David Morgan: The Evolution in Precious Metals

David Morgan joins the podcast to discuss the evolution of the precious metals market, earning a yield on gold and silver, changing supply and demand dynamics, and how blockchain and precious metals could be the future of the industry.

Follow David on X: @silverguru22

and Monetary Metals: @Monetary_Metals

Additional Resources

Earn Interest on Gold and Silver

The Morgan Report

Earn Passive Income in Gold and Silver

Podcast Chapters

00:00 – David Morgan

00:54 – Current State of Precious Metals Markets

04:15 – Domestic vs. Foreign Demand for Precious Metals

09:11 – Industrial Demand and Future of Silver

20:45 – Earning Interest on Gold and Silver

26:00 – Stock Market and Bond Market Trends

31:50 – Emerging Markets and BRICS Impact

34:41 – Blockchain and Precious Metals Integration

38:40 – Gold Income and Gresham’s Law

41:35 – Monetary Innovations

42:55 – The Morgan Report and more

44:44 – Earn Interest on Your Gold and Silver!

Transcript

Ben Nadelstein:

Welcome back to the Gold Exchange podcast. My name is Benjamin Nadelstein. I’m joined by the publisher of The Morgan Report, David Morgan, the one and only. David, how are you doing today?

David Morgan:

Doing well, Ben. Thanks for the invitation.

Ben Nadelstein:

David, great to have you. Lots of your analysis has out on the interwebs, talking about gold, talking about silver. Before we start, let’s get a 50,000 overview on where we are in the precious metals markets. Most people said, well, interest rates are high, that’s bad for gold and silver. The stock market is high, that’s bad for gold and silver. And political tensions, those are dying down, and geo-political tensions, those are dying down, too. So pretty much everything would put a damper on the price of gold and silver, which generally tend to move with those markers. And yet gold has hit all time highs as well as silver having a nice rally as well. So why do you think the precious metals have been doing so well despite all these indicators saying maybe they shouldn’t be?

David Morgan:

Great question. And the answer is because they know what’s ahead. I mean, Gold and Silver really are forecast casting the future. And the future is more problems in the financial sector, more problems in the monetary realm, more instability in the markets, more uncertainty in the markets. And the one tangible wealth item that we all know that exists is Gold and Silver. It’s often said that gold is the only monetary asset that doesn’t have a liability or a counterparty risk. And that’s true, but it’s not only it’s gold and silver. In reality, it could be a lumber yard that’s bought and paid for. But lumber could work. It could rot. Termite could get to it. The two monetary metals are the monetary assets that aren’t liabilities. So it’s forecasting what’s coming. If you think about what you just said, I know you did, But for the audience, and gold is the most negatively correlated asset in the stock market, and the stock market is making new highs, and so is gold at the same time. I mean, logically, you could say, well, if gold is… If stock market is making new highs, gold could be making new lows, or wallowing around, or unable to break a certain ceiling, or whatever.

And that’s not true. So under these conditions, it’s doing that well. That should actually scare you. That should actually, if you think about it, logically, would give you the thought, wait a minute. If that’s the case, then what does lie ahead when the stock market falls off, the real estate market implodes further with the commercial real estate bubble. What happens if the bond market really doesn’t do any better because interest rates are actually raised further and not lower. And these are all contemporary problems that you and I both know exist, but yet you see the mainstream never really touch on these topics. So thank you for that opener. I really like the question.

Ben Nadelstein:

Yeah. And for most people, one way to think about it would be if your house is fine, everything is a great sunny day, and you’re calling up your insurance agent saying, I need to buy more insurance. Well, most people would say, If it’s a great sunny day and everything seems fine, why are you buying more insurance? Why are you topping off extra housing insurance? And the answer might be that you’re looking ahead and thinking, Well, the insurance I have right now is not enough. Maybe that’s why there’s a bid on the precious metals. So on that bid, on the demand for precious metals, it seems like American and US demand for the precious metals is actually not super strong, not incredibly robust, and that lots of demand is coming from other sources around the world, since other buyers of precious metals can be from India, China, you name it. So where do you see the foreign demand versus domestic demand in the US? How do you see that playing out and playing out in the future?

