David Morgan: “During The Last Bull Market, Alot Of People Gave Up At $100 Gold”

“If you really have conviction for this sector, Then you have to review—have the fundamentals changed? And if the fundamentals haven’t changed, that’s a good reason to stay.  Another reason to stay, is that the best time to buy is when nobody wants it. We’re certainly in the case right now in the mining shares, where really—nobody wants them. So that’s a great time.
In all [bull] markets…there gets to be an acceleration point, where it becomes the ‘got to have’ investment…and once that happens you get an acceleration in price to the upside, and I really expect that to happen in the metals. It’s not here, it’s not now—but I’m very confident it will take place.

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Submitted by Tekoa da Silva, Bull Market Thinking:

I had the chance to reconnect this week with David Morgan, publisher of The Morgan Report. It was a fascinating conversation, as David began studying the silver market at age nine and has since become known as, “The Silver Guru”.

During the interview, David spoke towards first-hand observations made during the 70′s metals bull market, and the conviction it takes to remain positioned while most others have thrown in the towel. Those with a clear understanding of the fundamentals according to David, are most able to participate in the ultimate market “acceleration point”.

Commenting on the short-term technical picture, David noted that, “They [the miners] are so low right now…I don’t know if the bottom is in or not, but it sure looks like it to me. As far as the metals go, I’m pretty sure that the key reversal on the 28th of June was it. But again, time will tell.”

Reflecting on the mid-market shake-out during the 70′s, David said, “I recall during the first bull market that we saw gold from it’s official fixed price unleashed in 71′, move all the way up to $200 oz over time…and then it sold-off substantially…to $100 oz. I remember the gnashing of teeth, people couldn’t believe that gold had been to $200, when it was now at $100 oz. A lot of people gave up, and it took some time to work back to $200 oz.”

Following that recovery to $200 oz., David indicated that, “People [argued]–’Well it’s a double top’–but then it went from the $200 oz mark to $850 oz.”

“If you really have conviction for this sector,” David explained, “[Then] you have to review—have the fundamentals changed? And if the fundamentals haven’t changed, that’s a good reason to stay. Another reason to stay, is that the best time to buy is when nobody wants it. We’re certainly in the case right now in the mining shares, where really—nobody wants them. So that’s a great time.

As a final comment based on over 40 years of investing in the silver market, David said, “[In] all markets…there gets to be an acceleration point, where it becomes the ‘got to have’ investment…and once that happens you get an acceleration in price to the upside, and I really expect that to happen in the metals. It’s not here, it’s not now—but I’m very confident it will take place.”

——

This was a powerful interview with one of the world’s most experienced silver investors. It is required listening for serious investors and market students.

To listen to the interview, left click the following link and/or right click and “save target as” or “save link as” to to your desktop:

>>Interview with David Morgan (MP3)


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Comments

  1. Looks like my question is being answered here on the mining stocks. Lol Maybe the time is right. and the Fundamentals are right. Lol Keep Stacking
    P.S. Marijuana Fields, hell that might be a plus. LMAO

  2. Those that decide at this point to begin investing in the mining shares might as well hop on a plane to Vegas and play a little black/red on the roulette table. They have a better chance of guessing the outcome than knowing what plans the bad guys have for the mining companies and their stocks. Good question would be”In some type of equities market meltdown situation, what makes Morgan think that mining stocks wouldn’t get hammered more than they already have thus far”? My advice is to take a position in physical pm’s now that will be your end game position regardless of what that might be. Hold the rest in cash and wait. This talk of continued stacking in this environment(unless you have not achieved your endgame position) is crazy, based on the fact that silver could go to $16-$20 for the next many years. Don’t get me wrong, I hate saying that but it’s possible. The fundamentals are out the window and these guys simply don’t know what is going to happen. Regards.

