Silver’s bull market: done, delayed, or detonating?

Silver prices are rising rapidly and continuing to break all-time highs — but the real story is more than just rising prices. It’s the stress building underneath the market.

In this episode, precious metals expert David Morgan explains why physical silver is being pulled off exchanges, industrial demand is absorbing more physical supply, and prices are breaking out past in a historic bull run.

This conversation breaks down why silver behaves differently than gold and why many investors misunderstand what actually drives silver markets. If you’re relying on price charts or headlines alone, you may be missing the bigger picture forming beneath the surface.

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Transcript

Ben Nadelstein:

Welcome back to the Gold Exchange podcast. I’m joined by our good friend David Morgan. David is one of the world’s most trusted voices when it comes to precious metals and macroeconomics.

He’s the author of the Silver Manifesto, and he’s the publisher of the Morgan Report. David, welcome back to the show.

David Morgan:

Ben, it’s good to be back. Thank you.

Ben Nadelstein:

David, let’s talk about silver to begin with. Silver has had a massive run this year, and it’s not over yet. Silver has gone up almost 100%, depending on what price you’re seeing it today.

Tell us a bit about silver. Is this some industrial story that’s happening with silver?

Is it a monetary demand that’s happening with silver? Is it some combination? Why has silver outperformed gold this year?

David Morgan:

That’s a great question. It is a combination answer. Silver is basically 65 % industrial and maybe 20 % monetary. What’s the difference? Those two only add about 80 or 85. Well, the rest is jewelry and silverware. But in the big, big picture, we’re in a dynamic that many of us have predicted over a very long time, and quite frankly, it’s taken longer to get to this point than I expected. Nonetheless, here we are. And what does that mean? Where are we?

Well, we are at a point where The derivatives market, the futures exchanges, both the COMEX and frankly, the LBMA, which is really an exchange association, but similar function. It basically does a lot of paper derivatives that work in the what’s called forwards markets, which is similar to the futures exchange.

Based on that, what we have is a situation where the physical commercial bar market, which is the on a rigorous basis, has taken precedence over all of the silver products, which means that industry and perhaps institutional investors are buying these thousand-ounce blocks of silver at a rate that cannot be maintained at the current demand.

Now, perhaps there’s enough inventory to satisfy demand, but it’s in the wrong place, which means we saw these arbitrage opportunities that took hold between the LBMA and the COMEX.

A lot flew from London over to New York based on fear of tariffs, came an arbitrage, so even more came over. And then the LBMA was held. The situation where they needed physical, they didn’t have. So some more shipped back from New York in the LBMA.

And really, the one that’s talked about a lot, but the least understood, and the reason it’s least understood is this opaque, we don’t know all the dynamics, is this Shanghai Futures Exchange, and the amount of physical that goes through that exchange.

And from the few facts that I’ve been able to verify and ascertain, it seems as if that’s actually the driver behind the big move. It could be that the Chinese-Asian market, someone in Hong Kong, could be in Dubai, just working through that exchange.

It doesn’t necessarily mean that location, just means that exchange has got such a demand, either for current need or perhaps future need, thinking, well, we want to stay in production with our PV plant for the next five years. In order to do that, we need X amount of silver. I’m going to buy that amount of silver over the next six months to a year, and I’m going to warehouse it myself.

That’s pure conjecture on my part, but you can take that conjecture and say, that’s the type of demand that we’re witnessing right now. Will it hold for the next two weeks, Ben, or the next two years? That I don’t know, but it’s very strong that it doesn’t seem to be waning anytime soon.

What’s interesting, I’ll go back to you because I think we need to address That’s the retail market, but was I hopefully succinct enough on what I look to see on the commercial bar side, which is really driving the market this time?

Ben Nadelstein:

David, I think a lot of people don’t understand that if they have a stock, for example, that’s just all being traded digitally. There’s no physical stock certificate that needs to get moved from one location to another. But actually, the physical location and the type and size of the bars really do matter, whether it comes to gold or silver.

So talk a bit more about these different exchanges. People here are Shanghai exchange, they’re here London, maybe New York. Why does it matter where these bars are, and when, and in what format?

David Morgan:

Yeah, it’s a great question. So most of the exchanges really are, as I’ve said many times, derivatives. In other words, for the COMEX, basically about one % of the outstanding contracts ever are turned into the actual commodity. And that’s not only silver, that’s true in the wheat market or the soyabean oil or cotton market.

So there’s a lot of hedging done by the producers of cotton or soybean oil. And there’s a lot of speculation that says, look, I think that’s too low or too high. I’m going to make a bet. The price is going up or down. But as far as actual delivery of commodities in general, it’s, again, very small percentage. Nonetheless, there’s soybean oil, cotton, and silver that’s needed every day, more or less. So where does that come from?

Well, normally it comes directly from the manufacturer. I mean, just because it’s on the exchange. That’s the last place that you’re actually going to take delivery. The farmers have got co-ops, and they go from corn in the Corn Belt in Iowa or whatever, and it goes from that co-op directly to Kellogg’s. And it never sees the exchange. It might be traded on exchange, but it’s not there.

Very similar to silver. So someone that runs a photovoltaic operation in China needs the silver blocks, these thousand-ounce bars delivered to them. So where are they going to take them from? They’re going to take them from the nearest location they can get, which right now is Shanghai or Hong Kong market.

