Manipulation and apathy can't keep silver prices down forever; there is too much demand and too much money sitting on the sidelines. In this interview with The Gold Report, Silver-Investor.com Editor David Morgan tells us why he is grateful for his balanced approach to investing and life. He also explains why he is still excited about four developers that are moving projects forward at any price.
David Morgan (www.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.
The Gold Report: A recent GFMS/Thomson Reuters Silver Institute World Silver Survey shows that while the price of silver dropped 23.6% in the last year, there was actually an increase in demand, particularly from China and India. Why is the price so low when the fundamentals seem to point otherwise?
David Morgan: As the survey shows, there was a deficit of silver, which means fundamentally the price should be higher. But real prices are determined in the paper markets and the pressure there has been downward.
Additionally, the large physical silver holding companies—Sprott Physical Silver Trust (PSLV:NAR), Central Fund of Canada (CEF) and the Zurich Cantonal Bank, the silver ETF—have not purchased any quantities of bullion in quite some time. That begs the question of why these big, traditionally bullish entities aren't stepping in at these low silver prices.
The other question investors are asking is, "When is this going to turn around?" They get depressed and say, "I can't win because the manipulators always win. It's pointless to be in this market." That mindset has taken hold of a lot of people who were once very bullish in the silver market.
This is all proof that we're very close to the bottom, if not at the bottom. When sentiment is this low, people become fearful. As Jim Dines says, the cure for low prices is low prices. It won't go on forever, even though it may seem that way now.