central banks and some higher net worth individuals and funds and that will continue and maybe accelerate but you'll see that spill over in the silver market and it will far outpace the gold market at some point. And I say far outpac it's just outpacing now because it provides the same safe haven status but being more affordable and now with the internet almost anybody anywhere can buy uh over over the web and uh so you'll see an acceleration I do believe similar to what we saw on the 1980 bull run except this time instead of being the hunts and some Saudis it will be global. and looking at your work. Uh I'm not a technician. I always say I support technicals as long as they support my case. Uh and you're not really a technician, but price levels I've noticed are important to you. Um as we look forward, you know, the number 50, for example, is a really important number and uh it's important for a number of historical reasons and you're familiar with all of them. But as you look forward, what are the sort of the price points that we should focus on? Well, 50 is key and I do do technical work and I show that to our premium paid subscribers, but I'll make a big case out of it. Um, you know, there's some pure technicians and there's some pure fundamentalists and I mix them both because I think it's key to know the fundamental case. But the technicals do work, but people definitely put overemphasis on them. But going back to your question, 50 has stalled out silver a few times. And I think it will stall out again. That's my personal belief. Doesn't mean I'm right. But I see silver getting into the high 40s, maybe a little over 50, stalling out, and then regrouping and pushing past it. So once we push past 50 and we maintain it for I'd say a few weeks, two or three weeks, every close is above 50 in US dollar terms for you know 15 trading days then we've established a new limit and that overall resistance that's been there for decades will become support and once that takes place whether it's three weeks or three months. Once the market recognizes that, we're off to the races. Now, what I think is it'll stall out at 50. Uh reconsolidate and blast through it shortly thereafter. Many of the let's say the bears in the silver can't get us past 50. I told you blah blah blah blah. You silver bulls are wrong. D that goes on for a few days or a few weeks. All of a sudden, it's at 60 and now we don't know what we're going to do. Because once you get to a new high in a market, nothing's more bullish than a new high because everyone that owns it going to hold it. I don't want to sell it because I don't know how high it's going to go. And I've heard, you know, even David Morgan say it's going to go to 100. We're only at 60. I'm not selling. So that means any I mean one ounce of new buying pressure will move the market higher because no one's selling. That's what happened with GameStop. The reason those shorts got clobbered so bad is they're kind of their lead guy was saying not selling yet. So everybody was holding and there isn't anything in the market to to buy back and the shorts have to buy back to close out the position and there's no sales. What do you buy if it doesn't exist? So the same thing where similar thing could happen in the silver market. And now that retail uh holds as I said you know over two billion ounces of the 3.6 6 and the funds hold you know 6 of that or 600 million. So you add those two together, you got about um you know the lion's share of the silver market is held by retail, not by the banks, bullion banks. Then they're actually in control. Although it may not appear I it could be in control. I guess when it gets down to the physical market, they are in control. When it gets down to the derivatives market, which are still playing in, the banks have the advantage. Right. So, your comment about when it goes above 50, there won't be any sellers made me smile because this morning I was reading a Reuters article about last week's movement. You know, obviously we had big moves on Friday and we're at or near new highs and the reporter actually made me smile. He said, "Stocks are going higher because there's so many buyers and there's so many buyers because stocks are going higher." So, it's just going to be that way for a while. But, I thought that was pretty funny. So between here and 50 uh I've heard you talk about the stairst step pattern that silver is displaying. Is there any you know 39 seems to be a pretty important number. Is there anything important between 39 and 50 that uh viewers may want to focus on? Yeah. I mean if you don't mind me taking just a moment see I pull up a silver chart really quick. It really isn't. I mean, okay. Because I heard you talk about you talked about 44, 46, 48, but it was a couple of months ago and you were sort of talking about a different topic. But I wondered if those were trigger points. Not really. I mean, they're so small in duration, you can blast through them with any substantial buying. Okay. Basically through the 35 barrier. And why are we playing at 39? You can make arguments for all kinds of things. Primarily, it's the algorithms. It's the way it's set up in the futures markets where these bots are doing these trades back and forth all day long every day, every market trading day. And because of that, it's going to keep there. I'm really happy that it's stairstepping up. What we really don't want to see is a great big spike high that just takes a matter of a few weeks. Because if that's the case and we go parabolic then there is no support level. It's just an up and down situation and that will not be supportive. Whereas if we get a stair step and we get a base and move up and another base and move up that is the way to build a market that has some substance to it. So I'm very happy to see it move up more or less gradually. will get much better overall of a move and a sustainable move if it executes in that manner. Excellent. So, and then sort of wrapping up on the investment side, we'll talk about your letter in a second, but for the individual investor who's looking to initiate silver exposure, this is sort of a a 101 type question, but how do you divide the vehicles that are available and how would you advise folks to start building a silver position? I've always told people before you buy gold stocks, you want to initiate your gold position because gold is gold and the stocks are stocks and so you want to do it. You first you got to get your gold position and then you can start to move. But it doesn't really work that way with silver, does it? Well, it does for me. I mean, uh, any premium member, paid member, uh, the first thing they are asked to do is read how to use the mortgage report. And in that report, the first thing I say is what you just outlined. Before you start a metal portfolio, you need the real metal. And I talk about both gold and silver. And I give guidelines like the older you are, the more you should actually favor gold over silver. It's an establishment metal. The banks buy it. It's worldwide recognized and it's a less volatile market. But you should have some of both. And so I give that guidance once this amount is established. again guidance then I say now you can move into the equity side and the equity side we divide it into these categories so 70 goes 70% is suggested to go into top tier cashrich unad mining companies primarily the royalty and streaming companies and here's why and then I give an outline for that then I go down to the mid-tier junior producers and speculative positions speculative positions being money you could afford to