Precious Metals Slam Down, Silver Psychological Warfare Interview (4/13/13)


Voice: The Financial Survival Network, helping
you to survive and thrive in the new economy. Get our complimentary newsletter at FinancialSurvivalNetwork.com. This is the Financial Survival Network. Kerry Lutz: You’re listening to the FinancialSurvivalNetwork.com.
I’m Kerry Lutz on 1590 WPSL. We’re still covering the major smack down in the precious metals
market on Friday. Everybody’s got their opinion on what’s going on but we do agree on one
thing, and that’s that, in the end result nothing’s changed, the fundamental case for
gold and silver is stronger than ever and with ,e now is David Morgan, the Silver Guru.
Hello, David. David Morgan: Good weekend to you, Kerry. Kerry Lutz: I don’t usually do these on the
weekend, but I felt this was important enough and of course David’s publication, The Silver-Investor.com
and the Morgan Report. So did you see this coming David? Or did you have a feeling it
was going to happen? David Morgan: Yeah I did. You know, silver
has very typical spike kind of a modality. Something I wrote about for Future’s Magazine
years ago. I think the article was called “Spiked Again.” It had spike highs and spike
lows, spike highs like a parabolic move up and the spike low is like an extremely big
move down for a very short duration. So, when you’re looking at a chart you’ll see, like,
this trend and all of a sudden you’ll see this trend had an extreme, in a other words,
you’ll see like a line and it’ll be like a one-day event where you’ll see huge price
movement either up or down. And I call those spike highs and spike lows.
And what we saw in silver last week, I think it was, was something that looked close to
a spike low but I put it out to my basic plus members. These are members that are looking
at not only the basic Morgan Report, but they get the next level up and that’s where I let
them look over my shoulder or I do a video presentation and I show them usually chart
wise and other things you can look at visually as I’m speaking about them and what I saw
and didn’t see and I thought it looks like a spike low but I’m not really sure. So, did
I see it coming? Sort of. I did think that it wasn’t; didn’t fulfill, what I would think,
what all the criteria that I look for a first spike low. And here we have this spike down and I’m certainly
not convinced that this is it. In fact, I’m almost certain that it is not and the reason
being, Kerry, as you know that with the movement of a $1.81 down on silver, $84 down on gold
and these being in the paper markets, there’s going to be some extremely interesting margin
calls starting on Monday with phones ringing. And I’ve never seen a time when you had this
kind of movement down in a commodity; be it the metals market or the ags or the softs
or whatever where you’re not going to see the price continue on that trend because a
lot of these people cannot meet their margin calls, which adds to the solvent pressure. So, I think that we’re in for a very interesting
week ahead. As I said, I spent, oh, probably a good two hours making a 37-minute video
regarding what I see for the metals. I showed the upward trend lines for gold and silver.
How you draw them, why you draw them the way you do, why you don’t use a log scale, on
and on and on; and then we went through what has happened in the past, what kind of washouts
we get, what to expect and then a lot of stuff, I mean, you know and I can talk as anyone
knows. But, nonetheless I did hit the pause button probably about 20 or 30 times during
this because I try to be succinct. I make a point, I show it, and I show it usually
two or three times; I’ll say, well, “This is it,” because if you didn’t and you know
I’ve talked long enough, you know that if you say something once sometimes it goes over
somebody’s head but if you say it two or three times in a different way then usually: “Oh,
I get it, oh, I see what he’s doing” or that of thing. So, you know I’ve been in I guess the teaching
mode forever a long time; so usually when I try to make a point I do to try to maybe
belabored slightly so that I don’t get a lot of extra work calling me up or sending me
emails. “You said, ‘Blah, blah, blah,’ I don’t get it. Can you do that again?” So I take
a little extra time, you might say. Anyway, enough about me; these markets have
been hit hard expect more damage. I don’t think the damage is complete. Kerry Lutz: Yeah. You’re probably right. And
one thing that somebody pointed out was a massive put position. Like, gold had gone
under 1500, then it climbed back up and it was holding there and then right at the end
of the day, right before the close of the market, a massive put position, numerous positions
in GLD, which just had the effect of knocking down GLD and then knocking down the price
of gold. So, we’re defiantly seeing the bankster force take advantage of what probably might
have been a natural kind of weakness in the precious metals and use that to drive it down
even further. David Morgan: Yeah, well a lot of this goes,
you know, the momentum players and then certain levels are broken and then are these guys
broadcasting to each other and that type of thing. Who knows? I mean I think, yeah, probably
some of that. Then it goes on here probably in almost any market you want to name. But
yeah, just to back you up, Kerry, we’ve gotten; if you look at the Friday action in gold,
New York time, basically it held like you said right at the $1500 dollar level from
11 a.m. New York time to a little past 1500 New York time and then all of a sudden, bang,
you get moved down to 1490, bang, you get moved down to 1480, and sell off at the low
of 1477. So, these guys can move a lot of money with