David Morgan:

Well, most North Americans look at the dollar priced in US dollars. And when they see what’s gone on, and they’ve seen such a gully in the market, a downtrend, you could say, from 2011, basically, until recently, many people are just burned out. It’s called a round trip. For example, if you bought gold in September 2011, the all time high of approximately 2000. And you waited all the way to 2024, and it got back to 2000, maybe 2100, 2200. And you said, You know what? I bought too much gold. I wish you didn’t own it or whatever. And you exited the trade. That’s called a round trip. You watch it go from 2000 to 2000 over that decade and more. And so there’s a lot of that. I don’t know how much is a lot, but it’s substantive because the wholesalers are really full of metal, as you well know. And the bids have come, or the spread has come way down. And that’s a direct indicator of inventory supply, which is really big. So that’s part of it. I think the other side is that the other part of your question is what the foreigners doing?

Well, they’re seeing what’s happening in the dollar. They’re seeing what’s going on with peer-to-peer currency exchange for oil, for example, between China and Russia. They’re seeing what’s going on for Brazil with direct links to their currency. Once the BRICs get further established and they’re able to have multiple currencies in their basket of trade where they don’t have just Chinese, you want, and what do you do with it when they can exchange that for the Brazilian Riyal and other currencies, they’ve got a pretty big market. I think the basis of their knowledge of what’s going to go on with the dollar, which still most of the world’s debt is dollar-based, which means you’re not going to be able to pay it off in Riyal or rubels. You’re going to have to exchange it for dollars. So they see what’s coming. So they’re hedging their bets or forecasting or taking action, I think is the best word, taking action against basically the inevitable. All currencies meet the demise of fiat, which is an unbacked edict by government that demands you use the script as payment in full. And yet, as it deteriorates to the point of oblivion, where it’s worth less, and it’s worth less, it’s worth less, and it’s perceived becoming worthless, that’s when you see an acceleration in these markets.

And I think the foreigners are just starting to get their nose out of the tent for this, what I think is the third and final leg up in the precious metals, which is always or always has been the greatest gains in terms of percentage. And usually the frequency is small, meaning the time-duration is actually smaller than the other two legs. If that’s true, and I believe it will be, what we’ll see is a mass exitus out of currencies, generally, into precious metals. That would be accelerated if or when stock markets, bond markets, real estate markets, and every other asset class that’s held dear at this point starts to go the other direction. As we both know, the metals markets are so extremely small relative to what some of these other markets are. The amount of potential investment into these markets is so phenomenal that I believe what I’ve said many times, that this next run to gold will probably go into the financial record books.

Ben Nadelstein:

I think one way to see that microcosm play out is in the Chinese retail market, not talking about central banks, but Chinese retail market, where some investors and just everyday people, citizens have said, Okay, putting more money into Chinese real estate seems very iffy. Who knows what’s going to happen to that market? It’s obviously been crashing for quite a while, but do I really want to throw good money after bad there? Potentially not. Then they look at their own stock market, Okay, potentially volatile as well. Do I want to throw even more good money in the stock market? And then they say, Okay, I definitely don’t want to hold on to you, Juan, because it’s depreciating over time. It’s not strong currency. It’s not used internationally. I can’t really do anything with it. And so they can’t go out and buy dollars or hedge their currency exposure. So they have been left with the contra currency, as Bob Elliott calls it, which is gold. And of course, silver can also be thought of as well. So maybe that exact type of scenario on a small scale can play out on a larger scale in places with larger markets and stronger markets like the US market, the European market, the Japanese market, and so forth.

And you’ve seen, for example, the Japanese market, the Japanese bonds, looking precarious. So maybe people are going to start saying, You know what? Time to add a little bit of extra gold and silver into my portfolio as a hedge.

David Morgan:

Ben, I like that. Well said. And I just want to add on one comment. When Buffett, when the silver situation with the Hunt brothers ended, there was an article in Barron, you were too young. You didn’t see it. But it was Hunt versus a billion Indians. So the idea was that the Indian population of India has vast supplies of silver. Hunt couldn’t possibly coordinate the silver market. But let’s take this reciprocal of that. The central bank versus a billion Chinese. What happens if those billion Chinese 10% decide they want gold and silver? So it works both directions. Is this what I’m implying? What you said, I just wanted to reaffirm it. I don’t know why that popped in my head, but it did.