However, if the demand is so high that they can’t get what they demand, then it’s going to have to be shipped either from the LBMA or the COMEX or the manufacturers in China, but that’s probably been tapped out. They’ve probably got as many, I’ll call them co-ops, to keep the idea sound, even though they’re probably on any Silver Co-ops, but the idea being local places that manufacture Silver, either Refined or Dore.

So what we’re doing is saying, look, I need it, I need it now, and I’ll pay whatever to get it now, get it at this place. And that’s why I see these arbitrage opportunities. Now, moving back to the COMEX, which I find so fascinating is the amount of actual physical metal coming out of that facility that we’ve never seen in the past. And suggests to me very strongly that it’s become the storage facility of last resort.

And I say that without a tongue in my cheek, I really believe that is at least partially the case. The reason being is that most of these manufacturers like 3M or Samsung or Tesla or Apple Computer, there’s so many of them that demand silver for their final product.

Again, get it from a source that they’re normally We’re used to receiving it from, no problem. And it never goes to the exchange. Yet it’s coming off the exchange. Why is that? Well, it’s pretty logical it’s coming off the exchange because you can’t get it anywhere else. And So I think that’s really important to note, and I’m glad you asked the question.

Ben Nadelstein:

Yeah, David, what about if I’m a silver investor, I’m hearing, wow, Apple, Tesla, photovoltaics, all these industrial demands for silver rather than maybe monetary demands for coins or bars.

Would it be a bad thing if industrial demand overtook monetary demand completely and silver became much more like platinum or copper, where most investors don’t have platinum bars sitting at home as a monetary hedge?

Would that be a good A bad thing? A bad thing? Is that likely to happen? What’s the story there?

David Morgan:

Well, I would push back a little bit what you said, or maybe clarify, although I like your thinking. Really, right now, I don’t know if I did it on the last time we were together or not, but a friend of mine that’s a precious metals analyst, such as myself, that digs pretty darn deep, named Matt Watson, did an outlook of silver from like, 2020 to 2050.

And in his work, I don’t necessarily agree with it totally, but the idea is what you just said, had been, 100% of all silver mined and recycled is eaten up by industrial needs right now. But the monetary demand for silver wouldn’t go away like it would platinum. I think it would only enhance it, because silver is known as a monetary metal, not so much in North America, but in all the Latin-speaking countries, such as any of the South Americans, European countries.

The word silver, the word money is synonymous. So there’s a lot of, let’s say, reasons to continue to think of silver as money and a safe haven, and compared to the gold price. And so you know what? I I need a safe haven.

Gold’s really moved. It’s unaffordable to me, but silver is still there and available, especially to take a little bit of a cursory look that, monetary metals has done since an excellent job of them and say, look, golds of a ratio.

What’s the most valuable relative to the other one. And I know Keith made an excellent trade and kept me out of the market and helped me because he thought that this golds of a ratio would go over 100 one more time. And he was right. I wasn’t that sure.

I was, I don’t know, Keith. I don’t know. But he was correct. And that was the time he made a swap from, I don’t know, $120… Excuse me, 120 ounces of silver to purchase an ounce of gold, swap that, made that change, and really made a very smart move.

So there’s a lot to what I just said, Ben, you might want to unpack it a bit, but I think that this industrial demand is pretty close to taking all the silver that we’re mining and recycling, the investment demand’s on top of out, which causes a deficit. And I think the monetary demand will increase.

So I believe that silver will always be thought of going forward as both an industrial and monetary asset.

Ben Nadelstein:

Tell us more about this recycling story when it comes to silver, because in the past, In the past, silver’s price was really low enough that most people thought, If there’s a little silver in this washing machine, I’ll just throw it out. I’m not going to spend the time to get a big crane, lift it out, try to scrape up some silver. It’s just not worth the money.

But now with silver prices in the $70 range, probably a lot more people are thinking about recycling silver that’s in technology or in different units of something like a washing machine. Talk about the silver recycling story. Obviously, we mentioned in China, maybe they want to be looking at recycling silver. Where do you see the recycling story in silver compared to maybe gold?

David Morgan:

Yeah, that’s a great one. According to what Matt thinks, and I’ve thought about it as well, I’ll give you both ideas. According to Matt, he really doesn’t think that even with the dynamics I just outlined, that there will be a much of an increase in recycling.

I think somewhat differently. I think, as you said, once you double the price in silver in a year, someone may be looking at, how can we get more silver recycled. It was so easy with the photographic industry up till about 1999, we were pulling out 200 million ounces of liquid silver into physical silver through the photographic industry, and that’s basically gone to almost zero now.

So there isn’t really very much readily available recyclable silver in quantities that are economic, as you just said. I got to go get a washing machine. How much does it cost me to transport it, break it down, find the control panel, look at the relays, and get them off that circuit board? It’s an economic economic, even a $60 silver. Is it economic at $600 silver?

Yeah, probably. But then there’s logistics. How do I get people to give me their washing machines before I take them to the landfill?

And I’m laughing because it’s a bit of humorous, but it’s also factual. But I think people are smart, and when there’s an opportunity, they’re going to figure it out. And so maybe there’s some way that someone has to take whatever whatever appliances they are, take the circuit boards out of them, throw them in the dumpster they collect until the dumpster is full.

Now, they’re taking the circuit boards to a recycling facility. They’re paid 20 % of the silver value, and then the recycler takes the rest out. And last comment, you can ask me further, is the late great Jim Dines, who I’ve followed for years, known as the original gold bug, actually known as the original silver bug, said in his writings more than once, that there will be a day that people, society, will go into the landfills to get precious metals back out.

