Silver’s Final Phase: Why $100 Was Only the Beginning | David Morgan
Summary
Silver Market Structure: Extensive discussion of Shanghai premiums over Western benchmarks, localized strain, and how COMEX, LBMA, and Shanghai differ in setting price and delivering physical.
China Silver Demand: Emphasis on Shanghai’s role (SGE/SHFE), drawdowns, capital controls, and tighter position limits shaping physical flows and premiums.
CME Margins: Margin rules shifting to percent-of-notional act as a brake during rallies; rising margins can force deleveraging but cannot stop a true physical squeeze.
India Silver Demand: Rapid ETF accumulation in India (tens of millions of ounces) highlighted as meaningful to global supply, with currency effects and recycling influencing flows.
Industrial Drivers: Solar’s heavy silver usage (now a major cost share) and potential substitution (copper/graphene) create both demand tailwinds and caps at high prices.
Platinum & Hydrogen: Bullish outlook on platinum given tight supply, South Africa risks, and optionality on a future hydrogen economy where platinum demand could surge.
Gold-Silver Dynamics: Gold seen as macro barometer; monitoring the gold-silver ratio for cycle timing and profit-taking signals as the precious metals bull market matures.
Outlook & Risks: Expectation of higher precious metals prices with intermittent volatility; key watch items include Shanghai premiums, registered vs. eligible inventories, and ETF flows.
Transcript
Welcome back. I'm Jeremy Saffron. All right, today is not a price show. This is a market structure show. The plumbing, the rules, the bottlenecks because something has been happening in silver that keeps showing up week after week. As Shanghai has been trading at sustained premium to Western benchmarks. Now, if silver were one global frictionless market, that spread would close fast. Arbitrage would do its job. Metals would move. The the gap would compress. But this this one hasn't behaved like a normal clean arbitrage. That does not automatically mean a shortage. It does not automatically mean the comx is finished. And it does not automatically mean China is about to reset the world. Now China is not transparent. Market data can be delayed. Inventories can move off exchange. Policies can matter more than economics. So our job is to separate a policy premium from the real physical tightness. Joining me is David Morgan, publisher of the Morgan Report. David is the author of the silver manifesto and has tracked these markets for decades from the Hunt brothers to the ETFled markets that you're seeing now. David, good to have you back. Thanks for joining us. >> Well, thank you Jeremy. It's good to be here. >> Well, let's get to I mean I don't want it to be fact and fiction because you know again some of this data is a little bit reclusive but it comes at us very quickly as you know and as of today you know we talk about the Shanghai silver benchmark. It's fixing at around uh $82.60 60 cents an ounce, roughly $10 above the western spot price. I guess first, you know, explain why that adjustment isn't happening automatically. Is it is it VA that is it capital controls or does it suggest localized strain? >> Well, it's really all three. First of all, it's localized strain. Obviously, we willing to pay more than the benchmark price, you know, in New York. Uh it's going to bring flow over to China. But what are the problems? It's, you know, loading it up, inventorying it, shipping it across, and I've gotten different numbers on how much per ounce that costs, so I won't give you a bad number because I don't know what it is. Uh, but it's worth the $10 spread. However, it's really not happening that much. It is moving in the China. There's little doubt about that. But the spread hasn't closed, as you said, Jeremy. So, >> something's up. I think over time it will narrow and I think we'll probably get into a situation where the price in London, the price in New York and the price of Shanghai is pretty much the same. >> Yeah. Yeah. And let's elevate this. I mean, if it if this were a broader monetary shift in pricing power from west to east, wouldn't we expect the same structure premium and gold, why is silver showing a level of tension that, you know, gold is not? >> I think the main thing is, you know, how these three markets are set up. You've got the COMX which is really sets the price by a derivatives market. You've got the LBMA which is an exchange. It's an association and it's kind of a good boys club that kind of move metal around as necessary and that does uh supply the physical side. And then you've got Shanghai which is basically set up for industrial users of silver. So that's sort of where the rubber meets the road. It certainly it is a futures market but not to the extent that London and uh New York are which means a lot of that silver that's in inventory or on exchange is going to be taken by somebody for purposes of either investment or industry. >> Yeah. Yeah. And I mean at what point does does the diagnosis change? I mean when does regional friction officially become a structural fracture? You know is it duration? Is it is it just the size of spread? I'm going to jump a little bit ahead on that, Jeremy. So, what I'd like to do is just kind of set a little bit of a foundation. So, yeah, what we have seen for decades in silver is that the comet sects the price and that does set the physical price. And as long as there's enough physical to meet demand at that price, then everything's good. And once in a while, we would see it slip away. And usually for a matter of three days, you'd see a big backwardation. It lasts for a couple days and then all of a sudden there'd be enough silver to fill that gap. Everyone's satisfied. The people that had to have silver that day got it and things go back to normal. This time it's different. What's different? Well, what's different this time is that China is using this big demand for physical metal is in the arena of the Comx, meaning it's commercial 10,000 ounce bars. So even though the retail market can have an effect, it's a flea on a dog relative to the tail dog. So once the industrial needs were not met, you saw that the physical market took over the silver price and that has happened as I said very sporadically in the past. This time it was the real deal and we saw something that we haven't seen in a long time. We saw the silver price in 2025 go up 140%. We haven't seen those kind of years in a long time. >> Secondly, we saw what happened in January as the price went up 70% in one month. Now, I am not here to be an apologist for the bankers. Anyone that's listening to me for more than five minutes knows my thoughts about that. However, it is a derivatives market even in China. The market did get ahead of itself and it was overextended and the paper price or the paper paradigm took over. So temporarily, even though the physical thousand ounce bar market had had basically taken control for weeks, perhaps months and everybody's kind of cheering that understood what was really happening. It didn't negate what was going on the futures exchanges around the world. And again, they got ahead of themselves. There's lots of talk about what happened about a huge Chinese short. I think part of that's true. I haven't been able to verify it, but a good friend at the hedge funds banner verified it to me. So that brought things back into reality. So that is now where we are. So now we're in a struggle between who's going to win from this point and it could go back and forth a couple more times. Is it the paper pushes or is it the physical demand? >> Yeah. Yeah. Well said. And I guess on that China I mean for viewers let's clarify the exchanges because the Shanghai gold exchange handles physical flow while the Shanghai futures exchange handles those contracts. when the SGD reports a 43ton ton weekly draw down. I mean, what physically happens? >> Yeah. Well, if you're in that, if you're in line for silver there and you see at the these very lows that we're experiencing right now, as you just said, you get a little bit nervous. It's like, look, I need it or I want it and I've got to have it, you know, now or very soon. And so, you're going to do what you need, which means again, bid up the price. It'll be that arbitrage opportunity. you're going to get it from wherever you can. And of course, I don't want to jump the gun here on, you know, companies that have gone out and actually made deals with with mining concerns to secure supply, but it does tighten the market and it does basically switch the switch again where wait a minute, you know, the physical market is taking control over whatever the paper price is. >> Yeah. Yeah. And I mean, is is the metal leaving the system or is it just being reclassified internally? I mean, we've seen 40 ton draw downs before. How many consecutive weeks would we need to see before calling this a tightening trend instead of a, you know, a normal vault rotation? What what kind of specific metric confirms stress to you? >> That is a very good question and that's the one of the things I think that's most understood in the market. >> Yeah, >> everyone talks about deliveries and the drain of the COMX. Well, the COMX actually today I I haven't looked in the last week, but as of a week ago, the start of 2025 had x amount of silver in the vaults and comx. January 2026, a year later, there were 100 million ounces more in the ComX than there was the previous year. Now, a lot of that was steady eddy. it just stayed level and uh then it increased with all the metal coming from the LBMA over to the COMX. Then we got in that switcheroo as you recall and metal left comx back over to London. So right now what happens on these deliveries most of the time is it's what I call retagging. HSBC sells to JPM. The metal stays on the floor in the vault on the pallets and the tag that owns it changes. one comes off and another one comes on, it does not move. That isn't to say that the ComX doesn't have metal that leaves exchange. It does. But to answer your question, well, where is that stress? You really have to look at what the inventory is in the registered category primarily on the COMX, which right now is much much above where it's been in the past for a low around 30 million ounces. That was like the lowest I've seen in a long time. It stayed there. It's well above that now. And then on the Chinese market, it's hard to get data, although I am on their website to see exactly where that stretch is. Actually, I hate to use the cop, but I have to see more data, but I kind of need to know. We do know it's at a low. We do know that there's a huge drain. And I would just make an educated guess, Jeremy, that it's stressed right now. And if it goes any lower, there'll be more stress. That's the best I could tell you. >> Yeah. Yeah. Yeah. Well, you always try to find that a data, too, David. So, I hear you on that front. And and when you say Comx has plenty of asses, I mean, are we talking total inventory or registered inventory that's actual available for delivery? I mean, break down the difference for viewers because eligible metal isn't the same as deliverable metal. >> Registered is what the dealers have that has the medallion, the tag on it that says it could ship out for delivery. eligible, meets all the requirements, but the whoever owns it must make a commitment and sign a document basically that says, "I want to turn this metal to a sales position." And a lot of people think that the eligible is held by the bank. Some of it is, but most of it's held by long-term investors that are silver bulls and believes the price is going higher. So, the eligible is a separate category. You cannot count as readily available silver, and I don't. But still the registered amount is there and I'd like to veer off but I want you to lead but you know what happens on these margin increases because I think that's also um yeah >> something that people don't really understand but I'll give it back to you. I don't want to I want to be interviewed by you. >> Well I had I I got one followup before we get into the comx and the margin structure because it is important. It is changing but you know I just wanted to ask you where do I mean I get hit with on X on comments all the time whenever we cover silver as you do. Uh where do banks actually sit in this structure? Are they market movers or market makers rather providing liquidity or are they directional traders with large concentrated positions? I mean spell out their functional role in comx price discovery. >> Well, people are going to hate me and you know again I'm not a lover of the bullion banks banking system at large. Just keep that on the record. >> But banks do not like risk. So a lot of this idea that the banks are massively naked short just is not true. The banks, the bullion banks basically control the market. How do they control it? Through physical metal that they leverage in the futures exchange and is every one of it covered and not naked? No. No, they are naked short. However, not to the level that people believe or are taught or told over and over again. Most of that metal has, you know, some some backing to it. Again, it's not a one to one. Having said that, it's the commodities trading uh funds. It's the what we call the opposite of the commercials, the banks, and it's the public that are basically doing the naked. Not all of