The One Signal That Matters for Gold and Silver Right Now | David Morgan

Silver veteran David Morgan debunks the COMEX default narrative, reveals why wholesale dealers are flooded with metal and why that is actually bullish, and names the one bond market signal that says the monetary reset is getting close.

David Morgan — publisher of The Morgan Report and author of The Silver Manifesto — breaks down the structural divide in the silver market right now. Wholesale retail dealers are sitting on excess supply while commercial bars remain tight. The COMEX default story that has circulated for a decade has never materialized, and the objective inventory data from 2022 through 2025 proves it. Meanwhile, what silver did at $50 — stalling for seven trading days before exploding to $120 — is the exact same psychological setup investors should expect at $100.

Morgan also addresses Hong Kong's July gold clearing rollout designed to rival London, the copper substitution threat to solar demand and why it is not a near-term driver, the energy cost squeeze separating royalty companies from miners, and why his number one signal for precious metals before year-end is not the silver price — it is the bond market.

Recorded May 21 2026

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WHAT YOU WILL LEARN IN THIS INTERVIEW
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• Why the COMEX silver default argument is fundamentally wrong — and what the actual inventory data shows from 2022 to 2025
• What the 2008 financial crisis tells us about silver in a credit contraction — silver rose 500% vs gold's 300% from the bottom
• Why dealers running out of storage space from silver sellbacks is actually a bullish structural signal
• The $50 psychological stall and exactly what to expect when silver tests $100 again
• Hong Kong's July gold clearing system and why Eastern pricing power is a structural shift not a cycle
• Why solar copper substitution cannot happen at the speed the market is pricing in
• Silver price inelasticity — why industry will bid up to almost any price rather than go out of business
• Why royalty and streaming companies are insulated from rising energy costs in ways direct miners are not
• The one signal David Morgan is watching before year-end — and why he says it is getting close

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CHAPTERS
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00:00 Data Over Hype
01:22 Macro Credit Crunch Setup
01:58 How Silver Acts in Crises
03:47 Liquidity Lessons From 2008
04:58 Retail Sellbacks and Price Walls
08:03 Industrial Demand and Stockpiling
11:09 Asia Imports and Accumulation
12:34 Signals From ETFs and COMEX
13:55 COMEX Default Myth Debunked
19:11 What to Watch Instead
19:46 Price Discovery and Volatility
21:04 Deficits Then vs Now
23:26 Silver Price Elasticity
24:24 Industrial Demand Inelasticity
25:51 Hong Kong Gold Challenge
27:55 Silver Institutional Bid
29:41 Solar Substitution Debate
31:56 Energy Costs and Mining Equities
36:45 Who Sells Silver at $100?
39:20 The Ultimate Bond Market Signal
42:12 Silver Sunrise and Final Thoughts

#SilverPrice #DavidMorgan #KitcoNews #GoldPrice #PreciousMetals
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Transcript

SPEAKER_02 0:00

Kitco News in Focus with Jeremy Stafford.

SPEAKER_03 0:03

Welcome back, I'm Jeremy Stafford. Well, let's get into what the data actually shows right now. Hong Kong is targeting a July rollout for a government-backed gold clearing system built to rival London. Global banks are being brought in, storage capacity is being expanded. That's not a rumor that is institutional infrastructure being laid in real time. Meanwhile, the silver debate is fractured into two hard camps. One camp points to persistent physical deficits, heavy eastern industrial demand, and relentless currency debasement, and sees another major leg higher from here. And the opposing camp points to technical exhaustion. Chinese solar manufacturers actively substituting silver with copper and major bank models that forecast a multi-year decline back to some historic lower ranges. Now, today we're going to bypass the social media echo chamber to work through the verifiable data point by point. In his latest Morgan report, our guest directly confronts that tension. He challenges the bear case, warns of a coming credit contraction, and calls out one of the loudest narratives in the industry, the claim that Comex is on the verge of a silver default. David Morgan is the publisher of the Morgan Report and author of the Silver Manifesto. We'll get into the documentary in a moment, but uh David, welcome back to the show.

SPEAKER_00 1:16

Jeremy, thanks for having me back.

SPEAKER_03 1:18

Uh lots of interesting news. Of course, we saw those highs on the silver side. We saw it kind of get past those triple digits. But uh, I want to start with the macro framework because everything else today sits on top of it. I mean, your latest report argues that what most people are calling inflation does not end in a sudden deflationary crash, it ends in something quieter and more insidious, uh profound kind of credit contraction where perceived wealth quietly evaporates before most people realize what has happened. Uh David, it is severe credit contraction where liquidity dries up and leverage gets unwound and cash becomes scarce. Exactly, how does physical silver behave compared to paper assets?

