Tip:
Highlight text to annotate it
X
(Text on screen): The Ellis Martin Report with guest David Morgan, TSX-V:ELS, El Tigre
Silver Corp
Ellis Martin: The following segment is sponsored by El Tigre Silver Corp., trading on the TSX
Venture Exchange under the symbol ELS.v, and on the OTCQX as EGRTF. El Tigre Silver Corp
is focused on silver exploration and development in prolific Sonora State, Mexico. Find them
on the web at ElTigreSilverCorp.com.
Join me for a conversation with a frequent guest of the show, David Morgan, the Silver
Guru, an expert on money, metals, and mining. Also a lecturer and an author, Mr. Morgan
has written Get the Skinny on Silver Investing, available on Amazon.com. His website is TheMorganReport.com.
David, welcome back to the program.
David Morgan: Good to be with you, Ellis.
Ellis Martin: David, I'm optimistic about the economy right now and therefore pessimistic
about the precious metals market.
David Morgan: Well, you know, there's all kinds of opinions, that's what makes these
shows popular, a couple things, one, the defensive posture with silver. Silver's like a good
time/bad time metal. It's a real popular word these days; bi-polar.
Basically, silver is, you know, heavily used industrially and a high-tech metal, and I've
always jokingly said this gives the idea, although it's extreme, that if you have a
really booming economy, and everybody's working, and everybody's making money, and everybody's
just increasing their lifestyle, that you'd have a flat-screen TV in every bathroom which
would then take a lot more silver, so silver really does play a role in a robust economy,
much more so than gold.
Gold is more; tends to follow gloom and doom. Silver, on the other hand, is like gold from
the monetary aspect, but that's about half of the market. Half of it's industrial and
the other half is, oh, there's jewelry in there, of course, it's about 25 percent, but
it follows gold, from a monetary aspect, and, of course, it has its industrial XXunintelligibleXX,
so it's sort of both.
As far as the overall economy, I just finished listening to John Williams on another program
like yours, and he was very factual about his data. He basically said he doesn't really
see any recovery at this time, and this interview was just a couple days ago, so I'm giving
you the most up-to-date information from the way he sees it.
I'm sort of in the middle. I mean, I am looking here, where I live, and things haven't really
started to pick up much, but I will say, careful observation, that we are getting some new
construction downtown. There seems to be a little bit more economic activity than I've
seen over the past couple years, so this being one of the not very robust areas of Washington
state, second biggest city in Washington, but not known as being a very wealthy area
in this state, does show some pick-up in activity here.
Ellis Martin: I want to discuss that, but I'd like to fall back to a comment you made
about John Williams. If he's not talking about gloom and doom and hyper-inflation, he's got
nothing. That's his whole gig.
David Morgan: Okay, that's fine. You're making me laugh. That was his message, so we can
press on with the way you see it, Ellis. What do you see where you're at?
Ellis Martin: Well, I collect cars, Mustangs, actually, vehicles that hold their value and
grow in value, and I hang out at a car show here in California every weekend almost, and
I have a friend at the show who is the manager of a Toyota store down here, a big one. I
won't mention their name, but he said that business is booming for new and used cars.
I tend to believe that California is a leader with regards to the rest of the country. When
these jobs claims are hitting six-week lows, now, because of that conversation, I'm tending
to believe it.
How's that ever going to be good for speculative gold and silver stocks which tend, as you
said, to follow gold?
David Morgan: You make a good point, and I don't want to be anything but consistent.
I mean, basically I've told my members, especially, and the public, that I think that we're bottoming
here and this would be a transition year. I've never said it's going to be a really
huge booming year for the metals. I think we could go sideways, trending up. I do think
it's possible to see $2000 gold by the end of the year, but having said that, the Dow
Jones is making a new high and, technically, you know, on a break out, if it sustains here
for a few more days, basically it's saying it's time to get into the stock market, as
odd as that sounds.
On top of that, I want to make another comment, and this is someone, I won't use his name,
but he's an extremely good investor. He has been in the industry for a very long time.
