Analyst, author and speaker David Morgan tells us about the impact of the US Elections on the price of gold and silver, and what’s in store for investors in 2017.
Analyst, author and speaker David Morgan was interviewed by INN CEO, Nick Smith, about the impact of the United States presidential election of 2016 on the price of gold and silver. In the interview, Morgan also detailed his outlook for the precious metals sector as well as copper in 2017.
On Donald Trump’s victory over Hillary Clinton, Morgan said, “It doesn’t really matter [which] candidate gets the presidency in the United States. The economic and financial conditions are entrenched so deep, and so far, and so wide that we have a precious metals bull market. That doesn’t mean there won’t be some short-term iterations, as we already experienced.”
Indeed, gold surged nearly 5 percent on the night of the US elections, and had its biggest single-day gain since June. Mere hours after – when Trump took to the stage for his victory speech – the price of gold plunged to $1,302.42.
“We had a huge percentage increase in gold that was basically washed away within a matter of hours. So that is a precursor, I think, to going back to the fundamentals. And the fundamentals are, there is a systemic problem, worldwide, based on a lie that you can print wealth. It’s been experienced through all the market places.” says Morgan. He adds that “To preserve your financial health, you will need the precious metals at some point in your life.”
Morgan’s outlook for 2017 is positive. However, When asked about the steady increase in gold and silver prices, he said “I am more favourable to a longer consolidation period but 2017 will definitely see a lift throughout the year.”
He is cautiously optimistic; when asked about the continued rise in the price of precious metals, here’s what had to say “I was asked recently if I thought that the peak of the precious metals would be on the four-year presidency of Trump, and I said no.”
However, he does see a higher price for precious metals in 2017 as compared to 2016.
Morgan suggests that investors should diversify if they are leaning towards the precious metals, and says “and then that portion of your portfolio, which I then recommend 10 maybe 20 percent if you are a full-fledged gold or silver bull.”
Watch the interview, or read the full transcript below.
Full Interview Transcript
Nick Smith: Good morning. I’m Nick Smith, I’m the CEO of the Investing News Network and I’m delighted to be joined by precious metals aficionado, David Morgan, on the morning after the US election. Good morning, David.
David Morgan: Nick, it’s good to be here, thank you.
NS: Thank you. How do you think the political change which we are seeing in the US and Europe is going to impact the gold and the precious metal prices in 2017?
DM: Well, I’ve been asked that question several times, in fact, the last time I recall I was in Canada at the Mines and Money show and I basically said I’m agnostic about it. I think it doesn’t really matter which candidate gets the presidency in the United States, the economic and financial conditions are entrenched so deep and so far and so wide that we have a precious metals bull market, regardless. That doesn’t mean there won’t be some short term iterations, as we’ve already experienced. I mean, I think the Dow was off 500 points at one point and maybe it’s the S&P and we had gold up, I think, almost $50, hit about the 1330. And then within a matter of hours, we’re back basically to where we started, I mean, as if nothing happened markets. We had this huge percentage increase in gold that was basically washed away within a matter of hours.
So that is a precursor, I think, to going back to the fundaments, and the fundamentals are there is this systemic problem, worldwide, based on a lie that you can print wealth. And that’s been experienced through all the market places, the Euro zone, it’s experienced in the United States, obviously, Canada and everywhere else where we do trade. And because of that fact there’ll be more and more, let’s say, awakening to the fact that to preserve your financial health you will need the precious metals at some point in your life or at some point in, let’s say, the next two years.
NS: So you’re thinking we’re looking at a continued increase in the price of gold and silver through 2017?
DM: Absolutely, I think this year is pretty already determined, we may just go sideways to down for a while. It’s possible we get a lift, I’m more favorable to a longer consolidation period but 2017 will definitely see a lift throughout the year. Won’t be straight up, ebb and flow, back and forth, but overall be higher for 2017 than 2016. And then in 2018 I’m looking for an acceleration, although it could take longer than that. I was asked recently if I thought that the peak in the precious metals went beyond the four-year presidency of Trump and I said no, I think that you will see a peak in the price of the precious metals within this four year time frame.
NS: Oh, wow. As we bring 2016 to a close what are the main lessons that you’ve learned this year?
