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Ask The Expert

Silver vs. Gold Price Trends

Craig and Chris on Precious Metals Projections Banner

In today’s "Ask the Expert" episode, listen to Craig Hemke and David Morgan as they discuss:

  • The potential scenarios for the economy, considering factors like inflation, interest rates, and market trends.
  • The supply and demand dynamics, market manipulation, and potential price targets.
  • Potential risks, and opportunities in areas like mining stocks and physical metal investments.

Watch the full video below: 

 

Announcer: You're listening to "Ask the Expert," on Sprott Money News.

Craig: Greetings once again from Sprott Money News at sprottmoney.com. It is the month of January. It's actually January the 12th, 2024, as we record this. And it's time for your "Ask the Expert" segment, first one of calendar year 2024, and I can't wait to get into it. I'm your host, Craig Hemke. Joining us for this segment is David Morgan of "The Morgan Report." Probably about the most experienced and renowned silver investor that I know of, and we're gonna talk a lot about silver here this month. So, anyway, David, thank you so much for joining me, my old friend.

David: Well, Craig, it's great to be with you, as always, and thank you for having me as your first guest, and I think I'm gonna have to hand that baton off these days. I mean, all ego aside, I think there was a point in time where probably was the most studied, or one of them, you know, in the silver market. I don't know if I even hold that title anymore, but thanks for the compliment.

Craig: Isn't that funny? We've gotten old, man. I was talking to Eric. Anybody that missed it, you can find this on this Sprott Money channel that you're watching. I spoke with Eric Sprott last month. And we were joking around about, holy cow. We [inaudible 00:01:19] I remember when I first started doing this 15 years ago, you know, there were some people like Jim Sinclair, the late Jim Sinclair, that were, like, the mavens, if you will.

David: Yeah.

Craig: Well, the heck, David. Now that's us.

David: Yeah, I know. I mean, I watched that interview, by the way. It was very good. And, you know, Jim Dines, I mean, Jim Dines was extremely influential on me at the very beginning. In fact, because of the speech that he gave, that was what really got me to want to do what I do, want to be a financial newsletter writer. So, I really didn't know much about the industry. I was learning about it, and I started becoming a newsletter junkie, and then when I went to an investment conference... Actually, the truth is, I got the tape from the investment conference.

Craig: Yeah.

David: One of my friends had gone to it, given me the cassette tape, believe it or not. And I played that tape, like, three or four times, and I was just so inspired about someone having the cojones to stand up and tell a little truth about the monetary system, in a large audience like that. I go, "Man, that's what I wanna be doing." And here I am, many, many years later.

Craig: Yeah. And it inspired you, and, again, tell everybody what it is now you do in "The Morgan Report." What do they get there?

David: Oh, well, I've got a free subscription, and I've also got a paid service. And paid service, just go to the Subscribe button tab. And there's a video, and a good sales letter. I won't waste our time on it, but we do, mostly on the equity side, Craig, because there is leverage in the mining shares. And you can do better, even though the Mike Maloneys and all this say, you know, that bullion outperforms, on aggregate, it doesn't, I mean, versus the HUI or the XAU. Bullion can outperform on that basis, but if you're a good stock picker, you know, my top-tier picks, both in silver and in gold, gold royalties, both of them, one's a streamer, one's are royalty company, from the peak of gold at 2011, one's tripled. So that's better than what's gold's done, because it's been a round trip, $2000 to $2000. And silver, from $50 down to $25, still, that stock has doubled. So, and these are big plays. These are put big, serious money. So, if you pick the stocks right, and you have some patience, you can do better on the equity side. But it's not everybody that can do that. I'm not trying to brag. So, I've [inaudible 00:03:34] got my, sure, you know, I've got a bunch of wallpaper, as we say, with the juniors that have gone nowhere except to 0 in some cases, so...

Craig: Right. So do I. If any of them, though, you are correct. And it augurs for what you do. I mean, if you get someone that can kind of help you with the research, but also help you with the timing, I mean, you gotta be, you gotta get the timing right, too. I mean, the shares can really outperform, but, you know, they also [crosstalk 00:03:59]

David: I've been good at the, you know, lucky, good, at the top, so I've not been that good at the bottom. I mean, I know that you have limited time, but I called the bottom, and it was $1817 or something like that. And I was right for 14 months. That was the bottom. Until it wasn't the bottom. So, was I right or was I wrong? Well, I was right. For 14 months, then I was wrong.

