“We live in a corrupt system run by elites that are there for profit, manipulation and control,” David Morgan said on The GoldSilverBitcoin podcast. “And the way to break free of that is to basically adhere to your own currency system that is free of these people. Unfortunately, today, there’s probably not a free market anywhere, except maybe between individuals where you can decide how much fiat you want for a sweater, a car or a house.” As far as the marketplace of investing is concerned, everything is manipulated.
“Interest rates are even manipulated,” said Morgan on the podcast. “Interest rates are the cost of money. If you can manipulate the cost of money, you can manipulate the entire system, because everything is based on the present value of money. And, if you manipulate the present value of money, which implies a future value, everything stems from there. Everything’s based on credit and debt, and debt is the opposite of credit, so it’s really just different sides of the ledger.” Of all the markets, gold and silver are probably still the freest of all of them, says Morgan.
“From 2000-2011, gold went on a year-over-year uptrend,” he notes. “There were ups and downs, but the trend is your friend, and the trend was $252 an ounce gold in 2000 to a peak of $1920 in September 2011.”
Anyone that bought gold during that time frame made money in fiat terms. “And, if you even adjusted for inflation in real terms, you still had a positive gain,” said Morgan, whose work can be founded at The Morgan Report. “Silver did almost as well, and even outperformed gold several years during that sequence, although it was a more volatile asset. It performed well for a lot of the same reasons as gold and others.” Morgan called the top in silver at $50.
He got a lot of flack from some of the best-known names on the internet in the precious metals industry. The emails poured in, telling him he was going to ruin his reputation by not thinking the price of silver would increase to $100. “You are going to look like an absolute fool,” they wrote. “You don’t know what you’re doing, what happened to you.”
It went on and on and on like that. “But, I make my own calls,” he said. “And I got it right. I called every top correctly. When it comes to bottoms, he is not as good, and he admits that.
“Nearly ten years later since the top in silver, the price has been mostly flat, and the U.S. Dollar has yet to crater, because all fiat currencies are falling,” said Morgan. “The U.S. Dollar is still riding the top of the wave, and everything else is sinking fast relative to it. But, they’re all sinking.”
Meanwhile, gold and silver remain money. JPMorgan said it himself: “Gold is money, everything else is credit.” Morgan wonders: What if the banks held silver as a monetary reserve, instead of gold?
“It’s food for thought, because gold is seen as money by the establishment, even though the mainstream financial channels treat it as a barbarous relic or a pet rock,” said Morgan. “The truth of the matter is that central banks continue to deal with gold. Gold is perceived to be the money of last resort. But, if silver was perceived to be the money of last resort, you wouldn’t have a 100:1 ratio. Who knows, you might have a 1:1 parity.”
Morgan is not saying that will ever happen. “But, the perception around silver has been managed dating back to the 1870s, when William Jennings Bryan brought forth the idea that we should have a 16:1 gold to silver ratio, and that we should have a bimetallic standard,” he said. “The Wizard of Oz is a metaphor to what was going on with the eastern establishment going to a gold only standard.”
He credits a gentleman that has written on Gold-Eagle.com for writing about how a gold standard is one step away from fiat. “If you could get the monetary system to one commodity, instead of two or three; that is, going from copper, silver, and gold down to silver and gold down the gold, and you own most gold, then you get to make the rules.”
The world went from a gold-backed currency up until April 15, 1971 to the beginning of the end was when Nixon “closed the gold window temporarily.” To be sure, the end isn’t here yet, says Morgan.
“Hopefully, everything works out in the end, but I’m not so sure,” he said. “We’re in a system right now that’s based on lies. It’s a paradigm that will not last and the way this all unfolds doesn’t mean gloom, doom, and fear.” There is a lot of opportunity out there.
“But, we have to be wise to it and implement our own personal choices,” he said. “If 10% of the population chose silver as their means of payment, the price wouldn’t be where it’s at now.”
He remembers when he was in my twenties, and the first oil crisis hit. “Anyone knew in the Los Angeles area, you could go to a gas station, and, if you paid in silver dimes, you got ahead of the line,” said Morgan. “That’s a practical experience in the real world of why precious metals work. Few millennials know that silver is money. And they certainly don’t have any experience like I have, where you could go to some restaurants, in fact, and pay in silver. Those days are pretty much gone. But yet, they did exist in my generation.”
Fast-forward to today, and silver quietly had a solid 2019. “It did not perform as well as gold, but it did perform better than perception,” said Morgan. “My stock portfolio is balanced between gold and silver. The silver stocks I recommended in 2019 were up 100%, 60%, and 58%. The gold stocks were up 50%, 73%, and 57%. And, if you look at if you just went with the silver only picks, you would have outperformed the gold only picks, even though silver didn’t perform as well.” Before you invest in the stocks, Morgan warns, you need a core position in the metals first.
“If you’ve established a physical position, you get a lot of leverage in the stocks, usually two or three to one,” said Morgan. “Let’s take my top pick in a top tier company that went up 100%. That’s basically what the average was the year after it peaked in 2011. Silver stayed above $30 for most a year. You can make money in both physical and stock.” Morgan advocates you have a core position in physical,, and then you move into the top tier stocks.
“I’ve lived my entire life more than four decades in this world,” he said. “I take some of those gains from the stocks and put it right back into physical metal, and add to my savings account. If you want leverage in these stocks once you’ve established the physical position, if you do it right, you can do quite well.”