Miles F
 

INTERVIEW WITH SILVER GURU DAVID MORGAN

The Miles Franklin Report
Issue 2 February 2007

This issue of the Miles Franklin Report includes my long-awaited interview with silver guru, David Morgan.


Q: I recently read your book on silver, Get the Skinny on Silver Investing. Inside the front cover you wrote �David and Andy, remember me when silver hits $100 +.� Do you still think this is a realistic prediction?

A: The answer to that is yes. First of all I believe silver can achieve $100 if, there is a perceived currency crisis. That said, I fully believe there will be a currency crisis in the US dollar. If we take the old high of $50 silver, which was hit in January, 1980, and we adjust it for inflation, we arrive at $125 silver today. So, purely from an inflation-adjusted position, in nominal terms, silver could achieve my goal of $100+ an ounce. The second point is - if I�m wrong about the perceived currency crisis, the industrial demand alone, without factoring in investment demand - a worst-case scenario where only industry wants silver and there is no investment demand - we will still probably hit $100+ silver before we reach equilibrium. By equilibrium, I mean the amount of silver coming out of the ground does not meet demand on an annual basis. We have not had equilibrium for the last 16 years. The above-ground stock pile has been mostly used up filling the gap.

My best-case scenario would be for silver to go up three to four fold from where it is now, and in a dollar crisis or near-dollar crisis - I don�t want to be too doom-and-gloom here - I see silver going to well over $100 an ounce. And you have to be careful here; I don�t see the dollar going away or a full-blown dollar crisis with hyper-inflation like the inflation in Germany in 1923.

When silver tops $100 an ounce this time around, I don�t expect it to stay there for long. It will peak briefly in a panic mode, and then pull back, as it did in 1980.


Q: How much silver is mined each year and how much is consumed? In other words, what�s the annual deficit?

A: The normal amount of silver mined is roughly 550 million ounces of silver a year. And the amount used each year is about 650 million ounces a year. Now that doesn�t count the 200 million ounces of recycled silver that�s available through photographic recycling each year, and that�s pretty much a wash, meaning that all the recycled silver is consumed by photography.

That deficit has been shrinking the last five years. From 2001 to the present, the annual deficit has been less than 100 million ounces.


Q: Isn�t that because of the recent increase in demand for copper, zinc, lead and tin, which is a large secondary source of silver too?

A: Absolutely, that�s definitely part of it since silver is a by-product of base metal demand. And the other part of it is that there is a little bit more recycling of silver than there was a decade ago as a result of the huge increase in cell phones, large screen TVs, etc. where some of the silver can be recycled out.

Q: How much above-ground silver would you estimate is left to bridge the supply/demand gap? And based on this number, how many years would you estimate it will take for a real shortage of physical silver to occur?

A: Great question! It�s a two part answer. The amount of silver bullion in .999 fine form which is available, or a Comex-grade available, which is what industrial demand requires, is roughly 300 to 400 million ounces of silver, and right now Comex has a little over 100 million ounces of silver and there is another 100 million ounces of silver that is privately owned. So there are approximately 200 million ounces of .999 fine silver in 1000 ounce bars at Comex or out in the hands of individual investors. We know where some of those are. For example the Central Fund of Canada has 30 million ounces of silver in that form plus different banks and individuals that hold it.

Other silver that I refer to is in coin form. In coin form, we actually have a bit more, around 500 million ounces. There is a wide variety of different forms of coin silver such as junk silver bags that are 90% silver by weight, and you have �junk� silver in other countries � you have Canadian silver coins and some in other countries, but primarily it�s the US junk silver that I am referring to here.

You also have the bullion coin market like the American Eagle silver coin that is .999 fine. That roughly is 100 million ounces now. Then there are the silver Maple Leafs, the silver Pandas and when you add these all up, you have a significant amount of bullion coins out there.

As for timing � it�s hard to say, but the day of reckoning is approaching. A few years, at best, would be my guess.

http://www.silver-investor.com/index.html

Re: Miles F
 

Not really anything terrifically new there. This has been true for years, and the amount of scrap always seems to make up for the shortfall.

Remember when Warren Buffet bought a huge chunk of silver for around $5 like 6 or 7 years ago? He was betting the same play, and even though we are up more than double since then, still, I wouldn't call it a rocket action upward.

Still, I wouldn't be all that suprised to see silver hit $100 sometime in the next 10 years.

Chris

Re: Miles F
 

Well, there will be an economic deppression no later than 2013 , I am pretty well convinced of that. 2009 the earliest.

I think some questiones were answered as in owning junk and a lot of it.

Like in buying dredge parts from keene, there markup is like 300%, why? because it is such a small specialized market.

There is so much rehash of the same old diatribe from every PM guru, why because there really isnt a whole hell of a lotta news in the pm fields ( short of drill results that can go way outside the box.)

Ever get bored reading goldbug news?, ,,,, BECAUSE ITS SUCH A DEFINED SMALL MARKET.


Chris ;Agnico is drilling Swanson and PMM is drilling stele river and Bottle creek. (Phoenix Matachewan)

Bottle creek is north of lovelock, good roads, know the area at all?