Now, whether or not that’s true, I don’t know, but it does give you pause to think about how reckless we’ve been with such a precious commodity that’s been, my view, underpriced for decades, now is becoming fairly priced. And oh, my goodness, we shouldn’t have thrown it away.

Ben Nadelstein:

Now, I want to ask about the gold to silver ratio. We talked about this in our last interview. Some analysts say the gold to silver ratio does not matter anymore. It was a historical fluke.

And yes, it’s interesting to look back in the day when gold and silver were money, they had maybe some type of relationship. But today, because of all these different types of factors on gold, as well as different factors for silver, the gold to silver ratio just isn’t meaningful anymore.

David Morgan, where do you stand on the gold to silver ratio?

David Morgan:

I think it is meaningful. I mean, just, and you can back me up on this, Ben. I mean, Keith Wiener is probably one of the smartest guys I know in the industry, and not everybody agrees with him, and not everyone agrees with me. But the fact is, when you’re watching the Gold Silver Ratio, and you’re managing money, even your own, then you see this ratio go to extremes, it behooves you to make a swap. And that’s exactly what he’s done.

So just from that very basic methodology alone, I think it’s smart to watch a gold-silver ratio. As far as looking at long term, I’ll try to be consistent. I said, look, the gold-silver ratio from the 13th century up until about the 19th century, we saw the gold-silver ratio below 20.

But the reason that was is because it traded near what I call a natural ratio, how it came out of the ground, and they both serve the same function, money and money alone. So when we were on more of a silver standard, a bimetallic standard, it made sense that the natural ratio would be pretty much the ratio you would see in commerce, and that’s what happened.

Now, since we’ve had the industrial technological revolution for 100 years or more, and especially now in the last 15, 20 years, Silver has become industrialized technologically to where, well, it is just a commodity. It is just needed for technology and nothing else, which isn’t really true, as we already discussed. But nonetheless, I do think it skewed the ratio.

So to go back to the monetary ratio, Ben, honestly, I don’t see that. I don’t rule it out. I’ve written about it as a possibility, but not a probability. But I think still the goals of the ratio was too high. I’m thinking more of the mean of a 50 to one or perhaps 40 to one, which is almost a double from here, meaning silver would outperform gold on a relative basis twice as much. I don’t see silver ever coming back into the monetary sphere here with a new monetary system. However, I do see gold taking that role. So that’s where I stand on it.

Ben Nadelstein:

And is part of that monetary question on silver, basically, that with new ways of whether it’s tokenizing gold or sharing gold digitally, that the need for silver as a monetary medium is maybe weakened or relaxed, because if you want to buy a cup of coffee at Starbucks, you can use digital gold, fractional amounts of gold all the way down to a gram, rather than the need for silver to purchase maybe smaller items. Is that where you’re seeing the weakness for monetary silver coming back?

David Morgan:

Well, I love you young, smart guys, because none of us are the guys that could last forever. So yes, that’s definitely, I’d say, 80 % of it. The other part is mispricing? I mean, for silver to have any significance in the monetary sphere, it’s got to be astronomically priced from where it is now.

I mean, if you look at the financial system as it stands right now, silver is probably 0.2 % of the entire financial system. So as money, it’s got to be worth a lot more than that, which means to make it 2 %, you’re going to multiply it by 10, which is just $600. Or silver. And even there, would it be significant enough to have a monetary effect or not? Maybe, possibly. So that’s the other part of my thinking.

Ben Nadelstein:

David, I want to ask you about central banks.

Obviously, a lot of people say, well, the gold price has risen so much because central banks are buying gold, and they really focus the gold price or the gold bull run on the amount of central bank buying and how that’s maybe supported or exacerbated the run in gold. But central banks don’t really own silver in their reserves, so that argument that central banks are maybe central to this gold bull run seems a bit weak, and especially on silver, which has now outperformed gold, where central banks generally don’t hold silver.

So do you think that this will change? Central banks will own silver. They’ll say, Hey, let’s not have gold only, but maybe silver as well. Or are central banks basically going to remain unimportant to the silver story?

David Morgan:

I think it will remain unimportant, but I also have to give a caveat, and that’s to nation states looking at silver as a strategic asset. That just like the United States recently did with putting on the critical minerals list, which means Russia has already taken a dip in the physical silver market. I don’t think it’s at all for monetary purposes, but strategic, look up the word. It could be military, it could It could be photovoltaics, it could be batteries, it could be a number of things.

And then you look at Saudi Arabia, which bought roughly a million shares of the SLV recently, a nation state, not looking perhaps for monetary exposure, but for strategic purposes. And they bought enough to be an authorized participant. Recently, they sold off about 30, 33 % of their holdings. And I thought, that’s interesting, quick profit.

That’s not normally how the Saudis operate, although I’m not affiliated with too many in the Middle East, although I have some pretty good contacts. Back on point, I thought, okay, they’re profit-taking. And then someone got to me on exit, so what if they were actually taking physical? I go, aha, that could be possible.

I’m not saying it is, but they bought enough to be an AP, which means maybe they are testing the system. Hey, we got a million shares. That means that many ounces. We’re an AP, and send us this much. Let’s see do what they do. Let’s see how long it takes them. Let’s see if they push back on it. What’s going to take place? So I want to take that into consideration.

So the last statement is that there will be, in my view, other nation states that say, Hey, I don’t need it as money. I need it because I have a technological need going forward. It’s getting scarcer by the minute we could print fiat and buy it, let’s do it now.