lose And if you follow our guidance, you're going to do pretty well. And we have outperformed in the equity side over the metal itself by far. On aggregate, you can't. You can outperform somewhat like the HUI and the XAU have outperform the metal itself this year, but there's been years that the metals outperform those indices. Follow my guidance. you're going to outperform, but you have to be selective and pick the right companies, which we have very few in the top tier, like six. And when someone becomes a new member, I do a halfhour consult with them, explaining where we are uh in aggregate on the Morgan report and what's performing best for us right now and why it is. So I give them a little bit of guidance there as well so they get started on the right foot because a lot of people that have never bought a financial newsletter based on money metals and mining get the mis idea that all I have to do is buy a bunch of penny junior stocks and I'm going to get rich. There is a time that will take place, but it's a very select time frame and you better be timed perfectly and you better not get too greedy and get in and out very quickly. So that's a very specialized specialized field within a specialized field, but it can be done, but it's extremely rare. I tell people all the time, just because someone's told you about a stock that has gold in the stock name doesn't mean has any connection to gold or will ever successfully mine an ounce of anything. So, uh, I have a tendency to encourage people to focus near the top. In gold, there is this I call it a negative survivorship bias. Meaning you may not want to focus on say the top 10 names like the barracks and the news and the gold fields and Kimra because it's so hard to replace reserves but there's that sweet spot just below the top uh where there are a lot of emerging one mine companies that are likely to be acquired by the big guys which is really a sweet spot. Do you agree with that? Oh, there. Well, I mean, Gold Corp was our number one pick for years and it outperformed Berkshire Hathaway for like 12 years in a row. And for my conservative investors, they just made a bundle on it. And what I loved about it at the beginning when Rob McCuin was the CEO was uh they would had not only one of the best gold mines in the world, they were stockpiling gold in their own vault. So someone had a one-stop shop that could buy what we outlined physical metal and an equity at the same time. So you had the gold and a golden goose. I refer to gold mines as like the golden goose. Would you rather buy the gold or you rather buy the goose that lays the golden egg? And you should have both. But nonetheless, so that was one that's been bought out now. But um yeah there and I agree we don't have too many. We have two gold royalty companies that outperform those gold companies you mentioned by a long shot and that's the where you should put your big money. Again, big money goes into big companies, but best ones for return and then uh we move down the sector from there and we've gotten lucky on the junior side at the beginning of the Morgan report when I started more than 25 years ago. But honestly, I've not had the hot hand on the junior minors in a long time. It's extremely difficult to be good at it. And um again, there are times you can load up on the juniors and do well. We just haven't hit that time yet. And talking about this negative survivorship bias, when I started focusing on gold in 2001, I think New Pneumont was doing 7.1 million ounces. And I don't follow it that closely, but I think they'll do 56 57 this year. And that's only because they bought Gold Corp and New Crest, which uh That's right. Yeah. Which I would not want to be a big minor like your outline. Just too difficult to replace reserves as you just said. I'm just backing you up 100%. I really think again there is a sweet spot there, especially on the gold side. Silver's a little different, but you know, I actually told my investors early on, I haven't done it in a long time. If you're really conservative and just want to go along for the ride, you know, buy BHP. And from the time I suggested that for, you know, wealthy investors, conservative, low risk, high reward, they got a 10 bagger out of it. Now, that was years ago, and I'm not saying you're going to get a 10 bagger out of it again. But, you know, put a million dollars and, you know, five years later, it's a 10 million. You're pretty happy. Well, this has been a great introduction into what you do. Uh, how can viewers learn more about your letter? I assume there's a website or what's the best way to learn more about what you do and how you make money for clients? Well, there's a couple ways. The best way is just go to the main landing page. That's the morganreport.com or you put in davidorgans and it'll pop up like our blog and our YouTube channel and our Twitter feed and all that. Best thing is just go to the morganreport.com and there is access to Twitter and LinkedIn and all that stuff with little icons at the top. right hand side of the page. Terrific. Well, Dave, we're going to check in with you in a few months and see how much of what we talked about comes true. All right, fair enough. Terrific. Thanks very much. Yeah, you're welcome. For viewers who are interested in digging deeper into investing opportunities in silver markets, please remember to click on the link in the description below to obtain a free copy of Wealthy on Silver investing report. And even more importantly, for those looking for a little guidance in these volatile times and markets, if you're interested in a free portfolio review from one of Wealthon's partners, please visit wealthon.com/free. With markets at all-time highs and another volatile year, now's a great time to stress test your strategy and be prepared for what comes next. Thank you for watching and we'll see you next time. 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David Morgan: $50 Silver Breakout & GameStop-Style Short Squeeze Ahead
Summary
Transcript
I see silver getting into the high 40s, maybe a little over 50, stalling out, and then regrouping and pushing past it. And once that takes place, whether it's 3 weeks or 3 months, once the market recognizes that, we're off of the races. Greetings and welcome to our Wealthy on Show. My name is Trey Reich and we're here today with David Morgan, publisher of the Aonomous Morgan Report, which to my knowledge is the market's leading publication dedicated primarily to silver markets. David, do I have that right? Oh, pretty much really. The Morgan Report, we've covered all the resource sector really from the inception. Silver is my specialty, you could say. But, uh, obviously we take a hard look at silver and gold, but we were first, for example, uh, Trey, on the rare earth elements. We wrote about it before anybody else, although others claim to be first. We were actually first. Looked at the battery metals. We've got a new one that uh, is a mineral resource that very few people know about that's critical to a high-tech society. We just put put out for our members only. and we just did our first uh public interview uh with a company CEO that's exploring for that uh mineral in the United States. So it's much broader. The subset of the market report is money, metals and mining. So that kind of covers it. Look at the global macro on on the monetary picture. Uh metals, all metals pretty much base metals as well. And mining of course is where our specialty is really which is defining equities to build wealth and preserve wealth looking at a riskreward profile that is absolutely much