Ben Nadelstein:

And that’s a great point to think about, too, which is for every buyer, there’s a seller, and for every seller, there’s a buyer. But one thing to think about in the precious metals is something called the stock to flow ratio, which is that over time, gold and silver barely erode at all. They can last for thousands and thousands of years, which is partially why they’ve been considered money for thousands of years. They don’t erode, they don’t rust. And so you can hold on to them. They’re small. They have a high value to low weight ratio. And so for many people across different currencies, across different countries, countries across different times, have held on to gold and silver. Now, they’re probably not going to report, Hey, everyone, I’ve got 10 ounces of gold in the basement, or I’ve got a thousand ounces of silver just sitting around. So when the price of that metal does go up, you can, of course, find sellers that you didn’t think existed. But on the other hand, you can find lots of people who are potential buyers when they see, for example, their own currency, like the Rupee, falling. And that means even if a small percentage of those people, let’s say in India or China or other markets, say, I’d like to add to my gold or silver holdings, in terms of percentage, it can be small, but in terms of numbers, it can be quite large.

David Morgan:

Exactly. I’m going to bear off of that a little bit, but you reminded me of 2020 in the silver market. In 2020, the amount of demand was an all-time record. The ETPs or ETFs was 320 million ounces. The retail demand was over 200 million ounces. You add those together, you get over 500 million ounces. That was an all-time record on demand. And I really scratched my head, how was that demand met? All of that is purportedly physical. And what I determined, it took a little while, All that I got there, was that in terms of the foreign exchange, which remember, we talked at the beginning, in terms of US dollars, the gold price exist, making new highs. But it made new highs in almost every other currency on the planet. Anyway, back to my point, in 2020, the Rupee, the silver price in Rupee’s was at an all-time, and they were not doing well in the nation of India. A lot of people either wanted to sell because it was an all-time high or needed to sell, and it was an all-time high. I largely believe a lot of that liquidity for physical that was necessary for that year came through the fact that in the Rupee, silver had hit an all.

This is something people don’t consider that often because most of our listeners are North Americans. I’ve got a global audience. Subscribers to the Morgan report come from 72 different countries. But regardless, the idea being that the US dollar is everything, it’s not. But this is the reason you can see these flows, because in their currency, it’s worth it.

Ben Nadelstein:

Let’s quickly talk about the difference between gold and silver. They’re both monetary metals as well as precious metals. But do gold and silver have the same narrative going forward for 2024? One thing to think about is that gold is generally traded amongst capital assets. So if you sell your house, maybe you can buy some gold because of those proceeds and the size. You’d like to buy something that is like gold versus if you’re a wage earner, maybe instead of storing your paycheck in gold, which is a very small amount, you might be storing part of your paycheck in silver, which gets you more sizable coin or bar or something like that. So for the rest 2024, do you see that narrative for gold and silver playing differently? Do you think the metals are going to rise or fall together? Or do you think that there’s actually going to be a shift between gold owners and silver owners with the way 2024 plays out?

David Morgan:

Well, it’ll be very close to what you outlined, Ben, but I will say that the overall picture, I think, has changed. First of all, from a legal aspect, it changed in 1873 when the powers of be said, Silver is no longer mining. We’re a gold-only standard. Of course, a few years later, that really changed, and we still had silver, 90% coins up and through, 1964, ’65, they no longer existed. I think the monetary demand will accelerate on the silver side as gold becomes more and more expensive. So someone, as you said, sell capital good like a house, certainly can afford gold in most cases. But most working people that see their savings depleted because of inflation will probably run to silver. Plus it’s cheaper in a gold-silver ratio, if you understand what it really means, favor silver at this time. But I want to add on that going back just two decades, two and a half decades, the amount of demand on silver on the industrial side was 35 % of the market. Now, it is about 60. You could argue even 65 % of the market. Now, those are big numbers. It hasn’t doubled in the industrial demand, but not, almost.

But here’s the point. Two and a half decades ago, the total supply of silver was 550 million ounces of mined and recycled silver. Today, it’s one billion. So that’s almost double. So think about what I just said. I know your math mind will work. I think the general audience will understand what I’m saying is that the percentage went up from 35 to 60 at the same time that the amount of mined and recycled silver almost double, It shows you that if there was no increase in supply for the last 25 years, it has been, but it’s a thought experiment. If supply and recycling was flat, industrial demand would take over 100% right now. The point is further that the current rate we’re going, and I got to be careful because my predecessor, Jerome Smith, made a big mistake in his last couple of books he published about where he thought silver was going because there was a change in technology that increased production vastly from where it had been previously. But if the current mining efforts and recycling efforts remain relatively where we are with the best data we have, then in theory, we could be in a point in just a few years where industrial demand is taking almost everything out of the silver market, which means on the margin, where are you going to supply silverware, jewelry, and investment demand?

