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wille | 08-10-2008 05:05 PM
That�s the thing that could make silver $50 an ounce TGR: Will silver also play a role in terms of currency? RM: When you have a gold standard, the primary metal in currency is actually silver. That�s the thing that could make silver $50 an ounce. There�s no shortage of silver. All these guys running around saying there�s some kind of shortage of silver, and they never get enough and it�s the most valuable commodity in the world �it�s all nonsense. But when we go back to the gold standard, we will need a lot more silver. Bob Moriarty, 321gold.com: Gold is Safe Haven for Looming Crash By Gold Report Aug 8 2008 4:35PM www.theaureport.com Bob Moriarty, founder of 321gold.com, gives us his no-holds-barred opinions to The Gold Report on where the economy is headed, the demise of the dollar, and which mining companies are worth taking a look at. Bob travels to dozens of mining projects a year. He was one of the first analysts to write about NovaGold, Northern Dynasty, Silver Standard, Running Fox and YGC Resources among others. Bob and his wife, Barb, convinced gold/silver were at a bottom in 2001, started 321gold.com, one of the first websites devoted to teaching readers what they need to know about investing in resource stocks. Bob and Barb now operate two resource sites, 321Gold.com and 321energy.com, where up to 100,000 people a day visit. Prior to his Internet career, Bob was a Marine F-4B pilot at the age of 20 and a veteran of over 820 missions in Viet Nam. Becoming a Captain in the Marines at 22, he was one of the most highly decorated pilots in the war. TGR: Where do you see the markets going between now and the end of the year? RM: My opinion is that we�re headed for a major crash. I think the market will top in August and we will have a repeat of 1929. I believe in 1929 the very top was on September 5th. It declined into October and then crashed at the end of October. We are going to have a market crash between now and October. Reality is setting in; the smart money is bailing out of stocks. TGR: Well, that�s pretty dramatic. How do you view gold playing out in the same time period? RM: First of all, gold is the ultimate money. It�s portable; it�s divisible; it�s rare; and it�s transferable. It�s the only asset that has no obligation whatsoever to anyone. If you pick up a $100 bill, you may think of it as an asset, but it�s actually a liability on the government. Gold has no liabilities; it is the safest of safe havens; it�s been that way for 5,000 years, and in my opinion, it�s going to be that way for the next three, five or twenty years. TGR: Do you want to put a number on where you see gold going in October? RM: That�s a trap that everybody falls into, and it�s a bad question. When you�re talking about the price of gold, you�re talking about two commodities�gold and the dollar. Now, everybody thinks that gold has run up from $251, but it actually hasn�t gone up; the dollar�s gone down. So, the real question should be how much of a crash do you think there could be in the dollar. So, the real answer is there is no limit to where the price of gold can go because there�s no limit to how low the dollar can go; the United States is bankrupt. TGR: What about base metals? RM: Base metals are going through a correction; copper hasn�t declined that much, but lead and zinc and nickel have all gotten creamed. That�s perfectly normal. China has spent probably billions of dollars on the Olympics. I think there will be a slowdown there that will last 18 months but it�s no big deal. TGR: So, it�s a slowdown�are you saying it�s not going to be a �crash� as in the U.S. markets? RM: Here�s what�s interesting. China actually has been producing things they�ve been sending to us. If the United States goes into a depression, it�s still quite possible for the Chinese to consume. But you�ve got to consider that between 1830 and 1900, when the United States created all of its real wealth, there were three major depressions. Depressions are no big deal; they last 18 months and then you start all over. TGR: So, do you have money in banks right now? RM: The only money I keep in banks is the money I need to pay this month's bills. I wouldn�t keep a dime in a bank; the FDIC is more highly leveraged than Fannie Mae and Freddie Mac, and they�re both broke. When Washington Mutual goes under, and surely they will, it will bankrupt the FDIC. TGR: Can you speculate what will be the next reserve currency? RM: Gold. TGR: So you think the world�s going to go back to the gold standard? RM: It�s going to go back to a gold standard but not because anybody wants to, not because of any vested interest on the part of any governments. It�s going to go back to a gold standard because there�s no other choice. I was in Tanzania recently, and I walked into a bank, and I wanted to convert about $3,000 into shillings because I was going out into the field, and I needed to pay some miners. They handed about two-thirds of my money back to me, and they told me they wouldn�t exchange it because the bills were made prior to 2000. Now, that�s the first time in my life that�s ever happened to me, and it was a real shock. But when the entire banking system of the world freezes up and you can no longer get your money that is going to happen. And when people can no longer use credit cards and when people can no longer use bills, because nobody knows what the value is because it�s changing so much every day, they�re going to go to gold. They�re going to go to gold for the same reason they have for 5,000 years. It�s the only reliable alternative. TGR: Will silver also play a role in terms of currency? RM: When you have a gold standard, the primary metal in currency is actually silver. That�s the thing that could make silver $50 an ounce. There�s no shortage of silver. All these guys running around saying there�s some kind of shortage of silver, and they never get enough and it�s the most valuable commodity in the world �it�s all nonsense. But when we go back to the gold standard, we will need a lot more silver. TGR: Will there be any other precious metals that will operate as