Craig: Yep. Yep. Well, as we get started, just a couple of reminders. Again, this, all this content that you find is from, and generated by, Sprott Money. So, you wanna thank them, by subscribing, again, whatever channel you're watching this on, subscribe, and then you can go back and look at all the other content, like that discussion with Eric Sprott from last month. But remember, Sprott Money is a bullion dealer. And they have some special stuff going on here as 2024 begins. Of course, as 2024 begins, it's tax season, for crying out loud. But here's something you can do. You can get your tax-qualified accounts. In Canada, it's an RRSP. An IRA down in the U.S. You can open those at Sprott Money as well. To get the ball rolling, though, in this year, you can also get three months of free storage. So, here's a deal for you from Sprott Money. You buy yourself a 1000-ounce bar... You've got a couple of those probably laying around, don't you, David?

David: Oh, yeah.

Craig: Sit there and bench press 'em.

David: Yeah.

Craig: [inaudible 00:05:18] a little 65-pound, or whatever it is, silver bar.

David: Seventy pounds. Dumbbell in each hand, baby.

Craig: They'll send it to you. Get one on each hand, and just... Anyway, they'll send that thing to you if you'd like, but also, they'll store it for you, and if you buy one, they'll store it for free for the first three months. That's a pretty good deal, but you gotta do it before we get to leap day, February 29th. So, we'll remind you this next month too. Anyway, call up Sprott Money, place your order. 888-861-0775. Or, of course, you can go to the website and do this too, but anyway, don't miss out. It's a great deal. And of course, Sprott Money, the most trusted name in the precious metals business, and rest assured, your investments are secure when they hold them for you.

All right. David, let's get into the crux of things here. I have two primary things I wanna discuss with you. As the year begins, I always write my, what I call my macro cast, and Sprott Money published that earlier this week. And I try to just look ahead, based on what we know now. Because predictions are so difficult, because, as you know, I mean, the economic system is chaos. There's a million variables, and you have no idea which ones are, how they're gonna impact each other, and then which ones are gonna get acted upon by the monetary people, like the Fed. So, it's always risky business, but, as the year begins, what do you see? What do you think? How do you expect this year to unfold?

David: Well, it's probabilities, the way I look at it. And, you know, going back to the late, great Jim Dines, you know, he taught me, and others, that, you know, a trend in motion continues until it actually stops. And the trend is more chaos, more uncertainty. Distribution in the stock market, I mean, you're looking at, you know, Jamie Dimon. I mean, diamond hands? No way, baby. He's selling out a lot of his shares. You look at Bezos, selling out a lot of his shares. You look at Zuckerberg selling out a lot of his shares. I mean, Buffett, going back into cash. I mean, the top is in as far as I'm concerned. [inaudible 00:07:18] the distributions, like, yeah, we might be eking out new highs, but that's very common, as these people that really know how to manipulate the markets, I won't just say stock market, Craig, distribute their shares into the general public.

And I think we're gonna see a larger shift into the commodity sector out of the paper markets. Look at the bond market. On the short end, yeah, I'll buy a three-month. Yeah, I'll buy a six-month. You wanna sell a 20, 30, 10-year? Even a 10-year. I don't wanna go out 10 years, you know? So, you gotta bid the price up. I mean, even Mr. Powell said about, I think it was six months ago, I forget the timing exactly, but he said, "Oh, we don't have to raise interest rates. The market's doing that for us." And, you know, it's like, yeah, does he know what he just said? Because that's the way a free market is supposed to work. It's like, "Here's my offer. I'm gonna give you 4.8%." It's like, that's not good enough. You know, give me another offer. No one's, you know, that's the offer. No one's bidding that. It's like, "I don't want that. I want 5%." You know, whatever. So, there's a lot behind the scenes, if you know what to look for, that there's uncertainty in the market. So, [inaudible 00:08:24] I answered that. I do expect the metals to do good this year. Not extremely well, unless we have a black swan. I'll just leave it at black swan. There's so many of them out there.

Craig: In terms of, you know, it's an election year as well. I had a discussion a month... Again, another thing that's here at Sprott Money, my monthly discussion with the technical analyst Chris Vermeulen. And we were talking about, all of a sudden, this kind of similarities to 2008. You know, it's an election year. Coming out of 2007, you know, where Ben Bernanke was talking about, "Oh, no. Everything's fine." You know, it's a lot like what we got out of the Fed last year. And we had a massive run-up, basically, in everything, in the first quarter of 2008. And then the problems started. What do you think of that as kind of a parallel for [crosstalk 00:09:11]

David: I think it's good. Except, you know, the only thing I would add to it is, you know, how much printing has gone on between 2008 and 2023 for [crosstalk 00:09:19]

Craig: Yeah, yeah.