SPEAKER_00 2:01

Great question. The best study on it. In fact, um Mr. Grant from Interest Rate Observer actually mentioned the book. It's uh The Restless Metal Silver, the Restless Metal by Professor Jastrum. He looked at the gold and the golden constant over centuries, from like the 13th century onward. After that book, he wrote silver, restless metal. And it gets right to the hardview question. It varies. There's not a constant in silver. At times, silver will provide uh protection just like gold. At other times, it devalues. But we got to make the caveat that a lot of that study was done when the money was physical silver and gold coins. So it's hard in a fiat system to compare apples to apples. You cannot. However, the crux of the book was that silver, and this book, I forget the publishing, probably 60s or something. But regardless, silver does best in an inflationary environment, far enough, consistently. In a deflationary situation, I would guess it would do well, because one, the correlation of gold is very strong. Two, it's still a monetary metal in some nation states. And three, it's the most technological asset you can own. You can own Nvidia, you can own Microsoft, you can own many different tech companies, but every one of them, every one of them, relies on silver to maintain their production.

SPEAKER_03 3:32

Yeah, that's interesting. I mean, the the distinction matters. Physical metal can kind of be insurance in one regime, dead weight in another. So what tells an investor which regime they're kind of in? I mean, is it real rates? Is it trust in banks? Is it credit stress, currency weakness, or is it access to liquidity?

SPEAKER_00 3:50

Well, it's always access to liquidity when there's a problem, as we know. Right. And I would say, you know, silver being kind of, I'll call it bipolar, meaning, as you suggest, it's industrial one day and it's monetary the next. And of course, it's always both. But your question, I'll get right to it. It is liquidity and it's the ultimate liquidity. Because if you look what happened in 2008, and the everyone calls it a financial crisis, and it was, what happened? Gold sold off and went down, I think it was the 30%. Silver sold off greater, but both are highly liquid, highly leveraged, easily to sell under all conditions assets. The bottom, silver went from roughly nine up to almost 50. So it went up about over 500%. Gold, on the other hand, went up, I believe it was about 300%. You can check my numbers. Definitely silver outperformed. If we get into a situation like that again, which is possible, I would expect equal performance.

unknown 5:01

Yeah.

SPEAKER_03 5:02

What about the retail stacker out there? I mean, the everyday physical holder in a genuine kind of credit contraction, does that community become a source of secondary supply, kind of forced to liquidate just to cover living expenses? Or could the most committed holders in this market become involuntary sellers?

SPEAKER_00 5:19

Both, uh, because the people that are just stacking and basically that's their total savings, and they're just making it, they'll have to liquidate. Others uh that you know are better off, we'll say, or have more liquidity or a greater buffer would probably hold on. Now I want to spend a little bit of time here, Jeremy, if you'll allow me. Because once we saw silver get to 50, I said, and some others, we would see a stall out of the $50 level, briefly. And we did. What took place? Many burnt out longtime holders that had held silver in the belief of it's a you know great asset to own, it's a hedge, whatever their belief system, saw 50 and said, I am not going to be messed with again. It's never going above 50. I'm getting out and I'm getting out now. Now that didn't last many trading days. I'd have to look like seven trading days or something, very briefly. And then it moved up well above 50, as we all know, into the hundreds, as you said. But there was a stall there. Now, we're gonna see at this next round if we get a higher price, and I believe we will, I think we'll see something similar at the $100 level, because a lot of silver investors that have held for a long time washed through the $50 level, watched it move up, and then saw the January move of 70% in one month, saw it go basically from the low 70s to 120, said, I missed it. So when it gets back into triple digits, I think you'll see some liquidation. But specifically, some will have to sell, and others will sell because of price. And right now, as you may or may not know, the wholesale market is loaded with silver running. There's been so many sellbacks from retail that they almost are running out of shelf space. I'm being a bit facetious, but to paint an accurate picture, that as far as there being a tightness in the physical silver market is incorrect on the retail side. On the commercial bar side, the what I call the true silver market, which is based on derivatives, that's a much tighter market.

SPEAKER_03 7:37

You know, you you brought up a good point there. You kind of that sounds like overhead supply got cleared fast. So when silver hits that major psychological level and the old frustrated holders finally sell, what tells you the market has absorbed that supply and it's kind of ready for that next leg?

SPEAKER_00 7:54

Once we clear what's needed in the commercial side, which is really very difficult to find out. I mean, it's tough to analyze silver. It's a little easier, but I digress.

SPEAKER_03 8:05

Yeah.

SPEAKER_00 8:06

We have to see what happens with the new exchange. We got to see how much goes to the Shanghai Metals Exchange and the Shanghai Futures Exchange. And we got to see, you know, like the substitution that we're going to get to with copper into solar panels and that type of thing. But there's an insatiable demand for silver on a technological basis. And because of that fact, regardless of inflation, deflation, stagflation, the demand on silver and that purpose really doesn't diminish very much. And then, of course, the monetary man is a swing factor. And I think with uncertainty ahead of us and what's going on with Warsh and all that's happening with the Fed and the bond market. I mean, you've got three major entities that are basically showing their hand with uh the UK, the United States, and Japan all having problems, I'd say, in the bond market, or maybe I should say more accurately, reflecting the truth in the markets that their debt markets need to have higher interest rates because no one's trusting the viability of the current currency system.

