Resource World Magazine

6 www.resourceworld.com o c t o b e r / n o v e m b e r 2 0 1 5 S ilver is a rather special metal in that it is both a currency and an indus- trial metal. As detailed in The Silver Manifesto by David Morgan and Chris Marchese, it is interesting to note that silver (and gold) have been used as money as far back as 3400 BC. The Lydians introduced silver and gold coinage in about 700 BC, a huge advancement in the development of a monetary system. Amazingly, the United States was founded on a silver standard (Article 1, Section 10 of the US Constitution) that states that nothing but gold and silver coin are to be used as a medium of exchange. It can be argued that a monetary system based on precious metals brings stability. While, on the other hand, fiat money (paper) may have some conveniences and may even be indispensable; however, his- tory demonstrates that due to overprinting and other reasons, paper money is usu- ally destined to lose much of its value and often fails. David Morgan, silver expert, publishes the Morgan Report and is a popular speaker at resource investment conferences. He is of the view that the price of silver will increase six-fold over its current value within three to five years depending on financial conditions. In an interview, Morgan spoke to Resource World. Metal prices are in US dollars. Resource World: The price of silver has fallen about 70% since the spring 2011. What are the reasons for this? David Morgan: One reason is that sil- ver went from the $19 per ounce level to the $48 level, peaking at the end of April 2011. Such a huge move up, in such a short period of time (known as a parabolic move) almost always leads to a similar fallback. Second, the market started in a bear- ish correction mode that I thought could last two or three years but has gone on for four years. During that time the psychol- ogy of the market for precious metals and resource stocks has become very negative with, at times, glimmers of hope. Third, it is difficult to determine what the true market value of silver or gold is since there are so many derivative products on all the exchanges that can temporarily sway the market, not only by price, but by psychology. There may be other reasons but those are the main ones. RW: With the price of silver in the $15 range, would buying silver now be con- sidered a contrarian investment? DM: Yes – absolutely. The Morgan Report, which recently did a study for our members, showed that today, based on the true money supply, the price of silver at about the current level is equal to, or perhaps a better buy, than silver was at its inflation-adjusted low when the bull market began. In other words, the current $15 price has the same dynamics based on the true money supply that $5 silver had in 2000 when there were few buy- ers of silver. Today, things are different and many more people are becoming aware of the fundamentals of silver and some major government mints are having trouble meeting demand. As well, there are other signs that silver buying is pick- ing up. RW: Is it possible to call a bottom in the silver price or is it even necessary at the current low price? DM: I have attempted to call the bot- tom a few times and was wrong. I think a better approach for most people buy- ing physical silver is to use the dollar-cost averaging procedure over a number of months or years. However, if you are into derivatives, it's important to call a bottom. If you are a long-term investor, it's immate- rial to try and call a bottom as long as you are buying in a range that is undervalued. That would be from about $22 down to today's price. RW: It appears both mining shares and metals have suffered from negative inves- tor sentiment. What will it take to change the bears to bulls? DM: Normally, markets exhaust at the bottom and exhaust at the top. They exhaust at the bottom when there is no one left to sell and they exhaust at the top when there is no one left to buy. So, once a market has exhausted itself, any new buy- ing actually starts to increase the price. Once the price starts to increase then there is more participation in the market and sentiment starts to change. Once the mar- ket breaks through the various resistance levels, it gets stronger and stronger. For example, if silver were to go from the current $15 level up to $22, people that bought at $22 would have a more posi- tive frame of mind because they got their money back and the future looks promis- ing, even though the price is the same as when they bought. I would add that some will be relieved to get their money back and sell at what they paid. The market will have to work through this. However, once this is com- pleted there will be many people that will want to buy silver. RW: What is the current and near-term iNTErviEw Taking a look at silver with David Morgan by Ellsworth Dickson

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