Ben Nadelstein:

And what about having this silver physically or geographically close, where, for example, a mine in Mexico that has silver is now more valuable than a mine in Canada or China, simply because whether it’s geo politics, tariffs, trade wars, do you think that it’s going to matter where the silver is actually being mined mind, whether it’s in a friend-shoring manner?

Do you think that these silver miners, outside of the physical metal, will become critically important as well?

David Morgan:

Could be. I mean, it depends on if we get into what’s called Resource Wars, which there’s a couple of books written with that title. I read them both. It’s been a while. But the world works on the energy, as you know. It’s not money.

Money is what lubricates the commerce, but really money’s value It was really zero, but we all pretend it has value. Regardless of that statement, if we looked at a barter-only system, where does silver fit in the hierarchy? Well, really, for usability, it’s right below oil, right below energy. So where it’s located could make a difference, especially if a resource war starts to manifest where Mexico says, look, I’m putting a tariff on our silver export. It’s this amount, it’s 50 %, whatever it is.

You want it, you can have it, but it’s going to cost you more. Or we’re keeping it in-house because we see what’s coming. We want to use it as, let’s say, a bargaining chip going forward for a new trade agreement coming across with the new monetary system based on the blockchain. We feel our resource value is underappreciated, and therefore we’re holding off. So I think we could see that.

I think just like we saw the oil embargo in the ’70s, I know you’re too young, but I lived through it. And I remember waiting in line in my car, your age, which had more energy, and I was anxious to get my gas to get the hell out of there. I was frustrated to wait for two hours based on your license plate number to get up there and get a limited amount of gas and then go.

So these embargoes that have happened could take place again. And in a way, I want to be neutral. I want to be conservative, but I also want to be correct as much as I could be looking into the future, that you could really, in my view, objectively see that they’ve got a valuable resource that they really haven’t been paid properly upon, and pushing back to, wait a minute. We’re revaluing our resources, and this is what we’re going to do going from this point forward.

Ben Nadelstein:

What do you think the chances are of tariffs actually on gold and silver? There have been multiple talks, rumors, Oh, there might be a tariff on gold, and then all of a sudden, maybe it’s retracted or turned around or taken away. What do you think the chances are of a tariff on gold and silver?

And for gold and silver investors, do they really matter? Will that help the price? Will it hurt the price? Or will it just create volatility? Facility?

David Morgan:

I’m going to answer it backward. That’s the second question first. It definitely has taken place and been that way for a very long time. And I know you know this already, Ben, but if you’re going to buy silver outside of North America, almost anywhere else you’re going to buy, it’s going to have a VAT, so I’m going to call it a tariff. It’s the same damn thing. If you want to buy silver in Germany, I think it’s 15 %. Don’t quote me on the number, but the idea is absolutely correct.

Same thing in the UK, same thing in Japan, same thing through most of Europe. And so there’s already, so what does that do? Well, that takes a precious metals investor’s mindset into, oh, I want to buy silver. I believe, David, I think it’s undervalued, relevant gold.

Oh, wait a minute. I’m in the coin shop. I’ve already got a $2 markup or €2 markup on it, and a 15 % VAT, and maybe sales tax in some instances. So now I’ve got a 25 % spread from this physical bar I want to buy before I even break even. Heck, give me that small gold coin.

I’ve only got about a 2 or 3 % premium to overcome. So that’s definitely, absolutely deterred the silver purchase I’ve seen investment mindset of bi-physical, I can’t hold it, I don’t own it mindset that most of Americans and Canadians take for granted. That doesn’t really take place nearly as strongly as it could if there wasn’t a BAT or I’ll call it a Terra.

Now, on a big scale, which was the first part of the question, I don’t rule it out. I can’t rule it out. I’m against it. I’m an Austrian thinker like Keith. I think it does nothing but harm in the long run. But a lot of people run their lives based on short term instant gratification. And I think it could put a political class type.

You know my thoughts on most of the political class, but I’ll try to be kind, thinking it’s a good idea, putting a big tariff on their silver and saying, See, we told you so, and really disrupting a free market determination of what the true value is based on whatever. But I don’t think it will happen. But as you said, it’s already been on and off once or twice anyway.

And to know the future is pretty tough. My crystal ball broke on the way over here. But nonetheless, I certainly think it’s a possibility. How possible? I’ll put a number on it. Pretty high. I think it’s in the 10, maybe even 20 % range over the next couple of years.

Why? Because of what we see in the market for a fact right now that we’ve already discussed. If silver is that tight, that needed, why not take advantage of it, or why not… Let’s get that VAT. Let’s get that extra juice on it because we can.

Ben Nadelstein:

David, now I want to move into a lightning round with you. I’ll ask you questions all over the map. You can answer as short as you’d like with just one word, or you can answer as long as you’d like.

Let’s start with what you think will happen to silver demand if there is a recession, whether that’s domestically in the United States or globally. What happens to silver demand?

David Morgan:

It will subside somewhat. It just depends on how this tightness that we’re observing manifest going further. In other words, If the industry sees it as I got a stock product and the price is lower, they might even buy more or buy the same amount or whatever.

On the other hand, I think retail would basically back off of the market. Right now, we really have a bifurcation. We see the demand for commercial bars not being met in a almost backwardation, not right now, but it has been briefly. Whereas the retail market, the wholesalers are flush with inventory.

They’ve got silver coming out of their ears. I’ve got so many people selling back junk bags and 10-ounce bars, kilo bars, 100-ounce bars, that they’re running out of space. I mean, I’m exaggerating somewhat, and some In some cases, I’m not. The point being is that I’ve never seen a market like this. I mean, normally, if the silver market is very hot, there’s a lot more buyers retail than sellers. But that isn’t true.