a mouse click, especially in the paper markets. You can’t really move that much physical around
that quickly, but options expiration is next week and the main thing is just to take a
deep breath and know what’s going to happen. I mean, basically, there’s going to be a lot
of margin calls that’ll be made; a lot of big players and small players. Even the big players get over-leveraged and
that’s what we saw in the financial crisis of 2008, among many things, that was one of
the things that you saw. Why did gold go down during that? Well the reason it went down
is most of the gold is that’s owned by big money is paper gold and so when they have
to make a margin call they sell whatever they can. Gold went down less than a lot of things
went down, but it still went down. And, of course, selling gold that’s paper gold is
very easy to do. And so it went. It went down, silver went
down quite a bit in percentage wise more than gold did and all this stuff was basically
paper trades. Nonetheless it was a sale and the price was driven down so, I guess I’m
belaboring the point, but what I want to make sure everyone understands is what you said
at the beginning. If you talk any of the, I guess, the stalwarts in the industry, you
look at the Jim Sinclair and you go back the Harry Schultz that he quoted in his letter
today. Speaking of which, what Jim Sinclair wrote
on the internet today, I mean Schultz goes back forever very wise and seasoned, well-seasoned
investor, and a very good thinker and anyone else. I mean you’ve got the Aden sisters,
Doug Casey’s group, many, many people that are well-respected. Fundamentally things have never been better
for gold. I mean what are you going to do, trust the banks? I mean the situation is tenuous
at best and that’s putting it politely. So, the fundamental fact is that gold is what
one of the currencies of last resort. Silver as much so, in my view, and I hold a minority
view there, and I realize that, but I’ll say that because in real crisis situation, real
crisis, like an Argentina situation; I sent out an update a long time ago to my paid members
and I also gave it to all of my non-paid members, the people that just have the free email list,
which I’m happy to do, which comes out of my pocket by the way, but regardless, this
Empty ATM, called The Empty ATM or Empty ATM. It’s a PBS documentary. It’s a fact. It’s
a factual show. What happed in Argentina and that was before
the Cyprus event, so the idea being that silver works very well because it’s the money of
last resort when you actually do get to a barter situation and you can only get a hundred
dollars a week out of your ATM and your expenses are three times that, it’s nice to have silver
rings, and silver jewelry and gold rings and gold jewelry and not to mention the gold and
silver coins, especially silver because the denominations are so much less that you can
trade a dime for a couple loaves of bread or a loaf of bread or whatever. You’re in a barter situation. So the point
being that I think silver is more of a money of last resort than gold is from the aspect
that you can make a lot more simple transactions if you needed to and if you think you don’t
need to, it did happen. Does it happen in North America? I don’t know. What I do know
is it happened in 2000 in Argentina. I think that’s close enough to my birth date; it’s
a real event. So I don’t know; again I’m droning on, but doggone it, I don’t think; if you’re
thinking that this thing is under control you better recheck your thinking. You better
quit watching reality TV and take some smelling salts and wake up. Kerry Lutz: Yeah, it’s funny. One thing we
didn’t mention; if you remember it’s really interesting. I published that little report
on war nickels a couple of months back and I was paying about a $1.85 per nickel and
it was under spot. It was 8 percent below spot. Now I looked on eBay, those nickels
are selling for $1.93 each and they’re 50 cents above spot. So the point is, long-winded
way of saying it, is that premiums have gone up in silver dramatically and from what I
hear from the dealers that I talk to, there’s very little supply around of this stuff. David Morgan: Well, I’m fairly well-connected
and that’s putting it in the rather modest terms. I mean I know most of the largest wholesalers
on a first-name basis and many of the retailers that are substantial. And one of the bigger
retailers said that he had the best week he’s ever had about a week ago selling physical
silver. A lot of what you say is true. The bag market
has gone from a dollar under melt value; in other words, you’re buying at less than melt
to about two dollars over melt right now. So the premium on bags is extremely high.
You’ve got a shortage of almost anything in the retail market. Not as bad as it was in
the financial crisis of 2008 but it’s moving that direction. It’s harder to get silver
rounds. It’s harder to get silver bars. It’s harder to get silver bags. And the mints are
backlogged; the Canadian mint, three to four weeks out; the U.S. mint three to four weeks
out. Obliviously physical demand for silver is
anything but weak and yet you see a $1.81 down in one trading session with probably
more to come. Again, with the paper markets being set up the way that they are, you’re
going to see some calls; you know it’s possible that we get down to 25 and whatever during
the day, Monday, and all the margin calls are enacted and there’s some good buying in
there and it pops up above 26, I mean, that is possible. It’s possible it doesn’t below
26. I don’t see that. I mean I’ve seen this; watched these markets for too long. So, it
is kind of wait and see, but I did go through what has happened in the past on these really
