Conspiracy Facts Show Metal Prices Have to Rise

Even in a frozen metals price market, it only takes one event to shake off the paper manipulation keeping prices below what supply and demand fundamentals of a free market would dictate. And when that correction comes, it could happen quickly. In this interview with The Gold Report, The Morgan Report Publisher David Morgan shares his favorite ways to own leverage to metal prices upside while protecting against junior mining risk.

Gold and Silver Bars

The Gold Report: You and David Smith recently wrote a piece titled "Gold and Silver: Heading for a Blue Screen of Death Event." You compared the gut-wrenching panic of suddenly facing a computer that stops working with a precious metals market that seems frozen, in the case of gold, in sub-$1,200/ounce ($1,200/oz) limbo. But then you suggested that, like a Windows operating system, the metal could be rebooted on its way to once again hitting $1,900/oz. What would it take for something like that to occur? How do you hit Control-Alt-Delete on a commodity? Continue reading "Conspiracy Facts Show Metal Prices Have to Rise"

David Morgan: 'The Silver Bottom Is In: Time to Hold, Add and Ride It Out'

The Gold Report: When we interviewed you last, you mentioned the possibility of "resource wars" in 2014 as referenced in Michael Klare's book of the same title. What will that look like to the average investor?

David Morgan: The resource wars have already started. Look at Mexico. It has a resource that it covets very much, and that's energy. That is why the government levied a new tax designed primarily at energy but subsequently adds a 7.5% royalty on mining profits. Is it a war? Not per se, but it is detrimental to companies that operate in Mexico today and in the future. I think we will see even more of this kind of thing in 2014.

TGR: Last year was a volatile year for precious metals prices with silver going below $20/ounce ($20/oz) and gold bobbing around $1,200/oz at the end of the year. Are we still three or four years from $100/oz silver as you said in your last interview? What's going to push it to that level? Continue reading "David Morgan: 'The Silver Bottom Is In: Time to Hold, Add and Ride It Out'"

Interview with a "Silver Man"

Earlier this week I had the chance to talk to David Morgan from and ask him some questions about the futures markets and silver. Here's David's bio and below you'll see my mini interview!


Trader's Blog: David Good morning! How are things?

David: Things are well, just got back from vacation and am looking forward to getting my nose back into the silver that's for sure.

Trader's Blog: David let me get right to it here....Can you give us a brief overview of how the futures markets operate?

David: Until very recently the futures market has been operated the same way basically from the inception.  It’s what’s called an open outcry market.  Guys jam literally into a ring.  It’s a round section with tiers going up from the floor, like a cone.  The levels represent different months. This same layout is for different commodities; a wheat pit, a corn pit or ring as referred to in New York.  Now most futures contracts trade electronically.

What takes place is an auction method, and the futures price is set by this method.  This method actually sets the spot price.  The spot price is called the cash market.

Now, once that price is set, that doesn’t necessarily mean that you can buy silver or gold at that price that’s set in that pit.  You can buy it for that price plus a few other fees, such as a delivery charge and transportation, but basically you will pay the price set.

I want to be very clear; there are times that the silver market and other markets go into what is called backwardation, where you actually have to pay more for immediate delivery of the real product than you can purchase the same commodity for in a future delivery month. This is a sign of a tight supply situation and usually does not last for much more than a few days.

Conversely, in the past we have seen the opposite. If we go back to the 1980 high of January 21, 1980 – the peak in precious metals in real terms, not nominal terms the price of silver in the physical realm was less than the futures price. I was in Los Angeles at the time, and even though silver in the futures market was over $50.00 the ounce, in the futures exchange, on the spot market, closing that day, the actual price that you could sell your silver physically for all over Los Angeles, every dealer that I checked with  – was $35.00 the ounce.

So the dealer community bid it back $15.00 from the actual futures price.  I want people to be aware of the facts and this was at the high and a very fast moving market.  I’m really trying to be objective here.  Now, the way we’re going in the silver market and the gold market right now is that anyone that really understands these markets are willing to go to the futures markets and take physical delivery.

