David gives credit to Ted Butler’s continual analysis of the Commitment of Traders report, which David highlight’s often in his newsletter. The COT report reveals the large paper short and long positions in silver. Currently it appears to be indicating a small downtrend in the silver market. He discusses how silver markets move and how they can be pushed to the downside once investors run low on cash, as banks will short the market at opportune moments.
Over the last year the trading has changed dramatically, due to the advent of the Shanghai Gold Exchange, the strength of the long’s appears to be improving, perhaps almost as good as the banking system’s shorts. The open interest continues to grow and the longs are not as scared, they are better capitalized and are much smarter than they used to be. He is looking at the physical market where most dealers have very little silver, at some point the price must move to reflect the true value.
David says institutions have left the market and additional buyers of the actual commodity are needed. Any investor who bought under twenty is in a good position as that is near the mining costs.
David feels silver is the most honest money, for the average person, historically it’s been money far more often and longer than gold. The leverage you get in good silver equities is phenomenal. First Majestic for example went from $4 to $26 last year. There are many good silver companies with conservative stocks on good exchanges.
Talking Points From This Week’s Episode
• David thinks a small downtrend in silver in the near term is likely.
• Shanghai Gold exchange has changed the market dynamics.
• Good silver stocks can have considerable leverage.
• Long positions are improving, underlying physical remains scarce.
• A short squeeze is possible.
Seduced by silver at the tender age of 11, David Morgan started investing in the stock market while still a teenager. A precious metals aficionado armed with degrees in finance and economics as well as engineering, he created the Silver-Investor.com website and originated The Morgan Report, a monthly newsletter that covers economic news, overall financial health of the global economy, currency problems ahead, and reasons for investing in precious metals. In addition he has a show on iTunes called The Morgan Report.