dramatic moves down and what takes place; and I don’t want to give it away because I
spend way too much time and effort doing stuff and paying me, but I’ll just put it in a rather
vague, in a general way. Don’t panic. Please don’t panic. No need to. Kerry Lutz: Yeah, that’s always a mistake
and I’m looking at Nenner, Charles Nenner, who I mentioned to you, well-known cycle guy.
He said his down size target for silver, for gold is 1539 and he thought it would be later
in the month. He said when it hit 39 that there’d still be a later low, better trading
low. And his low price target of silver is $24.60 and he published this on April 5th
and he’s primarily looking at the paper markets because it’s so interesting that, yeah, the
price went down but the premiums have gone up and more than compensated for the prices
you’re still going to pay close to $30 an ounce, if you’re buying silver, certainly
in rounds and in the chunk, it will be close to $30 an ounce. David Morgan: We’ve done a study for the May
issue of The Morgan Report and what we’re looking at is the true costs. Most people
don’t have a clue unless they’re in the sector and very involved in the sector; a lot of
people that are subscribers that really don’t know a cash cost is backed basically meaningless.
There’re a lot of companies that run around saying, “Our cash cost of silver is $3 an
ounce” or something: “Oh my goodness, you know, our cash costs are $3. Cash cost are
meaningless and yet unfortunately I can’t say “meaningless.” To me, they’re meaningless.
To the accounting people they are significant because that’s the way that they’re required
to account. But they don’t mean anything as far as profit is concerned. What means everything is: Do you make a profit
or loss? So, if your cash cost is three bucks and you’re losing money then obviously something
doesn’t; the cash cost doesn’t mean anything. So the true costs are what we looked at on.
I forget how many cause it’s my team; it’s not just me anymore, I have a team of people
that do research constantly, on all kinds of topics, but primarily around the metals
markets. And so we found that the true, honest-to-God cost of silver in a lot of these situations
is around $20 an ounce. So, certainly sufficiently higher than a lot of people believe. A lot
of people think, you know, you’re getting silver for eight or nine dollars out of the
ground. Well maybe on their reported cash cost that’s what they’re getting, but their
honest-to-God true cost with everything that it takes to run the business is sufficiently
higher in a lot of cases. Kerry Lutz: No doubt. And with energy costs
the way that they are, because mining is such a energy-intensive business, you need the
energy to get it out of the ground and then you need the energy to refine it and every
step of the way, very energy intensive. So, with these energy prices their costs have
certainly gone higher. Every miner’s is cost is higher than it was just a couple of years
ago before oil hit 140 a barrel for a short period of time and probably those costs are
going to go up in the foreseeable future ’cause it looks like oil’s on a pretty strong footing
and it’s on a kind of gradual upward trend. Barring any geo-political “whatever” that
takes place. And it’s so interesting, David. You’d think
after Cyprus, where you see banks, they’re just telling you, “Oh, you know that money
you had here, well it’s ours now or it’s not longer yours; you lost it.” And you see Japan
hyper-inflating and you see the U.S. hyper-inflating and you see so many things occurring and yet
something like this can occur in spite of all the fundamentals because in the short
run you really have no idea what’s going to happen from day to day. David Morgan: Well said. Kerry Lutz: I mean, there are people who are
good at it; I ain’t one of them. I just try tune out the noise and not pay attention to
it because, like I said, there’s so much going on in the world that none of it’s good for
fiat currency; it’s that simple and if it’s not now it’s going to be later. But it’s going
to happen where there’s going to be some type of realignment, global realignment of currencies
and some reversion back to the only thing that keeps the currency alive for more than
40 years and that’s metal backing. It can’t work any other way, can it? David Morgan: Oh, in theory it can but the
more we have of recorded history, no. So, I mean, there’s always some proponent of like
the Bitcoin thing, and I’m not anti-Bitcoin, I just think it, basically, the argument boils
down to two things. There’s specie money and there’s non. The argument, the one side of
the argument is, well, money can be anything we say, it’s a legal act and therefore, money
can be anything. Well, if money can be anything it could be silver. Oh, what a concept. Oh,
I thought silver wasn’t money? But if money can be anything and you use that logic then
you have to adhere to your principle; you have to adhere to your foundational statement
or argument. If money can be anything then it could be silver. That’s one, that’s that
argument. So it boils down to; I’m off-track, but some of these arguments just really get
to me cause people don’t have any foundation in logic so-ever but; Kerry Lutz: And no history. No history; no
historical perspective. David Morgan Ah, it’s either specie money
or it isn’t. So it’s some fiction or something that somebody made up that forces you; that
forces you to use it. Or, the free market says it’s something in your hand that can
be borrowable, that has value in and of itself. And if you go back and really study monetary
history it’s really a tri-metallic standard. It’s copper, silver, and gold and there’s
