The Phaserl


David Morgan: Silver Supply under $16 Is Limited

from Gold Silver Worlds:

Mike Gleason, Money Metals Exchange: I’m happy to welcome back our good friend David Morgan of and author of the book The Silver Manifesto. David it’s a pleasure to talk to you as always, how are you?

David Morgan, The Morgan Report: I’m doing well, thank you for having me on your show.

Mike Gleason: Well to start out I’ll ask you to comment on the market action here in 2016 so far. Now, gold and silver have done quite well, we had gold advancing on weakness and concerns in the equities markets earlier in the year. In March, we’ve seen it continue to do well even as stocks rebounded from a strong employment report. One would think it’s a bullish sign when we get good price action even with supposedly negative news for precious metals coming out. So give us your thoughts on the market action so far this year, David, and specifically why do you think the metals have done so well here in the early part of 2016?

David Morgan: Well a couple things, one to quote The Economist magazine, which is a pretty well-known and revered publication. They stated that, “This is the best start of gold mark in 35 years.” On top of that, the main reason is because the overall equity market has basically gone 20% down. From a technical perspective, you have a top in the stock market in the United States and other markets around the globe. So the most negatively correlated asset to equities is gold itself, not gold stocks.

That’s basically it. I think it’s pretty simple. I don’t think you need to look much further than that. I would add on another real key element to knowing that things are finally off the bottom and going to continue, backing and filling, up and down – but nonetheless, the bottom is in – is the volume. The volume is substantial. The amount of flows into the gold ETF is the greatest that it has been since 2009, which is after the 2008 crisis but the first one that was off the bottom were the precious metals.

Most of us know, or at least those who listen to this show know, that gold basically bottomed in 2008 along with silver. Silver went from basically the $9 level and over several months made it all the way to $48. Gold bottomed, and I forget the number, but it went up to $1,900. Are we going to repeat that? I think in the long-term yes, but in the short-term, gold’s ahead of silver.

Mike Gleason: That leads me right into my next question. We do have gold outperforming silver so far this year, which generally we don’t see when the metals as a whole are rising. That means that the gold to silver ratio has actually even gotten a bit higher, sitting at about 82 to 1 as we’re talking here. Are you concerned that silver is lagging gold a little bit?

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