a currency like gold and silver? RM: Not operating as a currency, but remaining a store of value�the commercial need for platinum, palladium, and rhodium is still extremely high. They�re very valuable metals in a technological society, so they will go up probably more than silver and gold. TGR: And why do you see silver as being a primary currency? RM: Because you can trade it. If you can imagine, next week we go on a pseudo-gold standard because nobody accepts money. You go to fill your car up and you give the guy an ounce of gold. What�s he going to give you your change in? TGR: OK, interesting. Let's talk about some of the juniors. What do you make of the increase in merger activity lately? Do you think that�s going to be the beginning of more of these junior non-producers being picked up at these two-year low prices? RM: Absolutely. The majors have consumed their young and recognize that they have a 10-year reserve life right now, and they don�t have anything after that. So, they have to go out and buy reserves, and that�s just a start. There are a lot of juniors that are on the ropes now. Now, Aurelian happens to be a really good company in a really good project in a bad country, but there are lots of juniors that are in trouble. There are too many juniors. Rick Rule has done a really wonderful piece that's on your site, and ours. And he�s absolutely correct; there�s too many juniors out there, too many guys who think they can run mining companies. TGR: Is that why you think failure is an option in the junior market? RM: That�s a very important part; I can think of 10 or 15 companies on the verge of bankruptcy. And somebody will recognize they have very real assets, and go and snap them up cheap. TGR: You indicated in an article that we probably hit the bottom in gold shares in late July (July 25), and the reason for that is that investors favor metal over mining shares more than any point in time the last five years, and this is the mark of the bottom. Can you explain that a bit more? RM: Here�s the real key�all investing is psychological in nature. When people are the most optimistic, that�s a top. When they�re the most pessimistic, that�s a bottom. So, if you can ever measure pure psychology, you can pick tops and bottoms fairly accurately. When you have something as bizarre as last Friday being the very most pessimistic period in five years, it�s also probably�and I use the term probably�the best time to buy. TGR: You say you�re projecting that the market is going to crash, so somehow I can�t reconcile this. . . RM: Homestake declined about 21% from the crash in late October 1929 through the end of that year, but through the entire decade of the 1930s Homestake was the highest gaining stock on the New York Stock Exchange. So, it�s entirely possible the market could crash and gold stocks go up. At some point in time, people are going to recognize the precious metals stocks, not all metal stocks, are the safest place to be. TGR: You also indicated that you wanted to be focusing on production stories. RM: At these prices ($855 gold), if a guy doesn�t have a production story, he�s got moose pasture. TGR: Do you have some stocks that you would feel comfortable recommending readers own through this next time period, assuming that there�s going to be a crash? RM: I do, but I'd rather not pretend I�m guru, which I�m not. There are lots of really wonderful stories out there. If a guy is about to go into production or has just gone into production, the numbers are out there. You can do some research; there�s 50, 100 or 200 really good stories. You could pretty much throw darts. Rick Rule is absolutely correct; the period up ahead is going to be as easy to pick stocks as it was back in 2002, 2003 and 2004. TGR: Are there any particular resource sectors that are more intriguing at this time? RM: I think energy is pretty much a slam-dunk, depression or no depression. We have passed peak oil; it was May of 2005. It�s not a theory; you can go look at a production and say, �Okay, show me the production for the last 20 years,� and it peaked in 2005. It went down in 2006, it went down in 2007, and it�s going down in 2008. We can look forward to higher energy prices the rest of our lives. TGR: What�s your view on the ETFs? RM: My view is totally contrary to most of the people in the gold sector. I think the ETFs are the most wonderful thing in the universe. They give everybody the opportunity to buy into a position�and it�s not just silver ETFs�it�s any kind of ETF, whatever it is that you believe you can buy, you can buy here. Here�s what�s important to understand; there are no shares behind the S&P and the Dow ETFs. They are totally fictional investments, but their purpose is to set price in the same way of commodities. You know, actually, you have to trade commodities back and forth; you don�t have to deliver commodities; you don�t have to grow commodities. They have a commodities exchange because the real purpose of the commodities exchange is to set price. So, the gold ETF is very good. If you want to buy some gold. . .bang, you buy the ETF. Years ago we had coin stores in every town; now it�s actually very hard to buy physical gold or silver. It�s very easy for anyone to buy a gold or silver ETF. In that aspect, the ETF is wonderful. As far as actually being able to deliver gold, I don�t think it makes any difference any more than it does the ability to deliver Dow stocks. It�s a pricing mechanism, and from that point of view it�s a very good thing. That said, I think the real crisis financially is in derivatives. There are $596 trillion dollars in over-the-counter derivatives. That�s 10 times the world�s GDP. That�s an enormous amount of paper assets that people believe they own. I think they are going to find out they don�t really own. The paper assets are simply going to evaporate. TGR: Bob, do you have any final comments? RM: We are going to go into or we�re in the greatest transfer of wealth in world history. Everybody has a choice right now; they can either be rich five years from now or they can be poor five years from now. It�s entirely voluntary, and it depends on the decisions they make today.

