Gold is Doing Its Job...Silver Will Come Back as a Safe-Haven Asset / Commodities / Gold & Silver 2020

Mike Gleason: It is my privilege now to welcomeback our good friend David Morgan of The Morgan Report. David, it'salways great to have you on and appreciate the time as always. How are you sir?

David Morgan: Well, Mike, I am doing wellpersonally and the markets aren't, but I'm hanging in there and thanks forhaving me on the show.

Mike Gleason: Yeah, definitely overdue, and greatto have you back. Well David, we are seeing tremendous volatilityin markets. The coronavirus is getting the blame for a huge sell off instocks and in epic rally and bond prices. Commodities, oil in particular, aregetting hammered. Maybe the only thing predictable about the recent marketaction is the Fed's response. They did another emergency 50 basis point cutsand a lot of people expect them to cut another 50 basis points when the FOMCmeets later this month. What is your take on the turmoil, David? Is this ashort lived phenomenon and will markets recover as soon as the fear around thevirus dissipates? Or we looking at the start of something more serious andmaybe the bubble and equities is finally been popped?

David Morgan: Well, I think from a longer termperspective, it is 2008 part two. Really, the fact is after the financialcrisis of 2008 where these bank stopped trusting each other and money actuallystopped flowing, the Fed, right or wrong, came in and immediately exchangedthis worthless or toxic subprime mortgages that the banks didn't want anythingto do with and stop trading with each other and replaced it with basicallytreasury bills, which is the sacrosanct debt that anyone would ever want,right. So it basically kept us from having, basically a total meltdown.Obviously it was a pretty big meltdown. Well, from that time until this, it'sbasically been Quantitative Easing, one, two, three, four. It's been OperationTwist. It's been buying the long end of the yield curve. It's been pumpingmoney into the elite so they can buy Baptist stock and, and lower the floats sothat the price goes up and the CEOs get big bonuses.

But the systemic problem in the underlying financial systemreally has not been addressed. So, now we have more debt than we had before. Wehave probably more bad paper if you factor in, not subprime, but you look atstudent loans, you look at pension fund problems, you look at interest rateswaps, you look at the derivatives market and you look at the over-leverage inthe stock market. We're probably set up for a bigger fall than we were in 2008and that's the truth. So, I look at the long-term is 2008 part two.

From a short-term perspective, if we do get some kind ofresolution on this virus situation, yeah, there'll be a relief rally. From aFibonacci perspective, let's say the market ends up down 10,000 from top towhere this virus situation subsides, and then it takes back and moves up 5,000or one half retracement. That could be a fairly likely scenario but it hasn'tfixed the systemic problem I just outlined, which means that you're probablygoing to get a further sell off after that relief rally and continue down.

What most people don't even realize is where we are in theUnited States stock market. Let me elaborate a little bit Mike. So, mostmarkets go from undervalued to fair value to overvalued or from overvalued tofair value to undervalued. And it has that cycle over a long period of time.When we had the 2008 sell off in the stock market and I think the Dow got downto what, I forget the number 5,000 or something. What I do know is at thatlevel stocks were fair valued. They weren't undervalued. They were fair valuedright there. So, if we take whatever the inflation rate was from there untilnow and put a fair market value on the S&P 500 or the Dow or both, we'vegot a long ways down before we're fair valued again. We're still over-valued. So,that's my take on the stock market, Mike.

Mike Gleason: Well, it does seem like stocks werepriced for absolute perfection for a number of years here and now we don't haveperfection. We have an economic situation that's taken place because of thecoronavirus and maybe that's the straw that sort of broke the camel's back.Obviously we got a lot of algorithms trading and these high frequency tradingoutfits and machines and so forth and it can kind of get bad as everybody runsfor the exits at the same time. It sort of builds on itself, doesn't it?

David Morgan: Yes it does. And there's tangentsthat come off of it too. I mean you've got the overall market, then you've gotto have the gold market intersectit. What does the oil mean to the overall financial system? And I mean on andon it goes Mike. So we are in my favorite expression, I said a hundred times,interesting times.