reasons for that. Copper is less valuable than silver, silver is less valuable than
gold and you can make change pretty much with those three mintages anywhere, anytime, anyplace
for anything. But we’ve lost that simplicity and now, you’ve
got all this electronic digitry running around. And is it a means of settlement and all that?
And the answer is yes. Is it a means; is it a unit of account? And the answer is yes.
Does it function as money; quote, unquote? Well, in most cases it functions as money
except the most important part of money. The most important part and that’s a store of
value. That what you have today; those coppers, those silvers, those golds, those units, that
amount of weight will buy you 10 years, 20 years, 30 years, 50 years, 100 years, 200
hundred years from today, what it buys you today. And certainly the price fluctuates,
I will not argue that, but what people need to understand is that the weight of an ounce
of gold, of an ounce of silver, an ounce of copper, for that matter, does not vary at
all. What varies is the amount of currency that has been produced vis-a-vis the amount
of new copper, new silver, new gold that’s been produced. That’s what fluctuates. And as you said, Kerry, there’s little doubt
that this isn’t a great big psych-ops operation, psychological warfare; it’s to keep as many
people from getting into the market as they possibly can if there’s a cyber attack on
the financial markets in another week, month, year, two years, I don’t know if there will
be but if there were to be something like that, that caused these financial markets
to shut down on a temporary basis, it could be, wouldn’t would be, but could be a little
too late. So my suggestion is, don’t stake your whole life around the metals markets.
I chose to make it my life. I made that choice. But for most people, just buy a little bit.
Get some that makes you comfortable. Ten percent is probably enough for most people, 20 if
you’re really worried, and go about your daily life. I mean, you don’t have to make it complicated,
you can make it very, very simple and I think this is an opportunity. Kerry Lutz: Yeah, I couldn’t, couldn’t agree
more with that, David. You know, you really kind of hit the nail on the head and the fact
is that when you get away from gold and silver, the problem is that it allows the government
to take on, at first, limited amounts of debt and eventually, unlimited amounts of debt.
And once they get into that increasing amounts of debt, where debt never goes down, eventually
you’re going to have the exact situation that we’re in now and that external discipline
where the gold standard or a metallic standard is really adhered to forces the government
to not over-promise and over-deliver in pursuit of additional votes and attempt to maintain
power. And you know it’s been said so many times,
I’m not even going to bother to quote Tocqueville but it’s obvious that that’s the situation
we’re in now and we’re at the end of this thing and they’re not going to go quietly
into the night, they’re going to fight this every inch of the way until finally the discipline
is imposed upon them, the elites, and that’s why you need to get the gold and silver now.
Whatever you’re comfortable with, have some. It’s an insurance policy on the inevitable.
So, on that note, David, Silver-Investor.com and you’re sending out your report, as we
speak, huh? David Morgan: Well, the update. There’s several
levels of service; there’s three. There’s the one that is just a basic report, which,
is monthly for basically buy-and-hold investors. Then there’s one that entails that plus, what
I call Basic Plus, which is the basic letter and my updates on an as-required basis. It’s
not every week or every month or every two weeks, it’s just whenever the markets dictate
it. I’ve done several this month because the markets have been so crazy. So I sit down
and do a video and then I send that out. It’s on our server so it plays really quickly.
It’s; you know, I don’t have that many subscribers, but it’s my trading or my thoughts, so it’s
a good way update everybody. So after this big smashing of Friday’s event
I was required, really, to tell everybody what’s going on, how bad it could get from
here, where it will stop and why it will stop where it will, and on, and on, and on it goes.
So yeah, I just got a little burned out on it, in a way. I looked at it probably from
every angle I know and I’ve been at this thing for four decades, but nonetheless, always
learning more, always staying positive, and you’re right, unfortunately, you’re right.
I mean, I’d love to say, “You know what? The bankers have it well in hand.” Well, I don’t
know if I’d love to say that but let me restate that: I’d like to believe that the financial
system was on an ethical basis and we could trust the financial elites to do the right
thing, but we know that’s complete fabrication. Kerry Lutz: That is fantasyland. David Morgan: But the truth: We need to take
action in our hands and the best way to do that, you know, be real, get real and buy
real. Kerry Lutz: Yeah and that’s it. Be real. And,
again, we’re going to see you in Dallas on June 28th and 29th at the Liberty Masterminds
Symposium. We’re really looking forward to it because I think we’re going to get a lot
of people who aren’t just the converted, you know, people who already know all this. I’m
hoping that we can really educate a lot of you. People, if you’ve got doubts and you
feel uneasy about the system, then you really need to be there. So David, we’ll talk to you again soon. You
be well. Thanks for taking time out from a leisurely Saturday to update us. David Morgan: You’re most welcome. Thank you
Kerry. (Text on screen): Silver-Investor.com