David: I mean, it's unbelievable. I mean, we're in a parabolic mode of the velocity of money going to, like, new lows, and the amount printed to new highs. And so, there's that discrepancy, well, how does this work? And how it works is that if you think about it, one is, people that, you know, the average person out there is barely making it, if they're making it at all, some even with two jobs. You know, they can't afford groceries, the gas bill, the light bill, and the fuel for the car. And then on the other end, you've got all this funny money floating around in the asset markets. Or being parked. And I think that's the big one, that I'll shout out to Tavi. Tavi Costa, I think you said his last name. And, you know, he pointed out, and I think the number is even bigger, but it was, like, $5 trillion sitting there, basically, in the money markets, on the sidelines. And I said, well, wait a minute. If we take 1% of that, we're looking at $50 billion. That's 1%. Well, what's the silver market, Craig? Twenty-five billion. So, 1% of that money sitting on the sidelines is two years' silver production, and recycling. If you don't think 1% of that money is gonna move into the silver market during the next crisis, then, you know, I've got a bridge to sell you.

So, but we have, I think, a bright future. Not that, as far as our silver position, it's not a bright future. I mean, I'm not sitting here jumping up and down. It's gonna be different than the 1980s. Because there, you could have changed your lifestyle, bought a business, retired early, whatever. This time, there's gonna be a lot of people struggling. There's gonna be a lot of people that are gonna learn a lot, biggest lessons of history. What's the greatest lesson in history? People don't learn the lessons of history. That's the greatest lesson.

Craig: Right. Right. So, do you think? Combined with, you mentioned the, you know, the jobs. I mean, that's such a scam. I mean, they report the establishment survey, the 200-some-odd-thousand new jobs, when that's all part-time jobs, countering lost full-time jobs, so, it's not good news.

David: No.

Craig: So, the Fed, kinda taking that news at the surface, maybe, and, you know, and a claiming some soft landing, getting behind the curve economically. But then, on top of that, you know, that you mentioned all this funny money, like the $2.3 trillion in that reverse repo account, that's getting drained down to 0. Is there a situation, you know, is there a scenario whereby, I don't know, March, April, May, things are kind of getting really awkward for them, and you start talking about, like, emergency rate cuts and stuff like that. Can you see a scenario like that?

David: Possible. I think one thing that most don't touch on, and of course, again, I learned from experience and Mr. Dines, and others, the psychology of the market. So, what does the Fed really do? Well, of course they manipulate the money supply, and they set the discount window at the Fed, and all that. What do they really do? They do a psychological, you know, mindset for the public. Everything's fine, everything's good. We're not gonna see a recession. We're gonna have a soft landing. So, they're using psychology. Well, let's look at the other side of the coin for them. What's the reverse psychology of them? It's the inflation psychology that nobody ever talks about. So, the idea that, oh, we're gonna get inflation down to 2%, and we're gonna, you know, be able to lower interest rates. What if the psychology goes, "Screw these guys. They've lied to us about everything." And inflation isn't going down, because last time I bought peanut butter, it was up another 80 cents for, you know, a 6-ounce jar. And once you get the psychology of inflation, it's almost impossible to break it.

Craig: Right.

David: And I know, because I lived through it. Because when I was, you know, in my 20s, and we kept seeing more and more inflation, I mean, I went and got a signature loan just to buy gold, because it was a no-brainer. I'd borrow money at, like, 8%. That's, like, "Eight percent? How could you survive?" Hell, that was low. That was low, because inflation was 13%. So, we were 5% underneath the true inflation rate, so you're getting free money. It's all relative. And then, of course, with Volcker coming in, he had what it took, to take the markets back to some sanity. I'm not so sure we could do that this time. So, once the psychological factor of inflation comes in, they might be jumping up and down, and telling us a bunch more lies. I mean, the Ministry of Truth comes out, and grandma Yellen, you know, God bless her, comes out and tells us, "Everything's fine." And it's ridiculously ridiculous.

And so, that's the way I see it, Craig. I think that it may be harder for them to do what they think they can do, versus the reality, because things can get out of their control, and most people have never experienced that. But I have. And it could happen again, except this time, it's not just the U.S. of A. It's basically, it's the world, and the only counter policy to it, pretty much, is the BRICS. But even they can't mitigate it total.

Craig: All sets up to be a fascinating year ahead. I mean, wildly unpredictable, very volatile. Let's focus, in our remaining minutes, on silver, though, because, again, I, yeah, you're the silver expert, in my eyes, and it has been such a challenging couple of years for silver, in that price is basically unchanged the last two years. It was flat last year. It was flat the year before that. Yet we keep hearing about all of these great physical metal fundamentals, you know, like the Silver Institute, 238 million-ounce supply deficit in 2022, and another 150 million-ounce supply deficit last year. I mean, there's all these physical fundamentals. Yet, the paper markets don't seem to reflect, you know, that in their trading. What's your forecast for this? I mean, as you try to put all this together, will this be a better year than the last two?