Right now, there’s still more sellers than buyers in the retail side. So if we had a recession, Ben, to reemphasize it, I do think that a lot of people that bought it 30 or under, and they’re looking at a $60 print, and all of a sudden it’s down to $45 in six months.

They still have a $15 spread, will be more motivated to sell. And in that instance, there could be a discount to the market, which we’re already seeing, whereas we really want to sell, you’re going to have to take a $2 or $3 haircut. So even though the print in the futures exchange is $45, you might only get paid 42 for it. I don’t want to see that. I don’t know if that’s going to happen, but I’m giving you an honest answer.

Ben Nadelstein:

Next one for you, David. How should investors think about silver in a multi-asset portfolio? Maybe they have stocks, maybe they have bonds, maybe they own some gold.

Where does silver fit in? Is it junior gold? Is it gold with volatility? Is it something else entirely? How should investors view silver in their portfolio?

David Morgan:

I think they should look at it as an asymmetric safe haven. I think gold is the ultimate safe haven. And if you’re older and you want to protect your portfolio and hedge it, gold only would be okay with me. But if you’re younger, more aggressive, and you see the technological situation that we’ve already described going forward, then I would use both gold and silver, or if you’re really aggressive, perhaps silver owner.

Ben Nadelstein:

Next one. What historical Silver Bull market maybe matters most for investors looking for past lessons today?

David Morgan:

I don’t think there is one. I think the Hunt Brothers is a good look at how quickly the Silver Bull market can move when the supply and demand don’t equal. But that was really based on a lot of futures contracts and a fair amount of physical. But that was based on the Saudis and the Hunt Brothers. It wasn’t much more participation.

This time it’s global and it’s driven by the industrial side more than anything else, where the investment side is icing on the cake. That wasn’t true in the late ’70s and 1980. Plus it’s global. You didn’t have, again, the industrial demand. Looking back 25 Here’s the industrial demand for silver is 35 % of the market, and we’re only mining 500 million ounces a year.

Now we mine 850 million ounces a year, and the demand is 65 % of the market. So you have that insatiable demand. Now, as we said in the recession, would that back off? The answer is yes, it would. Would it affect it somewhat? But not as much as people think, because silver is inelastic on the demand side for most industrial products. But on top of that, 70% of it is a result of copper, lead, zinc, and gold mining.

So if there is a big recession, a lot of copper miners, lead, zinc miners, would basically curtail their production. So they either maybe mind the same seven, excuse me, five days a week, normal working hours, no over time, no weekends, that type of thing, and mind a higher grade because they need to make a profit, yet the copper prices are falling off.

So you could see a self-governing situation, where with the recession, the amount of silver as a byproduct is less. Therefore, if the demand’s less, they equal out because you’re getting less product to the surface.

Ben Nadelstein:

Now, David, what signal is one that you use to tell whether a silver bull market is ending, started, halfway? What’s a signal you’re looking at to talk about whether it’s the gold bull market or specifically the silver bull market?

David Morgan:

I look at the participation through the mainstream financial press, mostly. If you start seeing, you haven’t missed out gold’s going to 10,000, and it’s on the cover of The Economist, I’d be very leery that we were going that high. It was probably be a signal that we should be taking some profits. So that’s one of them.

The other one is my own database. When I start to see people coming in with two new subscribers a week, a thing, I know we’re getting pretty frothy.

The other one I’d use, which is maybe egotistical, I hope it doesn’t, is getting back on CNBC or MSNBC or Fox or one of the mainstream channels. I mean, Peter Shiff got a lot more TV time than I did back a decade ago, but I was on there several times because very few people were talking Silver. I was one of them at the time. There’s several more people doing it now, but the idea being that, Hey, we got to get a Silver guy in here to talk Silver. It just hit 100.

Let’s get Keith. Let’s get David. Let’s get somebody. And that would be a cue to me that, wait a minute, we’re probably getting near our top.

Lastly, I think it would be the best math I can do. In other words, objectively, where are we? If we’re in a situation where the refiners have finally started to open up to all Silver products, including 90 %, they’re refining it, they’re stacking it in the LBMA and the COMEX again, because there aren’t really any buyers of instant demand.

So we got to more or less build inventory at the current price based on market forces, and it’s starting to build, build and build some more, I would say, okay, got to take a look at that objectively and say the demand has been met, we probably peaked, and now we got to take some problem.

Ben Nadelstein:

David, what’s the single biggest misconception that investors have about silver?

David Morgan:

That is a risky investment. It’s not, although it is volatile, but it’s not the volatility of silver. An ounce of silver is a constant. What’s involved is the price sheet around It’s a small market. It depends on what I’ll call, hope I’m not offending anybody, but almost this bipolar personality. Oh, it’s just a commodity, therefore it’s only worth this. It’s only near the cost of production. Cost of production is 28 bucks, 30, that’s all it’s ever worth. That’s one side of the coin.

The other side of the coin is one of the best safe harbors that there are. It’s as good as gold or maybe better because the usage factor is so high as needed in technology as well as So I think it goes between this back and forth, where it’s just a commodity, and therefore, it doesn’t really have much value over the production cost, where it’s the ultimate hedge better than gold in times of economic uncertainty.

And because of that small market with those two forces interacting from time to time, it’s very volatile, which means most people think, Oh, it’s too risky. The real truth of the matter is on a long term basis, silver performs pretty much just as well as gold.

