Zero & Damaging Yields, Enormous Reward to Gold/Silver Buyers; David Morgan: Right here’s Why You Should Defend Your self


Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

Developing David Morgan of The Morgan Report joins me for one more fantastic interview on the state of the metals and the markets. David talks about checking your premises as a metals investor and lays out the case for why it’s extra essential now than ever to not lose your nerve regardless of some lackluster value motion. He additionally discusses the adjustments underway in our financial system, adjustments that everybody must take discover of. So, don’t miss my dialog with our good good friend David Morgan, the person they name the Silver Guru, developing after this week’s market replace.

Treasured metals markets tried to make some progress earlier this week. A lot of the precise value progress accrued to the white metals as gold lagged a bit.

Gold rallied as much as the $1,480 degree mid week earlier than retreating on Thursday. As of this Friday recording, gold trades at $1,467 per ounce, down $2 or 0.1% since final Friday’s shut.

Turning to the white metals, the silver market is displaying a slight weekly advance of 0.4% to carry spot costs to $17.12 an oz.. Platinum is unchanged on the week at $895. And eventually, palladium is perking up once more and is posting a 3.4% acquire this week to come back in at $1,772 per ounce.

Markets haven’t reacted a lot to the impeachment circus taking part in out on Capitol Hill. Maybe buyers sense that regardless of the deep partisan divisions being placed on public show, it’s will enterprise as traditional relating to the large fiscal and financial points no matter whether or not President Donald Trump is impeached.

The truth is, lawmakers and the White Home managed to comply with a stopgap spending invoice on Thursday that averts a authorities shutdown. Politicians agreed to kick the can down the highway till December 20th, when the specter of a shutdown will loom once more if President Trump decides to play hardball with Congressional Democrats.

Trump signed the present spending invoice even if it contained no new border wall funding or any significant spending concessions from Democrats. The invoice will broaden the already ballooning federal funds deficit.

In October the hole between authorities outlays and receipts grew by 34% from the earlier 12 months to $134 billion. The operating funds deficit for the final 12 months rose above the $1 trillion mark for the primary time in additional than six years.

Few in Washington or on Wall Road appeared to note or care. Everyone appears to suppose deficits don’t matter so long as the Federal Reserve retains rates of interest low and stands prepared to purchase authorities bonds in limitless portions.

Fed chairman Jerome Powell has expressed considerations over the funds deficit and the unwillingness of elected officers to make accountable fiscal coverage choices. Powell could want to not be within the place of papering over rising federal debt, however he’s now successfully trapped in that position.

Minutes from the Federal Reserve’s October assembly had been launched on Wednesday. Fed officers expressed optimism in regards to the financial outlook and pushed again in opposition to the concept of using destructive rates of interest within the occasion of a recession.

President Trump has expressed help for destructive rates of interest. Some economists, together with former Fed chief Alan Greenspan, have mentioned destructive charges are more likely to make their option to the USA.

There was a transparent and observable correlation between the worldwide inventory of destructive yielding bonds and funding demand for gold. To some extent that correlation has pushed gold costs increased over the previous 12 months – although we haven’t seen the form of spike we’d see if U.S. charges go beneath zero.

Laborious cash is clearly a superior retailer of worth when in comparison with nationwide forex devices that carry destructive yields.

We welcome the rise in public consciousness about sound cash that may certainly include accelerating forex debasement. However sadly some dangerous actors can even come out of the woodwork to attempt to make the most of folks searching for the protection of gold and silver.

This week an organization known as Chase Metals was uncovered for working a scheme that focused Boomers and older Fox Information viewers specifically. The playbook was all too acquainted to us. It was primarily a bait and change, excessive strain gross sales operation.

It goes like this: Spin a compelling narrative to potential prospects about the necessity to personal treasured metals, then trick them into buying explicit varieties of cash that carry absurdly inflated mark-ups as in comparison with atypical bullion cash.