David: Somewhat, in my view. First of all, I always forecast gold. It's a lot easier to analyze.

Craig: Yeah.

David: So, the forecast for gold this year is about up to $2500. And so, then I took the gold/silver ratio, back to, like, '70, and that put silver over $30, which will be a big achievement. I think there's somebody, somebodies out there that are really defending that $30 level. We saw that already, with Mr. Behnam coming out and said they had to tamp down the silver market. Why would anybody that worked for the CFTC say they have to tamp down the silver market? I mean... But they're so blatant, you know?

Craig: Yeah.

David: So, I'm still bullish. I do think that, again, when the run to gold happens, and then the, you know, sprint to silver takes place, you won't be in a position where you can't get it. Probably not. But we could be in what we've already seen, where you gotta wait three weeks to get it. Or four weeks. Or whatever. It's going to be, I can think, the biggest lesson that we already know. It's ahead of us. And that's that all fiat fails. That doesn't mean it goes to absolute zero, but the perception is it's going to absolute zero. It's like the inflation mindset, or psychology we talked about. So, my price target for silver and gold, I just gave you, and again, less a black swan event, which could happen.

Craig: Could higher prices eventually lead to, kind of, structural changes in the market? And what I mean by that is, you might be, you know, a guy like Elon Musk might be comfortable that he can get enough silver, anytime he wants it, at $25, to build all of his solar panels and everything else. But at $35 or $45, does he start thinking about, "Maybe I ought to just buy my own mine?"

David: You know, it's really...that's a great question, and I was asked that on the Financial Sense private newsletter. And the guy wrote, "You are the silver guru." Here's something that most people don't know. In 1979, January, the all-time high for silver is roughly 6 bucks an ounce. A year later, it was up over 850%, at $50. Okay? But here's the point. It dropped from 850, but it averaged $20 an ounce for all of 1980. So, '79, the all-time spike high was at $6. A year later, the average price for the year was three times higher. That's a structural change you just outlined. And that did take place, which very few people think about. So, it'd be the equivalent of silver going to something like $150, coming back down to, say, $50. And staying at $50, and basically, that's the floor for a very long time.

So, yeah. So, now Elon's gotta deal with $50 silver, not $25. Or maybe $75 silver. The numbers are almost irrelevant, because in a, you know, inflationary/hyperinflationary environment, you know, there's so much distrust in what the currency's value is that you really can't put a number on it very accurately. We could talk to today, so you get a general idea, but, you know, I mean, if you wanted to buy a Coke in Zimbabwe at the end of the hyperinflation, you know, it was only $50 billion, and then by the time you went to dinner, it was $100 billion Zims. [inaudible 00:18:42]

Craig: Well, and, okay. So, with that in mind, why don't we close with, kind of, the long-term cyclic picture of it all? Because you mentioned the '70s, right. And then price comes back down, and goes all the way down to $4 or $5, 20 years later. And then, after 2000, remember 2008, we go up to $20, go back to $8, and then you get this six-fold increase in silver, from whatever, the summer of 2009 to the summer of 2011. So, I mean, there's, history is replete with these examples of these big spikes, and then these long periods of, you know, "Oy." Okay, well, we're 12 years into another long period of "oy." What do you think long-term, like I said, cyclically? Are there levels to watch that you think could make it look like, "Okay, here we go. Another one of those big runs again?"

David: Yeah, there are. I mean, I really still think, and, you know, because I am biased, but well-studied that silver's probably one of the best legacy investments you can make. I mean, there's three legacy investments, real estate, gold, and fine art. And I'll put silver with gold, especially now, in a high-tech society. So, if you've got a 10-year time frame, and you're 30 or 40 or 50 years old, and you wanna leave a legacy investment for your heirs, I mean, nothing's probably gonna beat silver. On the metal side, anyway.

So, that's point number one. Point number two is, where will it settle out? And I think the example I just gave, of 1980, is a pretty accurate one. So, the level I look at's $50. Fifty's the nominal high. I mean, $50 in 2023 is ridiculously a different number than $50 in 1980. But, regardless, we'll probably see it float up to $50, and then probably stall out. And maybe come back and reconsolidate, but once it goes through $50, now we've got a whole new animal. And we could go from $50 to $100 pretty quickly, as we know, because silver, as you said, could go, you know, six-fold in a couple years. And usually, the third leg of the Elliott Wave is twice as good as the last wave, which was wave two, which was six-fold. So, if you double that, it's 12-fold, and you take 12 times $25, you got a pretty good idea of what's forecast to be. I'm not gonna guarantee these prices. I just know a lot about different technical analyses, and blah, blah, blah, blah. Do I know everything? No. I'm a learn-it-all, not a know-it-all, but just to give you some idea.