The answer is from above ground stockpiles. That’s already taken place from 1990 to 2005. We had 2 billion ounces of silver, we’re talking commercial bars, and it got depleted by 1.5 billion ounces 15 years later, a deficit of roughly 100 million ounces every year for 15 consecutive years, and we ended out at 500 million ounces at the end of 2005. And from then until now, the above-ground supply has been building up until the last couple of years where we have had these deficits.

Ben Nadelstein:

And so for some listeners, let me explain maybe the narrative shift and why this is so important, because if you are a monetary metal, you are being held on as money, right? You’re not being used. It’s not actually being consumed in any way. You think about gold, right? Someone’s just hoarding it or storing it or using it in some way as a monetary instrument, versus let’s take something like copper, right? Most people aren’t holding copper as a monetary instrument. They’re usually holding copper because they’re about to use it in some production, piping, wiring. Copper is not a monetary metal. It has uses other than being stored as money, the same way that most people don’t view a house as money. They view it as a service or a good that they can use. And so silver might be changing or slightly changing on the margin who its buyers are and why they are buying silver from a monetary metal where they hold onto it, they use it as a monetary safe haven, a hedge, right? Or now maybe this narrative shift is happening where they’re using it as a production tool as a part of a commodity process, where they’re using in the same way that they use it for solar panels or many other things.

So the demand on who is actually demanding, it will also change the supply as well.

David Morgan:

Absolutely. And if I could just say, once the industrial users realize what’s really going on, they will act like monetary purchasers. Let me explain. Your monetary purchaser holds it for insurance purposes, capital appreciation, wealth preservation, I mean, all those things. But an industrial user uses it for solar patterns. But That’s their business. So if they start buying it and hoarding some of it so they have six months supply or a year supply, so they don’t have a threat to their business, not only on price appreciation, which is minor in most cases. I mean, it could double, triple, quadruple, and it really wouldn’t affect the bottom line of a business that much. There’s so little silver used per unit. I know you followed that. I hope the listeners did. But the point being is that they have to get extra silver to stay in business, and that goes through the system and 60% of the system is industrial. Think of what that added demand on top of people seeing silver is really moving and the algorithms come in with all the momentum players, which is the vast majority of investors, which I call speculation, years these days, because it’s basically a casino play, not a value investor.

And those two things start to be a synergistic move in the silver market. You can see why I could still be excited about the potential for silver going forward.

Ben Nadelstein:

It’s a very interesting point. Now, I’d like to talk about monetary metals and what we do. So we actually pay interest on gold and silver, paid in ounces of gold and silver. The interest rates are actually quoted as an interest rate for ounces. So at 5%, you would have 5 % more ounces instead of some dollar price. And that really helps people turn away from thinking, Okay, what’s the current dollar price of gold and silver? And thinking, how can I acquire more ounces at a favorable risk and a favorable rate of return? So do you think that over time, as more people look at a rate of return on their gold or a rate of return on their silver paid back in more ounces, that that will actually dampen the effect of dollar interest rates on the metal prices, where people say, who cares that the Fed is paying 5% on a CD when I can earn 5% on gold or 5% on silver? And do you think that unlocks a different type of monetary demand for gold and for silver?

David Morgan:

It’ll do both. It will bring reality back to the monetary sphere because you’re getting the interest on money, not on some script or some edict or something that’s always lost purchasing power. Secondly, the idea that you can do better on, let’s say, a loan than you could on appreciation. I want to make this point that the CAGR, the compounded annual growth rate on gold right now, superior to silver starting from the bottom of the market of about 2,000. I think it’s roughly 9% for gold, 8 point something. For silver, it’s about 7.8, if I remember correctly. If you bought silver like I did at the very bottom, and of course, I bought it on the way up. I mean, I’ve got a certain limit, I won’t buy it up to a certain price. But regardless, my average cost is well above the $5 level. The point being is that it had a compounded annual growth rate for 20 plus years at almost 8%, yet this latest bond that you have available for silver is 12%. I mean, you don’t have to go through the ups and downs and all the waiting because that’s the compounded annual growth rate over period where we had this huge, we all call slump that we just talked about of 12 years or so.