Victims of the Chase Metals scheme had been apparently led to consider that the silver cash they obtained pressured into shopping for carried some form of particular collectible worth. The reality is that the patrons overpaid by as much as 200% for silver bullion that wasn’t particular in any respect.

Coin schemers like these sadly give our {industry} a nasty title. However right here at Cash Metals Change, we’re working to vary that. We’re dedicated to educating the general public about treasured metals, providing low-premium bullion merchandise, and offering sincere, no-pressure customer support. Our treasured metals specialists should not solely extremely educated, however they’re additionally not on fee, which means they don’t have a perverse incentive to sturdy arm prospects into shopping for one thing that’s good of them, moderately than good for the investor – the exact opposite of the boiler room, closely fee based mostly gross sales construction at lots of the different outfits. As such we’re pleased with the industry-leading popularity we have now constructed, one which earned us Precious Metals Dealer of the Year in the U.S. a few years again.

Properly now, with out additional delay, let’s get proper to this week’s unique interview.

David Morgan

Mike Gleason: It’s my privilege now to welcome again our good good friend David Morgan of The Morgan Report. David, it is good to have you ever on as all the time and we recognize the time at present. How are you?

David Morgan: Mike, I am effectively. Thanks for having me.

Mike Gleason: Properly, we have had a big correction in treasured metals costs, particularly in silver, and I wished to get your ideas on that to start out out right here. To us, it seemed just like the bullion banks bought futures contracts to a lot of speculators who obtained considering metals. Then as typically occurs, the speculators obtained taken out to the woodshed. Nevertheless, open curiosity seems to nonetheless be rising. We might have anticipated that to fall after a pair weeks of decrease costs and ache pushing these longs out of the market, so perhaps one thing else is occurring right here. What do you make of the current value correction and the place do you suppose the markets is perhaps headed within the brief time period? Do you suppose the promoting is perhaps over for now?

David Morgan: I don’t. I believe there’s most likely extra so on the top. I imply, it is doable that we get a elevate right here to do a pretend out from the longs, however I do not just like the construction of the Dedication of Merchants. Silver hit a few three-and-a-half 12 months excessive, which hit $19.65 which I consider was the highest of this spot market. And we have had a number of cases over the past six, seven, eight years the place the final day of buying and selling was the low choose for the 12 months within the metals. Historically they begin shifting up the top of the 12 months, however that is not been the seasonality for a few years now. So, I believe we will drift off decrease. It is doable that the underside is in, I known as the 4 a few $1,450 on gold, a few 50% retracement from the $200 transfer that went from $1,350 to $1,550 when it lastly broke that six 12 months buying and selling vary and it is accomplished that. However but in wanting on the CoT, I believe we most likely going to see decrease earlier than we see increased.

Mike Gleason: Clearly one requested to form of test it is test their premises after a simply the lengthy interval, particularly in silver. Gold in fact did attain that six 12 months excessive silver has by no means gotten to that time or we’ve not actually damaged out of the buying and selling vary. I am certain you are most likely doing this on a regular basis, checking your premises and the place issues are, I imply is gold and silver nonetheless going to be a superb place to be over the long term regardless of all of the consternation and the issue that we have seen over the previous couple of years?

David Morgan: Completely. I imply we’re dealing with one thing that is actually by no means been, taken place in financial historical past not less than what we all know of recorded historical past, and we’re seeing the demise of the age of empire. I imply mainly the whole lot was constructed on this method, on cash and the cash system is definitely designed to fail from the beginning. You can’t have infinite rates of interest. And what it imply by that’s the, the exponential perform, the compounding of curiosity over and again and again. They will go to infinity ultimately. So, we have had changes and definitely some very huge issues all through financial historical past. I imply there’s a number of that we will title. The purpose is, I do not suppose it is ever been one in every of this breadth and scope the place mainly you recognize that 7 billion folks on the planet and only a few will come out unscathed. It is definitely not the top of the world, however there will likely be an adjustment and the way huge how onerous and the way lengthy that adjustment is, nobody actually is aware of.

