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David Morgan's Top Reason for Being Bullish on Silver
Jan. 31, 2016 08:00PM PSTPrecious Metals
Morgan also discusses his new venture, Lemuria Royalties.
Those interested in silver know that for market insight and advice they need look no further than David Morgan. As publisher of The Morgan Report he’s a fixture at industry events, and much sought after as a commentator on silver and the resource space as a whole.
Morgan caught up with the Investing News Network at last week’s Vancouver Resource Investment Conference (VRIC), and while he did share some insight on silver (such as his number one reason for being bullish on the metal), he also spent some time talking about his new venture: Lemuria Royalties.
As yet few details have been released about Lemuria, but Morgan was able to talk a little about why he chose now to get into the royalties business and how the company will work. And for those skeptical that he’ll be successful in this new venture, he had this to say: “I’m very close to a lot of the mining projects. I know the ones that need financing, and I know the ones that have very strong positions in the metals space … and we can help them by giving them the money they need to advance their projects.”
Watch the video above for more on silver and Lemuria. And don’t forget to check out the Investing News Network’s other VRIC videos.
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.
VRIC 2016, Day 1: Notes from the Floor
VRIC 2016, Day 2: Notes from the Floor
Is it Time for a Silver Price Rebound?
This article was updated on February 29, 2016 to include the following interview transcript:
INN: I’m Charlotte McLeod with the Investing News Network, and here today with me is David Morgan, publisher of The Morgan Report. Thank you for joining me today.
DM: Thank you, Charlotte. Good to be with you.
INN: I want to start out by talking about silver. Like most commodities, it continued to struggle last year, and I haven’t heard a lot of positive predictions for this year. Are you still feeling bullish on silver?
DM: I am. The fundamentals are still fairly strong. Industrial demand has been not as strong as it’s been in the past, but it’s still fairly strong. And investment demand actually has been pretty robust outside the institutional investment.
INN: So your top reason for being bullish on silver is?
DM: Absolutely the demise of fiat currencies on a global basis, and I think that’s still in our future. Certainly, my belief is the 2008 crisis has … disrupted the financial industry, and there is really no strong recovery.
INN: On a different note, you’re setting up a new royalties company. You haven’t released too many details yet, but could you give me an idea of the basic premise?
DM: If you look at The Morgan Report, we favor the streaming and royalty companies a great deal because the risk is very low relative to, let’s say, an exploration company or even a producing company. I saw in the space there was a need in my view for a different way to do a royalty or streaming company. So we started Lemuria with the idea that it would be, let’s say, more of a win-win for both the company that provided the financing — Lemuria in this case — and the partner.
INN: There are a lot of royalties companies on the market right now it seems. You’re confident you’re doing something different and you’ll be able to compete?
DM: Absolutely. Because in the model that’s out there right now, it’s a fixed cost. So, for example, take a Silver Wheaton (TSX:SLW,NYSE:SLW) — there’s a fixed cost of, for example, $4.75 per ounce silver, and that’s in perpetuity, whatever the mine life is or the deal that’s struck — six-year life, 10-year life, 15-year life.
Whereas in our model, we thought, well, why not let these companies have exposure to the upside? We think we’re really near the low or at the bottom. So, if we gave them, for an example, 30 percent of the spot price. And silver went from $14 to $45, the amount that they would get on their silver would be much greater than it would at a fixed price. So it’s a different little twist, a little change to the model that we think is very favorable to the industry.
INN: For you, this will be a different kind of thing than you’re doing currently — you’re a market commentator and this is leading a company. How are your skills going to transfer over? What are you going to bring to it?
DM: A lot of experience — and don’t laugh. I mean, with my — not unique, because anybody that does what I do has a similar position — but I’m very close to a lot of the mining projects. I know the ones who need financing and the ones that have very strong positions in the metal space, for example. And we can help them by giving them the money they need to advance their projects, and in return get a favorable price on gold or silver.
We’re going to focus on gold and silver initially, but we’re open to other streamsin the natural resources, like even water as an example, but we’re not there yet. And we do have to go a step at a time — I’m pretty conservative, anyone that knows me. So we’re going to do it, you know, not super slow, but cautiously.
INN: What’s your immediate next step there?
DM: Immediate next step is to get our first stream, sign the documents done. Let the community know … what we’ve done, what the next acquisition will be or whatever. We’re looking, depending on the amount of money we raise, we’ll have enough to do at least one with a pretty good treasury.
And we’ll be very conservative, we’re not going to take any salaries the first year. We’re going to really just focus on building the company, again, with that strong foundation. And if we get up to the $50 million level, we’d probably be able to do like three acquisitions or three streams, I should say.
INN: Thank you for joining me today, that was very interesting.
DM: Thank you, Charlotte. It’s always fun to see you at the show.
INN: Once again, I’m Charlotte McLeod with the Investing News Network, and this is David Morgan.
acquisitiondavid morganfinancingmine lifemining projectsnyse:slwproducing companytsx:slwvancouverSilver Investing