You’re just earning silver on silver, gold on gold. I think it’s something that Keith has spearheaded. We’ve been supporters of. We’ve also done a few interviews. We’re going to do some more. Just to bring it to the attention of the public, because that’s one of some of the drawbacks, especially really wealthy investors. They want to go, Wait a minute. I don’t know what to do with my money, but I’m parking T-bills. I’m going to treasury. Gov, and I have to do it myself, and my secretary doesn’t form me with my account, and I’m getting 5% or five and a half %. I know inflation is really more like nine, but at least I’m not losing everything, and it’s liquid, and there we go. Well, if you could do that with your base money supply, meaning money of the ages, gold and silver, then you’re sitting in a different position because now you’re actually gaining something of value. And that’s what one thing I have a hard time conveying to several audiences and even myself sometimes. It’s like, Well, I’m losing, I’ve lost. Well, you haven’t lost it until you sell. But the idea is in paper value, it’s less than what I paid for it.

But it might be more in Rupees. It might be more in Canadian dollars. But even ruling that out, the way to really look at it, do I have more silver than I had yesterday? If it is true, Gold is true wealth, gold is true wealth, and you bought it at 2000 and 2011 at the top. You come out in 2024 and you have more gold ounces, but the price, let’s for talky purposes, say it was lower, you actually still have increased your wealth. But that’s a hard concept to grasp. Once you start to see that you can get an interest on gold, in gold, then you start to stop that mindset because you realize we’re talking something real and getting something real rather than this fantasy that we’re all pretending works when it doesn’t work at all and it’s starting to break down or break down further, I should say.

Ben Nadelstein:

There’s two ways to think about that. If you are a real estate professional and somehow your renters could pay you in more square footage on your rental unit, you’d be excited because you say, Hey, listen, I’m already betting on the price appreciation of a hard asset like real estate. Plus, I can get that rental income instead of in dollars, I could get it in square footage. Now, obviously, that’s impossible. No one’s going to pay you in more square footage on your house. But it is possible with gold and silver, where you say, Hey, I have 100 ounces, I have 10 ounces. I’m going to earn in ounces on my gold and silver. I’m going to have my rental fee or my loan denominated in ounces and paid in ounces so I can actually grow my wealth in a hard asset like gold and silver that have been money for thousands and thousands of years. And one way to think about that is, Okay, is it really true that in a place like Argentina or Venezuela that have experienced a horrible depreciation of their currency, that your house has increased in value by 100X? No, of course it’s not true.

Your house did not become 100 times more valuable if you live in Venezuela. What I also happened was your currency became 100 times less valuable. So the same thing is true of gold. Is it really true that your gold became way more expensive or priced higher in terms of dollars or Yen or euros? It is technically true, yes. But what you’re really seeing is the depreciation of the currency, sometimes slowly, sometimes quickly, sometimes with volatility, sometimes the dollar price of gold goes down or up. But you’re seeing a slow slide of the value of that paper currency and a strong appreciation or continued stable constant value of the gold and silver you own. Now the question is, do you want to grow your wealth in ounces or in paper?

David Morgan:

Well, you said it better. Well done.

Ben Nadelstein:

David, I want to ask now as we turn towards the end of the interview here, where do you see the stock market and bond markets and all these emerging markets going? Because most people said at a 5% interest rate from the Fed, there would be lots of havoc in the markets because most people and most businesses, zombie firms, other businesses as well, only could survive in a zero interest rate environment. Now, at a 5% interest rate environment, most businesses, most stocks, as well as most emerging markets wouldn’t be able to handle the pressure of a strong dollar and 5% interest rates. Yet so far, things have seemed pretty okay. There’s been some stability in the markets. Obviously, there’s problems in some areas, but overall, things seem to be going pretty well. So first, how do you explain that, and do you think that is going to change in 2024?

David Morgan:

It’s a tough one. First of all, it’s partly attributed to the fact of how the indexes are weighted. So you give this appearance. If you’re only going to show your football scores, but you only use the top five teams out of the 31 or 2 that exist, if it was 31, then you get a different picture than if you look at, let’s say, the average. So you look at the DJI, the S&P 500 versus the Russell 2000, if you look at the stock market in aggregate over the total, what you’ll find is that there’s many stocks that are even close to their two-year high rate. But again, the index These are weighted and manipulated, in my view, to paint a picture that is inaccurate of the total marketplace. That’s point number one. Point number two is that many times in a hyperinflationary environment, you see an increasing stock market. The problem is, even though these people perceive that they’re doing okay because they’re not in the bank, they’re in the stock market, their total return is still negative because the increase in stock price appreciation is not commensurate with the deflationary or the devaluation of the currency.