SPEAKER_03 9:12

You brought up the just going back to that physical market signal, because if retail and dealers are running out into storage constraints because so much metal is being sold back, is that telling us that silver has reached a profit-taking phase again, or just that the old supply is finally being recycled into stronger hands?

SPEAKER_00 9:29

Both. I mean, first of all, from a retail investor perspective, I think a lot of people are satisfied with you know $70, $80, $90 silver. And especially long-term holders, especially a lot of them are getting older. It's like, okay, what am I going to do? I want to, you know, whatever, retire, whatever their means is. As far as the other side, stronger hands, because the Elon Musks of the world can see out, you know, two, three, four, five years, and they know what the dynamics are. So they're very happy to buy silver at 80 because they know it's going to be 160 to them in two years from now, or whatever the price may be, it's almost undoubtedly going to be higher. And if they need that for their production, they're going to buy it now, put it on a warehouse shelf, pay storage fees or whatever, because it's actually a bargain relative. And even if it wasn't a quote unquote bargain at 80 and stays there for two years, they still may want it because without it, they're out of business. And that's what I call a push demand. And that is something that's uh irrevocable in my view, unless there's a complete collapse, which there won't be. So we're in a situation where the dynamics for silver really are more and more positive all the time. Yeah.

SPEAKER_03 10:46

So, I mean, you brought up Elon there and Tesla. I mean, if if in large industrial players believe silver will be material higher higher for years from now, uh, you know, and they're willing to warehouse it today, is the real story not shortage, but inventory strategy? Are companies shifting from just in time procurement to that strategic stockpiling we keep hearing about?

SPEAKER_00 11:08

I can't prove it, Jeremy, but I believe that is absolutely the case. I mean, if you look at what's happening at the, oh, let's say middle part of last year, maybe from fall onward, we kept seeing more and more imports going into China, and it was, you know, big block silver, commercial bars, and it was being eaten up rapidly. As that took place, the retail market in Asia took off, which had been pretty much dead for a very, very long time. So you had two demands in Asia and substantial imports going from you know wherever, whatever the mining facility into Asia. That is slowed off substantially right now at that facility at the SME. But if you look at the imports of China recently, they've hit a record. India has hit a record recently. So seeing a lot of demand, both monetary and industrial, more let's say outside of uh what I call the Anglo-American Empire. The uh Anglo-American Empire, for the most part, saying, Oh, finally, a high price, I'm out. Whereas the Asians are and Indians are saying, haha, we need it, we want it, we're buying it. So they are stock prominent as far as I can tell. To what level, I can't tell you, but I do know that uh from the sources I have, which are pretty tough in Asia, I only have two really good ones, that uh we are seeing them also use the word hoard silver for further use in the future.

SPEAKER_03 12:37

That's uh so I mean if Asian demand is now chasing the move a little bit, doesn't that introduce the same kind of hot money risk we see in Western ETFs? How do we how do we know this is a durable accumulation kind of cycle rather than that late cycle retail surge?

SPEAKER_00 12:54

We don't yet. That's the truth, and I'll be honest about it. Now, if we start seeing the ETFs being a supply of physical silver, which we have, and maybe the COMEX being neutral or drained slightly, that's a very good tip of the market telling us that the silver physical supply is tight. And this is something that a lot of people overlook because there's only certain entities that are allowed to take physical silver out of the ETFs. But that was baffling me, and it was a good suggestion way back before the big move that no one was buying silver from the uh institutional side. And that was really perplexing to me because it was such a gimme, and the algorithms knew it. So they knew it. There was no excuse for not knowing silver was ready to take off. And a lot of them just do momentum. So once it starts to take off, they just add on. It's automatic and it wasn't taking place. So that suggested to me that the physical market is being carefully um maintained by the powers that be.

SPEAKER_03 13:57

Yeah. We can move on to that, uh, to the claim you kind of pushed back on directly in your report because this is one that has real consequences for retail investors who are making decisions based on it. I mean, the viral argument, as you know, we've discussed this a little bit before, goes like this divide COMEX open interest by registered silver inventory. The ratio looks extreme, therefore, default is imminent. But you called out that as being fundamentally flawed matrix, and pointedly, one of the functions is a kind of a bully on sales pitch. I mean, walk us through exactly why that comparison is wrong and why people repeating it either don't understand the mechanics or maybe being deliberately misleading.