In extreme cases, when you want the protection the most, it outperforms.

Ben Nadelstein:

What do you think about which country is going to be the most important for the silver story in the future? Is it going to be India? More people maybe want to buy silver there. Will it be China and the Shanghai Exchange? Will it be the United States? Which country do you think in the future is going to be the most impactful when it comes to the silver story?

David Morgan:

That’s a really, really tough one. So I’m going to cheat. I’m going to say Chindia, which is a term made up by Frank Holmes, well-known analyst and fund manager, runs mutual funds, speaks in most of the gold shows. So I’ll crop out with China and India. And then I want to add to that, but I wouldn’t say the United States It’s a little we have to import a huge amount of silver to keep our productions going. But I would say, probably Mexico, because Mexico is number one or number two silver producer.

And again, we’ve already we discussed, Ben, and thanks for the great thinking on your part to move my thinking even stronger. It could be a one-off, where Mexico is not happy for whatever reason with, let’s say, the current administration, and not as a backlash per se, but as, let’s say, a pushback of some type of, wait a minute, you want this, we’ve got it, you don’t, let’s renegotiate. So I think I would throw that in there as well.

Ben Nadelstein:

What do you think about this idea that solar demand, which was a big piece of the silver story in the past, is now gone because people said, well, the Chinese were making solar, now there’s a glut of solar, we don’t need solar anymore.

We’re back on an energy grid that is mainly based on natural gas or coal or nuclear. And solar, yeah, it had its moment, but solar is gone. Is solar basically a story that no longer matters to silver, or is it still important?

David Morgan:

Don’t know. It’s too hard to determine at this point in time. I mean, obviously, if you’re in Africa, it’s a lot better, easier, cheaper to bring in a big solar array and then start mining or putting in water pumps or drilling for oil or what have you.

So I think in certain instances, it certainly won’t go away because technology is so easy to implement quickly. But on that basis, I think the bigger picture has merit of what you implied, and that is that maybe we’re there. I mean, right now, it’s very difficult to take that sense of energy and store it. It can be. It has to have batteries, but that’s another added cost. And these batteries don’t last forever. And depending on the type of battery you use, sometimes they have to be serviced, sometimes not. So I think you make a valid point in some cases.

You look at Germany. Germany went all in on solar. They definitely overpaid. It was subsidized. Oh, solar is cheap. It wasn’t very cheap. It was subsidized. So to the unaware or maybe it seemed misinformed even. Oh, it’s so cheap. Well, it really wasn’t. And Germany basically started curtailing back because it turned out to be too expensive, too much maintenance, and they basically said, enough is enough.

And so they started to really drop off on their big push to go, I wouldn’t say all solar, but that was the theme for a while. So I think there’s some of that. The last thing is, solar really isn’t that efficient, and it isn’t as renewable as we’re led to believe. In other words, these panels are good for maybe two decades. The batteries, again, depending on type, maybe a decade, maybe a little longer.

And then if you wanted to, let’s say, electrify the United States with solar, residentially only, which is only one-third of the electrical power requirement, would take all of the above-ground silver to date that we have right now to go all-solar or all electric using solar panels. So obviously, that’s impossible. Now, having said that, the US is small relative population size, maybe 5 % of the global population, but it is 25 % of the gross amount of resources taken in by a country.

So you could look at it as one-fourth of the world, even though population-wise, it’s much smaller. But even there, all the silver above ground right now would only be residential for, we’ll say, 25 % of the needs of the world.

That’s a lot of silver that doesn’t cover more than one-third the requirement. So we could be in, I’d say static, and that’s exactly what Matt shows in his forecast going forward.

In fact, it’s a little better than that in agreement with what I’m saying and what you asked, and that is, solar going forward from 2025 to 2050 actually It increases year over year slightly. It doesn’t go away, but it isn’t the big boom that we’ve seen the last three or four years.

Ben Nadelstein:

Now, talking about a potential area for a boom in silver investing, what is the AI story when it comes to silver? Obviously, silver can be used in chips. Maybe it’ll be used in AI.

Maybe it’ll be used in data centers, which people are investing billions, if not trillions of dollars into. What is the story when it comes to silver and AI?

David Morgan:

It’s going to be a big one. I don’t have any numbers for you. I have an appointment with Mike DiRinzo from the Silver Institute next year to discuss it. And they do have a new paper out that I haven’t had a chance to read yet. It’s on my desk.

And I don’t know how much it goes in AI, but I’ll tell you verbally that according to Mike, who I trust, I mean, every number he puts out is incorrect, but every number I put out is incorrect. Anyway, back on topic, AI is big. How big? I don’t know yet, but it’s significant.

Ben Nadelstein:

Okay, next one for you. Do you think that silver is really going to just spike back and forth only when there’s these physical supply issues? Not that necessarily there’s not enough silver in general, but that there’s these shortages on exchanges, or there’s shortages in Shanghai, or COMEX, or New York.

Do you think that’s where we see our next silver spike? It’s a acute shortage rather than a global shortage, or do you think that the global shortage actually matters more to silver now?

David Morgan:

Well, global shortage would matter more, but as far as answering your question, I think it will spike. I was asked to write an article for Futures magazine years ago, and the title of my article was spiked, and it had to do with the spike low and spike high over its price history.

And so I do think we can see that acute need for silver, and then, let’s say, investment demand couples on top of that, Because people that think silver is too high at 65, can’t get enough at 85. And so then we go into this double whammy, where we’ve got industrial and investment demand, retail, wholesale, commercial, investment, institutional, and all of it at one time, and get this big spike, it spikes out on 120, 220, make up the number you like, and then it comes back down.