You’re better having in the stock market than the bank, but not by as much as you could perceive. I gave the idea up that we’re going to see more of a deflation in the stock market and actually opened my mind to the idea that perhaps even in the North American or the US markets, NYSE, the Dow, the S&P, even in those markets, we could potentially have a situation where this trillion dollars every three months that we’re adding to the debt supply of the US could increase stock prices. So you’d have what’s called a hyperinflationary depression. Remember, in a depression, the word depression is pertinent to both a hyperinflationary or a debt deflationary depression. And a lot of things are very similar. One, high unemployment, high uncertainty, a depressed mood with the populace. The difference is that in the deflation, the currency gains in purchasing power. But in a hyperinflationary or an inflationary depression, the currency is basically shunned and not able to revive itself, and the new system has to be So I wouldn’t say I’m leaning either way. What I do know for a fact, and sorry if I’m being long winded, is in all cases where you have not had species behind the currency, gold and silver, every time up until now, We’ve gone an inflationary depression route.

Ben Nadelstein:

And one way to think about that point you made is that these stock indexes are pushed, or heavily weighted, if you’d like to say, towards Big Magnificent Seven. Some people have dubbed them where, okay, if NVIDIA makes 400% gains in a year, then it looks like the entire stock market is doing great. If all the other companies don’t do so hot and they have a low weighting on the index, then it actually doesn’t hurt the index much. Since most people are passive index investors, they see that the index is doing fine and therefore perceive that overall the stock market, which means overall all businesses, are just doing fine. They might even be up for a couple of years. And so maybe your point is, Hey, This can continue to go on where we see higher valuations for these smaller valued companies like NVIDIA and Apple and Microsoft. They might continue to increase in value while other mom and pop businesses, Main Street or even parts of Wall Street, continue to flail. But because of that way the index is structured, it seems like the stock market is all right. For most people, things will continue to seem all right, even though the currency as well as markets become worse, structurally less sound and over time become less valuable.

David Morgan:

Exactly.

Ben Nadelstein:

Okay, so now I want to ask you a question about emerging markets. So some people say, well, there’s these BRICS nations, Brazil, Russia, India, China, so on. And they think, okay, maybe those guys will have a stronger economy. Obviously, lots of people there, big economies themselves. But on the other hand, there’s an argument they have even worse governments, worse rule of law, and worse currencies. So do you actually think there is a threat to dollar markets, the dollar as a currency, as a bond market, and the US, the North American markets? Or do you think that that competition is really lackluster? And in general, people will be going to hard assets that are not denominated in a currency like gold, silver, or maybe even something like a cryptocurrency. Where do you see people going? Do you think that there’s going to be a competition from these other nations called the BRICS? Or do you think that in general, people all around the world will say, I would like to check out of my government’s currency and head towards something more like a precious metals or even a cryptocurrency?

David Morgan:

That’s how it takes, to me, my thinking, a bit of a nuanced answer. I think the BRICs are gaining credibility and obviously more participation. And if they all agree to trade in each other’s currency, that gives them strength, it gives them more flexibility. But at the same time, you pointed out what Tocqueville pointed out years ago when he came to the United States, and that is the rule of law, and we have that. China really doesn’t. People that were China-centric, let’s say at the beginning of the year 2000, early 2000s, and made businesses in China regretting it today because of that fact. I think there’s always innovation available. Whether the emerging markets are the place it’s going to come from, I would say yes and no. I know that’s a long answer. I think primarily most innovation still comes from a free market perspective, which the US has lost to a great deal, but there’s still a vestige of it here, more so, I think, than most other nations. Not to say that other nations don’t come up with great ideas or inventions or new ways of doing things. On the crypto, I think that’s been overblown at this point in time because it’s really not of substance in most cases.

And because it’s really nothing more than a software, if you get to the reality, what’s the there behind there? What’s really there? What do you get? It’s just like in some of these zombie corporations. I mean, if they cannot get enough cash flow to pay their bills, why would you own that business? Why would you even think about it? But yet they still are able to generate loan profile from their banker buddies to exist. Coming back on point, I think it’s going to be the precious metals and crypto as probably a second choice. Emerging markets, I think, will flutter in there because the perception will be. They’re cheap, they’re inventive, they’re where capital is flowing. So it’ll be a follow the leader type of situation on a momentary basis. I still remember the Asian currency crisis. That old. I remember when everything was the foreign markets, the Asia markets going east, and that blew up in their face. I think the best thing to do is to understand how money works, what money is, and to design a portfolio that requires your understanding. If you do that, then you have a precious metals component that basically will see you through no matter what the conditions are.