them, of course. So, the balance between the longs and the shorts have to meet. There's a winner for a loser. There's a zero sum game. The banks almost always win, but they're not as leveraged n uh nakedly as it is touted to be. And this is something that um I guess people just don't understand or want to believe that they want to make the banks the bad guys. I kind of do, but I also want to be as objectively true as possible and they are not nearly as leveraged as it's been out to be. In fact, if you go into the ComX, you look at the open interest and you look at the amount of silver that's on there, instead of 100 to one coverage. Last time I looked, it was six to one, not 100 to one. That was futures only. if we throw in options and I didn't do the math because I didn't really want to bother but it might be 10 to one. So this idea that there's now that doesn't account to be fair you know what's over in the LBMA which is outside of the system which there's you know there's forwards are called this is like futures and that's a paper contract so there's probably more than what I'm indicating but this idea that there's 100 to1 that kind of leverage is gone and it's been gone for some time I think the people that know the most which is pretty much the bullion banks know what the actual supply demands are and how stressed the markets are. And knowing that, are you going to go overboard in the leveraged uh arena? No, you're not. You're going to cut back and make sure that you're not going to be in trouble. >> Yeah. Yeah. Because if if commercial banks are net short as as the you know, the COT data often shows. I mean, that doesn't automatically mean manipulation. It can also mean they're hedging clients exposure, as you know. So, I mean, are the banks suppressing price? Are they simply facilitating flow? And and I guess the real question is if if a real physical squeeze develops, are the banks structurally vulnerable or or are they positioned to benefit because they control warehouse stocks and financing? >> Yeah. Well, I've been to get it on the record again. I've said from the get-go that you cannot control, you cannot manipulate the market for the long-term trend. I think that's pretty apparent. Within that trend, you can manage the price. When is the price managed? most often in what we used to call the aftermarket or the overseas market which now is a lot of power. it switched as we just discussed. But earlier on uh very light trading the banks would come in and throw massive amounts of paper, massive amounts of contracts and they push the price down and that would start the algorithms saying oh margin call and open up in New York and it would have a big follow through where you get a lot of downward pressure on the market and that's happened again and again and again. Uh now it's a little bit of a different story because >> the the physical demand is really dictating the market even though we had this big move in January and honestly I told you know publicly and privately on my premium service look I'm getting worried this is almost double parabolic and I don't care if it's soybean oil cattle futures or silver when it goes up that fast that high something's got to give. be prepared for a correction. And of course, we've got one and everyone yells, "Well, it's manipulation." Actually, it's normal market activities in the futures market. I defy anyone to prove me wrong on that. >> Yeah. Yeah. Yeah. Well, that brings us to the margins, our favorite topic. I mean, on the Western side, the CME recently shifted those margins to a percentage of notional value. I mean, it's I think it's roughly nine to to 15%. And as prices rise, margin requirements now rise automatically. I mean, does that act as a natural break on rallies? >> It does. And I'm, you know, again, people, oh, David's turn, you know, turn code or whatever. Again, I try to be objective. >> Yeah. >> So, the CME, the exchange is really the most responsible party and if they see problems in the market, you know, too much enthusiasm, let's say, they will increase margins and this is to protect everybody. Now, of course, every, you know, most of the silver people think, oh, they're doing it on purpose. I wrote on X that margins will be increased again and again and again until the market subsides until I might even said comes down or or peaks out, whatever. Yeah. >> Because that's the way it works. And they do that to protect everyone actually themselves, of course, because that's what they run. But it's not really as evil as people think. And so I want to do a real quick thought experiment with you, Jeremy. I thought about this my first cup of coffee this morning. You know what I've advocated for in the past and I still think might be the best. I'm not sure is a cash only market, just to digress slightly, the egg market and the milk market used to be in the futures markets. It doesn't exist, hasn't for decades, >> but they are both cash markets. We still go to the grocery store and buy milk and eggs. You could have a cash only market in silver. Now think about the margin thing. If my margin goes up from uh 10% to 20% to 30 to 40, what if I go to 100% margin? I'm now in a cash market. So, if you really think about it objectively, the harder the margins go up, the closer we're getting to a cash market, which gets rid of my favorite expression, who's who and who are the guys that are on very thin margin that are weak sisters that are going to get flushed out anyway and don't know what they're doing, never traded before or just aren't, you know, thinking through this market. So, the higher margin goes really, the more we're forcing a cashonly market. So, I wanted to get that into the record because it's an alternative way of thinking about it the way the mainstream silver bulls think about how the futures market works. So, I want to I just wanted to make that com I like your feedback on >> Yeah, that's interesting. Uh I've been thinking about that actually. I've been reading some things on it. I mean, you know, and we can compare it in in 2011 margin hikes triggered a 30% collapse. I mean, are exchanges kind of neutral risk managers because higher margins don't hit everyone equally as you know, David. I mean they hit the most leverage participants per typically funds and retail speculators retized. So when margins rise during a rally does that structurally favor the short side? >> It does because the banks have an advantage. Commercials put up 70% of the margin rather than 100% of the margin because they are purportedly owning the product to be like a farmer gets the commercials. Whoever it is, if it's wheat, it's a wheat farmer. They get an advantage because they don't exchange says, "Look, you've already got a lot of capital in the growing of wheat. Therefore, to hedge your position, you don't have to put up as much money because you can deliver against it." So, that's part of it. The other part is what you said, Jeremy, just repeat back that the the funds only have x amount of money. The banks have almost infinite money. So, when the funds are out of money, they have nothing left to do but sell. They can't do anything else. So when they start selling, the banks see the cells start mounting up. They see the book, they see the trades, the algorithms see it as well, and they get more selling. So once the funds start selling, the bank starts selling on top of it. All orders have to match. If there's all sells, who's going to match with the buy? Well, somebody's out there that said, "Geez, man, if I could only buy silver at 110 bucks because it's at 124, I missed the boat." Guess what? They get their wish. there's a gap between the 124 mark and 110. It didn't gap like that. But I'm trying to explain how the market actually functions >> and all of a sudden we're in this runaway waterfall decline where we came down what 30%. >> Yeah. >> And with that kind of a move of 70% in one month, we came down 30% one day. I'm not saying it's justified. I'm not saying they're right. What I'm saying is this is the market mechanism how the futures market trades. No more, no less. >> Yeah. Yeah. And I mean, if a real physical squeeze were building, margins going up shouldn't stop it. I mean, in 2011, margins went up five times. Price collapsed 30%. So, is margin policy just preventing squeezes? I mean, did did 2011 prove that silver was never structurally tight in the first place? >> I'd say pretty much. I want to digress into the palladium market because Ford Motor Company came into the palladium market early on. In fact, I was wrong with palladium at the time and Ford didn't know how tight the plating market was. So, they decided to switch from platinum, which is much more expensive, to palladium for Cadillac converters and made a huge order. So, what happened is the market took off and all of a sudden the margins went up if you were long or short. I was long thinking I could add to my position. No, no, my banker said, "Oh, no, you got to put up more margin both sides, longs and shorts." So, the market kept going up and up. You will not believe this, but you can verify it. At the top of the market, you had to put up double the cash price to keep your futures position, which is ridiculous. In other words, everyone was flushed out of their futures position and it became a cash only market. But it did not stop the price from going up up and up until it finally got up to the the ultimate high. So, I use that as an analogy for the same thing that could happen in the silver market. Does it mitigate it? It can, but when you got a demand that cannot be exceeded anything but physical and there's only so much metal to go around, the price is going to get to where it's going to get regardless of what the margins are. >> Yeah. Yeah. I was going to ask you that because if if if silver were forced into a cash only structure tomorrow, I mean, does price spike because supply is constrained or or does price drop because speculative capital exits? I mean, which one would happen first? >> That is a very good question. I'll have to be honest. I'm not sure. I would actually guess it would probably drop for a while and then we would see you know how much the Chinese are willing to pay how much India wants to for their ETFs and it's going to I would say it would probably drop initially I guess then it would level off for a while and then we would see what the true demand is and if we saw the true demand comes in on both sides which I believe it would meaning both industry and investment I think we get more of a steady climb and less of a radical move that we see from the leverage positions because it would be a cash and carry market. >> Yeah. All right. Let's talk about February 28th. I mean, for context, the silver or the Shanghai rather futures exchange require certain participants to demonstrate that their futures positions are tied to legitimate physical hedging activity. I mean, that means proof of physical business, not purely speculative exposure. Uh there's been discussion around the SHFE notice 20266 is what it is. Let's try saying that six times. And uh the enforcement of these hedging quotas. I mean explain the structure position limits there narrowly show narrow narrow sharply into delivery moving from roughly 9,000 lots down to 900. I mean compare that to the comix. Does Shanghai inherently restrict speculative exposure more aggressively? >> They are more aggressive than uh than the comx is. You know, the COMX has much more has a lot more paper flying around, let's say. But when you get in the first notice day and you get into deliveries, it drops off substantially. You see these huge numbers and people report, oh, all it has to happen is people stand for delivery and it's going to take down the comx. Well, the numbers add up. I won't argue the math. The problem is they don't understand how the market actually works because most of those are commercials and they hold their positions. they roll them over in the next delivery month and the game goes on and on and on. So, it doesn't have nearly as much meaning as some purportedly say it does. I mean, there's people out there that are pretty well recognized in the industry that will tell you, you know, when the next delivery month, the whole thing falls apart because there'll be a failure to failure to deliver. Now, could that happen? And the answer is yes, it could. But at this point in time, I don't see it happening. I think the real stress is what we keep talking about, and that is the Shanghai exchange. how much true demand there is and when or if it will subside. And there's less leverage there. So, because of that and what you just read where they're going to make sure there's less leverage than uh what we just saw where it was kind of outside the boundaries of what I thought their their limits already were. Uh anyway, it took place. It's done now. They're tightening up the rule book, let's say. And I think we're going to get a much more orderly market. I mean, you really don't want any commodity to be overly stressed as far as leverage, and silver is the king of kings. It's got more leverage in it than any other futures market that exists by far. And that's why you see these huge moves that you don't see in some of the other commodities. >> Yeah. Yeah. I mean, what going back to the Comx here, I mean, at what point does Comx actually feel the pressure? I mean, is it is it when open