TIPS FROM DAVID MORGAN — SILVER PRICES,MINING STOCKS, AND PRECIOUS METAL INVESTMENT

http://Silver-Investor.com
Thanks to Precious Metals Investing for the interview.

Latest Posts

Welcome to precious metals investing.com I have the pleasure of having as my guest today David Morgan David is one of the world’s top experts in the precious metals it is known for his thorough and in-depth analysis of the precious metals and precious metals mining stocks welcome David budgeted okay David

Besides our common interest in precious metals we also have an engineering background in common I think our engineering backgrounds have trained us to look at the data as our guide how do you feel your engineering background has influenced your outlook and analysis well the analysis is fairly easy because

As you know Ted when you look at an equation for all the bending of a wing for an example you do an equation and you then verify looking at all cases through integral calculus that they were carriers but from zero to infinity so what that does is it causes us to think

At the extremes well what if there’s nothing what if it’s everything and everything in between those two points I think most people listening would understand that when you look at something from both ends and the more likely how come you’ve covered all cases and this is really helped my economic

Thinking because if you think of you know the worst case scenarios example or the medication errors example you probably somewhere between but nonetheless it causes you to think throughout the entire spectrum and also when you look at an extreme and determine what that means it’ll also

Help you to you know prepare or whatever for a real quick example in real life was a bit of stock stock grips company will take a little one as this example but we have a mining stock and you buy it there is a possibility that that

Stock could go to zero and that has happened and it will happen again it’s happened in the markets many times now the probability is pretty low but still that possibility exists now I’ve been reading a but a fascinating book on how we quote entitled how we decide and we would like

To believe that we’re rational beings and we look at the data and come to a conclusion and actually studies have shown especially with a lot of financial analysts that they come to the conclusion first and then select the facts that support their conclusion so I appreciate the fact that you have at

Times a not only recommended the precious metals but basically said now’s the time to hold off exactly I I do both other investor mentality I mean nothing really makes me happier than to buy a long-term growth situation that compounds our growth for a year after year after year and can buy it early

Hold it for 5 10 15 20 years and make money every year or almost every year I mean that’s that’s true investing those days are probably over generally speaking for the generality market I mean you look at though you know in the past I mean general motors for a quick

Example those days are long gone gone for General Motors but the trading side especially in the commodity sector is really important to understand because they are so following the circular leverage so much the moves are exaggerating because of all the leverage so in those cases it really pays if

You’re so inclined to call tops and bottoms and move some of the capital isn’t out of those situations it really helped sort of psychological emotional basis as well I called the top in at the $21 level and there were others out there saying that’s the ultimate tops

They were going higher that’s it and I felt very strongly that that was a temporary top and then when we got down under nine I certainly didn’t lose my conviction but it did question the overall trend because I want to look and I did to see if the major uptrend had

Been pierced or not depending how you draw the chart it’s it touched the major uptrend line and bounced off it came back up you could draw differently and it might appear stood very slightly regardless that’s history now we know that from that sell out bottom in the 2008

Financial crisis that a lot of silver people were smart enough to buy at the bottom are very close to the bottom or during the bottom and have reaped you know very great rewards I mean from around number ten dollars it moved up basically five fold all the way to 48

Call that top again uh selling off you know our trading position keeping our core position and again it’s a psychologically satisfying to be able to do both in other words to hold your key or core position and yet take profit to say perhaps as much as twenty five

Percent in portfolio keep that in the cash and redeploy at a more appropriate time one of the things i greatly admire about your work in the precious metals is the depth and thoroughness of your analysis a coupled with a real down-to-earth grounding and modesty how long have you been interested in silver

Precious metals and mining stocks very long time i mean if you read my book at the skinny on silverbell g-night talk about their about being eleven year old kid watching the silver coinage evaporate from the time though is born until around age eleven silver rule ninety percent silver coins or what

We’re circulating and I was always fascinated with money and investing I don’t know why just was and so the quiz turned over in the Med 265 the cupro-nickel coins i noted that mentally it such it was interesting this you cannot be equal never knowing at that