different than almost all other writers out there. So long explanation but thanks for giving me the opening. No and our producers as you know have us here today to talk about silver. Uh, and I know that that's certainly one of your primary passions over the past couple of decades. And having watched a couple of your shows and, you know, talked to most people about silver in the normal way, um, I thought I'd come at it with a different view because I've been doing gold now for about 25 years. So my question to you is given all the asset classes that are out there and the raging bull market that you and I continue to watch in industries and stocks like Nvidia, what is it about silver that has captured your imagination for so long? Well, when I first got interested in money and how it works and I was self-studied as a very young man and found out how the banking system worked, what Frank fractional reserve banking meant and how they basically produce it for free or next to nothing. I started to look at the gold market because that's something that you kind of associate with an alternative to a fiat system. And I was pretty involved as a young man in the gold market from a futures aspect and also mining equities. And after the 1980 runup with the hunts, I really hadn't looked at silver that much. And when silver outran gold there at that final blowoff manic top, I started asking one big question. Why were the hunts so interested in the silver market? And I started looking at it more and more. So, I've been looking at silver for a very long time. And I think that the main thing about silver that intrigued me from the beginning was it was a dual metal that there were essentials that silver would only fill. You could only use silver in certain applications. You couldn't some cases substitute gold or maybe platinum or something. But they were on economics. Silver was far cheaper and therefore it was the only choice. So it was the industrial side and the monetary aspect that drew me to silver and then studying about the most prolific writer in the early late 70s uh into the 80s and that was Jerome Smith. And I actually have a copy of the original book, which is really a paper booklet called Silver Profits in the 70s. And purportedly that was something that one of the Hunts or both the Hunt brothers read that actually got them intrigued with the silver market. So I think it was just a f those two things, but I'd say primarily more from a oh a personal aspect is for one reason or another which I can't articulate. Trey, I've always been for the underdog. I've always been for the guy, you know, the movie with Secretariat being a smaller horse but winning, you know, the Triple Crown and, you know, uh I think it's Rudy who was an undersized uh football player and you know, just put in at the end. But the coach said if anybody had as big a heart as this guy does, you guys would really kick butt, you know. Anyway, and and silver's the underdog metal. It's been the people's money for a very very long time. But yet it was dissed by the bankers basically in the crime of 1873. And the book um by Frank Balm, Wizard of Oz, is all about the meaning of the yellow brick road and how the banking establishment in the east to the emerald city was taking over the monetary system on a mono metallic standard and dissing silver which really put hardships on on the silver market and primarily on the workingclass miners and tavern owners and railroad builders and all that out in the west of the United States. As part of our silver focus this month, we're bringing you top tier research in a free silver investment report, which you can obtain a free copy of by clicking on the link in the description below. And if you're looking for a simple, secure way to invest in physical gold and silver, check out Hard Asset Alliance at hardassetsalliance.com. Speaking of silver, Wealthon will be on the ground at the SP Resource Finance Global Silver Conference this October in Toronto where Eric Sprat will deliver the keynote address. It's going to be a major event for silver investors. Stay tuned for more details in the weeks ahead. Interesting. That's fascinating. Um why I think silver and gold are very commonly uh perceived as linked at the hip sort of like oil and gas or salt and pepper. Uh and this is just my view from having studied silver not as much as you have but enough to be dangerous. What I have found is that you know on a molecular basis or a weight basis or in terms of end uses uh I would make the case that silver and gold are actually more different than they are the same. So I don't want to put words in your mouth but can you talk a little bit about the differences and the similarities between gold and silver that most people may not uh have a feel for? Sure. first is if you go back I'd say five years or so the correlation the gold to silver is about 85%. It's not that high anymore. You're seeing silver and gold um part ways I would say where I don't know the exact correlation now it's probably below 80. But I think one of your points is a speech that I gave uh years ago and I said what if silver were treated like gold? And the first thing I looked at was the semantics around the two metals. So if you use the word gold, so much positivity is given around the word gold like the gold standard. Almost everyone realizes the gold standard is the standard, the best standard, the ultimate standard. But if you look at things around the silver market and you use the word silver in the vernacular for silver, you have junk silver. Now junk silver is what many call constitutional silver which is 1964 or older 90% silver coins minted by the US government. Now other governments minted silver coins as well, but it's specifically referring to silver. So why the word junk? I mean junk has a negative con connotation. And also when you look at what the price mechanism is for selling silver back, it's usually referred to as what's the melt value or salvage value, not used as much, but the melt value. Well, melt value is like you melt something down to the bare minimum to get, you know, whatever you can take more or less. So these connotations around the two words are very different. you have a lot of negative connotations. Now there are some positive ones and in that lecture I talked about a silver lining but even there you're looking at like well something wrong something bad something not copacetic but there is something there that's silver that's some somewhat good or maybe something but it's it's housed within a context of silver lining meaning that overall something isn't quite right but there might be something positive whereas you go to you know the golden rule that's the number one best thing take care of everything you live by the golden rule you're holding yourself and others to a very high standard so that's something that I just you know put on the thinking hat you might say and started to contemplate and then next on that on you know the use I mean gold really has two uses it's money and jewelry whereas silver has more uses than any other commodity in the on the planet other than oil. Oil has more uses, but silver has second most. There's more patents filed on silver than any other element on the periodic table, but again, oil has more patents. I mean, it's used in plastics and you know, so many things. I won't go into it all, but it is a very useful metal. So really if you look at something of what its use state is, if you have an automobile that uh could uh could fly and could uh be a boat and also travel on the ground, that have three uses. Uh whereas a