interest exceeds registered inventory by a certain ratio? Is it when delivery requests spike? I mean, because without it, stress is just narrative. >> Well said. Yeah. It's when they know that they have to deliver outside the exchange, that's when they get stressed. If they're just playing musical chairs and swapping chairs between each other, they don't really care. But if it's somebody, oh my goodness, we got this much of an offload and the trucks are backing up in New York and they're taking it across town to the port and they're shipping it out. Nah, that's what worries them. >> Um, you said it, not me. You're right there. Uh uh back on the Shanghai side, David, I mean, if enforcement tightens on February 28th, what happens to an oversized short position on March 1st? I in 2011, I mean, rules tighten causes liquidation. It didn't cause a squeeze. Why wouldn't this produce similar downward pressure? >> I think it would. I mean, but markets look ahead, as we both know. I mean, the stock market sees into the future. So does the metals markets. Gold is the best barometer out there for the general world economy in my view. And I've studied this market for a long time. So I think that'll kind of find its way before we actually get to March 1st. But yeah, it's more downward pressure. I mean, most of the public goes long. Most of the trading funds, the CMTs, the, you know, you put your money into an account for the futures broker to trade for you. Those funds are limited on cash, like I said earlier. So they've only got so much devoted to silver, which pales in comparison to what they have in oil and gold. So, it's really a thin market. So, it will weed it out. And again, I would love to see the position, excuse me, Jeremy, I would love to see the position limits upheld in the ComX. Really, they're supposed to be mitigation of that just like what Shanghai is doing in the ComX. You aren't supposed to have these extremely large positions that are backed by nothing more than a piece. But yet, the exchange seems to look the other way. >> Yeah. Yeah. And I mean, you know, for the people that are just watching at home and they've been watching this AI guy and everything else, I mean, let's get to the bottom line for that for that viewer. I mean, if if March 1st arrives and the world hasn't changed, does the regulatory squeeze kind of thesis lose all credibility? >> I don't think so. I think it um because the real participants are professionals. I mean, yes, there's a lot of silver stackers and there's industry that needs it and the industry doesn't really I mean, they care about the price, but these days they care more about ounces. You know, how many ounces do I need over the next two years to keep Sam Samsung viable? How much does Tesla need over the next two years to run all the, you know, manufacturing that Tesla does with silver? So I think they're more concerned about what is the flow rate, what is the amount of silver that's actually readily available physically rather than, you know, how far is the market moving or what are the rules. Having said that, I think it will tone down the market, maybe calm it down. I still expect higher prices. I don't think the top is in. I think we're in the the final phase. I've talked about 90% of the move coming the last 10% of the time. We are there. How much longer do we have to go? I don't think very long. I think we could see the ultimate peak in gold and silver in the next year or two. Uh there's many that disagree with me and that's fine and I'm not saying I'm right. I'm saying how markets move, what I've studied and what I think. >> I wanted to ask you what at what prices does that start to matter because no industrial buyer is completely price insensitive and we're seeing these huge prices. I mean once it went over a 100, are we talking about short-term procurement at any cost or do you think long-term contracts where price absolute, you know, matters? Well, it always matters at some point. As you said, for a lot of applications, it's inconsequential. It's already hitting the solar industry. I just did my mastermind with Mike Dorenzo yesterday >> and he said that on the rule of thumb, the general market is silver's 40% of the solar panels now. Well, that's significant. So, they're looking for alternatives, copper, graphine, or maybe, you know, making mitigations. There really aren't any substitutions now. But the point is, yeah, I think it will. The markets really are efficient over time. They're inefficient at times. That's why we invest. This is undervalued. I'm going to buy it. Oh, it's overvalued. I'm going to sell it. But right now, the efficiency in the silver market remains to be determined. But as we get more and more toward a cashonly market, which I don't think we'll ever go to and I'm not sure it's the best, I think we do need to be able to hedge. When we get, let's say, the rules in place that it's more realistic as far as how much can be hedged versus how much is produced. We're getting into that kind of balance, I think you're going to see a much more stable market and I think you're going to see less, you know, violence, but I think we're going to be quite violent. So, last comment on your question. I'm looking for the gold silver ratio. That's really the only way to not the only but one of the best ways to determine silver being overvalued or undervalued. If we get to a 30 to1 gold silver ratio, which is roughly double where we are now, meaning silver's outperforming gold 2:1 from this point forward, I'd start looking at taking some profits off the table. Could it get beyond that? Yes. Could it get to the classic or monetary ratio of 15 16 to1? It could. Could it go below that? Yes. But I don't think it's going to go much below 30 to1. But time will tell. But that's when I know that the physical market or the market silver market is at a level that we should really consider uh enough's enough and taking at least partial profits. >> Yeah, that's interesting. Uh because you know the ratio compresses late in precious metals bull cycles historically. I mean if if we're in that phase, what do you kind of look at? Well, the acceleration we talked about a couple times and also you know if there's congestion in the physical side will keep the market moving higher which we are seeing. So that's why I remain bullish and I still think the top isn't in but there could be a time where you know the industry is satisfied. They've got two years supply in the warehouse. Oh graphine can work in solar panels now and it is economic to do so. I mean those possibilities do exist. I mean, no market grows to the moon, even the silver market. So, you want to be a little bit careful. You want to be a little circumspect that this is a market to, you know, hedge the fiat currency fiasco and everything else that I've taught for the last 40 years, but it doesn't mean that the market won't change at some point. So, you have to be aware of that. >> Yeah. Yeah. I mean, is the ratio now, I guess, a timing tool or or do you think it's just a long-term rebalancing guide? because you know most people misuse it. >> Well, I use it and I think it's very useful if you look at the extremes. When I wrote the January issue last year, gold had already made a substantial move, but silver and platinum hadn't moved. I said, "If you're a new member, please buy silver or platinum or both. If you're a long-term subscriber, consider swapping some gold for platinum." And once uh ink dried on that issue, platinum and silver both took off and both outperformed gold uh year-over-year, which was surprising because gold had already made a huge move. And I just felt the best value was in those two metals. And just to comment on it a little bit further, using the ratios and how they work for you. If you do a silver platinum ratio, which hardly anyone looks at, I'm one of the balls it does, you will see that silver platinum ratio, silver is at a platinum is at a 25 year low relative to what it costs in terms of silver. So if you wanted to swap your silver for platinum, you're buying it at a 25-y year low, moving your silver into platinum. That's something to think about. That's huge. Huge. Um, okay. Well, I don't know if you ever watched, but we had Phil Baker on the show over at VRIC just a couple of weeks ago. I mean, he used to be the CEO of Heeka, and we had him on a couple of times, and I think about 6 months ago, he started to text me and he said, "Jeremy, I'm seeing something crazy happening in India. I mean, they just now, I mean, I saw the story this morning. They reportedly added 40 million ounces into ETFs in two months. I mean, it's that's meaningful relative to annual mine supply." Um, does ETF accumulation remove metal from tradable float permanently or or is it reversible? >> It's reversible, but it certainly has an effect. Yeah, Phil and I are friends. Go back a long time on my China trip. I brought him back a Chinese. It wasn't pure silver uh Ming dog, but I'm off track here. No, it's investment in silver is kind of a staple in India and it was that way and it still is. uh but as India got more and more wealthy uh they moved to gold. I mean they seems that the population prefers gold over silver but they still like silver. Now that it's become more and more wealthy, you're seeing ETFs deployed in India as you just said, which means the more and more ability to invest in silver without having to buy a silver bracelet, you know, down the road type of thing and really be able to participate in, let's say, substantive amounts outside the physical realm. Of course, the ETFs are backed by physical. Point being I think that I think that we have a double whammy meaning the industry's got a place where they are not satisfied with the amount of silver they hold in reserve and investors have more apt more ability to buy silver in size worldwide than ever before. >> Yeah I guess India's as you mentioned a little bit there David I mean it's pretty price sensitive. uh if silver stabilizes at these levels, won't we see scrap supply kind of increase and in Indian demand cool quickly or do you think that this is the new norm? >> I asked that of Mike Dorenzo yesterday in the mastermind and he said that he felt that the silver institute is saying yes there will be an increase in uh in recycling for certain. He didn't give me a number. I think he might have given me I'm going to say it. I may be wrong. I think he said 7%. uh you know there's like 140 million ounces I've got my numbers right per year that's recycled a lot more can be recycled it's not economic but in some places they do it anyway for environmental reason or otherwise so I do think that that's one as far as uh mitigating the price there was a price in I think it was 2020 or 2021 and there was a huge demand for silver and yet the price was falling off or stable And I thought, God, how's this happening? And I realized that in rupees, silver was at an all-time high. It was like this is it. It was the hunt days for them in that currency and it was massive selling that was able to balance the physical need that the market demanded. So the currency thing does play a role in how the silver market moves. >> Yeah. Speaking of the currency, I mean, we can get into the macro a bit because it is KCO news. got to I mean um I don't know how much of it you pay attention to but the BLS the Bureau of Labor Statistics released the final benchmark revisions this morning they confirmed that payrolls for the year were revised down you know significantly and at the same time we saw new job numbers come out that were exciting um you know the US debt exceeds 37 trillion right now I mean I guess the question is is is at what point does fiscal structure outweigh short-term macro noise and metal pricing >> I think Eventually, you know, the truth wins. In other words, the physical demand that's required has to be met and the price will be determined under those conditions. And going back to what you just said, I mean, the birth death model is incorrect. They admit it. The numbers coming out of the government are not believed by most. Of course, the mainstream banks and brokerage houses use them. Whether they believe them or not, we'll never know because they have to act as if they are, you know, correct. Certainly they quote them and they are somewhat valuable but nonetheless I think if you go behind the scenes and you know look behind the curtain you're going to find that a lot of the information that we're getting is skewed toward the inflationary bias that all governments have because they want to depreciate the currency so they can pay back the debt with cheaper dollars. Mhm. It did it surprise you? I mean, these latest swings, you've been doing this a lot, type, David. I mean, when you see gold shooting up past 5,55, we saw silver do that little top heavy dance. I mean, how fast that went. Did it surprise you this year? >> So, well, f first of all, yeah, 2025 surprised me. I mean, I did call like I said, hey, it's time to get in the silver if you're not. >> But the 140%, yeah, that surprised me. January definitely surprised me. I went, "Oh, I wasn't all that happy." Even though, you know, my personal portfolio is looking pretty good day by day. But I go, "This can't last forever." And if this thing goes all the way up to 200, for example, that could be uh didn't it it stalled out at 124 or something like that. So, I think we