SPEAKER_00 14:41

There is a problem with the understanding of what happens on the COMEX. Yeah. I think everyone understands it's a derivatives market. It's not a delivery market. Does the COMEX deliver silver? Yes, it does. What is the percentage? Generally speaking, in all commodities, not just silver, it's about 1%, which means 99% of wheat, corn, silver, is traded on contracts only for cash. Having said that, if you look at the data, which is an objective way to evaluate the silver market, if you look from roughly 2022 through present day, the amount of silver in the warehouses, counting both registered and eligible, is almost a flat line. It's a constant. And yet, all every month and non-delivery months, you see these massive quote-unquote deliveries. Most of these deliveries get rolled over into the future delivery months. So that's part of it. The second part, which many people don't understand, is many of these deliveries are bank to bank. So it goes from JP Morgan to HSBC or HSBC to Scotia Makata or whomever. So a lot of it's just kind of the pee under the walnut moving around. It's really, I wouldn't say it's sleight of hand, but it's stays within the warehouse with a different tag on it. The other thing is you can go past uh final notice day and still settle in cash. Most people don't know that. A lot of people say that there's cash settlement above and beyond the um the spot price or the contract price. I won't look you in the eye and say that's never happened. I really doubt it. But if it was consistent, then the banks would take advantage of it. They would get that higher price and buy a futures contract for less money and demand delivery. A lot of this stuff is absolute nonsense. Uh, but yet it gets out in the meme and people just spread it over and over. So I've probably heard for nearly a decade that if this much silver is on the exchange and this amount that's already contracted is held for delivery or stood for delivery, that the whole thing will collapse. And in theory, that's correct, but it's never happened. The last comment, and we can move on, is if you look at that data, the objective data, and everyone's saying the COMEX is being drained, it's been level, roughly level. It goes up and down slightly. But from 2022 through 2025, and we had the scare of the tariffs, and a lot of metal moved from the LBMA into New York, what we saw was the highest amount of silver on record for a long, long time. Years. So rather than being drained, it was at a nearly an all-time high for the last, say, five years previous. Now, what happened after all that metal moved? There was an arbitrage that went the other way, and that almost exact same amount of metal left the Comex rapidly for primarily Asia, some back to London. But on balance, the people that run the exchanges have inside knowledge on how much silver is really going to need to be delivered. And because of that fact, there is the ability to kind of maintain the market. Now, I'm not saying there aren't shenanigans. In fact, I've used that word. I think I might have said it last time we did an interview where they had a breakdown in the cooling system, which is preposterous, and another one where they had a break in the system. So there are suggestions that there's a lot of stress in the Comex. But up until now, um, it's been viable, it's been maintained, and the COMEX is not being drained from the way that most people suggest on, let's say, Twitter. Has it been um drained at times? Yeah, that metal that went out in uh January uh or earlier, right in that time frame, had come in just before that time. So I hope I explained it well. I get pushed. People get locked into the belief systems, but we I try to be as checked as I can.

SPEAKER_03 19:10

We both we both get the pushback. And and but you raise a good point. I mean, so if Comex warehouses stocks have been they've been broadly stable and most deliveries are rolled or re-tagged bank to bank, is the real stress not visible in headline inventory at all? Should investors be kind of watching actual loadout or lease rates and spreads instead of total warehouse numbers?

SPEAKER_00 19:31

I think that's a lot more accurate. I mean, if you look into the lease rates, that means somebody needs it, needs it now.

unknown 19:36

Yeah.

SPEAKER_00 19:36

And is willing to pay up substantially to get it. I think it's far more accurate look at the true, let's say, day-to-day movement in the silver market than what's happening on the Commons.

SPEAKER_03 19:48

Yeah. I mean, it's interesting too, because if Comex is mostly derivatives and kind of bank-to-bank warrants, as we talked about, then is it still the right price discovery venue for a physical market driven by Asian industrial demand? I mean, at what point does Comex remain functional mechanically, but kind of lose credibility economically, you know?

SPEAKER_00 20:08

I'd say it happened once. Uh, I was saying on interviews and in my personal work in public interviews that we saw true price discovery really when we hit that $50 level and broke through it. And then there was physical demand coming out of Asia that was looking like it was very difficult to meet the demand. And because of that, we were seeing true price discovery. And then once we got over-leveraged, we got the parabolic move, I said, be careful, get out, put it in a hedge, sell some, whatever. I was warning both my private work and the public, don't expect this thing to go to the moon. You might want to take some partial profits, some profits, edge it, whatever. And then we got the big fall from the 120 down to I think it was 65 intraday, you know, within a trading day or two. So that's that's just the silver market. You got to be pair, you know, mentally for those types of events, and many people aren't. Yeah.

SPEAKER_03 21:07

Hey, you know, I mean, we were talking about the structural supply deficit for 2026. Uh, silver institutes kind of projecting the same thing. How long can wholesale vaults drain at the current rates before industrial users begin panic buying to kind of secure that forward inventory we're talking about? Is there a tripwire level you're watching?