standard automobile could only go on the ground. Then that one that could do three things would be more valuable and usually cost more than one that only had one function. But silver has thousands of functions and yet it's priced at you know over 180th the price of gold at the current time. So there's lots of ways to look at it. And lastly is what I said earlier and that is the last part of the silver market that's changed is its monetary aspect. There's not very many that look at silver officially as money. And the end of the lecture I said well what if silver were treated like gold? That would mean it would be used as a rear a reserve asset by the banking establishment and it has is not and has not been for well over a hundred years and because of that fact it doesn't have that underlying buying pressure that gold has enjoyed basically throughout all of history. Great uh answer and uh I agree with everything you've said. the the one uh sort of aspect that I would ask you to highlight for viewers to get a clear picture of is I think it's commonly misunderstood how tiny the silver market is in compared to gold both for bullion itself for mining for silver equities for the market cap of all of those groups. Can you talk a little bit about just how small the silver market is and why that makes it so potentially valuable if if we turn certain inflection points? Great question. Boy, you hit the nail on the head, Trey. So right now the gold market represents approximately 1% of the financial system but the silver market represents 02% of the financial system. And to go further to your point right now there's approximately $6 trillion dollar of liquidity in the global financial system. That's parked basically saying, you know, what do I do? I might be in a tea bill or in cash. And so I suggest that as things unravel further, if 1% of that 6 trillion went somewhere and it went into silver, what would that mean? Well, 1% is $60 billion. The silver market is approximately $30 billion. It's more than that now, but I'm going to use 30 to do the math in my head. On an annual basis, that means all the mining and recycling, which is about 120 million ounces, 150 million ounces, that total recycling and mining globally is 30 billion. Well, we've got 60 billion. That's just 1% of that money that may want to find a new home, which represents approximately two years of total silver supply. And I would argue that as things unravel further and we get an asset allocation model that shifts from equities and bonds, not drastically but noticeably into hard assets be the commodity sector at large and primarily the money metals that it's not out of uh thinking that 1% could move into the silver market. So if you have that kind of money moving to the silver market, you can realize what the price movement could be in that market. And obviously time will tell, but it would not take very much uh for that, you know, for that reality to take place. And even if I'm wrong, take it down to a half or a quarter. So 30 million moves, excuse me, 30 billion moves into the silver market. even 15 billion is in the silver market. Even those extraordinary small numbers relative to the money that's going to seek, let's say, a safe haven if things start to unravel further certainly would could and I think would put a real big squeeze on the silver market. And I assume a important component uh of your newsletter is equities that are investing in silver. Is that correct? So, silver and others. I mean, like I said, we just did one on Florespar, which is something that's, you know, people don't even know about it. And we have uh done well in the uranium sector. We've done well in um the gold and silver miners. We have uh one lithium project which is not doing that well. We have a copper opportunity in Montana that I visited. I visit mostly smaller equities or smaller companies that are in the equity side. Uh one high-tech company. So we spread it around between top tier, mid-tier, uh junior producers and pure speculations. And we wait the portfolio. But finding a pure silver project is almost impossible. We do have one on the mine which is primarily almost 100% silver but in most cases like you take Pan-American which has been on our list for a long time and they are a primary silver producer but you look at the amount of gold, lead and zinc that they produce to their bottom line. They're really a poly metallic miner with silver being their key to the bottom line but not by much. Take another company like Heeka which is you know several mines throughout and uh depending on the price of gold they're either a gold miner or a silver miner. Right now they're a gold miner because the price of gold is you know at such a multiple of the silver price. I you've answered sort of my next question indirectly which is the relative dir of silver equities. It has to do, I think, a bit with how it's found in the Earth's crust in terms of being a primarily a byproduct metal. Do you have a couple of lines that outline that for folks? Yeah, really for primary silver producers, there's probably about five. Now, there's all kinds of explorers and junior mines, you know, or that are producing silver. Well, let's take the majors. I mean two of the biggest companies in the world BHP broken properties and RTZ Riointo you've got massive conglomerates I mean these are mining houses par excalance and they produce a lot of silver but if you look at the bottom line the percentage on their overall mining activities is minuscule and so these people really don't care about the price of silver they care more about the price of copper copper or lead or iron ore or whatever. And so silver is basically something they use as an accounting uh situation where they just basically more or less on an accounting basis write it off and just use it as a credit to their other uh expenses. And so they really don't care what the price of the silver market yet they mine a great deal of it. So that's part of it. And the other part is uh how silver is used in a management capacity. What I mean by that is on that bookkeeping entry. A lot of these bigger mining houses just give what's called their book or their entries on their ledger into the bullion banking system that takes advantage knowing of how much silver they're going to get in physical form and then making multiples of that to put into derivatives market which is really what the silver and gold markets are at this point from the futures market. I'm not trying to lose anybody. I'm just answering your question Trey. You take what's real and you make a derivative out of it and then you put it into the main market that actually establishes the price for that commodity, be it silver, gold, oil, or what have you. I'm talking metals right now. And that gives them a distinct advantage because they're getting something basically at cost and able to use what they have as a reserve if they're called out and have to produce the physical metal itself. But they can make that quantity let's say manyfold over in order to use algorithmic formulas that actually help them to trade a great quantity of something that really on a physical form doesn't have nearly that. And and one feedback loop into the supply demand situation for silver is because these behemoths make a lot of it, mine a lot of it, and it's not really something they spend a lot of time on with capital expenditure planning, etc. It sort of puts a cap on silver mine development. Right. Right. Yeah. As you said, Trey, I think he gave us I mean, it's about 70% of the silver that comes above ground as a result of other mining