need to, you know, take a deep breath and let the markets work the way they're supposed to. And I kind of missed your question. You want to give it to me again? Sorry, Joe. >> Well, I I'll give it to you in a different I mean there's this strong narrative that AI and solar demand will overwhelm supply right I mean at the same time engineering innovation reduces silver content per unit almost every single year you pay attention to this is industrial demand compounding or or you know does that that high price accelerate substitution and kind of cap that long-term upside >> yeah I think it will I mean everyone's a big believer in technology I am as well I don't think it's a panacea it's going to solve all our problem >> we go back to my predecessor about he predicted silver to be $200 an ounce in 1990 or mid90s. He wrote the last book around 1980 and his basics were right because at that time we're only mining 350 million ounces of silver on an annual basis and had been that way for 60 years. So we had 60 years of data. But once the ink dried on that last book where he made that wild prediction because silver was I forget which was the teens I think that there was a new technology and a new technology brought more silver and gold to the surface economically and we started increasing production like crazy. So his supply demand was off. The supply increased dramatically. Will that happen in the silver market? I doubt it. There aren't that many big viable projects in silver. I know a few. I write about them, but I think it could be substitution of some type. I mean, the graphine thing has been talked about. Again, I talked to the silver institute. Mike said that um you know, it's a ways off, but you know, markets are pretty efficient in in the long run. And if you need to substitute silver for solar, uh and you can wrap um copper with another element, I don't know. uh and it's cost less. Don't do it. I mean things get uh better and better over time generally speaking. I'm not talking about societal moral structure. I'm talking about efficiencies in the market stuff marketplace stuff we buy. >> I got to get your take on uh platinum. I mean it's a much smaller more industrial concentrated market than silver. I mean if we're truly entering that broad physicals market squeeze, shouldn't platinum be leading? I mean, given its tighter base and automotive dependence, I guess >> it could. It's a much smaller market. It's the noble metal. It's 15 times rarer than gold and it's supplied 70% out of South Africa, which has political problems and energy problems. So, I'm very bullish on it. And I do think if this hydrogen economy takes off, which isn't talked about much, but we've been looking at it here at the Morgan Report for some time, I think it is an alternative that may come into the four. Remember, hydrogen is the most abundant element in the universe. And if we could harness it efficiently where we could use it as an energy source, uh sky's is the limit and platinum plays into that uh narrative. So, I really like it. It isn't for everybody. I would caution the in and out on platinum is tough. I mean, the ETFs is probably one of the better ways to play it. If you want to be in the physical realm, you're going to pay a penalty. You're going to pay a high premium buying and you're going to take a discount selling. So, you want to keep that in mind. But if you're loaded up on gold and silver and you love the metals, I would take a look at that. >> Yeah. And if you're looking ahead at the rest of the year, which I know you do, I mean, the strongest signals we're watching are real verifiable data points. You know, the duration of the Shanghai premium movements in registered versus eligible flows into physical and out of ETFs. Uh talk to me a little bit about what you're watching closely and give me your outlook for uh for gold and silver this year. when looking at, you know, these rule changes in in the Chinese market. I made friends with uh Eric Young, who seems to have a very good handle on what's going on in China, >> who lives in Hong Kong, and I've interviewed him personally once or twice. I listen to most of his interviews. Uh I also think that there will be some changes in in the COMX. That's a gut feeling. I have an inside information. Uh, but I have a feeling that these position limits that do exist may start to be enforced, especially with China taking the lead. I think there may be something and exchange itself is going to say, "Wait a minute, boys." You know, we've been kind of um turning our heads on this, you know, this part of the contract or the limits and maybe we should reinvest, you know, relook at that. So, we'll have to see. I would like to see a more orderly market, but that's not what the metals pretend. Metals portend at the end of the great inflations violent moves to catch up with the misallocation of capital and the happy spending that the governments have done worldwide and they pay a catch-up mode and that usually happens in a big hurry and that's what we're witnessing now >> and I mean you know you and I you and I were chatting a little bit about this there's a lot of rumor speculation there's headline fear out there right now especially on social media but rumors don't move markets verif ified data does what you and I try and watch. So, I mean, what's your tips for people that are laid on this train? They haven't been covering these markets for years. They've just jumped on. I mean, where do you what's your advice for those that just there's so much out there? >> It's a tough one. You know, I don't like to see people lose money, but I really think if we do go into a hyperinflationary blowoff, which I doubt, but a deflationary spell that really worries people, I think everyone needs some metal. And how much is enough? And the answer is it varies from person to person. But you don't need to be overly exposed. That's for sure. So, I mean, if you're not exposed to the metals, you can do it. And I think physical is the best way to do it. And in that case, maybe what you're taught by a certified financial planner. Well, what do you need when you're starting out or even when you're middle-aged? The suggestion is like, you know, two or three months worth of uh pure cash in the bank. Well, pure cash in the bank to me is physical gold and silver. So, if your expense rate is 4,000 a month, three months is 12 grand. 12 grand in silver and gold, that's probably enough for almost everybody. And if there's a crisis, then that value of that might stay at 12,000 price-wise, but the value may actually go up. In other words, if the housing markets cut in half and the stock market's cut in half, even though gold and silver prices remain constant, I'm not saying they would, but as a thought experiment, then you've actually doubled your value because you could buy twice the amount of housing or twice the amount of >> whatever. So, I would go into that. And what I think is so interesting, Jeremy, is this. People that used to make fun of people like me are now in the mainstream talking about the basement trade. Well, that's why you're in this trade from the beginning. And I use that word 25 years ago. But secondly, and more importantly, there's giving suggestions of like a 60 2020 20 portfolio. Are you kidding me? I've recommended 10 maybe, you know, 20 at the most. But stalwart saying, you know, 60% bonds, 20% stocks, and 20% gold from, you know, notables on Wall Street. And that's very interesting to me because the institutions start, you know, following in the gold. And I believe that they will, then I don't think, you know, again, the top is in. I think we could see, you know, this 5,000 may be a pit stop on the way to 10,000. I don't know. But there's a lot of demand for gold as this debatement debasement trade gets near the end. Which means trust in the overall system degrades to a point where people just don't know what to do with their money and they don't want to put it in the dollars. They don't want to put it into treasuries shortterm, medium-term, or long-term. And when the trust gets to that level, and hopefully it won't, but if it does, we'll probably have a new paradigm. >> Yeah. Yeah. Yeah. I mean, we've been talking about trust, trust, trust. that was the the common theme and people are losing it that debasement trade. I mean we got uh CNBC, all these other mainstream media talking about it which we've been talking about for years. I mean are we in the early phase of a structural shift here or are we in another volatility cycle that looks dramatic but maybe resolves conventionally? It feels like this is different. >> I think it's the former. I think we're at the end of the end as Rafie Farber calls it the end game. I think we're at the point where we either reset the currency or start a new system or a combination thereof. I really believe that's where we're heading. Now, a lot of talk about the CBDC and the stable coin. And the stable coin is really a certificous way for a huge demand to come into the US dollar debt markets. I just outlined that may fail or fail lean. If there's a demand for a stable coin, then it's based on a very unstable thing called the US dollar. It's obviously an oxymoron, but nonetheless, if there's a huge demand for treasuries to make the stable coin quote unquote stable, then we have a demand there and we have a new let's say window dressing on an entity, the US dollar that's never that's a new method and from that maybe make a digital currency. uh do a cash wipeout, cashless society with a digital only paradigm direct with a banking institution or maybe an Amazon coin. I don't know. But I think that's the direction we're heading. I think that's what the bankers want. And I think that that move needs to be accomplished by them prior to an all-ight called crackup boom on the Mises the Austrian school where people just say I'll buy anything except dollars because I don't trust them. I don't think we're going to get to that point, but I think there'll be some that will be thinking that way before the new system is put into place. >> Yeah. Yeah. System sounds a lot like control there, David. I mean, uh, final question because I mean, we've been chatting for a little bit here. I got to ask you, I mean, if you're new to this space and we got a lot of investors, I mean, since this run, we've had a lot of eyeballs. I mean, what are what are the top, you know, few things that you're going to be watching over the next six months that could really represent the silver market? What are your advice to those new investors? Well, I'm going to be looking for what I talked to Mike Dorenzo on the solar institute yesterday. I'm going to see if there's a big increase or a notable increase in recycling. I'm going to look at sentiment. I think a lot of it's been punched out in this January pullback. I'm going to look for how quickly we go um up to 100 again. So, if it's a matter of uh stabilizing around a trading range of say 85 to 75 for a matter of three weeks and then, you know, a month and a half from now, we're back up near the high 90s. That just proves how much physical demand there is and how strong this market is. And that's kind of what I expect. I don't expect another six months worth of trading range. I think there will be one, but I don't think it's going to be very long. So, we really are in the final phase from everything I've learned over the last 40 years of studying markets. That's markets, not just the metals markets. And this means that if you're not on board now, don't be afraid, but don't overdo it. You don't need a lot of, you know, gold gold exposure to have a hedge. Uh, again, it's something that we really don't want to need, you know, want to have to use in a way. I mean, if you want to look at it from an investment and an insurance policy methodology, that's fine. You can do both. But if you just look purely at, you know, an insurance position against whatever else you own, real estate, stocks, bonds, what have you, then I think a modest position is fine. And no one cries about paying their fire insurance on their house every year because their house didn't burn down. You know, it's a price you pay for stability and insurance that, you know, if something really goes wrong, you're covered. And I think that's the way to approach the market at this point in time for most people. >> All right, great advice. Uh there's a sustained premium in Shanghai, a measurable ETF accumulation in India. There's a margin driven volatility as we just talked about in the Western futures. What a time. Uh what a time, huh? >> Unbelievable. You know, I'm glad I got to see it. I mean, a lot of my peers and some that work for me are no longer here to see that $100 silver >> and I said I would throw a party in uh $100 silver and I plan to follow through on that. >> All right, David Morgan, appreciate it. Of course, you can check out his full report. We'll put a link inside of our description. Uh thanks for breaking down the noise today, David. I appreciate you with this no matter where uh we're going to get some some feedback or not. >> Okay, very good. >> All right, appreciate it. Thanks, David. All right, to stay updated as the data breaks, make sure you subscribe to Kitco News YouTube channel and hit that notification bell for Kitco News. I'm Jeremy Saffron. We're going to have some great content coming up this week. Stay tuned. Heat. Heat.