SPEAKER_00 21:27

There is, and I want to digress for a moment, Jeremy, but a lot of people talk about this deficit, which is true. I talk about it. But many don't understand because they don't have the uh, let's say, depth of years in the silver market that I have. There was a structural deficit from 1990 to 2005, 15 consecutive years where the average drain off in silver was 100 million ounces per year. And no one ever talks about that. I do, because I was there. And so we went from 2 billion ounces of Of commercial bars, so what was the true silver market or sets the price for silver from 2 billion ounces down to 500 million? That's a big drain-off, 1.5 billion ounces in 15 years. And yet the price did very little. This time it's one of the big memes. Oh, the you know, the deficit in silver, the deficit in silver. What's the difference? Well, 2005, 6 was you know 20 years ago. How many people were involved in silver on an industrial level and a retail or uh institutional level at that time? Far less than now. And so that's the difference. If there was as much demand in silver from both industrial and institutional back then, I think that deficit would really mean something. But to show you how I'll use the word ludicrous the silver market can be at times, Jeremy. Think if there was a 15-year structural deficit in corn or wheat or soybean oil. I mean, it would be ridiculous. The market would go crazy. But in silver is kind of a ho-hum. Now it's not a ho-hum because of the interest in the market. How where do I think we need to be? So we have enough above-ground stockpile to feed the current deficit for years. That's the truth. But every, you know, every ounce of silver has its own price, so to speak. So just because the derivatives market sets $80 the ounce doesn't necessarily that's going to be the price, you know, in a month from now, because another use, someone buying it and buying maybe too much at one time and forcing the price up and being glad to get it, because they're looking ahead and say, look, we only have two years worth. Here's how our projections are. We're going to be out earlier than we thought, buy it now, buy it quietly, and it still moves the market. So it's really hard to put a number on. But I would say looking at that $500 million that I talked about in 2005-6, if we got to that level again, yeah, I think you'd have real fireworks.

SPEAKER_03 24:06

Yeah. Well, that would be a time, huh? I mean, it's an important distinction because there may be enough above-ground silver to feed deficits for years, but not at the same price. So is there, you know, the real issue, not availability, but price elasticity. At what price do hidden ounces come out?

SPEAKER_00 24:23

Well, first of all, to digress again, silver for industry is price inelastic. It could be 50,000 an ounce. I'm being facetious to make my point.

SPEAKER_02 24:34

Yeah.

SPEAKER_00 24:35

If you use, you know, a tenth of an ounce of silver or a hundredth of an ounce of silver in a handheld device, and the price of the device is $1,000, and you're only using a hundredth of an ounce, it doesn't matter if it's $100 an ounce or a thousand dollars an ounce, the overall price to the end product price is insignificant. That's priced inelastic on the demand side. And many applications in the electronics industry is exactly that way. Now that's not true for jewelry, and it's obviously not true for a block of silver or silver coin. But a lot of industry, it's priced in elastic, and the industry is at least 60% of the market. Is every industrial use of silver uh pricing the elastic? No, but most are. So there's that part of it. The other part, of course, is the monetary side, and that gets into you said, and this is the thing to understand. What is the demand? Where's it coming from, and how badly is it needed? If you're out of business without having silver, you're willing to bid up to almost any price to stay in business or to keep your industry going, or maybe military purposes. So it's got a very unique demand curve that most other commodities do not.

SPEAKER_03 25:49

Yeah, to say the least. I want to talk about this hard piece of kind of news that we got this week. Um, the one that I think is kind of being underweighed by retail investors. Hong Kong is targeting a July rollout for a new government-backed, unallocated gold system. Uh gold clearing system explicitly designed to rival London. Now, global banks are being recruited, storage capacity is being expanded. So it's not a proposal. It feels like it's being built on deadline. When sovereign wealth and institutional capital build this kind of permanent infrastructure, are they signaling that Eastern pricing power in gold is not a cyclical trend anymore? I mean, it's going to be a structural alignment here.

SPEAKER_00 26:28

Well said, Jeremy, it is a structural alignment. I mean, if you go back to my earlier work, I said if you really want to see what's going on in the world, follow the money. If you follow the money going back into monetary history briefly, I'll make it brief. But you look at the main power, you know, it was the uh the UK, it was the great empire. The sun never set on that empire, and of course it shifted after World War II. So the most of the gold was out of the UK, and then it shifted to the United States, and they had all the power. Where has the shift been in the last several decades? It's been to China. So he who owns the gold makes the rules, or he who owns the gold sets monetary policy globally at some point in time. So all we're seeing is a verification of what's already reality, which means the real monetary power has shifted from the UK in days gone by to the US, and now that's days going by, going into Asia.

SPEAKER_03 27:23

Yeah.

SPEAKER_00 27:24

So it's structural. It's a massive change. Remember, as an Austrian economist, I'll put that hat on, we don't look at money as money. We look at the true wealth as means of production because we produce wealth. We produce the iPhone, a computer, an automobile, an airplane. That is wealth. And who is the means of production? Well, we all know it's coming from China. That, from the Austrian perspective, is the true wealth builder.