DM: Well, first of all the market can still humble you, I mean, I’m much better at it than ever. But a few of those stocks that we did in the speculative section that have very high merit. We just can’t vet everything, I mean, I did my best on this mobile mill project which is very favorable to the small miners that actually have gravity feed gold. And what I didn’t factor in was that a contract would be reneged upon, and these are human problems, they’re not mining problems, they’re not gold issues, it’s the human realm that we deal.
And, you know, gold—people blame the gold standard, I mean, I remember one of the first lectures I ever gave in the public domain. And one of the other speakers was challenging me, Nick, about gold doesn’t work, you know, look at the banking system and the late eighteen hundreds and these banks failed and they are the gold standard.
And I was kind of tap dancing at the front of the stage, you know, because I didn’t expect, you know, to be ridiculed from another speaker, especially during the speech. But I, you know, composed myself and said it’s not a gold problem, gold’s an inert element on the periodic table, you know, used as money for thousands of years because people voted that way with their, you know, pocketbooks. In other words, they determined it was money, not me, and it’s certainly not the element itself, it can’t think. And it was a human problem, if a banker said they had this much gold in the vault and they didn’t, they’re lying, that’s a human issue not a gold issue.
But coming back on point, Nick, I think I’ll leave it at that, but always be diversified. In other words, if you are leaning towards the precious metals you have to diversify within that sector. And then that portion of your portfolio, which I recommend around 10, maybe as much as 20 percent if you’re a full-fledged gold or silver bull–
NS: And that’s in the physical asset? Ten to twenty percent or in stocks and–?
DM: The whole thing.
DM: About 20 percent. I’d go through that and how to use the Morgan Report, I mean, I have people that don’t buy the stocks at all which I think is a mistake. But that’s my belief, not theirs, that are metal only and I have people, unfortunately, that are like stocks only and no metal. I think a balance between the two, and I go through that now to use to use more report, put up a hypothetical. Like if you’re this age and you’re conservative, you would have like this kind of metal balanced in silver and gold and stocks. And if you’re this age and you’re very aggressive, you could have this kind. I just kind of outline it, I mean, there’s no one size fits all, we’re all individuals, we all have different styles and different risk tolerances. And because of that I try to give an outline or an idea of what’s best for that individual.
NS: Over the last couple of months, there has been a little increase in the price of copper. What do you think is driving that and is there an opportunity now for investors?
DM: Well, you know, Nick, we look at more than just the precious metals. I’ve looked at copper, lithium, coal, oil, I mean, we look at almost everything in the Morgan Report that has to do with the resource sector. And I’ve been pretty negative on the base metals since the last year and a half or two because I think we’re in the financial structure where only the precious metals are those would be the best place to be.
DM: Dr. Copper is called Dr. Copper for a reason. It’s got a PhD in economics, and if we see an increase in the copper price it’s very much telling us in real terms that there is further industrialization going on, on a global basis or at least somewhere on the planet. I am remiss to say I’m excited about it yet, I’d want to see a larger increase in the copper price out of the range it’s in right now, on a large volume and I’d like to see it sustained. So right now I’ll remain neutral on it, I’m hopeful that there’s not so much growth, you know, and I’m not really for sustainable development, I’m for intelligent application of the resources we have available. And I’m not a technocrat either, so I’m not trying to be all things to all people. What I’m trying to say is that we have done a great misdeed to ourselves because we have misallocated our resources.
And because of that fact, I think the millennials really are starting to get it, at least the deeper thinkers in the millennial generation, about how you allocate resources to the maximum efficiency of everybody involved. An example would be Uber — I’m not pushing Uber, I just used it yesterday to get my truck out of the shop.
Back on point, you know, do you really need to own an automobile? I mean, that’s an idea that would never have struck my generation, not only do I need an automobile but, you know, what’s the biggest fattest, baddest muscle car I can buy? That was kind of the attitude of my generation. Millennials think differently, it’s more about experiences and that type of thing as a whole. So anyway, back to your question, Nick, and I’ll throw it back to you.
NS: So neutral copper, and as we know, the Morgan Report does cover all the commodities, not just really silver and gold. So which commodities are you most excited about for 2017? We’ve had a year of a boom cycle with regard to some of the energy metals like lithium and cobalt are is starting to run now, do you think that will continue? Where do you think investors should be looking?