Silver’s Final Phase: Why $100 Was Only the Beginning | David Morgan
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Transcript
Welcome back. I'm Jeremy Saffron. All right, today is not a price show. This is a market structure show. The plumbing, the rules, the bottlenecks because something has been happening in silver that keeps showing up week after week. As Shanghai has been trading at sustained premium to Western benchmarks. Now, if silver were one global frictionless market, that spread would close fast. Arbitrage would do its job. Metals would move. The the gap would compress. But this this one hasn't behaved like a normal clean arbitrage. That does not automatically mean a shortage. It does not automatically mean the comx is finished. And it does not automatically mean China is about to reset the world. Now China is not transparent. Market data can be delayed. Inventories can move off exchange. Policies can matter more than economics. So our job is to separate a policy premium from the real physical tightness. Joining me is David Morgan, publisher of the Morgan Report. David is the author of the silver manifesto and has tracked these markets for decades from the Hunt brothers to the ETFled markets that you're seeing now. David, good to have you back. Thanks for joining us. >> Well, thank you Jeremy. It's good to be here. >> Well, let's get to I mean I don't want it to be fact and fiction because you know again some of this data is a little bit reclusive but it comes at us very quickly as you know and as of today you know we talk about the Shanghai silver benchmark. It's fixing at around uh $82.60 60 cents an ounce, roughly $10 above the western spot price. I guess first, you know, explain why that adjustment isn't happening automatically. Is it is it VA that is it capital controls or does it suggest localized strain? >> Well, it's really all three. First of all, it's localized strain. Obviously, we willing to pay more than the benchmark price, you know, in New York. Uh it's going to bring flow over to China. But what are the problems? It's, you know, loading it up, inventorying it, shipping it across, and I've gotten different numbers on how much per ounce that costs, so I won't give you a bad number because I don't know what it is. Uh, but it's worth the $10 spread. However, it's really not happening that much. It is moving in the China. There's little doubt about that. But the spread hasn't closed, as you said, Jeremy. So, >> something's up. I think over time it will narrow and I think we'll probably get into a situation where the price in London, the price in New York and the price of Shanghai is pretty much the same. >> Yeah. Yeah. And let's elevate this. I mean, if it if this were a broader monetary shift in pricing power from west to east, wouldn't we expect the same structure premium and gold, why is silver showing a level of tension that, you know, gold is not? >> I think the main thing is, you know, how these three markets are set up. You've got the COMX which is really sets the price by a derivatives market. You've got the LBMA which is an exchange. It's an association and it's kind of a good boys club that kind of move metal around as necessary and that does uh supply the physical side. And then you've got Shanghai which is basically set up for industrial users of silver. So that's sort of where the rubber meets the road. It certainly it is a futures market but not to the extent that London and uh New York are which means a lot of that silver that's in inventory or on exchange is going to be taken by somebody for purposes of either investment or industry. >> Yeah. Yeah. And I mean at what point does does the diagnosis change? I mean when does regional friction officially become a structural fracture? You know is it duration? Is it is it just the size of spread? I'm going to jump a little bit ahead on that, Jeremy. So, what I'd like to do is just kind of set a little bit of a foundation. So, yeah, what we have seen for decades in silver is that the comet sects the price and that does set the physical price. And as long as there's enough physical to meet demand at that price, then everything's good. And once in a while, we would see it slip away. And usually for a matter of three days, you'd see a big backwardation. It lasts for a couple days and then all of a sudden there'd be enough silver to fill that gap. Everyone's satisfied. The people that had to have silver that day got it and things go back to normal. This time it's different. What's different? Well, what's different this time is that China is using this big demand for physical metal is in the arena of the Comx, meaning it's commercial 10,000 ounce bars. So even though the retail market can have an effect, it's a flea on a dog relative to the tail dog. So once the industrial needs were not met, you saw that the physical market took over the silver price and that has happened as I said very sporadically in the past. This time it was the real deal and we saw something that we haven't seen in a long time. We saw the silver price in 2025 go up 140%. We haven't seen those kind of years in a long time. >> Secondly, we saw what happened in January as the price went up 70% in one month. Now, I am not here to be an apologist for the bankers. Anyone that's listening to me for more than five minutes knows my thoughts about that. However, it is a derivatives market even in China. The market did get ahead of itself and it was overextended and the paper price or the paper paradigm took over. So temporarily, even though the physical thousand ounce bar market had had basically taken control for weeks, perhaps months and everybody's kind of cheering that understood what was really happening. It didn't negate what was going on the futures exchanges around the world. And again, they got ahead of themselves. There's lots of talk about what happened about a huge Chinese short. I think part of that's true. I haven't been able to verify it, but a good friend at the hedge funds banner verified it to me. So that brought things back into reality. So that is now where we are. So now we're in a struggle between who's going to win from this point and it could go back and forth a couple more times. Is it the paper pushes or is it the physical demand? >> Yeah. Yeah. Well said. And I guess on that China I mean for viewers let's clarify the exchanges because the Shanghai gold exchange handles physical flow while the Shanghai futures exchange handles those contracts. when the SGD reports a 43ton ton weekly draw down. I mean, what physically happens? >> Yeah. Well, if you're in that, if you're in line for silver there and you see at the these very lows that we're experiencing right now, as you just said, you get a little bit nervous. It's like, look, I need it or I want it and I've got to have it, you know, now or very soon. And so, you're going to do what you need, which means again, bid up the price. It'll be that arbitrage opportunity. you're going to get it from wherever you can. And of course, I don't want to jump the gun here on, you know, companies that have gone out and actually made deals with with mining concerns to secure supply, but it does tighten the market and it does basically switch the switch again where wait a minute, you know, the physical market is taking control over whatever the paper price is. >> Yeah. Yeah. And I mean, is is the metal leaving the system or is it just being reclassified internally? I mean, we've seen 40 ton draw downs before. How many consecutive weeks would we need to see before calling this a tightening trend instead of a, you know, a normal vault rotation? What what kind of specific metric confirms stress to you? >> That is a very good question and that's the one of the things I think that's most understood in the market. >> Yeah, >> everyone talks about deliveries and the drain of the COMX. Well, the COMX actually today I I haven't looked in the last week, but as of a week ago, the start of 2025 had x amount of silver in the vaults and comx. January 2026, a year later, there were 100 million ounces more in the ComX than there was the previous year. Now, a lot of that was steady eddy. it just stayed level and uh then it increased with all the metal coming from the LBMA over to the COMX. Then we got in that switcheroo as you recall and metal left comx back over to London. So right now what happens on these deliveries most of the time is it's what I call retagging. HSBC sells to JPM. The metal stays on the floor in the vault on the pallets and the tag that owns it changes. one comes off and another one comes on, it does not move. That isn't to say that the ComX doesn't have metal that leaves exchange. It does. But to answer your question, well, where is that stress? You really have to look at what the inventory is in the registered category primarily on the COMX, which right now is much much above where it's been in the past for a low around 30 million ounces. That was like the lowest I've seen in a long time. It stayed there. It's well above that now. And then on the Chinese market, it's hard to get data, although I am on their website to see exactly where that stretch is. Actually, I hate to use the cop, but I have to see more data, but I kind of need to know. We do know it's at a low. We do know that there's a huge drain. And I would just make an educated guess, Jeremy, that it's stressed right now. And if it goes any lower, there'll be more stress. That's the best I could tell you. >> Yeah. Yeah. Yeah. Well, you always try to find that a data, too, David. So, I hear you on that front. And and when you say Comx has plenty of asses, I mean, are we talking total inventory or registered inventory that's actual available for delivery? I mean, break down the difference for viewers because eligible metal isn't the same as deliverable metal. >> Registered is what the dealers have that has the medallion, the tag on it that says it could ship out for delivery. eligible, meets all the requirements, but the whoever owns it must make a commitment and sign a document basically that says, "I want to turn this metal to a sales position." And a lot of people think that the eligible is held by the bank. Some of it is, but most of it's held by long-term investors that are silver bulls and believes the price is going higher. So, the eligible is a separate category. You cannot count as readily available silver, and I don't. But still the registered amount is there and I'd like to veer off but I want you to lead but you know what happens on these margin increases because I think that's also um yeah >> something that people don't really understand but I'll give it back to you. I don't want to I want to be interviewed by you. >> Well I had I I got one followup before we get into the comx and the margin structure because it is important. It is changing but you know I just wanted to ask you where do I mean I get hit with on X on comments all the time whenever we cover silver as you do. Uh where do banks actually sit in this structure? Are they market movers or market makers rather providing liquidity or are they directional traders with large concentrated positions? I mean spell out their functional role in comx price discovery. >> Well, people are going to hate me and you know again I'm not a lover of the bullion banks banking system at large. Just keep that on the record. >> But banks do not like risk. So a lot of this idea that the banks are massively naked short just is not true. The banks, the bullion banks basically control the market. How do they control it? Through physical metal that they leverage in the futures exchange and is every one of it covered and not naked? No. No, they are naked short. However, not to the level that people believe or are taught or told over and over again. Most of that metal has, you know, some some backing to it. Again, it's not a one to one. Having said that, it's the commodities trading uh funds. It's the what we call the opposite of the commercials, the banks, and it's the public that are basically doing the naked. Not all of them, of course. So, the balance between the longs and the shorts have to meet. There's a winner for a loser. There's a zero sum game. The banks almost always win, but they're not as leveraged n uh nakedly as it is touted to be. And this is something that um I guess people just don't understand or want to believe that they want to make the banks the bad guys. I kind of do, but I also want to be as objectively true as possible and they are not nearly as leveraged as it's been out to be. In fact, if you go into the ComX, you look at the open interest and you look at the amount of silver that's on there, instead of 100 to one coverage. Last time I looked, it was six to one, not 100 to one. That was futures only. if we throw in options and I didn't do the math because I didn't really want to bother but it might be 10 to one. So this idea that there's now that doesn't account to be fair you know what's over in the LBMA which is outside of the system which there's you know there's forwards are called this