Silver expert David Morgan says prices of the white metal may be low, but
demand is huge. Morgan explains, "I did a survey of many of the top
wholesalers and retailers in the country and came to the conclusion that the
retail side of the market has basically seized up. One of the biggest mints
in the U.S. is backlogged about 4 million ounces. You have two other main
government mints that are basically on halt and not producing, or trying to
catch up. You have huge premiums in the silver bar market and extremely high
premiums in the silver bag market, or what is referred to in the industry as
junk silver. Dealers are paying $5 above spot to source silver bags. What
that equates to for the cost of silver is about $19.25 an ounce, and we are
in the mid-$14 range for an ounce of silver. So, obviously, there is a huge
demand that cannot be met with the current supply in the retail market."
Morgan also says silver is an inflation adjusted deal. Morgan contends,
"The average mining cost used to be about $22 an ounce, but with the oil
price dropping, it's now about $15. In most cases, you are buying it for less
than the best producers on the planet can produce it for. . . . We are
basically at the same price, using the true money supply, when it was $5
silver in the early 2000's. So, if you look at all the fiat currency floating
around now, and you use that metric, you are buying silver at the same price
(inflation adjusted) as you were in the early 2000's."
So, why all the demand? It could be fear of what is coming, and Morgan
thinks what is coming is the same thing that has happened to Argentina when
its currency crashed. Morgan explains, "People lost their bank savings.
People lined up in the street and grabbed pots and pans and spoons and go to
the banks at lunchtime and, in unison, pound on the bank in protest. People
took to the streets. 40% of the middle class became below the poverty line.
You could not access your savings. You could go to the bank, but you could
only withdraw a certain amount. Sound familiar? It's exactly what happened
Greece. There were many people unemployed and people taking to the streets
saying that they were victims of the IMF (International Monetary Fund). . . .
The U.S. could turn into Argentina, and I believe it will happen. Why did
this happen in Argentina? Overspending -- this is the bottom line of why it
took place."
On the Fed raising interest rates, Morgan says, "I think they will, and
they are going to show how tough the Fed is and that they do what they say.
They are going to raise them a quarter of a point. It's a very small amount.
It's not like they are going to raise interest rates up to 4% or 5%. That
would be devastating, and that is not going to happen."
The main problem America and the world has is what Morgan calls "the
debt bomb." He says the debt is at the center of the black hole of
our problems. Morgan explains, "We are reaching a limit. All systems
reach a limit. No tree grows to the sky."
In March, Morgan predicted September as a time of increasing turmoil in
financial markets and thinks it's downhill from here. On the continuing
turmoil, Morgan says, "It will be ebb and flow, but the trend is
increasing, increasing and increasing. It will, unfortunately, in my strong
opinion, it will get worse before it gets better."
Join Greg Hunter as he goes One-on-One with David Morgan of Silver-Investor.com.