We trade letters, and he just put out an alert; basically it's what I just said, that the
Dow is breaking out, and the last time it did this it was good for a 20 percent gain,
and said, "You know, as much as I'm remiss to say I'm real fond of the stock market,
these levels, you know, I've got to go with what the technical and what the sentiment
is, and you might want to trade this market to the upside."
I go along with that. This guy's very savvy, very good. I'm agreeing with him that I don't
really like it, fundamentally. I think the market's actually overvalued here. There is
a lot of participation on the insiders, but it is what it is, and, if I were to do that,
which I personally am not yet going to do it, I would do it carefully. In other words,
I would probably take some options or something like that, where I have a limited risk to
the downside. In other words, I'd make a bet on it going higher.
Maybe things are picking up a little bit here. I try to get the actual on the ground looking
up, pay much attention to whatever bureaucratic agency is feeding us this number, and say,
"Oh yes, we'll look at that number," because they're always adjusting those numbers.
I try to get out of the airplane, get in the taxi cab, and take a hard look around and,
whatever hotel I'm going to, talk to the cabbie, and say, "Look, what's your economic activity
like? Are jobs hard to find here?" That type of thing.
So, maybe it is turning around. I'm reluctant to say it, but again, I'll go back to what
you said, Ellis, California always has tended to be the leader in these type of things,
so, if California is picking up as you say, and you're in Southern California which is
fairly affluent, but you guys have been down and out, like the rest of the country, and,
if you're picking up now, maybe things are starting to move.
And one last comment, and I'll use his name, it's Rick Maybury. Rick and I have a pretty
long history of knowing each other and trading newsletters. I've had him on some of my special
reports from time to time. I just got his latest information, and he really thinks that
the velocity of money is starting to pick up, and the velocity of money is the turnover.
In other words, you go down to the Toyota dealer and you buy, and you go buy the dresses,
the cars, the luxury items. You go out to eat more. You go to the theater and all that
type of thing, and he has suggested that that is taking place, and he thinks it's going
to accelerate, and he thinks the recovery, if you want to call it that, is starting and
that everyone is going to give out a big cheer, "Oh! The recovery! This is great. Look! Economic
activity is picking up and it won't really be a problem for probably a year or so."
More economic activity. shop owners are doing better. Merchants are doing better. The economy
is more aggressive. It's starting to grow and all that, he points out, and I agree with
him, assuming all that's correct, that inflation starts to come back, especially in the need
sector, meaning, like, food, water, housing, that type of thing, and then people start
to say, "Hmmm. Maybe this acceleration or velocity of money is not such a great thing."
Look at what happened to food prices or gas prices. They're starting to accelerate on
a week-to-week-to-week basis. So that's sort of the big picture. Again, I hope I'm staying
consistent with my readers, my listeners, people that follow my work, but, you know,
it's been a tough one, I mean, I don't think I've been in a position that's been this difficult
to make a call in quite some time, and I'm trying to stay open to all possibilities and
think them through.
Consider what I just said about Maybury, and his idea is, as mine is, don't abandon the
metals, certainly keep them and just realize that it's probably going to take some time.
That's where I'm at. I'm still adding to my position. I said, "Anytime you can buy silver
or gold, silver under $30 and gold under $1600, it's probably a good buy, but it's also something,
again, you have to, I think, have a three to five-year horizon. So, interesting times,
Ellis.
Ellis Martin: You made several good points, and I'd like to make a couple in relation
to them. QE3, or quantitative easing infinity, seems to actually be doing its job by getting
more of a velocity of cash into the system, as you might have said, increasing the money
supply and not helping the price of gold as many of us speculated would happen. However,
at some point down the road, inflation may kick in indeed for whatever reason. That's
bound to happen, and then John Williams is exonerated, at least by me, and we've got
a market we can trade into with regard to precious metals, but that may be a year or
more away.
David Morgan: All's I have to say is your opinion is as valid as mine. I think that
we're bottoming here. We're going to probably get a rally end of June or something, but
I could be wrong. It's, again, tough to call. My prediction's on probability.