is like futures and that's a paper contract so there's probably more than what I'm indicating but this idea that there's 100 to1 that kind of leverage is gone and it's been gone for some time I think the people that know the most which is pretty much the bullion banks know what the actual supply demands are and how stressed the markets are. And knowing that, are you going to go overboard in the leveraged uh arena? No, you're not. You're going to cut back and make sure that you're not going to be in trouble. >> Yeah. Yeah. Because if if commercial banks are net short as as the you know, the COT data often shows. I mean, that doesn't automatically mean manipulation. It can also mean they're hedging clients exposure, as you know. So, I mean, are the banks suppressing price? Are they simply facilitating flow? And and I guess the real question is if if a real physical squeeze develops, are the banks structurally vulnerable or or are they positioned to benefit because they control warehouse stocks and financing? >> Yeah. Well, I've been to get it on the record again. I've said from the get-go that you cannot control, you cannot manipulate the market for the long-term trend. I think that's pretty apparent. Within that trend, you can manage the price. When is the price managed? most often in what we used to call the aftermarket or the overseas market which now is a lot of power. it switched as we just discussed. But earlier on uh very light trading the banks would come in and throw massive amounts of paper, massive amounts of contracts and they push the price down and that would start the algorithms saying oh margin call and open up in New York and it would have a big follow through where you get a lot of downward pressure on the market and that's happened again and again and again. Uh now it's a little bit of a different story because >> the the physical demand is really dictating the market even though we had this big move in January and honestly I told you know publicly and privately on my premium service look I'm getting worried this is almost double parabolic and I don't care if it's soybean oil cattle futures or silver when it goes up that fast that high something's got to give. be prepared for a correction. And of course, we've got one and everyone yells, "Well, it's manipulation." Actually, it's normal market activities in the futures market. I defy anyone to prove me wrong on that. >> Yeah. Yeah. Yeah. Well, that brings us to the margins, our favorite topic. I mean, on the Western side, the CME recently shifted those margins to a percentage of notional value. I mean, it's I think it's roughly nine to to 15%. And as prices rise, margin requirements now rise automatically. I mean, does that act as a natural break on rallies? >> It does. And I'm, you know, again, people, oh, David's turn, you know, turn code or whatever. Again, I try to be objective. >> Yeah. >> So, the CME, the exchange is really the most responsible party and if they see problems in the market, you know, too much enthusiasm, let's say, they will increase margins and this is to protect everybody. Now, of course, every, you know, most of the silver people think, oh, they're doing it on purpose. I wrote on X that margins will be increased again and again and again until the market subsides until I might even said comes down or or peaks out, whatever. Yeah. >> Because that's the way it works. And they do that to protect everyone actually themselves, of course, because that's what they run. But it's not really as evil as people think. And so I want to do a real quick thought experiment with you, Jeremy. I thought about this my first cup of coffee this morning. You know what I've advocated for in the past and I still think might be the best. I'm not sure is a cash only market, just to digress slightly, the egg market and the milk market used to be in the futures markets. It doesn't exist, hasn't for decades, >> but they are both cash markets. We still go to the grocery store and buy milk and eggs. You could have a cash only market in silver. Now think about the margin thing. If my margin goes up from uh 10% to 20% to 30 to 40, what if I go to 100% margin? I'm now in a cash market. So, if you really think about it objectively, the harder the margins go up, the closer we're getting to a cash market, which gets rid of my favorite expression, who's who and who are the guys that are on very thin margin that are weak sisters that are going to get flushed out anyway and don't know what they're doing, never traded before or just aren't, you know, thinking through this market. So, the higher margin goes really, the more we're forcing a cashonly market. So, I wanted to get that into the record because it's an alternative way of thinking about it the way the mainstream silver bulls think about how the futures market works. So, I want to I just wanted to make that com I like your feedback on >> Yeah, that's interesting. Uh I've been thinking about that actually. I've been reading some things on it. I mean, you know, and we can compare it in in 2011 margin hikes triggered a 30% collapse. I mean, are exchanges kind of neutral risk managers because higher margins don't hit everyone equally as you know, David. I mean they hit the most leverage participants per typically funds and retail speculators retized. So when margins rise during a rally does that structurally favor the short side? >> It does because the banks have an advantage. Commercials put up 70% of the margin rather than 100% of the margin because they are purportedly owning the product to be like a farmer gets the commercials. Whoever it is, if it's wheat, it's a wheat farmer. They get an advantage because they don't exchange says, "Look, you've already got a lot of capital in the growing of wheat. Therefore, to hedge your position, you don't have to put up as much money because you can deliver against it." So, that's part of it. The other part is what you said, Jeremy, just repeat back that the the funds only have x amount of money. The banks have almost infinite money. So, when the funds are out of money, they have nothing left to do but sell. They can't do anything else. So when they start selling, the banks see the cells start mounting up. They see the book, they see the trades, the algorithms see it as well, and they get more selling. So once the funds start selling, the bank starts selling on top of it. All orders have to match. If there's all sells, who's going to match with the buy? Well, somebody's out there that said, "Geez, man, if I could only buy silver at 110 bucks because it's at 124, I missed the boat." Guess what? They get their wish. there's a gap between the 124 mark and 110. It didn't gap like that. But I'm trying to explain how the market actually functions >> and all of a sudden we're in this runaway waterfall decline where we came down what 30%. >> Yeah. >> And with that kind of a move of 70% in one month, we came down 30% one day. I'm not saying it's justified. I'm not saying they're right. What I'm saying is this is the market mechanism how the futures market trades. No more, no less. >> Yeah. Yeah. And I mean, if a real physical squeeze were building, margins going up shouldn't stop it. I mean, in 2011, margins went up five times. Price collapsed 30%. So, is margin policy just preventing squeezes? I mean, did did 2011 prove that silver was never structurally tight in the first place? >> I'd say pretty much. I want to digress into the palladium market because Ford Motor Company came into the palladium market early on. In fact, I was wrong with palladium at the time and Ford didn't know how tight the plating market was. So, they decided to switch from platinum, which is much more expensive, to palladium for Cadillac converters and made a huge order. So, what happened is the market took off and all of a sudden the margins went up if you were long or short. I was long thinking I could add to my position. No, no, my banker said, "Oh, no, you got to put up more margin both sides, longs and shorts." So, the market kept going up and up. You will not believe this, but you can verify it. At the top of the market, you had to put up double the cash price to keep your futures position, which is ridiculous. In other words, everyone was flushed out of their futures position and it became a cash only market. But it did not stop the price from going up up and up until it finally got up to the the ultimate high. So, I use that as an analogy for the same thing that could happen in the silver market. Does it mitigate it? It can, but when you got a demand that cannot be exceeded anything but physical and there's only so much metal to go around, the price is going to get to where it's going to get regardless of what the margins are. >> Yeah. Yeah. I was going to ask you that because if if if silver were forced into a cash only structure tomorrow, I mean, does price spike because supply is constrained or or does price drop because speculative capital exits? I mean, which one would happen first? >> That is a very good question. I'll have to be honest. I'm not sure. I would actually guess it would probably drop for a while and then we would see you know how much the Chinese are willing to pay how much India wants to for their ETFs and it's going to I would say it would probably drop initially I guess then it would level off for a while and then we would see what the true demand is and if we saw the true demand comes in on both sides which I believe it would meaning both industry and investment I think we get more of a steady climb and less of a radical move that we see from the leverage positions because it would be a cash and carry market. >> Yeah. All right. Let's talk about February 28th. I mean, for context, the silver or the Shanghai rather futures exchange require certain participants to demonstrate that their futures positions are tied to legitimate physical hedging activity. I mean, that means proof of physical business, not purely speculative exposure. Uh there's been discussion around the SHFE notice 20266 is what it is. Let's try saying that six times. And uh the enforcement of these hedging quotas. I mean explain the structure position limits there narrowly show narrow narrow sharply into delivery moving from roughly 9,000 lots down to 900. I mean compare that to the comix. Does Shanghai inherently restrict speculative exposure more aggressively? >> They are more aggressive than uh than the comx is. You know, the COMX has much more has a lot more paper flying around, let's say. But when you get in the first notice day and you get into deliveries, it drops off substantially. You see these huge numbers and people report, oh, all it has to happen is people stand for delivery and it's going to take down the comx. Well, the numbers add up. I won't argue the math. The problem is they don't understand how the market actually works because most of those are commercials and they hold their positions. they roll them over in the next delivery month and the game goes on and on and on. So, it doesn't have nearly as much meaning as some purportedly say it does. I mean, there's people out there that are pretty well recognized in the industry that will tell you, you know, when the next delivery month, the whole thing falls apart because there'll be a failure to failure to deliver. Now, could that happen? And the answer is yes, it could. But at this point in time, I don't see it happening. I think the real stress is what we keep talking about, and that is the Shanghai exchange. how much true demand there is and when or if it will subside. And there's less leverage there. So, because of that and what you just read where they're going to make sure there's less leverage than uh what we just saw where it was kind of outside the boundaries of what I thought their their limits already were. Uh anyway, it took place. It's done now. They're tightening up the rule book, let's say. And I think we're going to get a much more orderly market. I mean, you really don't want any commodity to be overly stressed as far as leverage, and silver is the king of kings. It's got more leverage in it than any other futures market that exists by far. And that's why you see these huge moves that you don't see in some of the other commodities. >> Yeah. Yeah. I mean, what going back to the Comx here, I mean, at what point does Comx actually feel the pressure? I mean, is it is it when open interest exceeds registered inventory by a certain ratio? Is it when delivery requests spike? I mean, because without it, stress is just narrative. >> Well said. Yeah. It's when they know that they have to deliver outside the exchange, that's when they get stressed. If they're just playing musical chairs and swapping chairs between each other, they don't really care. But if it's somebody, oh my goodness, we got this much of an offload and the trucks are backing up in New York and they're taking it across town to the port and they're shipping it out. Nah, that's what worries them. >> Um, you said it, not me. You're right there. Uh uh back on the Shanghai side, David, I