But there is a caveat to that, and I think it’s important for investors to know. It doesn’t guarantee that this will take place, but I really believe it will. If you look at the spike in 1980, prior to that one year run, which is about 850 %, silver was roughly six bucks at an all time high in ’79.

Spike to 50 intraday, didn’t even close. I think it closed in the Chicago market at 52. But anyway, this is there very long. But for the following year, all of 1980, not the intraday eye, it leveled at $20 a ounce, average price. So that’s tripled more than 300 % of the all time high a year earlier. So I want to build the case that it spiked at 50, but it actually averaged out at 20, which is triple the previous high.

So we could get to a situation where the previous high was 50, and it goes to 250. And then it comes back down, but it actually goes to triple the all time high of 50, and it levels out at 150, for example. Those are just numbers. Please don’t quote the numbers, but I think the idea is sound, and I wanted to get it out there. You’re such a good interview. You got to get great questions. Let me ask you about that, Ben. What do you think about that analysis?

Ben Nadelstein:

Yeah, I think what’s interesting about both the gold and silver markets, which is less true of silver rather than gold, which is that gold’s price spikes are actually not harmful to any industry, because even jewelry, where lots of gold is being used, it’s actually more alluring the more expensive it is, right?

Versus in silver, many industrial suppliers are not allured by the fact that silver prices have doubled or even potentially tripled.

So I think the chance for a silver spike spike up, and then a preceding silver spike down is much more likely than in gold, where monetary demand and jewelry demand can both meaningfully rise or meaningfully spike without any feeling or psychological need for people to say, Well, it should be a lot lower, or industries to say, listen, we’re tapped out.

So I think that thesis in silver makes more sense than it does in gold. And when you see outperformance in gold, it’s been a lot steadier rather than in silver, where these large spikes up and then large spikes down.

David Morgan:

Well said.

Ben Nadelstein:

All right. Now, David, I want to ask you about who you think will be the better performer as we end 2025, gold or silver?

David Morgan:

I think it’ll be silver. I mean, going back to the late great Jim Dines, He expressed, The trend in motion continues until it actually stops.

Sounds corny, but if you think about it, it’s a pretty powerful statement. And the trend right now is a gold-silver ratio continues to become lower and lower, meaning silver is outperforming gold. I think that is the trend. I think it’s intact. I think it’ll continue, so I’m going to go with silver.

Ben Nadelstein:

Okay, next rapid fire question for you. When it comes to the silver miners, do you think they’re going to outperform silver prices?

A lot of people think, Oh, miners, they’re just like the metal, but with leverage, do you buy that story, or do you think that the actual bullion is going to outperform the miners?

David Morgan:

Well, the bullion has done so for a long time. I mean, a lot of my friends that are in the bullion business make that statement again and again, and it’s partially true. I mean, I make most money for my people on the equity side. And if you look like wheat and precious metals versus the Silver Price, we beat the crap out of the silver price.

I mean, it’d be like Silver being $250 an ounce right now, based on the performance of that one equity. So if you’re a great stock picker, not saying great, but above average, you can do better in whatever environment by picking the miners.

But to your question, I think that it’s still worthwhile to have a balanced portfolio, which means physical first and the correct portfolio. The problem with my industry is that so many people are lured into in the get-rich-quick thinking that if you buy a Penny Junior mining exploration company, you can’t do anything but make money.

Well, you make money one out of 4,000 tries because they’re basically lottery tickets. If you take a analytical, conservative, calm approach to the industry, and you look at it like with any business, we’re manufacturing a fungible asset, gold or silver.

It doesn’t matter if it comes from the moon, South Africa or Canada. It’s the same product. So you want to find the producer that produces and provides this margin in probably the safest jurisdiction and goes right through the bottom line and could pay you a dividend.

Those are the type of companies we put large money in. They do well, they have outperformed. And I think we could see that trend continue.

Ben Nadelstein:

How do you view silver ownership? Do you see it as a conviction asset? Hey, this is a permanent part of my portfolio the same way gold is, or is it more of an optionality asset where you say, Listen, I I don’t really believe in Bitcoin, but I think the optionality on it is better than other assets. Where do you place silver? Is it closer to an optionality type of asset, or is it closer to a mainstay in a portfolio?

David Morgan:

Really, it’s optionality, and most people won’t believe me saying that, but it’s true. I have said over the last 25, 30 years that I’m really a free market capitalist, and I’d like to invest my money into whatever. I mean, we’re pretty big in the cellular phone industry at one time. But in these trying times, you need to put money into the metals because the markets are so distorted.

There’s so much misallocation of capital because capital isn’t priced correctly, and there’s so much bias for an uneven playing field, while failures are rewarded or too big to fail or subsidies, or we’ll let Chrysler Motors come back to life because even though they screwed up royally in a true-free market, they should be out of business. Now we’ll subsidize them. So in this distortion, you must, in my view, be attuned to what’s really happening. Look look at it objectively and prepare for, which means you must have some precious metals.

It doesn’t mean that your whole portfolio is precious metals. But once, let’s say, we get back on a more equal playing field, something that’s It doesn’t have the restrictions and biases that we currently see, that’s certainly the time I’d be very willing to turn that somewhere into XYZ company because they are making energy more efficient, or they’re building houses cheaply that are very, not only cost-efficient, but very good for all weather conditions that everyone can afford, or a food production where we’re getting organic and it’s so darn cheap.