Point in time what are we doing for living today but really i started in the stock market at 16 you have to be 18 but there’s a provision called the uniform gift to minors act when your parents can sign and say you know my son or daughter

Understands enough and i’m going to help them or whatever it said i don’t know the exact contract so i started investing in the dow jones when I was about 16 years old so just something that really really resonated with me and you know when I really get into in my early

20 to start devouring all kinds of books on investing trading and primarily my main thrust was like economics and monetary history and and once I learned about the fiat money system and factories are banking that sort of what a fire under me and it’s actually continues till this present time I

Remember listening to one of the interviews where you did with that you did and you identified the cell phone industry as a opportunity and basically passed it on to your father and he profited greatly although that’s not precious metals you’re certainly fortunate that you were able to see the

Value of this so early well thank you and you know I came from the name of the report many many years ago it used to be called the solar investors same as the website and it was outside of silver but the focus on silver and still does but

There’s a lot of investments outside of silver basically I’m a capitalist at heart and so you know there could be a time depending on how this unraveling continues that they’ll be trying to move out of precious metals and I know a lot of metals head sensors myself and find

That hard to believe but off all markets Evans low so i changed the Morgan report because we do look at things outside of outside the metals I mean one of our best companies was a resource company which was a mauling situation I’ve looked at the river suspect one of the

Few or first to look at the rare earths we no longer do that very often I do touch on it from time to time but I’m always kind of scouting out opportunities like that and go back to the cell phone when I did bring that idea to my father he said David that’s

An opportunity of a lifetime and obviously proved correct because I saw this big but I’m not really to the scale that it is i mean you know this look at China which is one of the few growth areas for cell phones I’m sure there are other areas as well but you know the

North American market I mean I don’t go anywhere in my travels said that everybody from about age 20 on earth has got a cell phone with them I’m the subheading of the Morgan report is money mining and metals how do you address those areas and how do you feel

Those areas relate well they all relate together my view first of all money is something that most people are very interested in regardless and transcends everything in my view it transcends religion transcend sex transcends age transcends political orientation and transcends everything can everyone’s interested in money the problem the way

I see it is that most people understand what money is they understand what it has to be what functions it serves they just think of money these green pieces of paper in the United States urge of the colors and different areas of the world and that’s money but really time

Is showing again and again again if that is an illusion that evaporates over time and that’s the situation we have now on a global basis so you have to understand money so my editorial almost every month deals with some aspect of the monitoring problem and you know what could be done

About it and then metals is you know the best place to be in my view and there are others energy is very important as well water as well food is again but my focus studying the amount of time have available focus on the metal so we look

At just about everything but we don’t see the opportunities and say lead zinc or copper that we see in its silver gold although there are opportunities up recommended a couple of copper companies along the way a few of the silver companies that we have chosen to feature

Are alleging companies as well as silver company so you know look at everything on the metal side and the mining of course we look from the top down look at top-tier cash-rich and hedge mining companies mid to growth companies and specular companies you sit in some of your interviews that owning the physical

Metal should be the base of your precious metals investing strategy before you invest in mining stocks or ETFs or anything else just considering the precious metals portion of your investment portfolio what percentage of the investment should be in physical silver what percent in mining stocks or something else very

Well I you know this is a general statement I’m freighted as it come as you know Ted so basically is up to the individual to make that determination but as a rough outline when I wrote the ten rules of silver investing over a decade ago in the last rule I said too

Much of a good thing maybe too much ten percent is probably enough for most individuals and I changed that shortly thereafter within a couple years before the war started in the Gulf not really in Iraq and said under the current economic conditions I think you can live

It up twenty percent so I’ll use twenty percent with the twenty percent someone is probably between age 50 or higher my thought on that would be a 50-50 split ten percent would be in hard money which would be gold and silver the other ten percent would be in the mining shares

And again at that ten percent you probably want eighty to ninety percent in dividend paying or high growth situations I mean these are management company companies we have strong management politically and geo physically diversified if possible like a pen America makes it for example or hecla mining is another example these

Companies have minds no different locations so if something happens per hectare I’ll going back in time in Venezuela which was you know heartbreaking but didn’t ruin the company wasn’t that the only had one mine it was whether they had that you know it went down under the political