SPEAKER_03 27:51

Now, obviously, it's the system is entirely, this one at least is focused on gold. But we know central banks are accumulating gold at historic strong pace. Sovereign wealth is building this gold infrastructure, but nobody is building an equivalent system for gold. Um, does silver need an equivalent kind of institutional bid to sustain higher prices, or can this industrial, you know, I guess deficit some people call it, but is there anything that can kind of carry that price by themselves without a sovereign backstop?

SPEAKER_00 28:22

Well, I think what what we already know. I mean, if we go back to the first the GLD, the gold, first gold ETF. And of course, you know, I study silver more than gold. I look at them both and the resource stocks. Regardless, I was getting a lot of input from you know various people. You know, will there be a silver ETF? And I was sure that there was, but I called the Silver Institute, spoke with uh Mike Dorenzo, and you know, Mike pretty much said, I can't say, but yeah. And of course there was. So I look at it the same way here, Jeremy. I think that you'll see gold lead. I mean, look, gold is really an established metal, if you think about it. I mean, central banks hold gold on their balance sheet, and as we both know, gold has become one of primary assets above and beyond treasuries of the United States for the first time in a long time. So we see where the world is trending as far as what real money is and how important it is. Having said that, yeah, there will be a silver facility, no doubt. Why? Industry alone, and also monetary. There are people that understand the leverage in silver is so phenomenal relative to gold that it's cheap to gold, and then it's a requirement, regardless. And as we talked about earlier, and I'll emphasize this time around, inflation, deflation, stagflation, I think silver's price is going higher, and the gold-silver ratio will favor silver in the future.

SPEAKER_03 29:50

Now, we talked about industrial demand for a minute, but there's this, you know, the majority of annual silver consumption, the single biggest driver, at least in some of the data, is solar. And there's this story, I mean, Chinese solar manufacturers that are actively kind of attempting to substitute it with copper and panel construction to reduce input costs. And you noted in your report that converting standard manufacturing lines takes years. I mean, not months, not quarters, but years. Um, given that multi-year factory conversion timeline, is this a genuine near-term threat to silver demand or is the market kind of pricing in a transition that physically cannot happen at the speed it's being implied?

SPEAKER_00 30:29

Exactly that. I mean, as you read my report. Yeah. It can and probably will take place, but it is not a real driver right now. Now, it can be in the Twitter meme, and people get excited and jump up and down and look at the price hourly, and you know, don't take a long-term perspective. But no, it's not, it's not the driver that people think. And the other part is all right, let's say silver demand is less because there's a copper substitute, or maybe there's a blend of copper with a silver coating or what have you. Regardless of that, where how much silver do you need for robotics? How much silver do you need for the AI build out? And what new technologies are down the road just a year and a half or two from now that require silver? I mean, you come back to the Samsung battery. I mean, the only reason, in my view, at this point, that you're not seeing a mass produce is because it takes so much silver. But it's so efficient. Who doesn't want to be able to charge your Tesla in nine minutes, right? So there's a lot out there that could put higher demand on silver if you even took the solar demand away. Now it's not going away, obviously, but it could be substitution could take place. But as we wrote in the report, I wouldn't get uh all wound up about that one aspect.

SPEAKER_03 31:46

Yeah, yeah. In that same report, I mean you kind of talked about the global energy market, how it's entered kind of a new paradigm where security of supply now trumps efficiency, and that is structurally raises kind of baseline costs across every extraction industry. If the cost of energy has permanently re-rated upward, what does that do to the free cash flow potential of these silver miners, especially the ones in your top-tier portfolio?

SPEAKER_00 32:15

Two things. One is that we saw this coming and recommended uh you know investments in oil, and uh I deferred that to one of the best you know energy analysts I know. Uh, secondly, it's it obviously affects everything. Energy is the key to everything. And because of that, if you are a miner and the cost of your input is you know 25%, which in some mines it is, it is gonna affect the bottom line. On the other hand, as you know, most of our big picks are royalty companies, which really are unaffected because the structure for the investment is not dependent on the input course to the mine. The mine is subject to the agreement, which means you're gonna get X amount on a silver stream, gold stream, royalty, or what have you. So we wrote a paper on that. Probably should do another one for our members a while back that fear not inflation isn't gonna affect the royalty companies, but will affect the uh the miners directly. Now, they can hedge, which some will, uh, and there's not a lot the mitigation they can do, Jeremy, other than um you know try to be more efficient. Uh, but nonetheless, so I'm talking out not really out of both sides of my mouth. In the royalty streaming phase, it has a little effect. In the hardcore mining, it can definitely have an effect.

SPEAKER_03 33:40

I was gonna ask you, I mean, what kind of separates a miner that benefits from higher silver prices from one that simply passes those gains straight to the energy companies? Is there anything you're looking at? I mean, you mentioned the royalty companies, they're some calling them expensive at these levels, but again, if there's more room to go here.