activity. So, if there were anything else out there like say wheat or uh corn or whatever and it was a byproduct like silver is, then those farmers that were growing, you know, X and they just got wheat as a byproduct. They didn't care about they only cared about cared about crop X. probably a corny analogy, but I'm gonna continue with it. You say, "Okay, well, get rid of it." You know, those guys want this stuff. Get them in here. Take it away. How much are they going to give us? Okay. All right. That's good enough. And that's the majority of the market. You know, if it's 7% now, you know, someone might pay attention to, but since it's 70%, it's more than, you know, a primary silver producer makes, right? Then they really have a lot of power over the market as you're indicating, right? So switching gears a bit, we were talking earlier about the complex nature, well more complex than gold's nature of uses for silver in terms of demand and the industrial demand and I think we've all read a million articles about photovalttaics so we don't have to go there and all that type of thing and and uh you know it's uh antibacterial qualities and all the stuff we've read. But my question to you, always trying to have a little bit of a different spin on this. Uh would you agree that even though industrial uses have been very stable and led to this supply deficit for the past four years that when silver really takes off, you really need that investment demand to to get it rolling? Do you agree? Absolutely. Okay. the all you know I've said this before but you know people are listening this for the first time or it's good to review I mean always review the fundamentals all markets move at the margin so the industrial use has been climbing steadily for decades you go back 25 years and the silver market from industrial use was 35% of the market today the use for industrials is about 60% of the market some say even higher So it's almost doubled in the last 25 years. What's interesting about that comment, if you go back 25 years ago, all the silver bought above ground was about 550 million ounces in a given year. Now it's 850 million ounces. So think about that. The silver industrial use is 60% in the market. We've increased the amount of silver over the last 25 years by 300 million ounces. So that shows you how much physical demand there is for silver on the industrial side. However, at the margin it is safe haven or monetary or investment demand and that's what es and flows. So the margin is that and when that increases you'll see the silver price move. For example, back in 2020 Scott Meanard who ran was a chief investment officer Yeah. said that his main investment for that year would be silver. And the Blumer guys interview him at Davos just about fell off their seats. And I cannot prove it, but I can prove the number. But in 2021, 300 and over 300 million ounces of silver were bought through the ETFs. 200 million is the normal average these days for silver on the retail side. So that's something like a total of 350 excuse me 550 million ounces of silver bought for investment purposes uh institutional and retail combined. That as I said was the total silver supply in the year 2000 and that all of it was for investment demand. Well that took the price up substantially higher as you may or you probably know Trey but maybe some of the viewers don't. Uh Mr. Mayard passed away some time ago and a lot of that silver in that in those ETFs was sold back uh into the market and we haven't had that kind of a demand on the investment side from institutions in a very long time but that doesn't mean it won't get there as I said earlier with the silver market being such a small amount of silver available versus the amount of money slloshing around that may look for an undervalued value asset It's been money for, you know, since the beginning of time. Almost. You dovetailed into my next question, which in watching one of your uh recent interviews, you differentiated between in measuring investment demand, retail demand and sort of coins and premiums and institutional demand. And at least a couple of months ago, I think you were making the case that the actual retail sector is a bit soft in terms of demand, but that the institutional half of the equation was starting to pick up. Is that still the case? Yeah. snapshot right now and you know as having a finance degree which it just means I have but you know these are terms that we use and you know when you do a quarterly you're taking a snapshot of that first quarter second quarter what have you because things do change but right now yes the retail demand for silver is is sluggish uh actually is probably more sales back into the market than there are new buys but on the institutional side it's the opposite that we're seeing a lot of demand for silver. And as I expressed in those previous interviews, a lot of um a lot of people that are not that sophisticated at the beginning hear about the retail silver market, which is substantive, but people will say, you know, we're running out of silver or we're very tight in the market. Well, they're being very truthful in that sector. So in the retail sector of you know premium coins, silver rounds, silver bars, all that may be very tight and the price is high but that is not truly the total silver market. The real silver market bases the futures exchanges are based upon commercial bars and that's where the price is set. So people, I wouldn't say they're misled, but they may not understand the bigger picture because you really have to put the retail silver market, which is at most 20% of the total into the context of 100% and say, wait a minute, you know, are we having a tight supply in coins and bars or are we having a real silver shortage? And the two are not equal. So, uh, if you were to estimate, one of the great mysteries of silver, all the gold that's ever mined in the world, I tell people all the time, is still with us in some form or another. It's in museums or in teeth or, you know, in non-jwelry, but you know, gold rarely is consumed. And the big mystery with silver is how much silver is above ground. I focus on this because I think that steady above ground stock which I personally believe uh is a lot larger than some people make it out to be is a positive for silver because it gives it that above ground stable stock which led lends to its monetary value. Um not a lot of people approach it from that direction but uh can you give us your estimation of above ground stocks and sort of how you break it down? Yeah, that's a tough one, but it's a great question. So, if we go back, oh, I'm going to just go back say five, six years, somewhere in that range. If you look at all mining activity and what the authorities say, uh, we have this. We have about six billion ounces of gold and about 60 billion ounces of silver mined from time and memorial. So that's a 10 to1 ratio. And I think that's a pretty good ratio because even though you'll hear over and over and over again, even some people that are very knowledgeable about silver, they'll tell you it's 15 or 16 to1, which is not true. The the ratio out of the ground, which I call the natural ratio, at best was about 12:1 back in the 13th century. Anyway, right now the average is probably 10 to1. The current is about 7 to1. So 60 billion ounces according to um uh one of the studies that was commissioned by the silver institute um I think it was Jay Edwards and company if I remember correctly said about half of all the silver ever mind has been lost. So that's coinage that was lost. That was, you know, ships carrying