I do a fair amount of technical work and, normally, any run that we've had in silver
was so long ago it seems like ancient history now, but it's still true that we moved from,
basically, the $19 level all the way to $48, then we backed off. Usually, those consolidations
take about two years. Two years will be the end of April this year, so we're looking at
about six weeks, seven weeks out, and it's not a precise number, but it's the idea. It
could certainly be longer than that. That's the average.
We're getting into that timeframe where we should be bottoming. Sentiment is horrible;
it's probably the lowest sentiment we've ever seen. We've got the highest reading in about
thirty or forty years for what an ounce of gold costs versus what buying the XAU costs,
so, you know, all the tentative work says this is it, right here, right now for bottom,
but again, and that's my opinion, Ellis. It doesn't mean I'm right. tentative work says
this is it, right here, right now for bottom, but again, and that's my opinion, Ellis. It
doesn't mean I'm right.
Your opinion that we could go another year is just as valid as mine, and I want to emphasize
that, because, again, this has been a tough one to call. It really has. Just to try to
stay consistent with everyone. I'm not giving up. I'm still buying more. I'm not buying
like a ton of silver here, but I'm picking out silver here and there and if I had to
dollar cost average through, I would get it as still a good investment. It isn't the great
investment it was when silver was at $5. I admit that, but I'm looking at it longer term,
and I think, again, three to five years out that $30 silver's going to look pretty cheap,
and, to say one more thing, what people seem to have a hard time conceptualizing is that
when QE4s bounced they said, "Oh, more inflation, you know, get into the metals." And they were
very disappointed.
Back then there were some friends that were trading that based on that news. When QE2
was announced that's when we got this movement in silver from the 20-level all the way up,
so QE4's announced and the market goes the other way.
And the point is, it's not a function of how much money they've printed, because when that
money is printed, it just stays in the vault. It has no velocities. It's not moving. It's
static. It's as if it doesn't exist. It's the velocity that turns over all that money.
It's when you go down and you get that loan. You make that purchase, so you start the activity,
in other words, the amount of turnover. That's what's important. It's not how much they’ve
printed, and, people seem to miss that idea. I tell you, Rick Maybury does probably one
of the better writings about that topic, and I agree. It's true.
You're starting to see economic activity. It would certainly take several months, in
my view, before you see that economic activity turn into an inflation concern, but once the
psychology moves into, "Oh, my God. Look. Gas price is going up every week, and every
time I go to the grocery store it's higher."
This is getting out of hand, and I think that's what John Williams has alluded to all along.
If we get to that point. I think we could definitely get to that point. That's when
it's really hard for the Fed to control it, so we'll just have to wait and see.
Ellis Martin: We'll just have to wait and see indeed. Of course, I can't help but think
that this just widens the have and have not gap, because there's plenty of folks living
on fixed incomes with small paychecks that just can't keep up with the cost of fuel to
get from point A to point B.
David Morgan: That indeed. Just looking at John Williams again, and there was, I guess,
47 million on food stamps in this country. It's a sad day. It's a sad day. Really, I'm
more in favor of the reset. It's like rebooting your computer. It takes time, and you're kind
of hoping the computer fires back all the way, but we have really gotten distorted.
Not only the United States, but globally, and there are some drastic things that need
to take place, and, hopefully, I believe the pain will be worth it, but we cannot structure
the situation the way it is now and expect it to come out and thrive.
We might get a big boost and a nice run, get some velocity in the economy and things look
good for a little while, but the structural problems that exist are not being addressed
and that's what needs to be addressed for this thing to get a solid basis where we can
move forward and have sustainable growth. Sustainable growth is a buzz word of some
of the liberals, but I'm not against sustainable growth.
I'll comment on that, as well. Most people that are probably not going to be favorable
to the precious metals, the one thing I like to say about the idea of sustainable growth
is, really, you have a very sustainable growth situation under gold standard, because there
is growth in the money supply. There is more gold taken out of the ground every year over
year, so that's a very small growth rate. A sustainable growth rate, if you will, and
there's a lot less distortion in the economy.