Because, think about it. What will be the run to gold this time? It'll be fear. It won't be greed. And unfortunately, fear is a far more motivating element in our emotions than greed is. And if you think you're gonna lose your, you know, multi-million-dollar fortune that you inherited through three generations, because you don't have any gold for crying out loud, what do you think you're gonna you? Quibble over a $10 spread? No. I think you're gonna get on the phone, and say, "Buy." And I think that's what we're gonna face at some point. Will it be in 2024? I doubt it. Will it be in 2025? Yeah, I think it will be.

Craig: Yeah. Yeah. That's kind of where I'm falling, too, in that macro cast. I thought, you know, in an election year, it's so unpredictable, but we're already seeing the politicians in the U.S. starting to lean on the Fed, right? And so, they're gonna do everything they can to kind of keep things looking as normal as possible this year. But again, you wonder, there and beyond, and get back to gold, what, from in, the bottom in 2008, $700 to $1900? What's that? More than 2.5 times? After that election year? So, 2.5 times from here is about $5 grand.

David: Yeah. Well, let me give you a real question. I know we're near the end, but, so, here we go. We go, you know, we go 10-fold, whatever. So, now what do you do? Do you cash out for fiat?

Craig: Yeah. Right. That's the ultimate question for all of us that have been stacking it. You gotta, you convert it back to, I mean, selling it converts it back to something. And that hopefully... Well, not hopefully. I shouldn't say that, because you got, God knows what the world's gonna look like at that point. But we will probably be faced with that dilemma, sometime before they get to the point where they're like, "Oh, yeah. David Morgan and Craig Hemke, I remember those guys. I think they're both dead now, if I..." Hopefully that won't happen first.

David: Sure.

Craig: Oh, David. It's always so much fun to talk to you. You know, you mentioned silver as a legacy asset. Hey, you got $25,000 laying around your legacy, man. Get yourself one of those 1000-ounce bars, bro. Put it in your gym. Right? Or store it at Sprott Money. You know, the other thing that I kind of touched on earlier. It is tax season. I gotta start putting my taxes together. I bet you do too, David. That's always such a dreadful thing, that I so look forward to. However, you can mitigate some of that by opening an RRSP in Canada, or an IRA down in the U.S. And you can now own physical metal in those retirement vehicles. And Sprott Money is a place to do that. For Canadian clients, you can get that kind of diversification through a self-directed RRSP, or a TFSA, whatever that stands for. I don't know what that stands for. I'm American. But anyway, tax... I bet the T stands for tax. How about that?

Anyway, in the U.S., take your IRA and convert it to precious metals as well. Sprott Money can help you with that. They are the most trusted name in the business. Your investments are secure. Call them up, 888-861-0775. They'll help you out. Of course, we've got a couple months to work on that deal, but just remember that it's not a bad idea. Take some of your fiat and convert it to physical metal in your retirement plan. And then let it go from there, tax-deferred until you take it out. That's always a big advantage there.

It's always a big advantage to talk to my friend David Morgan. And I know I've learned a lot over the last 20 minutes, and I suspect everybody listening has as well. Please check out "The Morgan Report." You can find it at themorganreport.com, David?

David: Correct. Yes.

Craig: All right. Well, that's pretty easy. Go check it out. Couldn't be a better time to have some assistance from David, and not only in his view of the world, but with mining stocks and everything else, themorganreport.com is something you need to check out. David, thank you so much for your time. It's always so valuable to talk to you, and I'm sure we'll do it again soon.

David: Great. Well, it was fun for me as well, Craig. Thank you.

Craig: All right, my friend. And thank you to all that's been watching. Again, subscribe. Maybe hit a like, whatever you can. It'll help Sprott Money out in the distribution of this, and also remind you the next time we have something for you on this channel. And come back later this month, because there is more information pending. And, again, we'll see you again soon. Thank you all for watching, and we'll talk to you again later this month.

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About the Author

Our Ask The Expert interviewer Craig Hemke began his career in financial services in 1990 but retired in 2008 to focus on family and entrepreneurial opportunities.

Since 2010, he has been the editor and publisher of the TF Metals Report found at TFMetalsReport.com, an online community for precious metal investors.

*The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.

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