Regime but they have some other minds of producing so that’s where you want the most you money want the best companies that you can afford and then you want all right well what I teach is to speculate I mean everyone loves a cocktail story where they bought a stock

For you and 27 cents and it went to two dollars and seventy cents or better yet with two twenty seven dollars but that does happen but it’s very rare in the odds are against you so you do want to balance a portfolio with the risk and reward profile

Are there any specific forms of the physical silver that you recommend investors start accumulating going back to the ten rules that I outlined by the way that’s for free on the website if you just come to silver dash investor calm you could sign up for the free e-letter that because that weekly when

You first sign up the autoresponder will give you the 10 rules it doesn’t think one rule that every two or three days and what I said in that was that you should buy the most silver for dollar invested so in that case usually that means a constitutional silver which is

You know 1964 or older ninety percent silver coins dimes quarters have or silver rounds which are privately minted one ounce silver coins that are begin are not government issued those are your best bets for the most silver dollar invested but then there’s people that think that you know I’d rather have a

Government stamp on this ounces or rather than a private stamp on the sounds of silver and again I pre-marked if that’s what you determined to be best for you then by all means best of those yeah there seems to be right now large-scale manipulation that’s been

Going on for a couple of years in the silver markets to push prices down there’s even some pending legal action as you remarked in some of your interviews it seems to be getting harder and harder for short sellers to push the prices down do you see an end to this

Market manipulation and would you like to speculate on when it would end and what we’ll see in the metals market when it does end if history is any guide and i believe it is and all these price controls management of the price manipulation whatever term you want to

Use to end and i believe this one will as well the comment that is taking more and more effort on these shorts to drive the price down as a fact to go back a decade or so the amount of paper silver that had to be sold into the price down

Was maybe a factor of two or three relatives of physical side buying silver now it takes about 10 times as much on paper to move the price the same amount so it proves to me that we’re winning in other words those are accumulating physical metal have more influence probably dollar invested in physical

Metal has much more of a foundational take where that builds again on self over and over so in other words more physical source taken off the market is stronger the position is and the harder it is to throw fictitious silver at the mark and drive the price down although

It’s done and it does work it’s just harder as far as when that’s a tough one if you ask me that well I don’t know 13 years ago or so I thought I were to give me a different answer because at the time there were in such a deficit

Situation for silver there was no new mining going on it looked like it was almost imminent in fact I wrote an article that I’m not embarrassed about I mean all my work is up and good bad or indifferent I certainly don’t have a claim that I’m always right but in that

Article is called silver 20 and basically from the data available at a time it looked like again it was very close well since I wrote that article i wrote a subsequent 70 we visited that corrected a lot of my errors and I certainly owned up to the fact that I

Made some bad assumptions in that first article nonetheless looking for what we are now an extremely huge increase in mining production globally primarily because of the boom in China over the last decade so that changes the dynamics when you have a lot more metal coming out of the ground going to counter the

Structure of you know when you’re going to have this price point or this tipping point i would say probably 10 to three years out maybe longer it’s tough to know and here’s the reason one is we don’t know the future no one does secondly there might be some innovation

The mining sector no one’s thought of us maybe on the books now that you know we’ll find out about you know soon also there’s the political side in other words we is so much favoritism to the shorts in the comex in the futures markets that you know the rule changes you want to

Call them that can take place many time so that’s a tough call but again go to my history I don’t want people to be upset that they shouldn’t buy silver gold because you know there’s these contravening forces I mean my my basic tenant has been very consistent I’ve

Always stated that cannot manipulate the markets long-term trend and that’s true i mean silver always under five when i started my website it’s up to around thirty dollar level now and and and you know 1342 timeframe that’s a pretty good return in real terms and gold was a 250

Ml or it you know around the 15 15 hundred dollar level again and again i could return over that time frame would they be higher without these you know massive paper sellers that take place from time to time the answer gesture would be but regardless i do again think

That’s going to come to an end i just don’t know when I think although Silver’s come down recently I think Europe’s financial situation the US financial situation and other fundamental factors seem to speak well for Silver’s potential you’ve said that ninety percent of the profit comes in

