Silver guru David Morgan shares where he sees gold and silver prices going in 2018, and weighs in on the next metal investors should watch.
Where are gold and silver prices going in 2018? At the recent Vancouver Resource Investment Conference (VRIC) David Morgan, publisher of the Morgan Report, said he sees both metals rising.
“I think that gold will probably have a similar year to last year, up 10 percent — [it could go up maybe] 20 percent this year,” he said. In terms of silver, Morgan thinks the metal may be able to make it above $20 per ounce, but noted that gold is likely to lead. “Silver has been struggling,” he explained.
Morgan, who’s best known for his silver market commentary, also laid out the current silver demand situation, saying that he sees an interesting situation potentially developing.
“If we get the situation that I believe we will, we [will] see investment demand taking silver higher and higher, [and] it could squeeze the industrial silver available,” he said. If that happens, and industrial users are not able to obtain the silver that they need, “that will start a feeding frenzy that will kick back to the investor side … and we will see more investor demand.”
He concluded, “I [believe] that’s where you’re going see this huge acceleration in silver.”
Watch the video above for more insight from Morgan on what’s next for gold and silver, as well as what the next metal to watch could be. You can also read the interview transcript below.
INN: We’re a few weeks into 2018, and we’re here at VRIC [where] I think a lot of people are looking for insight on where gold and silver prices are going this year. What can you share?
DM: I wish I knew. I think that gold will probably have a similar year to last year, up 10 percent — [it could go up maybe] 20 percent this year. We’re at what, $1,200, so $240, maybe in the $1,450 range.
Silver, I think, will probably be a bit better, maybe up 30 percent. So I think from $16 … $4.50, so say $5. It can probably get into the $20s, it may — silver has been struggling here. I think gold will lead this year.
DM: Yes, I was very favorable of palladium over platinum. I wrote a white paper for our subscribers, our paid members. And they did well. A lot of them followed me into the palladium market. I took profits a bit early — I always like to leave some margin — at around $1,000 an ounce. We are at about a 45-percent gain on my palladium position.
[I’m] not that favorable of platinum, although it’s so undervalued right now. It’s probably for a long-term investor worth doing a spread trade. Which means long platinum, short gold. But that’s only for very sophisticated investors.
INN: We spoke last in October, [and] you touched on a growing “debt bomb” that is coming. Can you talk a little bit more about how it developed and where are we’re at right now?
DM: It’s a whole chapter of my book, “The Silver Manifesto.” I almost get tired of talking about it because the very legitimate question is “when” or “we’ve been hearing this forever,” and on and on. Quite honestly, I never really expected it to go this long or this far. I mean, most of the markets now are based on algorithmic trading, which means computer to computer. I don’t have an answer for you as far as “when.”
I do have an answer for you as far as what historically happens, and it doesn’t end well. You cannot get out of a debt problem by creating more debt. And that is the only solution that these banks have come up with so far. I think we are borrowing from the future, and at some point in time we’ll have to hit reality. So I’m still very uneasy about the situation. And with pressure on interest rates being what they are, there’s a very small limit of how much more they can go up without causing problems. I think there will be some time in the not-too-distant future where everyone recognizes that the debt bomb has — the fuse has been lit and there’s no way out of it.
INN: So that’s one major thing investors should be watching. I wanted to ask about something you said about silver demand in your presentation earlier today — you mentioned an interesting situation developing between industrial and investor demand. Can you explain that?
DM: You look at gold, it’s about money; you look at copper, it’s about industry. And silver is both: industry and money … if we get the situation that I believe we will, we [will] see investment demand taking silver higher and higher, [and] it could squeeze the industrial silver available. Silver doesn’t care if it’s an investor buying it, or industry buying it — all it cares about is how much is available now.
If we get into the situation that I think could develop, then industry is going to need it and not be able to obtain it easily, so the price will get bid up. Then it will get to a point where industry says, “we’re out of business unless we have silver — we’re going to stockpile some.” So once Apple (NASDAQ:AAPL) or Samsung (KRX:005930), or one of the majors that needs silver at a very small amount per product — but they need it, they can’t do without it — goes in a search to warehouse silver, then many others will join and say, “oh my goodness, I need silver too! We’ve got to have it. We better have a three-month to six-month supply.” That will start a feeding frenzy that will kick back to the investor side — excuse me, I get excited — and we will see more investor demand. They kind of leapfrog each other. I [believe] that’s where you’re going see this huge acceleration in silver.
INN: What are some industrial sources of demand? There’s solar — do electric cars fit in there?
DM: Electric vehicles do fit in there. Solar’s [seen] a pretty significant increase on the industrial side. Again, it really boils down more to investment demand than industry. Industry gobbled up silver at a very voracious rate during the electronic boom. I’m not saying that’s over, I’m saying the lion’s share of it is over, now it’s kind of being refined.
We could get another big demand in industry that I don’t foresee at this present time. [Electric vehicles are] probably the biggest one that’s out there that’s known; there could be some battery development or whatever, but the point is that 60 percent of the market is industrial demand, 25 percent is jewelry and silverware, so you’re already at 85 percent — so you’re looking at 20, 25 percent maximum [for] investment demand, and that’s where it really swings.
INN: Any other factors we should watch [in terms of] gold and silver in the coming year? What do you think of all these rumors about QE4?
DM: I think a lot of it has a lot to do with geopolitics and the fear factor and all that. Uncertainty is what really drives these metals. Inflation — I could argue it’s deflation, but I don’t think it’s inflation, deflation, stag-flation. I thinks it’s how people feel about what is happening in their particular economy. If things get uncertain, people go to something that is certain. And the only certain money has been around for thousands of years [is] gold and silver. It’s that simple.
INN: I know at the Morgan Report you’re often ahead of the curve on what’s going to be next — what is the next metal we should be watching?
INN: Okay. Do you have anything more to say about it?
DM: No. Get the report.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.