Andy Hoffman discusses some of the issues affecting the precious metals investing environment with David Morgan,the silver guru. David discusses his thoughts on the possibility of Fed tapering and its affect on the precious metals market. David also discusses Yellen’s philosophy and the dangers and possible affects on the market. Andy Hoffman and David Morgan discuss the record low inventories currently in the precious metals stocks and the disconnect with the paper precious metals market. Paper precious metal doesn’t equal physical precious metal. When three quarters of a years worth of precious metal production can be traded in a matter of seconds besides being preposterous it begs the question about manipulation in the market. The US mint is reporting record Silver Eagle sales. In addition to US demand there is also tremendous overseas demand from countries like India and China.
David Morgan discusses the silver market in China and silver’s significance throughout its history. In this wide ranging discussion David also discusses industrial demand for silver and the mining production of silver. David is asked about the amount of investment grade silver available for purchase. There are two sources of supply, silver bullion and silver coins. All coins above ground total about a billion ounces and all the silver bullion total about a billion ounces. In the world of commodities this is still a minuscule amount. But the most important question is how much of this is available for purchase at today’s prices. And the answer is very little. Not many people are willing to sell the silver they are holding for today’s price of approximately $22.
They discuss the cost of production for the major miner companies. David’s research indicates the total cost is about $22 an ounce. At today’s prices the mining companies are not making money. So we will see further cutbacks in production. Companies that have lower margins as well as increased government regulation of mining activities will also curtail production in the future. As supply and demand squeeze becomes more restrictive the value of silver will go up.
For more information about David Morgan’s research and work on silver go to www.silver-invesstor.com