The last percent of the move where do you feel we are in that move right now may of 2012 and what do you forecast for the rest of this year a great question action is Jeff Christian from CPM group that said ninety percent of it comes in

A lot of ten percent of time and I’ve used that several times since then and Jeff actually should packed off on that you can make that case from the last bull market and silver and I did in fact I wrote that in the Morgan report recently but that’s a general idea it’s

Not precisely 92 sempra size of 10 but what I really want to convey is that the biggest up move is during Elliott way person I’m not a big Elliott adherent but the general idea of La that they can have some accuracy this final phase of the market is the last most enduring

Longest lasting and largest move by far and we have yet to see that this is where silver just keeps going up again and again day after day and the collections are very brief perhaps sharp but they don’t last long and that are part of the market can together a lot of

Momentum a lot of new bind and a lot of excitement this is what we saw the Nasdaq market at the top and in other words I remember the Nasdaq hit i think was 2500 or something you know way overpriced and who would buy it now and it quickly zoomed it like six months

From there to well above that level and this is true the housing like so most markets react the same way they get this over enthusiastic when I called manic Romania phase it takes place I’m almost certain that will happen the metals in fact I believe that will happen to such

A degree in the metals it will go in the history books will go to the financial record house because when the dollar starts dying and the dollars repatriated from all of the other countries that whole dollars as a reserve asset beside oh my goodness the United States is not

Backing off they’re just going to print to infinity and to make dollar worthless I’ve got to cashing dollars in for something all my bubblegum aisle by flashlight batteries all buy anything I can buy I just don’t want to have a dollar and one credit that ecology takes

Place you really can’t turn it off but once that happens you’ll see gold silver and gold silver stocks anything related to the metals will take off in a wild way and I reacted when I thought that would be I’m looking for the final phase and I to paly be between 2014 2 2016

Right now 2012 and in my book is a transition year this is the year or christmas for Americans in 2012 are probably going to have a Christmas and and somewhat are doing the event or maybe not i’m kind of making this up but i want to be clear on the idea i’m not

Making up the idea the idea is that you know what I don’t care what these politicians are saying I don’t care what you know Fed Chairman Bernanke does I know that the good old days of the early 2000s are back we’re living in reality so that’s

What i call the transition year so i think this year of 2012 is a year where most Americans you know become adults and decide you know what I’m not paying much attention to mainstream press they’re just shooting me stuff that really can’t be relied on I’m looking

Out my window i’m driving around my town i see what’s going on and it’s not pretty things are not getting better so that’s that year and then 2013 i think is a rebuilding phase where you’re going to see stronger markets in the metals and probably all the commodities and

Then the blow off phase it takes time that foundation build some look for life 2013 24 people higher prices all along dips of course they come and go but then that final mania phase it’s really hard to tell you know when thats part takes us takes place it’s like watching a

Flock of birds are all flying you know the winner in and all of a sudden they make a quick u-turn all in unison no one knows why that happens or know why or when it’s going to take place but it does that’s sort of the ignition point

But once it happens people follow very rapidly and again you’re going to see huge moves in these markets mining stocks are one of your focuses and areas of expertise and some of the interviews you’ve done in the past you said mining stocks or for a better leverage and profit potential than other metals

Investments what do you feel we are in the mining stock cycle and what do you see for the future versus other precious metals investments well it’s been extremely difficult for the people in the mind equities here for the last several months and i do believe we’re at

A bottom or very close to bottoms during the interview if you’re new it’s a good way to gain leverage you have to be a bit patient executive rebound immediately but the property world within the next 2-3 years quite significantly and going back to what we’re just talking about the final phase

Of this market most people will not buy physical metal gold will be for an example twenty five hundred dollars the outs are hired somebody 60 65 or higher and people will look back i mean they have the internet they’re going to say cheese i could have bought sword five several years back

Golden under 300 several years back I don’t want to pay 2,500 for gold but they will go into the market looking for the cheapest children gold stocks they could find and they’ll pour money into that they may move their IRA into it they made you know doing anything to get