SPEAKER_00 34:00

Well, hopefully they're gonna answer this. One is uh the best hedge is to own oil, which is, as I said, we're doing. The other one is to see you know if there's any breakthroughs in mining. I mean, you look at uh Hecla, which is you know one of my neighbors here the next state over, and you know, they're experimenting with you know robotic mining and this type of thing. And people are always looking at the energy situation, meaning how do we get more efficiency out of a you know, a gallon of diesel? How do we get more efficiency out of uh so much silver in a solar panel? So, you know, production and productivity in a free market system continues to improve. And that means that there may be some improvements, and if there's not, or you're inefficient or not able to make a change in time, then someone that is more efficient or has a better, easier uh-to-mine deposit, as an example, will come to the fore and the other one will wane. So markets, when allowed freedom, we'll say, are pretty efficient, and that's why you know the ability to have a free market system is actually always the best because it really doesn't discriminate. It goes with the flow of the voters, the people that buy, to determine what is the best solution. I have to caveat that, and I'm not putting my tongue in my cheek, but unfortunately, that uh true free market really doesn't exist much anywhere, anytime, anyhow, these days, because governments subsidize inefficiencies, which is rewarding failure, but I digress.

SPEAKER_03 35:38

Yeah, yeah. Um, I don't know if you saw. Well, I'll try and find the chart and put it up for the audience. Tabby Costa put out an interesting graphic today. And I guess it's all about share buybacks. They're making new records. Are buybacks kind of changing the story? If miners are finally uh returning cash instead of issuing stock and chasing growth, does that mark a real shift in capital discipline or are companies just buying back shares late in the cycle? What are your thoughts?

SPEAKER_00 36:03

My thoughts are you do buy back if it's the best use of your capital. Uh there's reasons to buy it to move the stock price and get a bigger bonus, and we're all aware of that. But to try to be objective, if you have good free cash flow, which many of these miners do, and you look out in the marketplace and you see there's nothing more efficient than owning our company, we're only going to be stronger, then I think it's worthwhile to do it. So I don't want to be um hypocritical. I think that there's times that it's stupid to do it, and maybe it's for selfish reasons, and there are other times to do it because it makes good common sense. Yeah.

SPEAKER_03 36:41

Hey, let's close on uh a couple of questions because your report warns that, and we talked about it before a little bit here, David, that substantial selling will emerge once silver pushes past triple digits from both physical holders and derivatives. I just wanted to ask you again, I mean, which specific class of holder hits the bid first? I mean, is it the industrial users locking in that forward supply? Is it in institutions taking profit, or is it the retail stackers who finally see their entry price validated?

SPEAKER_00 37:10

Not to be cute, Jeremy. It's the algorithms, it's the bullion banks. I mean, they control the market, and they have for a very long time. I think they lost control, as I said earlier, there for a while last year, where we saw the market price continue to go up with the physical demand taking precedence over the futures prices, but that didn't last for very long. So primarily it's the bullion banks that have the I won't say monopoly on price, but almost. Other than that, then yeah, industry will move with them. Uh, and then the retail is harder to figure out because, as we discussed earlier, there's a lot of gray hairs that are kind of tired of it, maybe bought too much. Or maybe they're very smart, and silver was 10% of their portfolio, and then it went from their average price of 20 and it's at 80, it's up four fold. And now it represents, you know, 30% of their portfolio, and they're overweighted. So they rebalance and sell some off and rebalance into real estate and stocks. So there's lots of factors, there's lots of whys, and there's lots of whatever's. But trust me, it's the main players, the bullion banks, their algorithms, and let's say their uh the exchange and the association, if you follow my drift, that still have most of the control.

SPEAKER_03 38:31

Yeah, I mean, it kind of means retail investors are always reacting after the move is already started if the algos hit it.

unknown 38:38

Yeah.

SPEAKER_03 38:39

Yeah, yeah. Um, what is your thoughts here going into this last one? I mean, it's been an interesting quarter so far. I mean, we're sitting here in May looking at the next month. Usually it's sell in May, go away. Uh, where do you think precious metals are going this year?

SPEAKER_00 38:55

Same thing. I know I get should I get a little tired of saying it. Yeah. But uh historically and the seasonality is that we see uh kind of a dull summer for the medals. And I think that's going to be the case again. I wrote uh not in the report I sent you, but previous one. I expected to see a broad trading range for both gold and silver, probably through the summer. I still believe that.

SPEAKER_03 39:19

A lot of macro events. I mean, we saw what's happening in Iran. Obviously, we're talking a little bit about silver. We saw those massive highs. Is any the bond market, David? I mean, has any of the macro signals really surprised you uh this year so far?