    • Inflation is a fact. Cash inflates away from you.
      Perhaps metal will remain near these bottom levels for years, but ounces are ounces.
      We are at the ocean shore. Our travel goal is the summit of a mountain. We can see the mountains on a clear day, but which mountain we’ll manage to summit, is unknown. We know it’s going to be a good 2000m higer than where we are. The road though, we can only plot when we know the exact destination. So, we make our way towards the mountain in the distance. Is a path that leads lower always a path away from our destination? No. A road may well dip below sea level and still be the fastest way up a mountain. If anything, the low road gives you free acceleration, gravity powered. Yes you lose this speed on the other side of the low detour, but the flat section is traveled at higher speed, taking shorter time.
      A low path in silver prices means that those of use who are spending all our free purchase power on silver, get more ounces. These are off the market. It hauls in the mountains closer to the sea, as the given moment of shortage (every market has periods of shortage) apparently will be sooner rather than later. More silver taken off stockpiles sooner. We may not be getting nominal gains in the beginning, but we’re sitting on more silver than we projected. This is a fact in my case. I am not in a good place financially but the stacking has been stellar this year. Way ahead of the very most optimistic schedule. Easy to get greedy, but I am thankful to be ahead. 
      I prefer silver over cash, and went all-in again 21 hours ago. I was too sleepy to make the absolute bottom of that night, but still happy I waited up for it. Yes even though silver is currently at the same levels pretty much. I slept great, over 9 hours, knowing I had less cash and more silver. A great year for stackers. Prices of everything you need up, silver down. Not perfect, we’d love to stack harder, but for what we have, we can stack greatly. Under mining cost, yeah!
       

  3. The 70′s had inflation to make the gold bull, todays gold market does not. That could change, without heavy inflation, the PM market can’t make new highs.

    • Keep yapping you worthless troll. Someone might hear you someday.

    • Trader Dan- “velocity of money if falling”   ” CRB index cannot gain any traction”  “stagnent wages”
      “The current monetary system, with the US dollar as the Reserve currency is fatally wounded but what is there to realistically to replace it?  NOTHING.”
      http://www.traderdannorcini.blogspot.com/2013/10/velocity-of-money-falling.html
      This is not the 70′s, today is a completely different set of circumstances.

    • What is there to replace it? Chinese are chomping at the bit and are setup with gold backing

    • zman you bring up some good points.  I don’t care to counter like most people just point out that in the 70′s precious metals like gold were not huge derivatives like they are today.  That means the paper market controls the physical which is a recipe for disaster.  
      The real dilemma happens as the paper market continues to drop in price.  I can already see $10 or $15 silver on the wall but miners cannot product anywhere near that price.  At some point physical gold stops trading because it can no longer be produced for $800 or $1000 an ounce.  At that moment the SHTF.
      It will happen through a weekend Bank Holiday or similar type of default.  There will be no warning.  While I disagree a lot with these so-called experts, one item I do agree is at that point is either you have gold bullion in your hands or you don’t.  Either you have physical gold otherwise you are holding paper and at the mercy of the banks.  There will be no gray areas or disclaimers.  Either you can go to a vault and put gold bullion in your hand or you can’t.  Its that simple..

    • I do wonder about the cost of production.  How much ‘fat’ exists in these companies due to years of high profits?  What costs can be cut, shift focus from mining all grades to mining only high grades, etc. 
       
      If prices get too low then the miners will stop producing.  You do mention the paper markets, but neglect to mention that paper=physical if you want to make the effort.  It is not physical overnight, but the cheapest silver and gold is still October, meaning buy paper and don’t sell and you have physical in a few days.  If the paper price becomes the cheapest silver out there, it will get gobbled up by those who need physical, and as a result prices of the paper will move higher to ‘converge’ with the true physical price.

    • This “cost of production” argument is based on a lot of misinformation in my opinion.
      80% of all silver production comes from a by-product of base metal and gold mining. Freeport, BHP, Barrick are still going to be pulling out lots of silver even if the price drops to $10-12 oz, even Hecla, CDE, and PAAS will be mining their primary silver mines, so the 90% of the silver production will remain.
      Same with gold mining, Barrick, Goldcorp, and Newmont have already spent the Cap-Ex for the majority of their major mines, and the production costs are only $500-600 per oz, so their is still plenty of profit to mine even at $900 oz, they are not going to stop mining gold at sub 1000 oz level.   Yes, new projects will be delayed, but up and running mines with at 10-25 life will stay producing regardless of price.
      Yes, some of the smaller high costs miners will shut down at sub 1000 oz prices, but most likely 90% of production will remain on line.
      “paper controls the physical”   I disagree, the physical controls the paper price. Are there any physical shortages of silver?  No, despite being in the low 20′s for over 6 months, there is still always available silver to buy for industry or investors.  The only thing that will more the price of silver higher is stronger physical demand, it still remains weak.