I believe the principle factor to do is to at least one, not panic and to comprehend that every one the wealth stays in place. I imply all of the agriculture, the entire oil fields, all of the buildings, they’re all nonetheless there. However what takes place in a monetary adjustment, a forex reset, any phrases that you simply wish to use, is that the possession adjustments mainly. So, you may have lots of people that is perhaps over leveraged, and the over leverage will take them out of the sport so-to-speak. So, actual property investor that is on the margin, that is very leveraged, ready for, as an instance hyperinflation to bail them out could have made the unsuitable wager. There will likely be deflationary forces. It is inevitable due to the way in which capital markets are arrange. So, when the bond market begins to fail, rates of interest will begin to be pushed up and that may lower the worth of the bonds.

And since they’re so large and so broadly unfold out among the many monetary capital markets, they mainly contact the whole lot… pension plans, retirement financial savings, financial savings, even cash markets, the whole lot is mainly touched by the debt markets. There’s nothing that actually may escape it. So, that is one thing that had my eye on for years and I’ve all the time acknowledged that, watch the bond market that holds the keys to the dominion and the bond market actually begins to be questioned for its capability to not simply pay the curiosity, however what’s the actual worth one thing that may by no means be paid off, i.e. the nationwide debt? Then sooner or later you will most likely begin to see some motion within the bond market. I consider what occurred in my lifetime. I do not suppose we have one other 5 years, however folks akin to myself and others earlier than me have made statements much like that after which they’re unsuitable of their timing, and it’s extremely tough to say when.

The truth is, I used to be listening to a podcast this morning as a result of I strive greatest to remain up on all of this and his forecast was like 2047 and I overlook the way it got here up with that quantity, however it by no means hurts to be early. And because the markets twist and switch the least valued belongings proper now, notably silver and gold, considerably relative to the S&P, the DOW, the true property market or anything. So, each metals are undervalued, notably silver. So, once you purchase one thing undervalued and add it to your portfolio or steadiness or rebalance your portfolio is one thing we actually ought to think about.

Mike Gleason: Actually, a key factors that you simply hit on there’s that it is by no means dangerous to be early. You undoubtedly do not wish to be late. Being too early as just isn’t the of the world. Being too late is catastrophic.

It is clearly not been a complete lot of enjoyable for gold bugs lately. The Fed has returned to reducing rates of interest. They’re pouring a whole lot of billions into the repo markets they usually have launched a brand new program to buy treasury notes, which seems to be suspiciously like Quantitative Easing. One would possibly suppose the entire stimulus together with the difficulty the Fed is attempting to handle within the repo markets would drive treasured metals’ costs increased, however that is not what occurred. For many buyers the takeaway from all this extraordinary Fed coverage appears to be “purchase extra shares” and “there is not something to fret about.” Do you suppose that’s the proper takeaway and may the Fed hold this celebration going some time longer?

David Morgan: Properly, it isn’t the proper takeaway, however it definitely factors to the actual fact that there’s a lot of manipulation and management in these markets. I imply anybody that is subjectively wanting on the information, as you simply acknowledged, sees that there is more cash printing occurring. This repo factor is scarier than it seems to be and but, the inventory market continues to make new highs. I am simply repeating again what you mentioned, however basically all these information ought to result in increased treasured metals’ costs they usually do not. And why is that? And the reason is, as virtually anybody that is ever listened to me or any most individuals in your present would say, look, it is the paper paradigm that runs the futures markets. And that is how the costs decided. And till that’s damaged sufficient for the market to settle based mostly upon the bodily market, you may have the power to mainly management the value kind of.