It's when you're in a Keynesian system that you can print, print, print, loan, loan, loan,
and the fractional reserve banking system that allows $1 to become $10, that you get
into this massive distortion or misallocation of capital, but under a true gold standard,
where the savings is what you build with and there's only so much gold coming out of the
ground so the growth rate is slower but sustainable, so I like to throw that out there, Ellis.
I don't hear many people talking about that, and that's something I think to bear in mind.
I remember coming upon that years and years ago, and there wasn't all this emphasis on
the green and sustainability and that type of thing, but I thought, "Wasn't that interesting?
You know, you can have a loaf of bread that costs the same for a hundred years." That
type of thing, and, of course, this is the only true honest monetary system.
Ellis Martin: Referring back to something you said earlier in this interview. We really
don't see gold or silver production slowing down, definitely not consumption, that's not
happening, especially considering silver is an industrial metal. At some point, speculators
or investors have to look at these companies, see they're making money, and say, "Well,
why should we invest in them?"
David Morgan: Right. Well the best place to invest if you're new to this sector, I've
always taught, and I want to be consistent, that if you want to be a precious metals investor,
the best place to start is buy the metal itself. In fact, I've even made the comment that unless
you own the metal, I really don’t want you looking in The Morgan Report where we look
at these companies.
Bear that in mine, but, nonetheless, if you really want to get involved here, the best
place to get involved is in the mining sector because these things are dirt cheap and some
of them provide good yield, so you're making more money than you would on a T-bill. It's
gold or silver or both backed, and, on top of that, you've got a fantastic upside.
I mean, you really want to buy when no one wants them, and this is exactly where we're
at right now. No one wants these things. Now that doesn't mean you're not going to have
to wait three months, six months, maybe even longer. I don't know. I think it's going to
bounce here pretty quick, but, again, that's just my opinion.
Ellis Martin: We'll be right back.
Break: The Ellis Martin Report is sponsored by El Tigre Silver Corp., trading on the TSX
Venture Exchange under the symbol ELS.v, and on the OTCQX as EGRTF. Silver has been considered
a precious metal for 6,000 years and currency since 600 B.C. It's been commercially mined
in Mexico since 1530 in mineral-prolific and mining-friendly Sonora State, where El Tigre
Silver Corp's 5,000-meter drill program is now underway. El Tigre's properties with gold
and silver mining concessions span approximately 267 square miles. With an attractive share
structure and a strong, proven management team, El Tigre Silver Corp is poised to identify
a resource in an area that from 1903 to 1938 produced 75 million ounces of silver and 380,000
ounces of gold. Additionally, their tailing stockpile is currently progressing to production.
Learn more about El Tigre Silver Corp by visiting their website: ElTigreSilverCorp.com. Or click
through El Tigre's logo on the home page of our website, EllisMartinReport.com.
We offer expert opinions only. Find them on our website: EllisMartinReport.com. That's
EllisMartinReport.com.
And we're back.
Ellis Martin: I have a friend in New York who's a member of the clergy. We never talk
about anything related to what I do for a living, let alone investing in silver and
gold stocks, but he chatted me up the other day mentioning how cheap they are now and
how it's a good time to possibly invest. I guess he's been listening to the two of us
or someone.
David Morgan: Could be. Well, I hope we've been pretty consistent in this interview.
It's been a tough call. I think we're pretty much bottoming. I think it’s a good time
to get in. I really do, but I don't know what the time factor's going to be going forward,
and neither does anyone else.
I will bring to the floor someone that's very, very notable that we've talked about on your
show before, and that's Jim Sinclair. Jim's basically saying by the end of March the bottom
is it, and he's put his reputation on that, and I wouldn't bet against Jim, but he's not
always 100 percent correct, like any of us.
Ellis Martin: What would you say to our listeners and your followers specifically who are itching
to make money in the short run? They're used to doing that. You mentioned the stock market
that could rise another 20 percent in the foreseeable future. What are you saying to
these folks?