Mike Gleason: Yeah, we certainly are. Wellswitching the focus to metals. Gold in particular has done fine. Obviouslysilver has been sold along with stocks and commodities. Do you think we willsee more futures market selling or will metals start to get a bid perhapsbecause speculators anticipate some safe haven demand and start buying futuresor because the Fed is pulling out all the stops on stimulus… or both? The U.S.Dollar is not looking too good here. It's been falling in currency marketsdespite the turmoil. Let's get your thoughts here on metals and how they'rereacting to things.

David Morgan: Sure. Well gold is doing its job.Gold came off of bottom of December, 2015 and it's up from that level and it'sworked through the $1,350 levels. Finally made a six-year high, hit the $1,550level, which is resistance. Worked through that, we're up at $1,700 gold inU.S. terms in the aftermarket, just a few trading sessions ago. So gold isresponding, gold itself, not gold stocks. And sure it goes up and it was down,what, 60 bucks in one trading session a Friday, a week and a half ago orwhatever. And then by the next Friday, it had taken back that $60 it had lost.So, these are very volatile markets in gold, especially gold equities are aboutthe highest beta stocks, meaning beta ladies and gentlemen just means how volatileare given set of stocks. What do they do? And the gold stocks are notorious forbig moves up and down.

So anyway, gold, I think doing quite well and it's signaling usthat there are more people coming in the gold markets seeking a safe haven andgold is the answer for right now. Silver on the other hand has gone to thehundred to one ratio, which it's only done a couple of times previously andthat has signaled the financial crisis in the past. So obviously I'm believingit's signaling the financial crisis, which we're probably in right now. So it'sdone this job there. As gold becomes more and more of a safe haven and there'smore price pressure in gold and the gold stocks start to recover, I think youwill see some people starting to move into the silver market. I mean thisgentleman, Scott Minerd from Guggenheim, who's their main investment advisorauthority or the chief investment, I guess, officer, I don't know if there'ssuch a term.

He was asked at Davos by some financial news reporters fromBloomberg, what was his go to trade for 2020 and he said silver. And aBloomberg gentleman kind of rocked him on his heels a bit, said “Silver, whynot gold?” And Mr. Minerd said, because gold is pretty near it's a nominalhigh, but silver is about 65% off. And silver is an undervalued asset. That'spretty close to what he said. And then the reporter went on to ask him, hesaid, do you think that, he didn't say silver, but do you think the metalscould perform like the non-precious metals have recently? What he meant by thatwas could gold and silver perform like palladium even though in my view hestated, it was well understood what meant. He was saying these other twometals, can they perform like palladium? And Scott said, I think there's a highlikelihood of that.

So, there's a guy that's managing a lot of money because Ilooked it up. In fact, I wrote about it in The Morgan Report twomonths ago. The amount of money that if they devoted to the silver market couldcertainly have a huge impact on the paper price if silver.

I'm going to digress a bit further Mike if you don't mind. Butwhen we look back in history, when (Warren) Buffet bought in 1999, he bought ahundred, almost 130 million ounces of physical silver and it took the market upfrom about five to by eight and a half, which didn't double it, but moved itquite a bit. And when he reported that year, I got the Berkshire Hathawayannual statement because it's part of my job to report on the silver market andthe word silver never showed up. Are you kidding me David? David Morgan, silverdidn't show up and the Berkshire Hathaway and he bought 130 million ounces ofsilver, about 25% of the supply. Are you kidding?

And the answer is, I'm not kidding at all because by law, if youare a company like Berkshire Hathaway, well you're an investment companybasically. You only have to list out in detail anything that's greater than 2%of your asset holdings. And since that amount of silver was less than 2% ofwhat Berkshire held, they just said they made a miscellaneous purchase and thatmiscellaneous purchase happened to be 130 million ounces of silver. So, I thinkthat gives some people an appreciation for how small the silver market is andthere's somebody as smart as Scott Minerd and he is. I could go on and on… letme just say this. When I hear his interview, I go, well that guy thinks justlike me. So either we're both smart or maybe we're both missing something. I'llsay it that way, but very interesting.

