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Jake
3rd May 2010, 17:48
David Morgan: The Latest Skinny on Silver
Source: Ellis Martin and Karen Roche of The Gold Report 05/03/2010
http://www.theaureport.com/pub/na/6209
http://www.theaureport.com/images/morgan4.jpg
Excerpts:


It's often called the "Poor Man's Gold," but according to "Silver Guru" David Morgan of The Morgan Report and www.silver-investor.com, silver is poised to outperform gold. "The amount of silver mined meets industrial and investment demand. We've reached equilibrium," Morgan explains. In this exclusive interview for The Gold Report, Mr. Morgan gives us the straight skinny on silver and highlights several silver juniors.

The Gold Report: You stated last June that silver is trending gold and will outperform gold by about 30%. What will be the catalyst?

David Morgan: Well, there's several. Silver is the bipolar metal, as I refer to it occasionally, because it's both an industrial metal a monetary metal. If you look at the industrial side, it's very bullish even in these recessionary times, meaning that silver needs to be used in all kinds of industrial applications. There might not be as much manufacturing on a global basis as there was during the times when the economy was doing better from 2000 to 2007. However, a lot of manufacturing is still taking place. As it occurs, there's a tradeoff, with less manufacturing in some sectors and more in others. The amount of cell phones in China and India continues to grow. Another one would be solar energy, which is projected to increase rapidly over the next decade.

There's a big impetus by several governments, again on a global basis, to install more green energy. Solar is at the top of that list. Silver plays an important part in that story. On top of that, you've got water purification, which is something I was talking about many years ago and continue to because silver is a very unique biocide. Due to that, the EPA has actually okayed silver's use in bottled water, which very few people know about.

Then, of course, in food processing, the unique properties of silver are used in meatpacking plants where you'd have silver tip appliances like the saws and cutters, etc., because for sterilizing purposes they do not spread any bacteria. Some of the new packaging plastics have a bit of silver in them on a microscopic level. Once the food is packaged and you have the silver in there, it's going to prevent any kind of spoilage or bacteria growth. On top of that, you've got other applications like the radiofrequency identification tags, and on and on the list goes.

The other side is investment demand. Here is where I think there's a little confusion on this subject, because a lot of the main studies in silver just emphasize investment demand as coin demand. It is talked about as being 5% of the market. If you look at 660 million ounces of silver being mined presently, and you take 5% of that, you're looking at 33 million ounces. An accurate number for coin demand is somewhere between 30 and 40 million ounces on an annual basis, but that's coin demand only. What very few of these studies really emphasize, which is really a big part of the investment demand, is how much of the commercial bars are used for investment purposes. Let's look at the largest silver ETF (SLV). It holds roughly 300 million ounces of silver in commercial bar form. But it's all for investment purposes. So, there's more to the investment story on silver than most people realize.

TGR: Why aren't we seeing the pressure in the market yet with all the industrial demand?

DM: I would say the pressures are there right now. Have they started to build up yet? Perhaps. They're not as strong now as they will become over the next few years. As there is more and more silver demand on the industrial and on the investment side, the price is going to go up.

You've got to look at where silver is at right now. It's certainly off the $21 nominal high that we saw many months ago. We're still hanging around $18 compared to the $5 or less it was based at for almost 20 years. That's quite a run, and even in inflation-adjusted terms, it's a pretty good return on your money. Is it going higher? Yes. When is it going to start? I'm not sure. It's going to be in this idling period for a while.

The dynamics are so strong that I don't see it continuing all year. I believe strongly that the closing price in December 2010 in silver is going to be above the $21 level. In other words, silver will be making a new (nominal) high this year!

TGR: When is the best time to get into silver and in what capacity?

DM: From the standpoint of the actual metal itself, any time is the right time as far as I'm concerned. You don't have to worry about market timing. I mean, $18 silver is obviously more than it was 10 years ago when you could probably get it at around $5. Again, I believe it's going far higher. It's something tangible, something real and something outside the financial system. When you own silver coins or bars or both, you actually have real money that's recognized worldwide. If you own the real thing, don't worry too much about the price. Buy the real thing. That's where you start your precious metals investing.

TGR: Why is there so much concern about the silver-to-gold ratio?

DM: I think that too much emphasis is put on the ratio. It's a metric that many follow to value the silver price relative to gold. It's useful in trading between the two metals, which I have taken advantage of a few times during this bull market. It's something that can get overblown and no one knows what the correct ratio is.

When you get silver really moving and the euphoric panic part of the market engages, it tends to really move faster than gold because it's a smaller market and you have a lot of money moving into the market. That's where you see silver overtake gold on a percentage basis. So we could be 60-to-1, 50-to-1, 40-to-1 and stay 40-to-1 for a long time. Then when then market goes into this panic buying mode we could go from 40-to-1 to 20-to-1 and then 10-to-1, as an example. That whole process from a 40-to-1 ratio to a 20-to-1 ratio might take two to three months. Again, is there an exact perfect ratio for silver to gold? No there isn't. The ratio does suggest that silver is still undervalued relative to gold.

TGR: Do you have a timeline for when silver may overtake gold?