silver was lost. And it was landfills full of, you know, micro amounts of silver in a membrane switch in a uh brand new microwave oven that, you know, those people threw that in the trash can and they're on their 15th, you know, microwave. So what's been thrown into landfills, lost in coinage, or lost at sea was about half of all the silver. So you're down to 30 million ounces. So now you're at that ratio of uh that's much different. So if you go through what what's in that study I'm referring to, you have like religious and art objects which is a huge amount. Then you've got jewelry which is another huge amount. And then you have silverware which on aggregate back before you know we went to steel and you know people used silver not the common folks but let's say the upper middle class or high class was a fair amount and then uh also in that era you know candalabbras a lot more silver artwork and all that. So if you lump all that together, it's a big number. And what's in the silver coinage and um used as bullion for you know silver smiths or somebody that's going to turn that silver in the account. So that amount is probably equal to about what the gold market is which would be six billion ounces. Now if we divide it further I do what's called investment silver. So that is anyone buying a silver coin or a silver bar and anything that's a 99 fine 999 fine LBMA good delivery bar or comx good delivery bar and if you look at that that is about 3.6 billion ounces. So, if you take that six billion, that's a wag wild ass guess, and you convert it to how much silver could I put my hands on for investment purposes, either investment purposes, retail or institution, you can round up to four billion, but it's 3.6 according to the silver institute. So, I'm not making up the number. I can cite the source. Now, if you look at how much of that silver is held in strong hands, it's well over two billion ounces. These are silver government minted coins, silver rounds that are privately minted medallions and silver bars that are 100 ounces, kilo bars, 10 oz bars, 1 oz wafers type of bars that retail investors buy. So that leaves about a billion ounces in commercial bars, which is the silver market, big market, and of that about half of it is in ETFs. So we only have about 600 million ounces in the float which is being eaten up pretty rapidly by the industrial side at 200 million ounces per year perhaps more 250 and if we get a big buyer that comes in for a new use for silver or just to warehouse it so they don't run out and stop a production line that could be eaten up very easily. By the way, as I mentioned, just to reiterate, you go back to Scott Meanard and he bought, you know, 300 million ounces of actually is more. It was like more like 350 million in that one year. Now, I'm not saying it was him. Uh I I'm making an educated guess it was him, but somebody did. It's provable by the inflow into the ETFs. So that happening again by some one or some ones on the institutional side could wipe out the silver market pretty easily in theory. I mean obviously as price rises there'll be people more willing to you know sell their silver. As I said retail's willing to sell their silver near the $40 mark for whatever reason. And I can't go survey everybody that's selling their silver today and ask them why they're selling it because there's a variety of reasons, but we know what the aggregate is. On balance, the amount of silver sold right now seems to be on the retail side above what's being bought. If you have any questions about how to navigate the current environment, Wealthon can help connect you with a vetted advisor to get a free portfolio review. Just click the link in the description below or head to wealthon.com/free. There's no obligation and it will just take a few minutes of your time. Again, that's wealthon.comfree. So, in because you know the history so well, um if you look at that big chunk that silverware and you know non really expensive jewelry, let's just say in your past 20 years, have there been periods where the price movement has activated liquidation of some of that silver or is it incredibly constant? Yeah, this I think it's Edwards and Associates. I forget the first name. Did this study, it's fascinating. I have it back here somewhere. I reread it every once in a while. What they claim, and I tend to go with, but remember, I'm somewhat biased in the silver market. I really try to be as objective as I possibly can, but there is some bias that's crept in. But they said there in their study, it was quite a detailed study. They thought that the great meltdown happened. They think that in 1980 the smelters are backed up for a year in some cases, even more than that in some cases, that most of the silver um silver wear, silver candalabbras, silver artwork, um you know, mismatched jewelry. That great meltdown took the lion share of it out. And does that mean there isn't somebody that, you know, at the $100 silver isn't willing to, you know, throw in their candalabbras or their whatever? But silver just is not and has not been for the last 50 years anything that anyone really wants. You look at the silverware market. I mean, I've been to many weddings in my life, Trey, and none of them, and some of them have been some fairly affluent people, have gotten silverware as a wedding. Now, that's not true in India. There's some maybe in the UK, but the silverware market's like 4% of the market at best. Jewelry market es and flows. When gold gets very high price, people seem to buy more silver jewelry because it's more affordable. And then it kind of goes in streaks. When the rappers start wearing big silver chains, all of a sudden, oh my goodness, I got to have a big silver chain, too. And silver's affordable. say, "Hey, you know, I could spend a thousand bucks and get this huge amount of silver around my neck or whatever." So, jewelry, I don't count too much, but a lot of that doesn't come back to the market that often, although it could. So, my point is that I think the great meltdown, I agree with that study. Could it happen again? Yeah. But I don't think it did nearly as big as it was in 1980. And you go back to like the junk bag market, constitutional silver. I mean there is not that much of a an amount of bag silver left. So much of this billions of dollars in pure and 90% silver been melted down into 999 fine bullion for delivery into the comx or LBMA. I mean, not saying it's like super scarce, but the amount left is minuscule compared to the billions and billions that were minted at one time. As the fact being that we're primarily on a silver standard at one time in the in the world and then it switched to a biometallic standard and then went to a gold only standard. But at one time, silver was the coin of the realm for almost everyone on the planet. So, if you think about it, if you didn't have silver, you didn't have any money whatsoever. You were talking about silver jewelry, and I'm sure you saw, I think it was about four months ago, uh, the S jewelry association of America or some organization did this uh survey of all the jewelers about what whether gold, silver, diamonds or other categories of jewelry. And they had several categories of questions. You know, where did you make the most profit? What was the most stable demand? How were your Christmas sales? And even though last year was only half of the gold move that we've had, that move from 24 2600 up made silver the more profitable jewelry item in a lot of jewelry stores across the country. So, I'm sure that's happening this year as well. And another thing most