mean, if enforcement tightens on February 28th, what happens to an oversized short position on March 1st? I in 2011, I mean, rules tighten causes liquidation. It didn't cause a squeeze. Why wouldn't this produce similar downward pressure? >> I think it would. I mean, but markets look ahead, as we both know. I mean, the stock market sees into the future. So does the metals markets. Gold is the best barometer out there for the general world economy in my view. And I've studied this market for a long time. So I think that'll kind of find its way before we actually get to March 1st. But yeah, it's more downward pressure. I mean, most of the public goes long. Most of the trading funds, the CMTs, the, you know, you put your money into an account for the futures broker to trade for you. Those funds are limited on cash, like I said earlier. So they've only got so much devoted to silver, which pales in comparison to what they have in oil and gold. So, it's really a thin market. So, it will weed it out. And again, I would love to see the position, excuse me, Jeremy, I would love to see the position limits upheld in the ComX. Really, they're supposed to be mitigation of that just like what Shanghai is doing in the ComX. You aren't supposed to have these extremely large positions that are backed by nothing more than a piece. But yet, the exchange seems to look the other way. >> Yeah. Yeah. And I mean, you know, for the people that are just watching at home and they've been watching this AI guy and everything else, I mean, let's get to the bottom line for that for that viewer. I mean, if if March 1st arrives and the world hasn't changed, does the regulatory squeeze kind of thesis lose all credibility? >> I don't think so. I think it um because the real participants are professionals. I mean, yes, there's a lot of silver stackers and there's industry that needs it and the industry doesn't really I mean, they care about the price, but these days they care more about ounces. You know, how many ounces do I need over the next two years to keep Sam Samsung viable? How much does Tesla need over the next two years to run all the, you know, manufacturing that Tesla does with silver? So I think they're more concerned about what is the flow rate, what is the amount of silver that's actually readily available physically rather than, you know, how far is the market moving or what are the rules. Having said that, I think it will tone down the market, maybe calm it down. I still expect higher prices. I don't think the top is in. I think we're in the the final phase. I've talked about 90% of the move coming the last 10% of the time. We are there. How much longer do we have to go? I don't think very long. I think we could see the ultimate peak in gold and silver in the next year or two. Uh there's many that disagree with me and that's fine and I'm not saying I'm right. I'm saying how markets move, what I've studied and what I think. >> I wanted to ask you what at what prices does that start to matter because no industrial buyer is completely price insensitive and we're seeing these huge prices. I mean once it went over a 100, are we talking about short-term procurement at any cost or do you think long-term contracts where price absolute, you know, matters? Well, it always matters at some point. As you said, for a lot of applications, it's inconsequential. It's already hitting the solar industry. I just did my mastermind with Mike Dorenzo yesterday >> and he said that on the rule of thumb, the general market is silver's 40% of the solar panels now. Well, that's significant. So, they're looking for alternatives, copper, graphine, or maybe, you know, making mitigations. There really aren't any substitutions now. But the point is, yeah, I think it will. The markets really are efficient over time. They're inefficient at times. That's why we invest. This is undervalued. I'm going to buy it. Oh, it's overvalued. I'm going to sell it. But right now, the efficiency in the silver market remains to be determined. But as we get more and more toward a cashonly market, which I don't think we'll ever go to and I'm not sure it's the best, I think we do need to be able to hedge. When we get, let's say, the rules in place that it's more realistic as far as how much can be hedged versus how much is produced. We're getting into that kind of balance, I think you're going to see a much more stable market and I think you're going to see less, you know, violence, but I think we're going to be quite violent. So, last comment on your question. I'm looking for the gold silver ratio. That's really the only way to not the only but one of the best ways to determine silver being overvalued or undervalued. If we get to a 30 to1 gold silver ratio, which is roughly double where we are now, meaning silver's outperforming gold 2:1 from this point forward, I'd start looking at taking some profits off the table. Could it get beyond that? Yes. Could it get to the classic or monetary ratio of 15 16 to1? It could. Could it go below that? Yes. But I don't think it's going to go much below 30 to1. But time will tell. But that's when I know that the physical market or the market silver market is at a level that we should really consider uh enough's enough and taking at least partial profits. >> Yeah, that's interesting. Uh because you know the ratio compresses late in precious metals bull cycles historically. I mean if if we're in that phase, what do you kind of look at? Well, the acceleration we talked about a couple times and also you know if there's congestion in the physical side will keep the market moving higher which we are seeing. So that's why I remain bullish and I still think the top isn't in but there could be a time where you know the industry is satisfied. They've got two years supply in the warehouse. Oh graphine can work in solar panels now and it is economic to do so. I mean those possibilities do exist. I mean, no market grows to the moon, even the silver market. So, you want to be a little bit careful. You want to be a little circumspect that this is a market to, you know, hedge the fiat currency fiasco and everything else that I've taught for the last 40 years, but it doesn't mean that the market won't change at some point. So, you have to be aware of that. >> Yeah. Yeah. I mean, is the ratio now, I guess, a timing tool or or do you think it's just a long-term rebalancing guide? because you know most people misuse it. >> Well, I use it and I think it's very useful if you look at the extremes. When I wrote the January issue last year, gold had already made a substantial move, but silver and platinum hadn't moved. I said, "If you're a new member, please buy silver or platinum or both. If you're a long-term subscriber, consider swapping some gold for platinum." And once uh ink dried on that issue, platinum and silver both took off and both outperformed gold uh year-over-year, which was surprising because gold had already made a huge move. And I just felt the best value was in those two metals. And just to comment on it a little bit further, using the ratios and how they work for you. If you do a silver platinum ratio, which hardly anyone looks at, I'm one of the balls it does, you will see that silver platinum ratio, silver is at a platinum is at a 25 year low relative to what it costs in terms of silver. So if you wanted to swap your silver for platinum, you're buying it at a 25-y year low, moving your silver into platinum. That's something to think about. That's huge. Huge. Um, okay. Well, I don't know if you ever watched, but we had Phil Baker on the show over at VRIC just a couple of weeks ago. I mean, he used to be the CEO of Heeka, and we had him on a couple of times, and I think about 6 months ago, he started to text me and he said, "Jeremy, I'm seeing something crazy happening in India. I mean, they just now, I mean, I saw the story this morning. They reportedly added 40 million ounces into ETFs in two months. I mean, it's that's meaningful relative to annual mine supply." Um, does ETF accumulation remove metal from tradable float permanently or or is it reversible? >> It's reversible, but it certainly has an effect. Yeah, Phil and I are friends. Go back a long time on my China trip. I brought him back a Chinese. It wasn't pure silver uh Ming dog, but I'm off track here. No, it's investment in silver is kind of a staple in India and it was that way and it still is. uh but as India got more and more wealthy uh they moved to gold. I mean they seems that the population prefers gold over silver but they still like silver. Now that it's become more and more wealthy, you're seeing ETFs deployed in India as you just said, which means the more and more ability to invest in silver without having to buy a silver bracelet, you know, down the road type of thing and really be able to participate in, let's say, substantive amounts outside the physical realm. Of course, the ETFs are backed by physical. Point being I think that I think that we have a double whammy meaning the industry's got a place where they are not satisfied with the amount of silver they hold in reserve and investors have more apt more ability to buy silver in size worldwide than ever before. >> Yeah I guess India's as you mentioned a little bit there David I mean it's pretty price sensitive. uh if silver stabilizes at these levels, won't we see scrap supply kind of increase and in Indian demand cool quickly or do you think that this is the new norm? >> I asked that of Mike Dorenzo yesterday in the mastermind and he said that he felt that the silver institute is saying yes there will be an increase in uh in recycling for certain. He didn't give me a number. I think he might have given me I'm going to say it. I may be wrong. I think he said 7%. uh you know there's like 140 million ounces I've got my numbers right per year that's recycled a lot more can be recycled it's not economic but in some places they do it anyway for environmental reason or otherwise so I do think that that's one as far as uh mitigating the price there was a price in I think it was 2020 or 2021 and there was a huge demand for silver and yet the price was falling off or stable And I thought, God, how's this happening? And I realized that in rupees, silver was at an all-time high. It was like this is it. It was the hunt days for them in that currency and it was massive selling that was able to balance the physical need that the market demanded. So the currency thing does play a role in how the silver market moves. >> Yeah. Speaking of the currency, I mean, we can get into the macro a bit because it is KCO news. got to I mean um I don't know how much of it you pay attention to but the BLS the Bureau of Labor Statistics released the final benchmark revisions this morning they confirmed that payrolls for the year were revised down you know significantly and at the same time we saw new job numbers come out that were exciting um you know the US debt exceeds 37 trillion right now I mean I guess the question is is is at what point does fiscal structure outweigh short-term macro noise and metal pricing >> I think Eventually, you know, the truth wins. In other words, the physical demand that's required has to be met and the price will be determined under those conditions. And going back to what you just said, I mean, the birth death model is incorrect. They admit it. The numbers coming out of the government are not believed by most. Of course, the mainstream banks and brokerage houses use them. Whether they believe them or not, we'll never know because they have to act as if they are, you know, correct. Certainly they quote them and they are somewhat valuable but nonetheless I think if you go behind the scenes and you know look behind the curtain you're going to find that a lot of the information that we're getting is skewed toward the inflationary bias that all governments have because they want to depreciate the currency so they can pay back the debt with cheaper dollars. Mhm. It did it surprise you? I mean, these latest swings, you've been doing this a lot, type, David. I mean, when you see gold shooting up past 5,55, we saw silver do that little top heavy dance. I mean, how fast that went. Did it surprise you this year? >> So, well, f first of all, yeah, 2025 surprised me. I mean, I did call like I said, hey, it's time to get in the silver if you're not. >> But the 140%, yeah, that surprised me. January definitely surprised me. I went, "Oh, I wasn't all that happy." Even though, you know, my personal portfolio is looking pretty good day by day. But I go, "This can't last forever." And if this thing goes all the way up to 200, for example, that could be uh didn't it it stalled out at 124 or something like that. So, I think we need to, you know, take a deep breath and let the markets work the way they're supposed to. And I kind of missed your question. You want to give it to me again? Sorry, Joe. >> Well, I I'll give it to you in a different I mean there's this strong narrative that AI and solar demand will overwhelm supply right I mean at the same time