David Morgan:

And these questions become somewhat secondary meaning because you have a sound basis for how you structure yourself financially. Yeah, things can come and go and go up and down, and yet you know that your ship is sailing majestically across the ocean because you have built it in the right way.

Ben Nadelstein:

Where do you see the potential marriage or relationship between this blockchain cryptocurrency technology and gold and silver, which have usually been money or thought of as a monetary asset for thousands and thousands of years, marrying the history and the provenance of gold and silver, where people trust them, they know them, they understand how they work and why they work, why they have value, and the technological benefits, the more advanced technology that is coming out in the blockchain and cryptocurrency space. Do you see that there’s going to be some marriage there between the two, or do you think that they’re going to continue to be separate asset classes for a while?

David Morgan:

I made the bold statement, and I think that will be the next major leg up in the crypto world is asset-backed crypto, where you have digital gold and silver, and you could have platinum playing in for that matter. And the reason I say that is all of the problems, quote unquote problems with physical gold and silver. I mean, you go back to when the governor of Utah and other states have said, you can use real money, gold and silver, in any transaction in this state, anywhere, as long as both parties agree. Well, the problem is if you go to Walmart, first of all, they have to agree. But let’s say they do agree. So now you put down 20 silver Silver ounces. What do they pay you your change in? Fiat? Mm-hmm. Okay. What price should they take? Do they get on their phone and see what the exact spot price is in Chicago that just changed by 20 cents because there was a trade made? So there’s There’s a lot of cumbersome ideas surrounding actual. Now, in a one-on-one transaction, if I want to buy your car and you want to take my silver for it, we can negotiate it, find the price.

We know the price fluctuates, but that’s a little different than going to the grocery or a hardware store or something like that. So the point is, if you put it in the blockchain, now you all agree on your contract that we will use the closing price of the afternoon fix in London as the price. So now we all agree it’s a price. So you don’t have to worry about what’s the exact spot price at this moment in time. And then what you do is you just basically move it from a depository that could be state run into whoever’s account you are debited out of or the debiting from your account and crediting the other account. That would work perfectly. It actually blends with the system that most millennials, like my daughters are familiar with right now. They go into Starbucks and buy a coffee with gold. It’s immaterial to the barista, whether or not they pay with gold or fiat. And we actually have a system like that here in Spokane. Unfortunately, the bank is not taking any new members, but it’s a debit card based on gold and silver. And we do it on the fix at the end of the day at London.

David Morgan:

And it is just a paperwork entry, and it’s transparent to the bank. Because you’re issued a debit card, which is the same as on your phone. I think that it will happen. It is happening. It’s just not widely adapted, or excuse me, adopted, but I think it will be or it could be. I think your generation, more and more, I mean, really, it pleases me a great deal that more and more are seeing the reality of where we are and where we need to go. I think once that becomes more well known amongst everyone, particularly you guys that are the hero generation, to have to rebuild the mess that was left to you by a fiat system that no one was able to rein in, it’ll probably collapse of its own weight. We’ll at least have a a tool that you can have integrity in a system that trusts each other because the whole system is based on trust, and that’s going away rapidly.

Ben Nadelstein:

I think one way to think about what Monetary Metals is doing is we’re unlocking that incentive or beating that Gresham’s law, which for those who don’t know, if you have money that is becoming bad or is worth less, you’re more incentivized to spend that because if it’s fixed against something that is good, you’d much prefer to hoard that good. So if gold and silver fixed a certain ratio and silver is undervalued, maybe you’re going to start spending that and you’re going to hoard or hold on to the overvalued, let’s say gold. And in this case, if you have gold and silver and you also have a dollar income, you’re much more likely to spend the dollar income because you know, six years from now, how much is that $100 bill going to be worth? Well, maybe not that much. But with monetary metals, if you actually earn income denominated in precious metals, you are more likely to say, Hey, I earned X amount of ounces this week. Maybe I’ll spend a couple ounces on a latte or maybe a car or maybe even potentially a house. So it really does change the incentive around spending your gold and silver because now you have an income denominated in gold and silver.