DM: I was very early on the cobalt story, and of course that’s come to the fore now, usually I’m early, I’ll admit that. Mary Ann Green, who’s now deceased, did a great job on a cobalt project in Idaho and I followed her for a very long time and reported on her company, for years actually. Favorable on cobalt, lithium, I thinks been overdone, although it’s very important especially with the Tesla push. We actually had a lithium project, the one that I chose unfortunately failed. It was a discovery project I called my secret sources, you might say, and asked one of the top geologists I know and trust and known for years, and I asked point blank, you know, am I making a mistake or not before I put any words to paper. And he said, “David, look, you’re in the absolute right area for a good discovery of lithium.”
So I felt ok because when I tell people to speculate I absolutely, explicitly tell them, bet money you can afford to lose. If the company makes a discovery, everyone’s happy, and if it does you can actually add your position. But you don’t want to start off in a big position in a speculative company. So I’m favoring lithium, I was one of the first on the rare earth elements due to a friend of mine that got very, very interested in the space and is actually one of the leading thinkers and doers in that space. He’s kind of backed of the sector and he’s trying to spend more time with his family and that type of thing. But definitely a leader there and he would contribute to the Morgan Report from time to time. So I think there are things outside of the precious metals, I’m still favorable with the metals because the monetary system has got so many dynamics pointing to situations that are not correctable, at least in my view, very easily. So that will put pressure on tangible assets that hold value throughout the centuries.
However, you know, there is technology, will technology save us… to be determined. I’m somewhat doubtful that it will in the short term. In the longer term, maybe once we hit the reset and we revalue, not only our human experience, but what it means to cooperate more than to fight with each other. We can have more cooperation on a global basis or at least even in our neighborhood. We certainly could accomplish a lot more than having an adversarial point of view, and that’s something that either Hillary or Trump would air regardless of who got in. There’s a huge divide between ideologies and because of that it’s very hard to bring people together. But a real leader can, not that everybody’s going to join hands and sing kumbaya, I’m not that idealistic. But I idealistic enough to be reminded of our common core value system and what works, what’s practical.
I think you can kind of have a mending of the emotional upheaval that’s taken place from a paradigm that doesn’t work again, that we can print wealth and everybody will be happy and joyous and free. You can’t do that unfortunately, one of the human experience that takes work at some level. So I think that’s where we’re going, I’m hopeful that the attitude may shift and there will be some true leadership. But I’m old enough and wise enough to know that that’s rather idealistic and the more likely experience will be more of the same.
NS: Just to wrap, any tips you could share with our investor audience, apart from the obvious and probably the most important, which is subscribe?
DM: Thank you for that. I think balance, you know, something I’ve overused or preached to myself. I mean, you know, the idea of, you know, spiritual, mental, physical try to do something nice for somebody and not get caught. I mean, be a better person and as trite as that may sound, I think, you know, at my age, you know, it’s more about what I can give back. My profession gets a very interesting spectrum because there are those that are totally self-serving and do situations that are very beneficial to the very few and the publisher themselves. And then there’s others at the other end of the spectrum that certainly eat their own cooking, yours truly included, that truly do have the best interest of all subscribers at heart.
So it is a service industry, it’s a subscription service and it means that. You know, how can I maximize people’s financial well-being by doing the research that we do and telling it like it is. Do we get it right every time? Absolutely not. But do we have that in our hearts and heads? And the answer is, yes we do. So balance, you know, don’t make finances the most important thing. I did that for a number of years, from my 20 to my mid 30’s, you know, money was everything for me.
NS: Because you wanted that muscle car…
DM: Yeah, the muscle car, normal stuff. Thank God I’ve matured well beyond that. So it’s again, balance, so maybe a little overdone, Nick, but thanks for giving me the opportunity to state that. I really mean it too.
NS: Those are really important words especially at a time like today, directly after the election and what we’ve seen happening in Europe. So, David Morgan, thank you very much for taking some time to speak with me this morning, we look forward to getting this message out to our investor audience in the next couple to days.
DM: Thank you so much for having me.
NS: Thank you very much.
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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.