David Morgan Interviewed by Nancy Massicotte of The Opportunity Show

June 19, 2009

Ellis Martin: Welcome to The Opportunity Show. I'm Ellis Martin. Today we have an interesting interview from Vancouver, British Columbia, with our correspondent Nancy Massicotte and The Silver Guru, David Morgan.

Nancy Massicotte: This is Nancy Massicotte of IR Pro Communications and The Opportunity Show. Today I'm pleased to be speaking with The Silver Guru, David Morgan. David has a Web site, www.silver-investor.com. These have definitely been some tumultuous times the past year. Do you feel that the investment market has experienced a turnaround at all?

David Morgan: We've had quite a lift since the November lows. In fact gold, silver, even the stock market generally, have gotten a big lift in the last few months, however I put out a market alert to my subscribers saying that I actually thought this is probably in the topping action for gold and silver on an intermediate term basis. I still believe this is probably the case, we had what is called a key reversal Wednesday of last week. We're doing this interview in early June, so I was a little bit early. I didn't say it was an exact top, I said it was topping. I still believe that's the case. Longer term I'm much more bullish than this, but the market's ramped up pretty quickly here. I think we may need to back and fill for a while.

Ms. Massicotte: Your main focus has been silver, but today you were speaking on other metals. What are your thoughts on the companies focused on these less glamorous metals?

Mr. Morgan: I did speak about silver and then I turned it over to Clint Cox. Clint has done a great deal of research. He's traveled all over the world. He's been in China several times and he knows the rare earth elements market as well as I know the silver market. So I gave half of my time to Clint because Clint actually contributes to my report, The Morgan Report, probably three or four times a year on rare earth elements.

We keep all of our readers informed in that market. It's a very small market. It's a little over a billion dollars right now, total, but China has about 95 percent of the total rare earth element market. It seems to be kind of the hot buzzword up here in Vancouver in June. John Kaiser, who is very studied, gave a very accurate point of view about rare earth elements. You also have Jim Dines who has just given himself the title, "the original rare earth elements bug." We've been on this for about the past two years. We have one company we recommended that doubled the money or slightly better for our Morgan Report subscribers, and then we got out of it. We're not afraid to sell stocks at a profit, and the company has since that time not done nearly as well. Are there opportunities in rare earth? Yes. Finding a really good company is a bit of a task, but if we do find one that we like and that meets our very strict criteria, it will be in The Morgan Report.

Ms. Massicotte: Do you feel the investor is interested in the return for the risk in investing in rare earth elements or do you still feel silver and gold will garner the investor's money?

Mr. Morgan: I think right now you're probably going to see silver and gold markets certainly get more exposure. Gold certainly is in the mainstream right now. You very often hear the main commentators talking about gold. Silver of course doesn't get nearly as much exposure, but it gets some. Rare earth elements, though, is something that, unless you're involved in the resource sector, almost nobody really even hears about. With people like Jim Dines and some of the others coming onboard and starting to talk about it, you start to learn about it more and more. It is very critical-similar to silver from the aspect that it's one of the most critical assets that we have in a high-tech society, yet most people are undereducated or know nothing about it. So, it will come to the fore. As far as investment it's highly speculative and risky right now, but it's very much needed. So again we're looking for opportunities that make sense, but we're not just willing to jump in simply because it's "rare earth." There are some companies out there that basically don't know, really, what they have-whether it's economic at this point or not.

Ms. Massicotte: Do you still feel silver will outperform gold? Everyone is touting 1,000+ gold. How high to do you feel silver can reach?

Mr. Morgan: I do believe that silver will outperform gold, and it has done so since the bull market began in 2003. The ratio at that time was about 80 to 1. The gold/silver ratio is currently around 60 to 1, so it has outperformed gold although the ratio has been down as low as 50 to 1 in this bull market. I believe longer term, as bizarre as this may sound, that silver will make it to about US$100.00 an ounce or better, and the reason for that is pretty simple. Silver already made it to $50.00 an ounce in 1980. At that time there were about 1.5 billion more ounces of silver available for investment than there is today. Secondly, the M1 money supply (I'm not talking about all the credit that's out there and the trillions and trillions of dollars that's just been added over the last few months but the actual checkbook cash money) available is about sevenfold higher. So if you've got 7 times the amount of cash chasing one-fourth the amount of silver, how high do you think the price could go?