And that is unlucky. Folks hear that they usually get discouraged and he mentioned, effectively, you recognize, why battle the Fed? I am simply going to be within the inventory market. I do not wish to be the metals. However as we mentioned within the final phase, it is essential to be ready for what the eventuality is as a result of nothing grows to the moon. The Fed Is just not all mighty, regardless that it may appear that manner at instances, and we’re getting close to the top. I do consider, I do know that is actually robust to time, however I am unable to see it occurring for much longer. Our debt is so excessive relative with the curiosity funds are, and that is with low rates of interest. If rates of interest get pushed increased as I outlined a second in the past that it is increasingly more tough to service the debt. So, no, the elemental information have most likely by no means been extra essential for proudly owning some treasured metals.

And but the market is simply worn out. I imply it was a six 12 months buying and selling vary for gold. It lastly broke above it. It went up moderately considerably. $200 on a $1,350 is a reasonably good transfer given up half of it and it is taken awhile, and other people say, “Ah, that is it.” And it could remark, and naturally you may touch upon my remark as a result of as you recognize Mike I discuss to lots of the wholesalers and retailers on this market and many of the greater ones as effectively… and I used to be advised by one moderately considerably sized retail seller that they had been getting a 4 to at least one ratio, which means they had been shopping for again from retail, not on the wholesale aspect, about 4 instances as a lot gold as they had been really placing via the door. So, most of this transfer has been based mostly on the larger cash, in different phrases the ETF’s, hedge funds, banks, you recognize China, that kind of factor.

Mike Gleason: Yeah, definitely that is much like our expertise as effectively. Undoubtedly form of a skewed to at least one finish there. Properly we would prefer to get your feedback on the division of justice investigation of the bullion banks, they’ve indicted a number of bankers together with six now from JPMorgan. They’ve gotten just a few responsible pleas and a few of these guys look like cooperating. The DOJ goes to be prosecuting utilizing RICO legal guidelines, which means there’s proof which works past dishonest by just a few rogue merchants. They’re treating this exercise like organized crime. On one hand we’re skeptical about whether or not the investigation goes to result in actual outcomes. We’ll consider it once we see it relating to the federal authorities doing something severe about corruption at main Wall Road banks. The banks just about personal Washington DC, as we noticed in 2008 when large fraud led to precisely zero excessive degree prosecutions and crooked bankers had been handed bailouts as a substitute. Then again although this prosecution does form of appear to be it is perhaps going someplace. Do you suppose the DOJ is perhaps severe about this investigation?

David Morgan: Oh, I definitely hope so. I agree with you. I imply, I’m on report as having mentioned there’s going to be one other, you recognize, wrist slap and that may be about it. However now that you recognize extra are concerned and it looks as if there is a little bit of a pit bull angle, which means that the DOJ hasn’t given up or going away very simply this time. I’m optimistic that could be simply perhaps they’ll really pursue some justice on this case. It stays to be decided. So I am barely optimistic that I may have been unsuitable earlier after I mentioned it might be nothing greater than one other, you recognize, wind up everyone after which it is only a wrist slap, pay the high quality and return to enterprise as traditional. It definitely hasn’t modified the buying and selling construction of the COT. That will be one indication to me that the banks are scared that there is going to be some actual effort put forth to this investigation and the prosecution course of. And up to now it has not indicated that.

Mike Gleason: Getting again to metals costs right here, David, the gold to silver ratio has been fairly stubbornly caught within the mid-eighties about 85 to at least one as we’re speaking right here at present, we noticed it rise up to about 90 to at least one earlier this 12 months and after a summer season rally it fell. However I do not suppose it fairly obtained beneath 80 to at least one at any level. Though perhaps it did inside day maybe someday over the summer season, I do not recall precisely. So, it looks as if the ratio, like silver, is de facto caught in a variety. It is between say, 80 and 90 to at least one. So, what do you make of the gold to silver ratio, David?