DM: I don't have, but I'll be consistent. I've been asked this before and the answer has been probably 2012-ish. If you look at some of the analysts work, they put timelines at sometime between 2011 and 2016. Basically, if you forecast, you should put a price and no timeline or time and no price. That way you can't get cornered. Who wants that? That's no value to anybody. But a guess is a guess. I don't think you're going to see a really big move in the metals until 2012 or later. However, I do expect both gold and silver to make new nominal highs this year and silver to outperform gold by 30%.
http://forum.mamboserver.com/image.php?u=43346&dateline=1124655960

silverstriker62
3rd May 2010, 18:39
TGR: Do you have a timeline for when silver may overtake gold?

DM: I don't have, but I'll be consistent. I've been asked this before and the answer has been probably 2012-ish. If you look at some of the analysts work, they put timelines at sometime between 2011 and 2016. Basically, if you forecast, you should put a price and no timeline or time and no price. That way you can't get cornered. Who wants that? That's no value to anybody. But a guess is a guess. I don't think you're going to see a really big move in the metals until 2012 or later. However, I do expect both gold and silver to make new nominal highs this year and silver to outperform gold by 30%.

Silver overtaking Gold, has this been something they have always said or is this something new?

silversurfer1
3rd May 2010, 18:52
Silver overtaking Gold, has this been something they have always said or is this something new?

That one is news to me. Silver overtaking Gold???

Sakata
3rd May 2010, 18:53
Silver overtaking Gold, has this been something they have always said or is this something new?

I've heard him say it before. He believes that eventually and ounce of silver will be worth more than an ounce of gold. I don't think he gave a timeline and I would suspect he thinks it will not be in our lifetime.

Jake
3rd May 2010, 19:34
There are others who believe this too.
I, for one, don't like these guys mixing predictions into their opinions about why gold and silver will continue to maintain buying power. I've read the same stuff you guys have read. Silver is scarce/silver is being depleted/silver is used up in industrial applications/silver can't be recovered economically/etc-etc.

If silver becomes expensive, then mining will increase.

Speculation on $100 silver and $5000 gold is fun to read, but there are not enough articles that point out that "things" will also increase in price along with silver and gold. This is just not the way people should look at why metals should be held.

I bet that in 1947, most people would never have believed that their 31 cent loaf of bread would rise in price to $5 by 2010. However, that liberty walker half-a-buck would buy a loaf of bread then with 19 cents change and will still buy it today with about $1 change.

So...projecting this into the future, that liberty walker will buy a loaf of bread for $31 with about $5 change when silver rises in price to $100/oz.
Time Flies When Silver Prices Rise!
http://forum.mamboserver.com/image.php?u=43346&dateline=1124655960

Sakata
3rd May 2010, 19:41
So...projecting this into the future, that liberty walker will buy a loaf of bread for $31 with about $5 change when silver rises in price to $100/oz.
Time Flies When Silver Prices Rise!

I don't think anyone disputes this. But without silver the percentage of your daily income required to buy a loaf of bread will probably be considerably higher.

Jake
3rd May 2010, 20:41
Here's another who posts these wild price predictions on silver:
"The Silver Price Spiral, Part III: Tomorrow"
http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=11360:the-silver-price-spiral-part-iii-tomorrow&catid=49:silver-commentary&Itemid=130
I guess this is still from parts 1 and 2?
Excerpts:
As I stated at the beginning of this series, a “three-digit price” for silver is assured, while over the long term, that price could rise close to, or above the $1000/oz-mark...but I am getting ahead of myself. This series is all about studying the dynamics of the silver market, so what I will focus on is what we can expect to happen in the silver market (on the demand side) as silver rises to, and then above $100/oz.

"...according to the research of noted silver authority, Ted Butler, somewhere around 90% of those stockpiles have been “consumed” over the last 50 years. Thus, no matter how high the price of silver goes, we cannot see any major growth in supply from “scrap sales”, simply because that silver is already gone."

Silver is roughly 17 times as common as gold in the Earth's crust. This differential has been exaggerated by the grossly disproportional price ratio between silver and gold – which is currently greater than 60:1, and has remained at or above 50:1 for most of the last two decades. However, as I have discussed previously, one of those two parameters has already changed dramatically.


With somewhere around 90% of global stockpiles of silver gone, the amount of (above-ground) silver versus gold is nowhere near that historical, 17:1 ratio. While no firm numbers exist to quantify this, estimates I have seen range from there being six times as much silver as gold, while some commentators are already maintaining that the amount of available silver in the world now exceeds the amount of gold.

Given such parameters, the current 60:1 price ratio is absolutely ridiculous – even without factoring-in all the demand fundamentals which I have mentioned previously. When we include those factors, it becomes safe to conclude that (at current prices) silver is the most-undervalued of all commodities in the world, today, and arguably the most-undervalued commodity in modern economic history.


Thus, an “explosion” in the price of silver is coming – and coming soon...and when that explosion takes place, it will be the re-discovery of silver as jewelry which will be the additional variable in propelling silver toward or above the $1000/oz-mark.

While those investors who have been accumulating silver for many years may curse the continued market-rigging of the bullion-banks, for newer investors, the nefarious deeds of these miscreants can be thought of as “keeping the train at the station”. Today, investors still have one, last opportunity to buy silver at (literally) “once in a lifetime” prices. When silver explodes above $100/oz, it will never return to current, absurd price levels.

http://forum.mamboserver.com/image.php?u=43346&dateline=1124655960

Goldbrix
3rd May 2010, 20:53
Nice to see JUSTICE has decided to sniff around the paper silver pit.

http://www.caseyresearch.com/displayGsd.php