Into this market and so a lot of that money will come to the mind and equities and that will push the prices the equities far higher so it’s easier to make a stock investment for most people that is to make a precious metals investment although physical metals investors one of the easiest

Transactions you’ll ever make and then the left built the final phase will be comprised mostly of people that will buy the mining equities I think one of the pillars that will maintain Silver’s value today is the industrial demand it’s required for many of the electronic devices we come to depend on and it

Seems that you know there are no medical applications first and new applications in the alternate energy field almost every day could you talk about the industrial role of silver and what part it plays in the value and investment potential what’s a good buffer for the foundational price of silver I mean it’s

Pricey an elastic for almost all industrial demands it’s the price elastic for jewelry or silverware but almost any other application its inelastic so if you’re building a flat-screen TV that’s only for I don’t know what they are these days and let’s come down specifically learning work

From say 600 bucks or 2,000 bucks and you’re using a temp an ounce of silver and I don’t think it uses that much but if you’re using it’s similar goes to 100 200 300 announce it doesn’t really matter for the end product in such an insignificant portion of the price

Relative to the amount used and so it’s price inelastic you couldn’t substitute anything and work as well and that’s true of almost all electrical applications so the demand will continue the demand of going back a little more than a decade was about thirty five percent of the entire silver supply now

It’s fifty four percent and in that 10 year time frame we’ve had significant increases the amount of Silver’s coming out of the ground so not only is it you know moving up as far as percentages over half the markets industrial demand it’s done that while the production rate of Silver’s increase substantially as

Well so it’s certainly again important now the argument about you know price too high price being a mechanism that controls supply and demand and it’s true it does especially for a real free market so there might be a curtailment of silverware as an example silver jewelry is a bit of a different story

What’s interesting about silver jewelry is that as gold goes higher with silver vice versa we want to think of it a lot of gold jewelry buyers will switch to silver so the cell are the detriment to Silver’s Julie uh purchasing is actually not significant in the gold market you

And others have estimated that there may be as many as much as a hundred times as much paper silver and silver derivatives as actual physical silver we’ve seen some pretty sophisticated investors lose investments when the silver they thought they had turned out to be paper we’ve also seen some legal action where people

Were paying storage charges for paper silver and the physical melt metal really wasn’t in the vault what are your recommendations for reducing or eliminating counterparty risk in your precious metals investments well obviously the you know Mike Maloney suck at touchy don’t own it so by the physical silver and take delivery of it

And then if you want to redeploy it into a storage of altering or something like that that’s fine I realize that’s not the case for everyone and I’ve done actually several consultations with high net investors that have asked me you know that same question David I trust

You and I want to buy your X amount of silver we’re talking significant money here barely I don’t want I’m not putting it in my office or my house I mean where do I buy it from the Lord oh I store so I give answers to that on an individual

Basis because you know what size of it also is someone that’s us-based event right but uh you want to be careful and what again going back to the tendrils of server that’s what I say in there is to start small you know make a small purchase see how your handled see you

Get it see how much time it takes and all those things that are concerned with especially of your first time buyer and what trick a small purchase for a quick example seeing it about five or ten thousand dollars into the precious metals sort of the thousand dollar

Purchase and see what happens or five hundred dollar purchase and and find out what happens and after that then you’ll be you know you’ll have confidence to go back in and purchase the rest or purchase it over time or whatever you do but some people get very excited about

This market they put the divert know the actual amount relative their network into the metals all at once since I bought the wrong kind about you want people and things to happen I mean this market is probably one the safer ones out there nonetheless there are you know

Places you want to avoid and investments in the precious metals you want to avoid that’s great advice you you’re very down-to-earth and one of your strengths is being able to put precious metals investing into concrete terms everyone even the beginning precious metals investor can understand could you talk

About a little bit about your a little bit of silver presentation all the one about if everyone is yep that’s thank you that’s what it like that one was in my head for a full pull a couple of years but if you talk to most dealers most precious metals dealers they will a

Lot of them are fairly agnostic because a lot of these guys have been around for a very long time and they saw the first bull markets such as myself and their I did about it they don’t have the emotional attachment let’s say to the precious metals and honest money that I

