A metals portfolio isn’t complete without physical precious metals, says David Morgan. But the best bang for buck right now is in well-chosen mining stocks.
“The most leverage is in the mining sector, and the miners are undervalued relative to the metal itself. So if you already have exposure to the physical, the best bang for the buck is no doubt in well-chosen, well-selected mining companies,” he explained.
Morgan, who’s well known for his silver commentary, is optimistic about both silver and gold in 2018. But he sees the white metal outperforming its yellow counterpart as the year continues. He commented, “I could see a 30-percent increase in the price of silver from the bottom, and maybe something similar in gold from last year — 10 to 20 percent.”
In the video above Morgan also shares his thoughts on LODE, a cryptographic silver monetary system that he recently became involved with. According to Morgan, part of its appeal is that it could represent a way to return silver to the monetary system.
Watch the interview above for more insight from Morgan on the future of silver and gold. You can also click here to view our full PDAC 2018 playlist on YouTube.
INN: We’re here at PDAC, and it’s the first day of the convention. It’s actually quite early, but have you had a chance to get a sense of the atmosphere yet?
DM: Walking in from — you know, I’m here almost every year — it felt about normal. But when I got to the area to get my badge, it was incredibly crowded and extremely noisy. I would say, based on that — and I think it’s a good market — that things are picking up in the sector. We know that prices have been down and it’s been kind of a washed out sector for awhile. I would say based on the enthusiasm, it’s going to be not only a good show, but I think that’s an indicator that things are doing better.
INN: We spoke last at VRIC, and you said you see gold and silver prices going moderately higher this year. We’ve had a couple of new factors introduced since then. We’ve got a new Fed chair, we had the US stock market selloff in February. Are you still feeling the same way?
DM: I am. I think the ability for gold — gold did [see a] modest increase in 2017. Silver was pretty flat. I think this year silver will outperform gold. I could see a 30-percent increase in the price of silver from the bottom, and maybe something similar in gold from last year — 10 to 20 percent. Those are modest numbers relative to what gold can do. But if you compound your money at 20 percent, you could make a fortune over a few years, really. I think that’s the type of environment that we’re in right now, barring any unforeseen … I hate to say it, worse scenario or geopolitical upheaval.
INN: What’s your advice for investors in this type of scenario? Should they be buying physical precious metals? What should they be doing?
DM: If you don’t have any physical, I’d say yes. Especially now because gold and silver are both near the cost of production for most of your majors. I’ve believed all along that unless you own metal you really don’t have a metal portfolio. Having said that, the most leverage is in the mining sector, and the miners are undervalued relative to the metal itself. So if you already have exposure to the physical, the best bang for the buck is no doubt in well-chosen, well-selected mining companies.
INN: In the very long term, where do you see the potential for gold and silver to go? Not this year, but just very long term — what’s the upside there?
DM: If you look at some of the, let’s say, more establishment types that are giving interviews like this, you’ll look at people like Jim Rickards, for example. Jim’s got a huge following, and he’s talking about $10,000 gold. You’ve got Mike Maloney who’s probably not as [well known] … let me move back to Rickards, David Harkwell, you’ve got Nick Barisheff. You’ve got several people that are in the industry. And these people are talking about $5,000 gold, perhaps $10,000 gold.
It’s very difficult in a system that’s based on debt where you can create money basically out of nothing, put a paper price on it. But I think looking at the gold situation and the increase in the money supply from what we saw in 2000, we’ve had basically a four-fold increase in the money supply. So if you took all the gold and divided it into the amount of dollars in 2000, you’d come out with $2,500-an-ounce gold. If we increase the money supply from 2000 to 2018, you’d take that number and multiply it by four, which would give you $10,000. So I don’t think it’s really out of the question.
INN: Thanks for explaining that. I want to switch gears a little bit. From what I understand, you recently announced your involvement in a project called LODE. It’s a cryptographic silver monetary system. Can you explain to me what that means in layman’s terms?
DM: Cryptographic silver monetary system just means that that’s a way to trade silver on the blockchain … it’s that simple. And there’s others out there. There’s some gold-backed cryptocurrencies. There’s another few silver-backed cryptocurrencies. I was intrigued by this one because I was introduced to it some time ago, and I’ve really done some due diligence and I like the way it’s set up.
INN: Can you talk a little more about how you got involved with it and how long you’ve been looking at this?
DM: I was introduced to it at the Vancouver Resource Investment Conference in 2017 after the show. It was when I was kind of exhausted … and David Smith that works with me said, “hey there’s this idea that these guys have.” I knew one of them principally from some other mining events way back. But everyone else was new to me. So they proposed the idea, we had like an hour-and-a-half-long meeting. And that was just the start of investigating it. I came up to Vancouver and went through the whole details a few times, and decided to go ahead and help to get the word out on this — remonetizing silver, basically.
INN: How can we learn more about it? Where should we go to find out?
DM: The easiest way to get more information is go to https://ag.lode.one/. You’ll be able to get signed up for no obligation, like their newsletter. And then there are commitments you can make. You can commit silver at a level and be one of the founding members, which offers the opportunity to reap rewards in silver itself. I’ll leave that to the discretion of the people that investigate this further.
INN: One last question about LODE. Part of the appeal is that it could represent a way for silver to return to the monetary system. Can you explain why that’s appealing to you?
DM: Well here goes an hour-long speech.
INN: The condensed version.
DM: Silver is basically the money of the people. I mean, the monetary history, if you really look at it objectively, silver is the money of all time. Gold certainly is money, but silver’s been used in transactions more times than gold ever has. So the appeal about silver is that it’s not top-down controlled like gold.
In other words, central banks still own about 50 percent of all the gold in the world, whereas the central banks effectively own no silver whatsoever. Which means if it was remonetized, the power of money would be in the hands of the people again. So imagine a system that allows you to trade silver physically with the blockchain. With your phone, peer to peer. Let’s say some mining companies get involved. Let’s say bullion dealers get involved. If this thing grows to the proportion that it has the potential to do, imagine that people actually determine what the price is rather than some algorithm. I mean that’s, to me, a very exciting proposition.
Don’t forget to follow us @INN_Resource for real-time news updates!
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.