David Morgan: Properly, it is traditionally excessive. It has been as excessive as 100 just a few instances because the crime, 1873 when silver was actually demonetized. When you may have silver and gold performing the identical perform, which implies cash, it is by no means traded above 20 to at least one. So, when you return to historic Egypt until 1873, mainly, silver had a ratio of 20 ounces of silver to at least one ounce of gold or decrease more often than not, decrease like 12 to at least one 10 to at least one 9 to at least one, that kind of factor, till it grew to become a commodity solely. And so it actually relies on how issues on unravel going ahead. And when the financial demand for gold accelerates, it is going to spill over to the silver market. And as soon as silver is considered extra on a financial foundation for funding foundation, for defense foundation or something that you simply affiliate with defending capital or making capital positive aspects, that is once you’ll see the ratio come down.

And I am sure that it’s going to, it is simply onerous at this cut-off date when issues have gone on for a very long time. I imply the height in silver was the top of April or early Might 2011 and right here we’re on the 12 months 2019 and silver has not carried out in addition to gold. Gold’s at a six-year excessive, however silver hit a 3 and a half 12 months excessive and fell off quickly. So it is robust. I do nonetheless consider within the metals and it isn’t as a result of I am cussed is as a result of I studied financial historical past so deeply and intensively, and I do know the end result forward just isn’t one which’s very fairly for the fiat system and it is obvious. I imply, when you simply overlook the whole lot I’ve ever mentioned in regards to the treasured metals, simply look within the panorama of cash because it’s perceived proper now, there’s a lot of various issues occurring within the financial system.

Bitcoin might be the prime instance. There’s anyone someplace that mentioned, “Look, I’ve had sufficient with what the federal government’s management I am going to do that one.” And naturally there have been a variety of copycats on the market, however that is what occurs on the finish of the age of not solely impart the top of the age of a forex experiment that has all the time failed previously. So, that is a superb indicator. It does not have to simply be gold and silver as a substitute. They’re all alternate options which might be coming to the fore on a regular basis. After all you may have treasured metals again cryptos to some extent and you’ve got others which might be related to the completely different commodities and you’ve got some which might be simply fiat, mainly. They’re simply an edict that claims we’re solely going to make this many. There’s some which might be limitless. Nonetheless, the principle level is that there’s a striving to search out a substitute for the present financial system.

Mike Gleason: Yeah. There definitely one thing that continues to go on beneath the floor relating to our financial system and yeah, folks have to be aware of that and acknowledge that not one of the issues of the final eight, 10 years have been resolved to any extent. The truth is, they’ve solely turn into worse. So, I believe once we’re speaking about checking our premises as treasured metals minded people, we have to hold that in thoughts.

Properly lastly, David, let’s get to any last feedback that you could be wish to depart us with at present. Maybe one thing that we’ve not coated but. What are you going to be watching most carefully or what do you suppose folks should be specializing in?

David Morgan: Properly, as I’ve all the time acknowledged, I believe the perfect factor to do, in case you are inclined to know the place we’re in our present financial system, it is most likely very clever to have some treasured metals. And if you wish to transcend that… I imply, I do not actually just like the state after I heard it, however it’s completely true…. one in every of these previous timers, after I spoke to the Society of Mining Engineers very early on on this profession, after my discuss a man got here up and mentioned, “Oh, I’ve all the time made more cash and paper silver than I ever have paid in silver, silver.” And what he meant was not futures, he did not even imply choices. What he meant was the mining equities. And so that is true. I imply, for instance, once we had a terrific run in 2016 and I believed that the bull market had restarted for the dear metals definitely seemed prefer it on the time, however at turned out I used to be unsuitable.

It’d’ve been a false begin. I am not going to make an excuse. I used to be unsuitable. Nonetheless, it was a really huge ramp up for the metals. We had a silver and gold carried out from January 2016 all the way in which into September after which they began to appropriate. The purpose is the silver made a reasonably good proportion transfer, however we have traded First Majestic virtually completely throughout that timeframe and through that timeframe it outperformed the steel like 5 to at least one. So, there are occasions when equities do play part of the portfolio, however they’re for aggressive buyers. It is not one thing that is an informal purchase and maintain kind of state of affairs. These are unstable, excessive beta, which means excessive volatility shares, and also you just about must know what you are doing to carry out effectively in a portfolio. And once more, it could be a part of an total construction. It would not be simply these shares as a result of they do transfer up and down so quickly.