Ms. Massicotte: Politically, have some countries been able to support their mining economy to survive over other countries?

Mr. Morgan: Yes. Labor costs are a very important element in mining around the world. I'm next-door to Idaho, and in the silver valley that has some very rich silver mines, the labor costs on that silver are far, far higher than in Mexico, for example, and Mexico is actually higher than what you would be able to mine in China. So, certainly it does depend on where you mine the metal, what the labor laws are and what the government mandates are around the mining industry.

Ms. Massicotte: This being the start of summer and the old adage of, Sell in May and Go Away, do you recommend looking for opportunities in companies that may look good or waiting until the fall to see how they fare in this quiet time?

Mr. Morgan: Well, Nancy, I'm going to give you a bit of a curve ball here and say both. I would say the old adage may hold again this year. I'm always suspicious when I make that recommendation because you know there's always going to be a year somewhere along the line that proves that statement incorrect. From what I'm seeing in the market currently, I think from a metals-only perspective we're probably going to have a wide trading range for the summer. As to the other part of the question, looking for opportunity? Absolutely. I was taught early on, and I've proved it over and over again, that there's always opportunity; it's just a matter of finding it.

So I'll be working during the summer, as hard as ever if not harder than ever. If there's opportunity there that I feel is undervalued, regardless of the metal's price I'll make the recommendation. Sometimes you can find that the price of the metal doesn't matter, and then in other cases you've got to be a little more careful because the stock does move the metals price. So I look at everything on a case-by-case basis and make my analysis based on each individual company.

Ms. Massicotte: You have a plethora of information, David, for new investors and for experienced investors. How does one get in touch with your recommendations and reports?

Mr. Morgan: Well, if you're new and you want to explore the sector, I really don't recommend buying The Morgan Report. I think the best thing to do is go to the Web site (silver-investor.com) and educate yourself for free and for fun, because I've posted about a decade's worth of work. I write weekly. I write usually in the silver space, but sometimes about the economy, sometimes gold.

I think the best way to make an investment is know what you're doing. A lot of people jump into the sector because it's hot or their neighbor did it or there's some other reason that's more emotionally based. It should be logically based. You should really understand why silver is important and why you want to make a silver investment.

Once you accomplish that and you want to get specific recommendations, we do make those, and that's a fee-based service called The Morgan Report that you can access through the same site, silver-investor.com. I do focus primarily on silver but we've made a great deal of money in moly, copper, drilling companies, and also uranium companies. So, I'm not afraid to look for value wherever it resides in the resource sector, but yes, most of my time is devoted to the silver market.

Ms. Massicotte: If a company has a project that they would like you to analyze and consider, how do they get in touch with you?

Mr. Morgan: Best way is just go to the Web site and hit the Contact Us link. E-mail is usually best for an introduction. A lot of stuff crosses my desk, as you can well imagine. I basically look for certain criteria: 20,000,000 ounces of silver, not silver equivalent-20,000,000 ounces of fine silver that's delineated by 43-101 or equivalent-then we could probably start talking. If it's less than that I'm really not interested. Do I make exceptions? Yes, every once in a while, but very, very rarely.

Ms. Massicotte: This is Nancy Massicotte of IR Pro Communications and The Opportunity Show. It's been great speaking with you today, David. Thank you for your time.


David Morgan

Mr. Morgan has followed the silver market for more than thirty years. He wrote the book, Get the Skinny on Silver Investing. Much of his Web site, Silver-Investor.com, is devoted to education about the precious metals, it is both a free site and does have a members only section. To receive full access to The Morgan Report click the hyperlink.

David Morgan (Silver-Investor.com) is a widely recognized analyst in the precious metals industry; he consults for hedge funds, high net-worth investors, mining companies, depositories and bullion dealers. He is the publisher of The Morgan Report on precious metals, the author of Get the Skinny on Silver Investing, and a featured speaker at investment conferences in North America, Europe and Asia. You can receive a free 30 day trial subscription here http://www.silver-investor.com/joinfreelist.html

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