Have and so their basic tenant is everyone should own a little and so that sounds great but they don’t really understand what they just said because first of all everyone if you took everyone meaning the populations of planet not everyone could own a little

So I did this video that you can look up on my youtube channel to go to youtube and type in silver guru you ought to search around I do a fair amount of videos but its biggest tell everyone you know a little or try that mr. Chad you’ll probably

Find it and what I point out is even in the United States if everyone around a couple of ounces you run out of this physical filler supply and two ounces of silver is actually my book a little bit of silver it’s certainly not like sitter an investment my my idea of an

Investment silver be a thousand dollars or more so even at today’s price you know two silver ounces is about sixty dollars I don’t think sixty dollars in investment sixty dollars in the two silver rounds is not going to change your life significantly but a thousand dollars might or certainly can help you

Through hard times or whatever appreciate enough to wear that one thousand could become three to five to ten who knows where summers going I think it’s going far higher but that’s the idea so if everyone owns a little it’s a preposterous statement not everyone can and that’s the beauty of

The silver market is is a very small market the downside is small markets can be manipulated quite easily whereas larger markets which were difficult to do so but again if you start your portfolio correctly with physical silver physical gold and then move into other areas if you so choose then I think you

Have a good balance you’ve all you’ve often said that what people need to do is educate themselves I would like to urge all my viewers to go to your site and seriously consider joining your membership at the level they feel is most appropriate from for them I’m a

Member at the basic plus level and there’s just a wealth of information there stock company updates archives the Morgan report asset allocation table and in addition to the Morgan report you’ll have access to bonus of reports that alone are worth more than the price of admission and they did make it easier

For the audience to find you I’ll put links to your site and the other sort services you offer on your resource page at precious metals investing.com but David would you talk about the services you offer and where people can find you sure i’ll i’ll do all the free stuff first twitter account

Is silver guru 22 on twitter and that basically i don’t tell you if i’m having a latte or something ridiculous like that what i do do is I usually link 3 4 articles a day ah that I think it’s very important in the precious metals or the

Economic picture that I’ve read that I think you know you should pay attention to I have a video channel on YouTube it’s called sri guru the speak for themselves some are a little bit for fun but most of them are pretty serious in nature then the website is the Morgan

Report com they can go to the Morgan report com all in word you’ll find a free e-letter that comes out again weekly you get the tingles ever invested your brand new and then there are three levels of membership services there’s the basic level which is so basically a

Blind hold investor there’s the look over my shoulder basic plus service and I show you charting a lots of videos and do that the gold shows will come the updates that type of thing with you on video and also this ability to look over my shoulder when I see a move coming or

I want to create a position I’ll tell you what I’m doing and then the last we have an advanced service building for fund managers are very high net worth individuals where it’s kind of a potpourri of different things that I think up every month to bring people in

Sometimes we have like an interest broad interview or a certain situation that’s probably not appropriate for the basic membership stuff like that um David are there any questions that you wanted to answer that I haven’t asked you know I think I just make a general comment that

You know investing is great it’s fun again we talked about money transcending everything it is important but I think not to make money the most important thing in your life I mean I strive for balance life I’m still probably a little more obsessed about you know my

Remaining the metals as you know my work details because I’m very passionate about it but also you know take time out for you know all the choice of life has to offer certainly I think we’re facing hard times I’m very good harder but I think you know that puts a greater

Demand on all of us to become you know better human beings all the way around and at the count you know things are better get in our lives in do you know look at look for the good look to the good another’s look look into your life

And now focus on it take the positive I think there’s too much in our industry and I apologize guilty of it as anybody of kind of costly you know beating the drum on the doomed side of the equation but you know every silver cloud every cloud has a silver lining so you know

There’s just that balance of nature of good bad you know the black white up down and everything has a balance so i think a balanced approach to investing a balanced approach to life is the final comment i’d like to make well thank you very much for being with us today at

Precious metals investing.com once again I’d like to urge my viewers here to visit David’s resource page here or go directly to a site thank you so much for taking the time out to talk with me today my pleasure thank you