So, I circled into gold. Gold is doing its job. Silver islagging. Silver will come back. Silver is a precious metal. Silver is actinglike it's only an industrial metal or a base metal. It's doing absolutelynothing, disappointing everyone. It's been there before. It's done that before.I'm just so old, I know that from my own experience. But it will come back as asafe haven asset again and as a precious metal. And it's a spike. I mean thesehundred to one ratios usually don't last 10 years. They're a momentary thing ona chart. It might be a month, might be two, I don't know. It could more likelygoing to be about a month and a half or so. But we'll see. But normally it'lllast long. So we'll see silver start to outperform gold and go from a hundredto one and 90 to one, 80 to one, 70 to one and we'll what happens. But it'stough. It's tough on silver holders. I know that, I'm one of them.

Mike Gleason: Yeah, 30 to one, we saw that or 32 toone, right in that ballpark less than a decade ago there in 2011. So those daysare not too long ago and certainly could happen again if silver does outperformeventually you have to think it well. Well speaking of silver, David, man ithas such amazing uses when it comes to antibacterial and antiviralapplications. A pretty important metal at a time like this isn't it?

David Morgan: Well, it is. If you don't mind mesaying it Mike, there is a way to take a look at that. If you goto TheMorganReport.com/silverwater. If you do that you will find aninterview I did years ago in Salt Lake City with two doctors. You see the interviewand you can make up your own mind what you want to think about silver'sproperties, but it was a pretty interesting interview and I saved it basicallyfor those that are interested in a structured silver water and what thesedoctors have to say about it.

Mike Gleason: My wife has been breaking out thecolloidal silver here of late as we try to sanitize things and obviously justsort of practice good hygiene, especially at a time like this.

David Morgan: Let me interrupt you there, sorry.But there is pretty, I think it's a legitimate report that the Chinese in someareas were taking one of these spray canned things and it was basically acompany from the United States that produces this the silver water that is abiocide. Silver is a biocide. That's a fact people. And they were using it as aspray down mechanism to basically sterilize the areas for this virus situation.So, maybe there'll be more of that in the future. I don't know. But I thoughtit was pretty interesting that even the mainstream news mentioned it, that itwas being used. And I've said for years, if you really want to keep the publichealth at a better level, you would use nano silver. We're not talking an ounceof silver and a doorknob.

We're talking just pennies worth the silver, but you need to doevery doorknob at every public facility, every airport, every school, everychurch, every corporate building, every government building and everythingelse, it would add up. And you can use copper, copper is pretty good. Butsilver obviously is the best. Is that going to happen? I doubt it. But thepoint I'm making is that it's that important if you want to keep bacteria atbay. And the higher end Japanese cars put silver in their steering wheels. So,when you're holding on to the steering wheel, you're basically, no matterwhat's on your hands, you're not going to carry any germs.

Mike Gleason: Yeah, pretty interesting and amazinguses in silver for sure. Well, switching gears here a little bit, David,politically, you got to think the potential economic meltdown here could putTrump at risk, seems like things a couple months ago, looked like Trump was acertainty and was very safe for November. But maybe now he could be fallingvictim to an economy spiraling out of control, which seems like maybe the onlything that could derail his re-election bid. Any thoughts there?

David Morgan: No, I agree. I don't really have muchto add, Mike. I think you hit the nail on the head. I mean every election ispretty economically dependent. The old Clinton (line) who I'm not a big fan of,but he was president for two terms. It's the economy stupid. I mean it carriesa lot of weight with a lot of people and you said it. I mean it's possible thatthings, if the economy gets "destroyed", I don't want to be too panickyhere, talk in hyperbole. But it is a concern and it could be enough of aconcern and people say, next, let's vote in who knows? I wouldn't even say itbecause I am equally distrustful the whole political class. But regardless,someone's going to fill that vacancy or Trump will get reelected. We'll justhave to wait and see. But you make a great point.