people never talk about since we're diamond fairly deep is you know 14 karat gold 18 karat gold 20 karat gold what's it mixed with? Well folks silver. So when you got 14 karat you got a fair amount of gold but you got silver with it. So you know that plays into it too. I mean not to a large degree. I don't want to make a big case out of it, but there is, you know, silver's got so many uses and one is to uh let's say um give you different uh flavors of gold. Excellent. So, going to a bit of a macro level, if we look at 2024, gold was up 27% and I think most people have been a bit surprised that it's up another 28% this year. So that's 27 and 28 for a 62 compound return. Silver lagged a bit in 24 it was up 21% but is now outpacing gold uh in 25 being up 32%. Sorry, a lot of numbers there for a compound return of 59. My point is we're sort of at the same end point but silver seems to be uh shifting into a bit of a higher gear. Is that something you would expect say for the balance of this year and next year to be the case? Yeah, I think that trend will continue. Uh I think it'll be subtle at first as you just indicated where gold outperformed and then silver slightly outperforming gold now. But as we get near the end game, once the masses get into a manic panic buying mode because they perceive the stock market is falling, uh maybe their pension won't be there, a higher inflation rate, regardless of what the official statistics are, and you start to see more and more of the public come into the metals markets. Silver is much more affordable than gold. So you'll see a run to gold initially which you're already witnessing through the smart money big money meaning the central banks and some higher net worth individuals and funds and that will continue and maybe accelerate but you'll see that spill over in the silver market and it will far outpace the gold market at some point. And I say far outpac it's just outpacing now because it provides the same safe haven status but being more affordable and now with the internet almost anybody anywhere can buy uh over over the web and uh so you'll see an acceleration I do believe similar to what we saw on the 1980 bull run except this time instead of being the hunts and some Saudis it will be global. and looking at your work. Uh I'm not a technician. I always say I support technicals as long as they support my case. Uh and you're not really a technician, but price levels I've noticed are important to you. Um as we look forward, you know, the number 50, for example, is a really important number and uh it's important for a number of historical reasons and you're familiar with all of them. But as you look forward, what are the sort of the price points that we should focus on? Well, 50 is key and I do do technical work and I show that to our premium paid subscribers, but I'll make a big case out of it. Um, you know, there's some pure technicians and there's some pure fundamentalists and I mix them both because I think it's key to know the fundamental case. But the technicals do work, but people definitely put overemphasis on them. But going back to your question, 50 has stalled out silver a few times. And I think it will stall out again. That's my personal belief. Doesn't mean I'm right. But I see silver getting into the high 40s, maybe a little over 50, stalling out, and then regrouping and pushing past it. So once we push past 50 and we maintain it for I'd say a few weeks, two or three weeks, every close is above 50 in US dollar terms for you know 15 trading days then we've established a new limit and that overall resistance that's been there for decades will become support and once that takes place whether it's three weeks or three months. Once the market recognizes that, we're off to the races. Now, what I think is it'll stall out at 50. Uh reconsolidate and blast through it shortly thereafter. Many of the let's say the bears in the silver can't get us past 50. I told you blah blah blah blah. You silver bulls are wrong. D that goes on for a few days or a few weeks. All of a sudden, it's at 60 and now we don't know what we're going to do. Because once you get to a new high in a market, nothing's more bullish than a new high because everyone that owns it going to hold it. I don't want to sell it because I don't know how high it's going to go. And I've heard, you know, even David Morgan say it's going to go to 100. We're only at 60. I'm not selling. So that means any I mean one ounce of new buying pressure will move the market higher because no one's selling. That's what happened with GameStop. The reason those shorts got clobbered so bad is they're kind of their lead guy was saying not selling yet. So everybody was holding and there isn't anything in the market to to buy back and the shorts have to buy back to close out the position and there's no sales. What do you buy if it doesn't exist? So the same thing where similar thing could happen in the silver market. And now that retail uh holds as I said you know over two billion ounces of the 3.6 6 and the funds hold you know 6 of that or 600 million. So you add those two together, you got about um you know the lion's share of the silver market is held by retail, not by the banks, bullion banks. Then they're actually in control. Although it may not appear I it could be in control. I guess when it gets down to the physical market, they are in control. When it gets down to the derivatives market, which are still playing in, the banks have the advantage. Right. So, your comment about when it goes above 50, there won't be any sellers made me smile because this morning I was reading a Reuters article about last week's movement. You know, obviously we had big moves on Friday and we're at or near new highs and the reporter actually made me smile. He said, "Stocks are going higher because there's so many buyers and there's so many buyers because stocks are going higher." So, it's just going to be that way for a while. But, I thought that was pretty funny. So between here and 50 uh I've heard you talk about the stairst step pattern that silver is displaying. Is there any you know 39 seems to be a pretty important number. Is there anything important between 39 and 50 that uh viewers may want to focus on? Yeah. I mean if you don't mind me taking just a moment see I pull up a silver chart really quick. It really isn't. I mean, okay. Because I heard you talk about you talked about 44, 46, 48, but it was a couple of months ago and you were sort of talking about a different topic. But I wondered if those were trigger points. Not really. I mean, they're so small in duration, you can blast through them with any substantial buying. Okay. Basically through the 35 barrier. And why are we playing at 39? You can make arguments for all kinds of things. Primarily, it's the algorithms. It's the way it's set up in the futures markets where these bots are doing these trades back and forth all day long every day, every market trading day. And because of that, it's going to keep there. I'm really happy that it's stairstepping up. What we really don't want to see is a great big spike high that just takes a matter of a few weeks. Because if that's the case and we go parabolic then there is no support level. It's just an up and down situation and that will not be supportive. Whereas if we get a stair step and we get a base and move up and another base and move up that is the way to build a market that has some substance to it. So I'm very happy to see it move up more or less gradually. will get much better overall of a move and a sustainable move if it executes in that