Tn...Andy | 08-10-2008 08:27 PM
Re: That�s the thing that could make silver $50 an ounce Interesting take on things.....thanks for the post.

Gcubed | 08-10-2008 08:55 PM
Re: That�s the thing that could make silver $50 an ounce Why would those who actually control money supply negate their ability to inflate? Would it not better serve them to just allow controlled appreciation of the paper prices of monetary metals?

Twisted Avatar | 08-10-2008 10:11 PM
Re: That�s the thing that could make silver $50 an ounce 1 Attachment(s) All silver needs is time....... Check back here at 11/11/09

SomeSilver | 08-11-2008 12:41 AM
Re: That�s the thing that could make silver $50 an ounce He cites platinum and palladium as valuable industrial commodities in tecnological economys and completely overlooks that same role for silver. Silver today has far greater (indispensible) industrial uses than it ever had when it was widely used as circulating currency. It is unlikely that it will ever again circulate as everyday money. It is far too valuable. It will continue to be widely hoarded. Any money function will most likely occur as silver certificates. The real metal will remain in bank vaults and in private hoards.

nub | 08-11-2008 12:51 AM
Re: That�s the thing that could make silver $50 an ounce Good read thanks Willie

Saul Mine | 08-11-2008 02:29 AM
Re: That�s the thing that could make silver $50 an ounce About a hundred years ago, when a buck was silver, a newspaper cost 2 cents. Now a newspaper costs 2 bux. If silver had kept pace with inflation it would now be $100 per ounce. Even more important, it was a little over a hundred years ago when the value of silver went from 1/20 ounce of gold to 1/60 ounce of gold. That happened because the Comstock mine went into production in 1890 and flooded the country with silver. There is now nothing to compare with the Comstock, and all that silver has been used up. Silver production is back to 1/12 to 1/20 of gold production. FIGURES Other reports indicate that there is now more refined gold in the world than refined silver, roughly five times as much. (Those are guesses based on lies. Find your own references.) It is hard to make any prediction at all when things get as goofy as they are now. If the prices were adjusted for supply and demand, an ounce of silver might then be worth five ounces of gold. (TIP: If that happens, you should invest in lead and zinc mines.)

Riskfactor | 08-11-2008 03:07 AM
Re: That�s the thing that could make silver $50 an ounce fascinating read! thanks.

Bx3 | 08-11-2008 12:54 PM
Re: That�s the thing that could make silver $50 an ounce Let me get this straight, he is pumping ETFs which are one of the instruments being used to water down the price of real bullion and this is a good article?

wille | 08-11-2008 01:00 PM
Re: That�s the thing that could make silver $50 an ounce Quote:
Originally Posted by Bx3 (Post 1232802) Let me get this straight, he is pumping ETFs which are one of the instruments being used to water down the price of real bullion and this is a good article?
I had a problem with that as well-- I did discount his bash on silver also. Hey, the sheep move the markets ya know.

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