Mike Gleason: Yeah, you both want to actually know what you are doing and find out how to determine and decipher a geologic survey put out by a mining firm otherwise you simply have to get connected with folks like The Morgan Report and allow them to do a variety of that evaluation for you, such as you’ve been doing such a terrific job through the years. Properly, good things, David. It is all the time an actual pleasure and we recognize your insights as soon as once more. Now earlier than we allow you to go on that be aware, let’s inform folks about The Morgan Report and the way they’ll get on board after which comply with you extra carefully.

David Morgan: Certain. Simply go to, our major web site, give me a primary title and an electronic mail. We’ll put you on the free listing. You will get a weekly replace, I name it the Weekly Perspective. I speak about an important monetary information that you simply most likely will not discover wherever else. A few of it is mainstream, like a Bloomberg or Reuters or no matter. These are articles dug out that most individuals overlook or do not have the time to search out. After which I often wrap up the top of the phase with some remark or commentary on each gold and silver, and it is a great way to form of catch the, as an instance, various view of the information. And it isn’t simply bloggers or something like that. Numerous stuff is mainstream, however you bought to know the place to look to search out it. And the principle theme over the past say, a number of months, Mike, has been, there’s actually a contraction within the international economic system.

And the second factor is that we have now a meals state of affairs that is going to hit everyone right here most likely within the not too distant future. In all probability throughout the subsequent six months, 12 months on the most. And that is one thing that will spark the metals as a result of it is fairly onerous to cover rising meals prices, or rising vitality value. The 2 issues that Individuals notably take note of is how a lot does it value me to eat? How a lot does it value me to replenish my tank of gasoline? And so, I believe that would, I’m not saying would however may, be a catalyst for folks to say, “Why is that this costing me a lot, there have to be inflation.” And in a manner it’s, however in different methods it was provide and demand. So, it may be fascinating to see how issues progress throughout these very, very turbulent instances and I do not wish to be overly aggressive on the gloom, doom kind of situation.

Actually there’s much more to life than cash, however nonetheless I believe an opportunity favors the ready thoughts. So, in case you are ready, you’ll be able to sleep effectively at night time and regardless if I am off by an element of a decade or not… it is one thing, when you’re my age, you would possibly move on their youngsters… so long as you do not over make investments I believe it is really one of the simplest ways to guard your self financially trigger it is outdoors of the present system. And that is a key level that some have mentioned however most likely is not emphasised sufficient and the whole lot fails as a thought experiment. To illustrate for example, the banks go down due to some electrical failure someplace. You’ll be able to all the time go to your trusty cash and there they’re, they usually all the time have worth. So, I am going to depart it at that Mike.

Mike Gleason: Yeah, very effectively put a superb abstract there and could not agree extra. Properly, thanks once more David. I hope you may have a terrific Thanksgiving and we’ll be catching up with you once more down the highway. Care for my good friend.

David Morgan: All proper, you too. Thanks.

Mike Gleason: Properly that may do it for this week. Thanks once more to David Morgan, writer of The Morgan Report. To comply with simply go to, you can too comply with him on Twitter. It is @silverguru22 and if you have not already, seize a replica of his ebook titled Second Chance: How to Make and Keep Big Money During the Coming Gold and Silver Shock Wave, which is out there at and different locations the place books are bought. Make sure you seize a replica of that at present after which try and begin getting the fantastic commentaries that David and his workforce put on the market on an ongoing foundation.

And do not forget to test again right here subsequent Friday for our subsequent Weekly Market Wrap Podcast. Till then, this have been Mike Gleason with Money Metals Exchange, thanks for listening and have a terrific weekend everyone.

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