SPEAKER_00 39:37

It's hard to answer. First of all, the bond market has been controlled by you know the political class for way too long. And you know, I come from an era when I was much younger than you, and you know, that we call them the bond vigilantes, and we looked at the M1 money supply on a weekly basis, and you'd see gold moved on the M1 money supply. Well, those days are long gone, and you know, the uh powers of B have been able to pretty much control the bond market for a very long time. But as I said earlier, that's no longer true. So Wars could get in and have these great feelings about what they're gonna do. Oh, let's change the metrics. First of all, they changed the metrics in 1980, as you recall. You know, let's not put in food and energy into the inflation equation. Are you out of your mind? What are the main things that all people worldwide look at to determine whether their paycheck is working or not? And that's food and energy. Regardless, that was changed in 1980. Now there's suggestions that they'll change it again to lower the metric. In other words, cheat what you're looking at so inflation's lower because we say it is. Coming back to the bond market, as I said earlier, you've got the UK, Japan, and the United States seeing increases in their bonds, which means the market's taking control. Remember, money, especially commodity money, but I'm going to talk fiat money. Money is a commodity like potatoes, in a way. And interest rates are telling you how valuable that money is. So if you have 0% interest rates, it's pretty worthless. And we know money can become worthless. I say money, I should say currency. You look at Venezuela, I mean, there was a time in recent days where currency was in the gutters in Venezuela and no one would pick it up because it didn't have any value. Will the United States dollar do that? The answer is absolutely not. But the idea is it has trended that way for over a hundred years. Now I'm suggesting, as I wrote in the main thesis in the in the uh report I sent you, that perhaps the market is going to say, look, we don't trust the future value of this UK, you know, the yen, the dollar, and the pound, and therefore we're demanding a higher rate of return to hold on to it. And that could continue to go higher and higher, believe it or not.

SPEAKER_03 42:03

Yeah, yeah, it feels like it comes down to trust too, or at least that lenders are demanding, you know, more compensation for fiscal risk. Hey, David, what one thing before I let you go? You've got a new documentary out called Silver Sunrise. And for viewers who are feeling genuine pressure for from inflation and debt and currency debasement, people who feel like the system is no longer working in their favor, what is the first practical step they can take to kind of reduce their dependence on it?

SPEAKER_00 42:30

I think it's becoming more self-aware. I kind of take a bit of a spiritual look at money or the situation and how much control people, you know, the money system has over them. And a lot of that's just the belief. You know, if you're more, let's say, independent, then you have more control. There's things we can control and things we cannot control. And one thing about this stress of money that most of us feel these days can be mitigated just by a deep breath and understanding that one, we've been through things worse than this in the past in monetary history. Two, that there are ways to mitigate the problem. And three, the things that you can control, let's get with it. You could maybe change your budget, move. Let's say I said earlier, you know, a lot of families after the illness, two cars were not really needed because a lot of people were working from home. So if you off one car, yeah, it's less convenient. But if you don't really need two cars, there's a big savings right there for most families. So there's things that you can do. And the main thing in that movie, I think, is to realize that we're all in this together and that we have the ability, in and of ourselves, to come together and as I said earlier, the true free market, vote. You know, buy the better food. I know that's hard for people. Um, but we can. The economic system works very, very well when it's truly free. It's not, but we still have the ability. To buy things that let's say are more meaningful to our lives than something that we've been hyped up because there's so much data collection. We're fed something that uh is on our computer after we talk about it on our phone, and we're kind of almost forced into buying something that we regret later. So I'll leave it there, Jeremy.

SPEAKER_03 44:18

Well said, my friend. All right, David Morgan, publisher of the Morgan Report, author of the Silver Manifesto. And check out that documentary, Silver Sunrise. I appreciate this. Uh always an interesting time. Uh lots to go into. What would be your number one signal to watch before the end of the year here, David?

SPEAKER_00 44:35

The bond market is it. Yeah. Look at what happens to interest rates. Let's say that um, first of all, in June, I think uh the next rate increase will be not a non-event. I think they'll keep rates at the same level.

SPEAKER_03 44:48

Yeah.

SPEAKER_00 44:48

And then also, if interest rates do get lowered later in the year and the bond market ignores it, which it's done in the past, uh, I think that's a big signal that, as you said, trust is breaking down on an institutional level, which means we really need to do something to get our house in order. Is it too late? I don't think so, but it's getting close.

SPEAKER_03 45:13

Well said. All right. Appreciate your time. Thanks, mate.

SPEAKER_00 45:16

My pleasure.

SPEAKER_03 45:18

Uh, for our viewers, this is an environment where discipline matters. Silver can be in a structural bull market and still aggressively punish leverage. The data we'll be keeping on tracking. Central bank accumulation rates, Hong Kong's July gold clearing rollout, COMEX inventory categories, and actual loadout data, and of course, whether the solar industry actually executes this copper transition at scale. Subscribe right here to Kitco News, hit the notification bell, let us know in the comments what you're watching most closely: the physical drain, the mining equities, or the macroeconomic reset. I'm Jeremy Saffron. This is KitCo News. We'll see you next time.

SPEAKER_02 45:53

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SPEAKER_01 45:57

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