    • Who says there is no inflation?  Printing money = Inflation.  The people in the US are always deceived to think the world revolves around the US.  Look at China, Hong Kong, India, etc, and tell people there there is no inflation.  The US prints currency and is able to export the inflation, but the rest of the world is getting tired of this corruption.  They are finding many alternatives to the Dollar, but even they don’t want the Dollar to collapse suddenly, because they hold so much of their savings in Dollars.  But countries like China are buying Gold for a reason.  They have little faith in the Dollar, and they by no means think holding cash is safe.  Why else is China also buying real estate, land, businesses, etc, all over the world?  The ‘velocity of money’ may be low for the economically depressed West, but the people in creditor countries are buying up hard assets as fast as they can, because they know the days of unbacked fiat paper currencies are numbered.

    • “Why else is China also buying real estate, land, businesses, etc, all over the world?”
       
      For the very same reason that many of us are.  They want to convert as much dying fiat currency as they can into real tangible goods and, hopefully, before the fiat currency that they hold goes totally toes up.
       
      Additionally, China wants to secure their food supply for the present and the future.  They know that they cannot grow or raise all of their food in China, so must procure land in other countries where food can be grown and raised that can then be shipped back to China.  They also want to export more people and what better way to do that than to buy businesses in other countries and staff them with Chinese?  Yippie Kai Yea, Chuk Fu!  Making the fluent speaking and writing of Mandarin Chinese a job requirement will eliminate virtually all non-Chinese from applying for those jobs.
       

  4. David Morgan, Jim Sinclair, Bix Weir, et al.
    The diffrence between them, and us is really very basic. They are not playing with the rent money.
     
    The people who control these markets, are without question, the most powerfull people to EVER walk the planet. Don`t loose sight of that fact.
    The only thing people in power want, IS TO STAY IN POWER. That`s it.
     
    The democrat`s have had ample time to right the ship, as have the republican`s. They don`t want to.
     
    But what do I know. I proclaimed that in 2008 TARP was the final fleecing of America.
    There is an old saying “YOU CAN SHEAR A SHEEP MANY TIMES, BUT ONLY SKIN IT ONCE”.

  5. not much to say  I’m just testing my email and computer system which are on the fritz. I guess the NSA found me out.  Cheers
    Go Gold or Go Home.  Or something to that effect

  6. not much to say  I’m just testing my email and computer system which are on the fritz.  I guess the NSA found me out.  Cheers
    Go Gold or Go Home.  Or something to that effect

  7. I read with interest about Russia setting up an exchange with figures denoted in Ruble. Like I was saying the other day when I was wondering which fiat will get the last chair at the party. the only fiat I would want would say: worth your weight in gold…or something to that effect. Worth your gurus weight in gold um…

    • I am waiting for the Chinese and the Russians to come out with a gold-backed trading currency.  Initially, this would not be used in everyday personal commerce but would be used in international trade settlement with other countries that also have a gold-backed trade currency… or gold itself.  Trading paper for gold is going away and quickly.  Trading gold for real tangible assets will be a workable system.  It will be interesting to see how they fix the price of gold as all this unfolds.
       

  8. Ed, unless we end up back on a gold-backed paper currency, in which case we are all set up ready to get scammed all over again, I think the only true measure of the price of gold would be as measured in other commodities – grain, pork bellies, oil etc.

    • I agree, Speros.  In fact, if one looks at charts of the prices of gold or silver vs. oil, an interesting picture emerges… and it is not the same pablum that the financial media cranks out every day.
       
      It is possible to have a dual currency system, one for internal use and one for external trade use.  Either of these could be gold backed but it is a lot more likely that the trade currency would be gold backed.  The problem in this is that a gold backed currency cannot be traded for a currency that is not gold backed.  Sooner or later, someone will be trying to exchange the gold backed currency for real gold.  If it works both ways that’s one thing but trying to work it any other way is not.  Also, part of my comment on exchanging paper for gold refers to us being able to buy gold with FRNs.  This works until the paper Ponzi scheme collapses and then no one will want paper at all, let alone trade it valuable gold.  :-)
       

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