Tom Jeffries: David Morgan is editor and publisher of The Morgan Report. Full disclosure: it is my favorite publication. David is one of the leading experts on silver in the world. The Web site is silver-investor.com. You get all the details about The Morgan Report.
Mr. Jeffries: Everybody's talking about gold's place in the new world order. Woo! Let's not get spooky, folks. How would you expect silver to act in the event of a world oligopoly, David?
David Morgan: I think that, as I wrote so many years ago in Silver Investing Rules, no one likes to be a prophet of doom, but silver is the money of last resort, and I still believe that. However, gold certainly has a higher monetary aspect to it as basically a store of wealth, a store of value, and a safe haven. Silver has those qualities because it's an industrial metal as well.
But from a practical perspective, silver is the one that you'd be actually using in times of crisis. Not that you wouldn't use gold, but if something happened and you needed to get a loaf of bread, a gallon of gas, pay rent, or keep your landlord off your back, and you had some silver coins, that would be a lot more advantageous to you than a gold bar, which would be pretty hard to divide up and pay your landlord or whatever.
So silver really has been money in more places for longer periods of time than gold has, and whenever I make that statement it seems to get some people upset, but it's a fact, it can't be disputed. Through all of recorded history it (silver) has far more functionality as money than gold does.
Mr. Jeffries: Okay. I'm playing devil's advocate for a second here with you, David. I guess that begs the question, and maybe you can explain, what central banks and those wily governments out there are going to do to resist the allure of silver for the average investor? As a money alternative?
Mr. Morgan: Well, that's a great question, Tom, and it's a tough one. To really get an in-depth answer to that question you should go to our Web site, silver-investor.com, and go in the archives section and read everything Charles Savoie has written for the last decade.
Mr. Jeffries: Yes, okay; I have read his work he has provided a massive amount through the years.
Mr. Morgan: Readers get an eye-opener on how important silver is as money, what the central banks really think of it through history, and why they basically demonized and demonetized silver as their main concern so many years ago, hundreds of years ago, really. You're looking back to, say, the Crime of 1873, 120-130 years or so ago.
And once that was accomplished, you went to the gold-only path. And then you had a monetary metal that was much easier to control because the banks had most of the gold anyway. So if the banking community and financiers got rid of silver, you didn't have a problem with the people (or the peons and underlings, as the bankers view us), and you just had gold, and they owned it, so they could make the rules.
And as you know Tom, and very few do, The Wizard of Oz was basically a metaphor for going to the gold-only standard. There's a gentleman, whose name I can't recall, who wrote an article that's on the Gold-Eagle Web site about how the gold-only standard eventually leads to the fiat system, but when you have bi-metalism, which is where you have both gold and silver circulating freely, not necessarily a fixed ratio by government but what the market could decide, you have a much freer and safer system.
You have a lot more stability in the system than you have on a gold-only standard, but very few people know that, very few people believe it, very few people study it. And if this is the government of the United States, supposedly of the people, for the people, and by the people, you should look at what the people use as money and why they use it.
Of course I take that perspective and because of that, I'm very, very biased toward silver being not only a monetary metal but also probably the most high-tech industrial metal required for today's world.
Mr. Jeffries: I was shocked, and I don't know why this was so obvious, standing right in front of my face, when I found out that Dorothy's shoes were originally silver in The Wizard of Oz and then I realized what Oz is short for ounce . . . I don't know where I was with that one! The Wizard of Oz, not time for that right now, but do some digging. Web of Debt, a book by Ellen Hodgson Brown, explains it very well.
David's written about this, it's just fascinating. Holy Williams Jennings Bryan, Batman! The old Latin phrase comes to mind, talking about these ETFs and banks and central banks and that stuff, Cui Bono. Who benefits? in Latin. So, is this Goldman Sachs or is this one of the big guys behind the curtain (as in The Wizard of Oz) playing these ETFs or what's going on?
Mr. Morgan: It's the banks. From my perspective, if you look at the Barclay's Silver Trust, it's in London. When Buffett bought 129.7 million ounces of fine silver off the COMEX, once he received the silver it ended up in London.
Then Buffett sells his silver and then the silver ETF arises in London, so now Barclay's bank has some control of a great quantity of silver. Just look at the two best studies on the silver market, depending on which one you choose. I'm going to choose the CPM Group (even though I'm very close to the Silver Institute). In any event, you're looking at maybe 500-600 million ounces of fine silver in 1,000-ounce bar form. So, the iShares has almost 300 million, which means they have three-fifths, or 60 percent, of the world's silver supply sitting in their bank more or less. Which is a pretty healthy amount, and then if you subtract the COMEX out of that, they've got most of it. In fact, they do have most of it, not counting COMEX, obviously, but the point is that the banks now-or a bank, Barclay's-has silver in their bank again, which is something that they haven't had up until the creation of the ETF.
Mr. Jeffries: Tell me something about the Silver Summit in Spokane.
Mr. Morgan: I did a Webinar with Hugo Salinas Price in Mexico and he actually asked that I would be the interviewer, which I consider to be an honor. I met him in person many years ago.
Most people don't know that Hugo Salinas Price has started a foundation (I don't know if it's technically a foundation, but a group) that is looking into using silver side-by-side with the Mexican peso, and this story has been out there for a very long time. It recently got shot down by, guess who, the central banks in Mexico. But the idea to put money into circulation just in one nation-state alone has huge significance, and as Hugo himself said (I'm paraphrasing), even if it doesn't happen the idea of it happening has a lot of power, because people will realize honest money works!
In the United States, some people are two paychecks or three paychecks away from bankruptcy, thus gold is the last thing on their mind as far as what they can afford. But they certainly could afford some silver, so I think you're going to see silver really, really take off once we get near the end of this great credit debacle that we're now experiencing. Again, though, I want to caution everybody: I don't see that happening in 2009. I'm looking for the final wrap-up in this thing to happen somewhere around the 2012 timeframe.
Mr. Jeffries: Just an amazing time we live in. By the way, I know David's a very busy guy but he's kind enough to say he will answer questions. If you've got a reasonable question send it along to firstname.lastname@example.org, select David Morgan, and we'll send it along to David.
If he has the time he'll respond to it on his weekly podcast on HoweStreet.com. And if you're wondering about the Silver Summit in Idaho, just Google it; you'll see David is joined by a lot of top people, including the eminent Hugo Salinas Price.
Comments made on goldradio.fm are an expression of opinion only and should not be construed in any matter whatsoever as recommendations to buy or sell any financial instrument at any time. Available online at www.goldradio.fm, goldradio.fm is a production of Howe Street Media, Inc.
Mr. Morgan has followed the silver market for more than 30 years. He wrote the book Get the Skinny on Silver Investing. Much of his Web site, Silver-Investor.com, is devoted to education about the precious metals; it is both a free site and does have a members-only section. Mr. Morgan has just written a free report titled, Silver Fundamentals, Fundamentally Flawed, which can be accessed here: Free Silver Report. To receive full access to The Morgan Report, click the hyperlink.