I do expect these premiums to close up, meaning, that what you have to pay your local coin dealer for silver being greater than the spot month is going to narrow so that if you have to pay, as an example, $14.00 for one ounce of silver at your coin dealer, and the futures price is 10, those two will come together at some point in the future.

I wrote an article about that recently; if you haven’t read my Web site, you might go there, It’s called Silver Arbitrage; where I explain these arbitrage opportunities, usually don’t last for a very long time.

Trader's Blog: Okay.   I guess what I’m driving at is reading the Internet that some say big interests are depressing the price through Comex.  I don’t understand how they succeed in that and why they don’t just lose money and go out of business and why the price doesn’t just reach its natural equilibrium due to supply and demand rather than this manipulation?

Continue reading interview

The Biggest Mistake Silver Investors and Traders Make

Last month I invited David Morgan to come and do a guest blog post. Well we received a huge email and comment response to bring him back for more analysis.


The Biggest Mistake Silver Investors and Traders Make!
Do you know what it is?

by David Morgan

To say that investors in the resource sector have been having a bumpy ride for the last six months would be the understatement of the year! Whether you hold mining stocks, buy physical precious metals, or play the futures market, it’s been hard to make dimes and easy to lose dollars. How is a trader supposed to keep his or her balance during these turbulent times, when gold and silver can make bigger up and down moves overnight than they normally do during the daytime session?

I’ve said many times that the market will seek to find and lay bare every weakness a trader has (both in personality and trading style). In order to survive and trade profitably, it is not enough just to become proficient in the mechanics of buying and selling. What is critical is to spend the time necessary to develop a thorough understanding of yourself.

An old Chinese saying that many of my readers have no doubt heard, but which in today’s market environment certainly bears repeating, goes:

If you know your opponent and yourself, you will be victorious in one hundred battles.
If you know only yourself, the odds are even.
If you know neither, there is great danger in one hundred battles.

Tony Burroughs of the Intenders tells us that, to a large extent, our reality is formed by the way we talk to ourselves. Almost always, the outcome of something we are doing will be more productive and positive if we “intend” rather than “try” or “hope.” When the markets are challenging, as they have been lately, “the novice buys into the doubt, but the ‘knower’ pushes the doubt aside and continues forward.”

Start by asking yourself if the reasons you initially invested in mining stocks and metals have changed. Do you believe the fundamentals are different now than they were a few months ago? Are your goals and how you plan to achieve them still aligned? Can you still focus on the larger, long-term picture and turn down the short-term noise?

If you believe, as I do, that this secular bull market for gold and silver has a long way to run, then you can more easily deal with current conditions, limit second-guessing, and make the trading decisions that will keep you in the game.

My friend Pat Gorman has spent much of his life helping others to develop the tools they need to succeed, as well as spending no small amount of time in the search for balance in walking his own path. He likes to speak of two important concepts that can help us stay centered and move forward professionally and personally. These concepts are discipline and gratitude.

Be disciplined in studying about the markets you choose to invest in, and then follow through on what you have learned. Just as important, take time on a regular basis to express your gratitude for what life has given you and the opportunities it presents. Sure the markets and the profit we hope to make from them are important. But doesn’t the real value in our lives rest with our relationships and the health of family, friends, and ourselves? Aren’t you privileged to live in a country that in spite of its many problems is still a beacon for millions of people from around the world?

Developing a thorough understanding about yourself and making sure your self-talk moves you in the direction of your personal and professional goals may not seem as exciting as pulling off a ten-bagger mining stock trade or catching a one-dollar move on a silver futures contract. But it really does offer the potential of helping your trading to become more consistent and enables it to flow with the market, regardless of what it is doing on a given day, week, or month.

Let’s face it. Not only is the market unaware that you exist, but it probably wouldn’t care, even if it knew. There are valid reasons for seeing the trading floors as battlefields, because that’s what they really are . . . titanic battles between bulls and bears.

When the day comes that you have developed a good understanding not only of the markets, but of yourself as well, you may then truly become “victorious in one hundred (trades) battles.” I’d say this is a very worthy endeavor. How about you?

Get Real, Buy Real,
David Morgan

Mr. Morgan is the founder of and has followed the silver market daily for over thirty years. Much of this Web site is devoted to education about money, metals and mining.