manner. Excellent. So, and then sort of wrapping up on the investment side, we'll talk about your letter in a second, but for the individual investor who's looking to initiate silver exposure, this is sort of a a 101 type question, but how do you divide the vehicles that are available and how would you advise folks to start building a silver position? I've always told people before you buy gold stocks, you want to initiate your gold position because gold is gold and the stocks are stocks and so you want to do it. You first you got to get your gold position and then you can start to move. But it doesn't really work that way with silver, does it? Well, it does for me. I mean, uh, any premium member, paid member, uh, the first thing they are asked to do is read how to use the mortgage report. And in that report, the first thing I say is what you just outlined. Before you start a metal portfolio, you need the real metal. And I talk about both gold and silver. And I give guidelines like the older you are, the more you should actually favor gold over silver. It's an establishment metal. The banks buy it. It's worldwide recognized and it's a less volatile market. But you should have some of both. And so I give that guidance once this amount is established. again guidance then I say now you can move into the equity side and the equity side we divide it into these categories so 70 goes 70% is suggested to go into top tier cashrich unad mining companies primarily the royalty and streaming companies and here's why and then I give an outline for that then I go down to the mid-tier junior producers and speculative positions speculative positions being money you could afford to lose And if you follow our guidance, you're going to do pretty well. And we have outperformed in the equity side over the metal itself by far. On aggregate, you can't. You can outperform somewhat like the HUI and the XAU have outperform the metal itself this year, but there's been years that the metals outperform those indices. Follow my guidance. you're going to outperform, but you have to be selective and pick the right companies, which we have very few in the top tier, like six. And when someone becomes a new member, I do a halfhour consult with them, explaining where we are uh in aggregate on the Morgan report and what's performing best for us right now and why it is. So I give them a little bit of guidance there as well so they get started on the right foot because a lot of people that have never bought a financial newsletter based on money metals and mining get the mis idea that all I have to do is buy a bunch of penny junior stocks and I'm going to get rich. There is a time that will take place, but it's a very select time frame and you better be timed perfectly and you better not get too greedy and get in and out very quickly. So that's a very specialized specialized field within a specialized field, but it can be done, but it's extremely rare. I tell people all the time, just because someone's told you about a stock that has gold in the stock name doesn't mean has any connection to gold or will ever successfully mine an ounce of anything. So, uh, I have a tendency to encourage people to focus near the top. In gold, there is this I call it a negative survivorship bias. Meaning you may not want to focus on say the top 10 names like the barracks and the news and the gold fields and Kimra because it's so hard to replace reserves but there's that sweet spot just below the top uh where there are a lot of emerging one mine companies that are likely to be acquired by the big guys which is really a sweet spot. Do you agree with that? Oh, there. Well, I mean, Gold Corp was our number one pick for years and it outperformed Berkshire Hathaway for like 12 years in a row. And for my conservative investors, they just made a bundle on it. And what I loved about it at the beginning when Rob McCuin was the CEO was uh they would had not only one of the best gold mines in the world, they were stockpiling gold in their own vault. So someone had a one-stop shop that could buy what we outlined physical metal and an equity at the same time. So you had the gold and a golden goose. I refer to gold mines as like the golden goose. Would you rather buy the gold or you rather buy the goose that lays the golden egg? And you should have both. But nonetheless, so that was one that's been bought out now. But um yeah there and I agree we don't have too many. We have two gold royalty companies that outperform those gold companies you mentioned by a long shot and that's the where you should put your big money. Again, big money goes into big companies, but best ones for return and then uh we move down the sector from there and we've gotten lucky on the junior side at the beginning of the Morgan report when I started more than 25 years ago. But honestly, I've not had the hot hand on the junior minors in a long time. It's extremely difficult to be good at it. And um again, there are times you can load up on the juniors and do well. We just haven't hit that time yet. And talking about this negative survivorship bias, when I started focusing on gold in 2001, I think New Pneumont was doing 7.1 million ounces. And I don't follow it that closely, but I think they'll do 56 57 this year. And that's only because they bought Gold Corp and New Crest, which uh That's right. Yeah. Which I would not want to be a big minor like your outline. Just too difficult to replace reserves as you just said. I'm just backing you up 100%. I really think again there is a sweet spot there, especially on the gold side. Silver's a little different, but you know, I actually told my investors early on, I haven't done it in a long time. If you're really conservative and just want to go along for the ride, you know, buy BHP. And from the time I suggested that for, you know, wealthy investors, conservative, low risk, high reward, they got a 10 bagger out of it. Now, that was years ago, and I'm not saying you're going to get a 10 bagger out of it again. But, you know, put a million dollars and, you know, five years later, it's a 10 million. You're pretty happy. Well, this has been a great introduction into what you do. Uh, how can viewers learn more about your letter? I assume there's a website or what's the best way to learn more about what you do and how you make money for clients? Well, there's a couple ways. The best way is just go to the main landing page. That's the morganreport.com or you put in davidorgans and it'll pop up like our blog and our YouTube channel and our Twitter feed and all that. Best thing is just go to the morganreport.com and there is access to Twitter and LinkedIn and all that stuff with little icons at the top. right hand side of the page. Terrific. Well, Dave, we're going to check in with you in a few months and see how much of what we talked about comes true. All right, fair enough. Terrific. Thanks very much. Yeah, you're welcome. For viewers who are interested in digging deeper into investing opportunities in silver markets, please remember to click on the link in the description below to obtain a free copy of Wealthy on Silver investing report. And even more importantly, for those looking for a little guidance in these volatile times and markets, if you're interested in a free portfolio review from one of Wealthon's partners, please visit wealthon.com/free. With markets at all-time highs and another volatile year, now's a great time to stress test your strategy and be prepared for what comes next. Thank you for watching and we'll see you next time. 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