engineering innovation reduces silver content per unit almost every single year you pay attention to this is industrial demand compounding or or you know does that that high price accelerate substitution and kind of cap that long-term upside >> yeah I think it will I mean everyone's a big believer in technology I am as well I don't think it's a panacea it's going to solve all our problem >> we go back to my predecessor about he predicted silver to be $200 an ounce in 1990 or mid90s. He wrote the last book around 1980 and his basics were right because at that time we're only mining 350 million ounces of silver on an annual basis and had been that way for 60 years. So we had 60 years of data. But once the ink dried on that last book where he made that wild prediction because silver was I forget which was the teens I think that there was a new technology and a new technology brought more silver and gold to the surface economically and we started increasing production like crazy. So his supply demand was off. The supply increased dramatically. Will that happen in the silver market? I doubt it. There aren't that many big viable projects in silver. I know a few. I write about them, but I think it could be substitution of some type. I mean, the graphine thing has been talked about. Again, I talked to the silver institute. Mike said that um you know, it's a ways off, but you know, markets are pretty efficient in in the long run. And if you need to substitute silver for solar, uh and you can wrap um copper with another element, I don't know. uh and it's cost less. Don't do it. I mean things get uh better and better over time generally speaking. I'm not talking about societal moral structure. I'm talking about efficiencies in the market stuff marketplace stuff we buy. >> I got to get your take on uh platinum. I mean it's a much smaller more industrial concentrated market than silver. I mean if we're truly entering that broad physicals market squeeze, shouldn't platinum be leading? I mean, given its tighter base and automotive dependence, I guess >> it could. It's a much smaller market. It's the noble metal. It's 15 times rarer than gold and it's supplied 70% out of South Africa, which has political problems and energy problems. So, I'm very bullish on it. And I do think if this hydrogen economy takes off, which isn't talked about much, but we've been looking at it here at the Morgan Report for some time, I think it is an alternative that may come into the four. Remember, hydrogen is the most abundant element in the universe. And if we could harness it efficiently where we could use it as an energy source, uh sky's is the limit and platinum plays into that uh narrative. So, I really like it. It isn't for everybody. I would caution the in and out on platinum is tough. I mean, the ETFs is probably one of the better ways to play it. If you want to be in the physical realm, you're going to pay a penalty. You're going to pay a high premium buying and you're going to take a discount selling. So, you want to keep that in mind. But if you're loaded up on gold and silver and you love the metals, I would take a look at that. >> Yeah. And if you're looking ahead at the rest of the year, which I know you do, I mean, the strongest signals we're watching are real verifiable data points. You know, the duration of the Shanghai premium movements in registered versus eligible flows into physical and out of ETFs. Uh talk to me a little bit about what you're watching closely and give me your outlook for uh for gold and silver this year. when looking at, you know, these rule changes in in the Chinese market. I made friends with uh Eric Young, who seems to have a very good handle on what's going on in China, >> who lives in Hong Kong, and I've interviewed him personally once or twice. I listen to most of his interviews. Uh I also think that there will be some changes in in the COMX. That's a gut feeling. I have an inside information. Uh, but I have a feeling that these position limits that do exist may start to be enforced, especially with China taking the lead. I think there may be something and exchange itself is going to say, "Wait a minute, boys." You know, we've been kind of um turning our heads on this, you know, this part of the contract or the limits and maybe we should reinvest, you know, relook at that. So, we'll have to see. I would like to see a more orderly market, but that's not what the metals pretend. Metals portend at the end of the great inflations violent moves to catch up with the misallocation of capital and the happy spending that the governments have done worldwide and they pay a catch-up mode and that usually happens in a big hurry and that's what we're witnessing now >> and I mean you know you and I you and I were chatting a little bit about this there's a lot of rumor speculation there's headline fear out there right now especially on social media but rumors don't move markets verif ified data does what you and I try and watch. So, I mean, what's your tips for people that are laid on this train? They haven't been covering these markets for years. They've just jumped on. I mean, where do you what's your advice for those that just there's so much out there? >> It's a tough one. You know, I don't like to see people lose money, but I really think if we do go into a hyperinflationary blowoff, which I doubt, but a deflationary spell that really worries people, I think everyone needs some metal. And how much is enough? And the answer is it varies from person to person. But you don't need to be overly exposed. That's for sure. So, I mean, if you're not exposed to the metals, you can do it. And I think physical is the best way to do it. And in that case, maybe what you're taught by a certified financial planner. Well, what do you need when you're starting out or even when you're middle-aged? The suggestion is like, you know, two or three months worth of uh pure cash in the bank. Well, pure cash in the bank to me is physical gold and silver. So, if your expense rate is 4,000 a month, three months is 12 grand. 12 grand in silver and gold, that's probably enough for almost everybody. And if there's a crisis, then that value of that might stay at 12,000 price-wise, but the value may actually go up. In other words, if the housing markets cut in half and the stock market's cut in half, even though gold and silver prices remain constant, I'm not saying they would, but as a thought experiment, then you've actually doubled your value because you could buy twice the amount of housing or twice the amount of >> whatever. So, I would go into that. And what I think is so interesting, Jeremy, is this. People that used to make fun of people like me are now in the mainstream talking about the basement trade. Well, that's why you're in this trade from the beginning. And I use that word 25 years ago. But secondly, and more importantly, there's giving suggestions of like a 60 2020 20 portfolio. Are you kidding me? I've recommended 10 maybe, you know, 20 at the most. But stalwart saying, you know, 60% bonds, 20% stocks, and 20% gold from, you know, notables on Wall Street. And that's very interesting to me because the institutions start, you know, following in the gold. And I believe that they will, then I don't think, you know, again, the top is in. I think we could see, you know, this 5,000 may be a pit stop on the way to 10,000. I don't know. But there's a lot of demand for gold as this debatement debasement trade gets near the end. Which means trust in the overall system degrades to a point where people just don't know what to do with their money and they don't want to put it in the dollars. They don't want to put it into treasuries shortterm, medium-term, or long-term. And when the trust gets to that level, and hopefully it won't, but if it does, we'll probably have a new paradigm. >> Yeah. Yeah. Yeah. I mean, we've been talking about trust, trust, trust. that was the the common theme and people are losing it that debasement trade. I mean we got uh CNBC, all these other mainstream media talking about it which we've been talking about for years. I mean are we in the early phase of a structural shift here or are we in another volatility cycle that looks dramatic but maybe resolves conventionally? It feels like this is different. >> I think it's the former. I think we're at the end of the end as Rafie Farber calls it the end game. I think we're at the point where we either reset the currency or start a new system or a combination thereof. I really believe that's where we're heading. Now, a lot of talk about the CBDC and the stable coin. And the stable coin is really a certificous way for a huge demand to come into the US dollar debt markets. I just outlined that may fail or fail lean. If there's a demand for a stable coin, then it's based on a very unstable thing called the US dollar. It's obviously an oxymoron, but nonetheless, if there's a huge demand for treasuries to make the stable coin quote unquote stable, then we have a demand there and we have a new let's say window dressing on an entity, the US dollar that's never that's a new method and from that maybe make a digital currency. uh do a cash wipeout, cashless society with a digital only paradigm direct with a banking institution or maybe an Amazon coin. I don't know. But I think that's the direction we're heading. I think that's what the bankers want. And I think that that move needs to be accomplished by them prior to an all-ight called crackup boom on the Mises the Austrian school where people just say I'll buy anything except dollars because I don't trust them. I don't think we're going to get to that point, but I think there'll be some that will be thinking that way before the new system is put into place. >> Yeah. Yeah. System sounds a lot like control there, David. I mean, uh, final question because I mean, we've been chatting for a little bit here. I got to ask you, I mean, if you're new to this space and we got a lot of investors, I mean, since this run, we've had a lot of eyeballs. I mean, what are what are the top, you know, few things that you're going to be watching over the next six months that could really represent the silver market? What are your advice to those new investors? Well, I'm going to be looking for what I talked to Mike Dorenzo on the solar institute yesterday. I'm going to see if there's a big increase or a notable increase in recycling. I'm going to look at sentiment. I think a lot of it's been punched out in this January pullback. I'm going to look for how quickly we go um up to 100 again. So, if it's a matter of uh stabilizing around a trading range of say 85 to 75 for a matter of three weeks and then, you know, a month and a half from now, we're back up near the high 90s. That just proves how much physical demand there is and how strong this market is. And that's kind of what I expect. I don't expect another six months worth of trading range. I think there will be one, but I don't think it's going to be very long. So, we really are in the final phase from everything I've learned over the last 40 years of studying markets. That's markets, not just the metals markets. And this means that if you're not on board now, don't be afraid, but don't overdo it. You don't need a lot of, you know, gold gold exposure to have a hedge. Uh, again, it's something that we really don't want to need, you know, want to have to use in a way. I mean, if you want to look at it from an investment and an insurance policy methodology, that's fine. You can do both. But if you just look purely at, you know, an insurance position against whatever else you own, real estate, stocks, bonds, what have you, then I think a modest position is fine. And no one cries about paying their fire insurance on their house every year because their house didn't burn down. You know, it's a price you pay for stability and insurance that, you know, if something really goes wrong, you're covered. And I think that's the way to approach the market at this point in time for most people. >> All right, great advice. Uh there's a sustained premium in Shanghai, a measurable ETF accumulation in India. There's a margin driven volatility as we just talked about in the Western futures. What a time. Uh what a time, huh? >> Unbelievable. You know, I'm glad I got to see it. I mean, a lot of my peers and some that work for me are no longer here to see that $100 silver >> and I said I would throw a party in uh $100 silver and I plan to follow through on that. >> All right, David Morgan, appreciate it. Of course, you can check out his full report. We'll put a link inside of our description. Uh thanks for breaking down the noise today, David. I appreciate you with this no matter where uh we're going to get some some feedback or not. >> Okay, very good. >> All right, appreciate it. Thanks, David. All right, to stay updated as the data breaks, make sure you subscribe to Kitco News YouTube channel and hit that notification bell for Kitco News. I'm Jeremy Saffron. We're going to have some great content coming up this week. Stay tuned. Heat. Heat.