Everyone can eat healthy lifestyle. I mean, those are things I want to see for the population. And if those opportunities are available, especially if we corrected the monetary distortions that we now have, the monetary system that works for everyone more or less equally, I definitely rip into my stash to start feeding into those type of ideas.

Ben Nadelstein:

Speaking of dipping into the stash, which do you think is maybe more exposed to this forced liquidation? Hey, prices are going down. I got to get some liquid cash on me.

It’s time to sell the gold. It’s time to sell the silver. Which do you think is more exposed there? Is that the silver or is that the gold portion of most investors’ portfolio?

David Morgan:

I really don’t know, but I suspect it would be silver because anecdotal evidence, I mean, I have a friend, one stayed over, and for years, he would buy a bag in January. In January, the previous year In other words, he’s buying a bag of silver, and it would pay his taxes every year.

And he did that for 10 years. When the market was going up from 2000 to 2011, he just buy a bag, and not that you’re tax free, but you buy it for X and sell for X plus 30 %, and that’s your tax rate.

You had to care of it that way. So that’s one. And there are others. Most people that buy gold usually are of higher means than people that buy silver. Not always. I buy both. I mean, a lot of people do.

But I think gold is more of a legacy investment to pass on as a legacy. If you’re very wealthy and you’ve got all you need and then some, it’s more of a way to pass it onto your heirs, that type of thing.

Whereas silver being the poor man’s gold, I don’t mind using that nomenclature, is more of a like cash now, ready cash that I mean, oh, my goodness, we had a car expense we didn’t need, or whatever it might be.

So I I would guess silver, but I’m really not sure.

Ben Nadelstein:

David, what’s a life lesson that you learned layer in life, maybe the hard way that you wish you had learned earlier that you can share with our audience?

David Morgan:

I think it’s more… I was going to editorialize it. I won’t. Should I own self be true? I think most of the biggest mistakes I’ve made in the investing world haven’t been by my ability to push a pencil around numbers or to think, logically, it’s been in the emotional side where my gut was telling me, I don’t trust this guy, and I acted on it anyway because the numbers look good.

So if I was really true to myself, and I don’t really know. I know what the numbers are, but I don’t know this guy, or I don’t know him well enough.

I would have followed those instincts and be more true to my holistic self and said, it doesn’t feel right. I probably would have done much better in some of these big mistakes. And I learned that later. So now the adage I use trading, when in doubt, stay out.

Well, it’s this mining deal, or it’s this private placement, or it’s this whatever, tokenize gold or silver. I made a mistake there. I don’t know enough yet. I’m going to stay out. So hopefully that helps someone else. You don’t like to run everything on a motion, but a lot of investing is.

You want to stay cool and calm. But nonetheless, you get that feeling It isn’t just right. Sometimes the best investment you can make is one that you don’t make. So I’ll leave it at that.

Ben Nadelstein:

David, if you were going to make one change in the world to benefit mankind, what would that be? That’s what you asked for me to ask our next guest. I’m going to turn it around back on you again. If you’re going to make one change in the world to benefit mankind, what would that be?

David Morgan:

Give them free energy. Now, as an engineer, I’m not even supposed to say it exists, but I will say that it exists or something close to it exists. If we could do that, get out of the oil, petro-dollar paradigm, and get into where we really create wealth for everybody.

It’s based on energy. If it was very low cost and readily abundant out of the Ether, and we could produce it, that would be my dream.

Ben Nadelstein:

David, what’s the best gift you’ve ever received?

David Morgan:

Well, that’s a tough one. Best gift I’ve ever received? Probably the idea that you can make a difference. It’s not any physical gift, like an ounce of silver or a piece of art or whatever. It would be the idea that, to an own self, be true, you can make a difference, and to follow your passion. That’s three rolled into one, but it boils down to, yes, you can make a difference.

Now, I’m not going to make a difference for the world. I’m not going to make a difference for whatever, but even making a difference for one person person that puts them… I’ll give you a real quick example, I won’t name names, but I’ve inspired more than one, but one in particular I’m thinking of that said, Wow, I met you and you inspired me to follow my passion.

I’m doing it now, and I really want to thank you. But that’s a really heartfelt compliment. And it had nothing really to do with me. It’s just me being my authentic self doing what I’m passionate about, but that spilt over and helped somebody else. So I would say that would be it.

Ben Nadelstein:

David, last question for you. What’s a question I should be asking all future guests of the Gold Exchange podcast.

David Morgan:

Put me on the spot again. How long have you been involved in the precious metals? In other words, I would ask them, is this something that It’s more recent because of the current price action, or is this something that you took as a fundamental fact that all currencies fail, and I’ve known about it forever. So once I learned that information, I decided to take action. I’d like to know that answer.

Ben Nadelstein:

David, you’re one of the wisest when it comes to precious metals, macroeconomics, and finance. If people are absolutely in love with you after this interview, where can they find more of your work?

David Morgan:

The best place is just our main landing site, tomorganreport. Com. And from there, you can scroll down the bottom and see all of our social media, our X, our LinkedIn, our Twitter, our X Twitter, but all of our social media.

And then on top of that, if you care to go to our documentary, we released 22 October, which is silversunrise.tv. It’s for free. Just click the little arrow and you can get an hour and a half documentary, took two and a half years to produce.

Ben Nadelstein:

David, thank you so much for joining us, and we’ll have to have you on again soon.

David Morgan:

Thank you, Ben. It’s been a pleasure.