David Morgan: Well, that's something I do on the advanced service where I use technical
analysis and chart and I talk, or just make a movie using some charting services and other
places on the internet, and I haven't made a trade in a while. People that don't subscribe
seem to know everything that I do and bad mouth me. That's fine. They can have their
opinion, but I haven't made a trade in quite some time. I haven't seen any that I liked.
I did do a spread trade on platinum versus gold, meaning that platinum would catch gold.
I got the first one and missed the second, unfortunately. I did allude to the fact that
I felt platinum and palladium would lead the rally, and that's been true, but I didn't
make that trade, either, but I did write it out in The Morgan Report.
Regardless, the bond market to me looks like it's probably topped. Very tough to call that
market or any market, but what I do, Ellis, is I sit down and I let people look over my
shoulder, and I tell them what I see and what I'm doing, and I have made some pretty good
calls, particularly in the metals regarding movements.
When you have a very long-going sideways market like we've had, it's pretty tough to trade.
It's not the style that I like. It's called scalping, and you've got to go in and get
out pretty quickly.
I like more position trading where you have these huge washouts, and you get in pretty
much near a low, or you make it break out, which is the preferred method that I use most
often. You force the market to prove to you that it's on the way up and, once that's established,
you get in and ride it as long as you can, and that's been very successful for me for
many years, so I just wait for the opportunity. The problem is you can't tell the market,
"I'm ready. I want to trade now. Come on. Let's go."
You just can't do that, and, of course, it's frustrating at times. I'm ready to put a trade
on. Believe me, but I just don't see the conditions at this point and time where it behooves me
to do it in the metals, and there are other markets.
The dollar chart's very interesting to watch, but I'm not ready to put a trade on there
or so. I just have to wait for the opportunity. I'm pretty good at letting the market tell
me what to do, not me tell the market what to do.
Ellis Martin: Talk about TheMorganReport.com which started out being Silver-Investor.com
David Morgan: TheMorganReport.com is the URL, and it's also Silver-Investor.com. I think
one thing that people don't understand about TheMorganReport.com and our subscribers, and
our subscriber base is really not that big, is that we don't just look at the silver market.
Now, I admit we emphasize silver quite a bit, and it is my specialty, and that's a fact,
but we've looked at many companies across the board, and we have featured several that
are outside of the silver space. Mostly, they're in the resource space. We're probably going
to do something in the energy sector, and it's not my work. I have two analysts that
work, well, it's actually three that work with me, which means four total, and we're
probably going to look at some of the energy sector for a high-yield stock that provide
income.
I changed to The Morgan Report years and years and years ago, because, one I wanted to be
outside of just the silver only guy, and I wanted to bring opportunity to our members
that were outside of silver alone.
So, a lot of people can think, "Well, that's all he talks about. I have my silver position.
I like hearing him on the Ellis Martin Report, but I don't need his newsletter." And I'm
not saying that you do, but what I am suggesting is that's a lot broader than most people would
think until they get a look at it. I had a uranium situation; I really liked it. We topped
fairly well during the uranium boom. I don't, like, necessarily to get in and out, but,
again, I let the market tell me. I called the top of the uranium market. I fact, Marin
Katusa actually wrote for The Morgan Report for a few months, and Marin did a superb job.
We'd put our heads together, I basically timed it, and he wrote it, and it was an excellent
piece, and shortly thereafter he started working with Doug Casey, which is fine. I think Marin's
a fantastic guy.
Ellis Martin: Well, David, we've certainly once again covered a lot of ground. I look
forward to our next conversation. Thanks so much for joining me today on the program.
David Morgan: Thanks for having me.
Ellis Martin: I've been speaking with David Morgan. His website, again, is themorganreport.com.
Listen to this segment again on the podcast page of our website, ellismartinreport.com
and download The Ellis Martin Report on iTunes.
This segment has been sponsored by El Tigre Silver Corp., trading on the TSX Venture Exchange
under the symbol ELS.v, and on the OTCQX as EGRTF. El Tigre Silver Corp is focused on
silver exploration and development in prolific Sonora State, Mexico. Find them on the web
at ElTigreSilverCorp.com.