And so potentially marrying income denominated in precious metals, as well as the technological capabilities and the adoption to actually pay on a network the same way that you use the financial rails of Visa and MasterCard to instead of use dollars and draw on your dollar bank account to draw on your ounces from a vault. Actually, maybe, I’m not sure if this story is true. So if it is in the comments, please do let me know. If it’s false, you can share the correct story with me. But I remember hearing that in Fort Knox, when central banks had their gold stored at Fort Knox, it was not just the United States who had their gold there. It was also the French, the Germans, so on. And if there was a trade imbalance between, let’s say, the French or the Germans, that instead of shipping their gold all the way to the Germans or all the way to the French, they would simply move it from one cage that said France on it to another cage that said Germany on it or the US on it. And so obviously, that is not a great way to change over who owns what, but the system was built on trust.

People knew, Hey, we have a trade imbalance with the Germans. The Americans will actually move that gold from the German cage to the US cage and so on and so forth. Now, with the invention of blockchain and these other types of cryptocurrencies, you can confirm without this trust, a decentralized system where everyone can confirm, yes, it really did happen that the gold went from this vault to that vault. This person owned this and this person owed that. And it was actually settled in real-time with a physical good. The marriage of those two, the physical plus the technological decentralized centralized trust really could be a innovation, like you said, as well as an alternative to this current trust-based paper system where most people have to say, Well, I hope my bank doesn’t go under. I hope there aren’t bail-ins. I hope that the currency remains strong. And for many countries and many currencies, that, unfortunately, has not been the case.

David Morgan:

Well said, again. And I will want to add that the potential I’m working with a cryptocurrency that is gold and silver-backed, I won’t name it. But the idea with one of our debit card associations that we’re working on is to get rewards, and the rewards are paid in gold and silver. Wouldn’t that be cool? So you’d have monetary metals, and now all of a sudden, you got a Visa card that That pays you 2%, but it’s 2% in silver at the end. So there’s a lot, I think, coming into the monetary realm, which is exactly what happens at the end of all these great inflations because people understand what’s happening. The innovators such as your boss, Keith Wiener, come up with ideas. And this idea really isn’t new. I mean, let’s face it, there were gold bonds. I got a picture of one in my office here. But it’s new to you, and it’s new to me because we never had such a thing For many what, over 100 years, I’m sure at least. And now it’s that principled idea of sound money and sound interest is back in front of us.

Ben Nadelstein:

For those interested in learning more about Monetary Metals, you can check out monetary-metals. Com to learn more about earning interest on your gold and silver. David, where can people find more about you and your work?

David Morgan:

Well, two places. One is themorganreport. Com. The landing page will give you all kinds of features that you could click on the blog, How to Subscribe, How to Get a consultation about us. There’s a couple of films on the monetary problem you can watch for free. And then I’m doing a documentary, and the documentary is at silversunrise. Tv. It’s mostly on the spiritual side of money, believe it or not, and how much stress it causes people worldwide because poor people are always worried about their money. They don’t have enough. How do they get another job? And certainly, that’s a reality. And the super-rich are almost equally as worried as the extreme poor. And the reason being is, who do I trust? Are they going to try to take my money? Is this investment a good idea? What about my bank? Does it sound? They have worries as well. So it’s about the stress of money and overcoming that with an attitude of not only… I don’t want to get too spiritual, but an alignment with the meaning of being a human and what it means to relate to other humans. That’s part of it. The other is by having a sound system where we all can trust each other because we can’t trust each other or trust the monetary system.

Then our interactions on a monetary basis are, I would say null and void, but certainly questionable. Hey, you pay me me this for my truck, but inflation just doubled. I feel like you cheated me. No, you didn’t, because at that time, we both agreed that was fair value. It’s just that the value of the currency has been disrupted so quickly that now you feel that you’re a victim. Well, we’re all victims of the great scam that you can get something for nothing because the whole system is based on the fact you could print something and it actually has value.

Ben Nadelstein:

David, it has been a pleasure speaking with you. I encourage everyone to check out the Morgan Report, and we’ll have to talk more when gold and Silver move, and we see more monetary soundness, more trust in the system. David, great interview. Thank you so much!

Additional Resources for Earning Interest in Gold

If you’d like to learn more about how to earn interest on gold with Monetary Metals, check out the following resources:

The New Way to Hold Gold

In this paper, we look at how conventional gold holdings stack up to Monetary Metals Investments, which offer a Yield on Gold, Paid in Gold®. We compare retail coins, vault storage, the popular ETF – GLD, and mining stocks against Monetary Metals’ True Gold Leases.

 

 

 

 

 

The Case for Gold Yield in Investment Portfolios

Adding gold to a diversified portfolio of assets reduces volatility and increases returns. But how much and what about the ongoing costs? What changes when gold pays a yield? This paper answers those questions using data going back to 1972.