The Inteligencia Financiera Global blog (Global Financial Intelligence Blog) is honored to present an exclusive interview with David Morgan "The Silver Guru". Morgan is a world known expert on the Silver Market. We are sure our readers from around the world will enjoy it.
(Guillermo Barba, GB). David, you are the “silver guru”. Please tell us, why is silver so important for our modern lives, both as an investment and as a commodity?
(David Morgan, DM) First - common to everyone in modern life is electricity and electronic devices,which are ubiquitous throughout the world. Even remote places have cell phone coverage now. Silver is vital to all electronic devices and therefore as discussed before, silver can be considered the most important element in a high tech society. As an investment, silver has all the attributes of gold, but is a better value as it has more upside potential.
GB. Do you think that silver is a more important precious metal than gold? If so, why?
DM. Yes. I know silver is more important than gold. First, most value is determined by the marketplace on several issues, but one often is the number of "features" a certain product has. For a quick example, take a blender. You can buy one that blends at one speed or you can buy one that blends at various speeds, for different purposes-- crushed ice comes to mind. So the purchase is made based upon the customer's needs, but if both sold at the same price then most often the blender with the most features would out-sell the other blender.
With this context-- Gold is money and jewelry and that is about it. But silver is the most used commodity in the metals complex--
So Silver is used in solar energy, water purification, heat reduction with silver in glass, silver is used in medicine, nanotechnology, and batteries. More than 700 tons of silver are used each year to produce ethylene oxide and formaldehyde, both of which are essential to the plastics industry.
On the monetary issue, silver is the monetary metal of history, having been used as a medium of exchange and final payment for longer than gold, more often than gold, and in far more transactions.
The gold/silver ratio in the ground is roughly one to ten. And the current gold/silver ratio is above 70, which suggests silver is undervalued. The ratio is a method to determine which metal is performing better.The gold/silver ratio was below sixteen for 3000 years; it is only in the last one hundred years that this ratio has been as high as one hundred to one. Some state this has no meaning, and perhaps that is true, but if markets revert to the "mean" it would not be the way to bet.
GB. The silver all-time-high was reached in 1980. In 2011, it was close to reaching a new high but it failed. Since then, it’s been in a correction. Why does the silver price keep falling?
DM. There are two primary reasons, one is that many silver holders have given up and sold metal back into the market. The other is that the quantity of "paper silver" can make up for a great deal of silver demand as most commodities trade far more in terms of derivatives than they do in regard to the actual commodity. Most of the time it is about a factor of one hundred, which means you only need to have about one physical ounce for every one hundred that is traded in the futures or options market. This "oversupply" of paper silver keeps the price well below where it would be if we had an all cash market, meaning you had to pay for the silver in full,with no leverage and no derivatives.
GB. What’s the average cost of production for an ounce of silver? Are these low prices affecting its production?
DM. The price varies from mining company to mining company, but for a primary silver producer we would state with today's oil price, the cost of production is somewhere between $15 and $20 per ounce. For a base metal producer, silver can be accounted for in a variety of ways, and according to which accounting method is used silver could show up for "free" on the BOOKS- but of course we all know this is just a method of accounting, not reality.
GB. Do you recommend investing in physical silver, ETFs, or mine shares? why?
DM. We have always recommend having physical silver first as it is outside the financial system. Fully paid for silver is one of the best hedges against a failing financial system.
Next we like well-chosen mining shares such as those we feature in The Morgan Report because you get - leverage to the silver price and the potential for a company to continue to increase profits thorough exploration or acquisitions.
ETF's do have their place for some investors and we do address these for our subscribers from time to time.
GB. Central banks around the world seem to hate gold and silver. Mainstream economics even consider gold a “barbarous relic”. Do you agree? Aren’t gold and silver real money?
DM. I disagree with the notion that gold is a barbarous relic. Silver and Gold are real money and I have presented this idea numerous times on my YouTube Channel at silverguru. Those interested might type into a Google or any good search engine --"David Morgan and real money." You will find lots of information to explore further.
GB. Should our monetary system return to the gold standard?
DM. We outline in the book that a bimetallic standard - gold and silver is superior to a gold only standard. The book is available on Amazon or it can be ordered through us at TheSilverManifesto.com
GB. Finally David, tell us about your website Silver-investor.com and your subscription service, please.
DM. The website is TheMorganReport.com
We offer a free weekend letter that anyone interested can get for just verifying their email address. Because many want to know when to trade the gold/silver ratio, what stocks to buy or sell, which have the highest rankings, where to get the best deals on metals and many other topics we have three membership services which are described on the website. Further you can follow us on YouTube at silverguru and twitter @silverguru22.
GB. Thank you for the interview.