17 thoughts on “Precious Metals Slam Down, Silver Psychological Warfare Interview (4/13/13)

  1. The fundamentals are still intact,
    The fundamentals have not changed,
    The fundamentals have not changed,
    The fundamentals have not changed,

    …but the price has, and may remain so for another 5 years or more.

  2. there is no more Silver Maples nor American Eagles monster boxes left for sale… they are all SOLD OUT…
    If you can find some of these coins, they are both usually 25%+ over spot… the value of these PHYSICAL silver coins did not go down !!

  3. I buy silver on its future value not the fiat dollar value. silver will be here when the fiat dollar goes under.

  4. I have a four week wait on regular silver rounds, my dealer told me they started to get new buyers and have never been as busy as they were last Friday, Saturday, and Monday..

  5. So you think the price will stay down for 5 years… For the price to stay down would require China and other asian countries to stop or dramatically reduce purchases… but at this moment both the Chinese government and the Chinese people are increasing their purchases of physical gold and silver. Many banks in China and have large lines out the door. Everyone is buying no one is selling.

  6. You got that right, the physical price remained almost unchanged. Also look at the Sprott fund PSLV also stayed almost unchanged. (if you trade silver, the PSLV is the best way to do it)

  7. If it will be at the same level for five or ten years it would be just wonderful!
    It would mean that a relatively nice life we have is still going on.

    I do not expect anything good occurring if silver rises to $100 or $200.

    The later the dollar dies the better.

  8. I bought silver when it was $32.50 per ounce…and I'm buying now…
    I buy for the future..not just becasue is't shiny and pretty.
    I used to talk about it..to friends and family..got tired of the 'duhhhh' look…
    Soon, there will be an 'event' that will shake the markets and the dollar..that's when PMs will skyrocket….

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