Mike Gleason: Yeah, it's going to be veryinteresting to see how that develops throughout the rest of the year and whatkind of blame, I guess he takes. He has taken ownership of the stock market inthe past and that could end up being to his detriment. Maybe we'll find out.Well as we begin to wrap up here, David, any parting words for folks here todayas we are looking at some serious tumult in the markets and in society as awhole? Any comments to share with us as we close?

David Morgan: Yeah, one I think is stay calm, don'tpanic. The human species is quite adaptable and we've survived almosteverything. But I want to move on to a different topic and that is this, I'vebeen getting more and more correspondence communications with people that areworried about the next bale in and you cannot basically go to your friendlylocal banker and say, hey, “I've got 100,000 in my bank account and I'd like tocash it out.” They'll tell you to stand in line, sign a form, take athumbprint, get three photos, and you could get $5,000 and you got to wait aweek for that to happen. So if you really want to move some of your savings outof the bank and into your own hands, the best way to do it is to invest in preciousmetals.

And I obviously favor silver and have for some time, but of ahundred to one ratio, I wouldn't say go all in on silver. I think you shouldown both. And I said that basically from the beginning. However, it's a goodway to cash out pretty quickly. Just find a trusted dealer like you have there,Mike. I've known you and your brother for quite some time and I've never heardof one complaint. I'm sure there's always a disgruntled somebody somewhere forsomething. But regardless, it's one of the best and I don't recommend very manyas you know. So I would say if you're out there listening and you're worriedabout having too much cash reserves in your bank and you think this next bailout, which is now against the law will be a bail in which is in the law, andyou have a lot of cash at risk in a bank, you might consider moving some ofthat through Mike and Stefan and whoever works there to get this precious metalinto your own hands. And if you don't want to hold it, they have a storagefacility right there in Idaho that I visited as it was being built. And I'm notbig on storage really, but there are cases where it makes a lot of sense. And that'sone, again, I would vouch for. So Mike, there you go.

Mike Gleason: Well thanks. I didn't put you up tothat, but certainly appreciate the kind words and it means a lot to us comingfrom you and certainly appreciate it. Well good stuff. It's always a pleasure.Always love getting your insights and before we let you go of course we got tohave you share with the folks about The Morgan Report and howthey can get on board with your great service and the information that you putout there and how they can follow you more closely.

David Morgan: Sure. So the easiest things could inour free newsletter list, which is TheMorganReport.com. And then we have apaid service. You can go to the subscribe tab, pull down, watch the video andread. And I'll just repeat, if you're interested in a silver biocideproperties, just type in TheMorganReport.com/silverwater. And youwill see a pretty big set of videos that I did years ago interviewing twodoctors that are extremely familiar with what silver solutions can do in thefield of biocidal properties that can do everything from like decontaminateyour floor, the air or whatever to help situations. So if you're interested, gofor it. If not, then don't. It's that simple.

Mike Gleason: Well, thanks again David. All the bestto you. Strap on for what is likely going to be a wild ride and we'll lookforward to having you back on here in the not too distant future. And in themeantime we'll be following the great stuff you're always putting out thereat The Morgan Report. Thanks again for the time and have a greatweekend my friend.

David Morgan: You bet you. Take care. Thank you.

Mike Gleason: Well that will do it for this week.Thanks again to David Morgan, publisher of The Morgan Report. Tofollow David just visit TheMorganReport.com, you can also follow him onTwitter, it's ;@silverguru22 and if you haven't already, grab a copyof his book titled Second Chance: How to Make and Keep Big Money Duringthe Coming Gold and Silver Shock Wave, which is available atMoneyMetals.com and other places where books are sold. Be sure to grab a copyof that today and then check out TheMorganReport.com and startgetting his wonderful commentaries that David and his team put out there on anongoing basis.

By Mike Gleason

MoneyMetals.com

Mike Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2020 Mike Gleason - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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