My guest this week is David Morgan, a renowned precious metals analyst and publisher of The Morgan Report. We explored the monetary system, its flaws, and how precious metals like silver and gold can protect your wealth. David shared his journey, sparked at age 11 when silver was removed from U.S. coins, replaced by “Johnson slugs” (copper-nickel coins). This ignited his fascination with money and banking.
He explained why silver is undervalued today. Historically, the gold-silver ratio was 15:1 in the 13th century, but now it’s over 80:1, despite silver’s growing industrial demand. Silver’s use has jumped from 35% to 65% of supply, yet prices lag due to its shift from coinage to industrial commodity.
Check out this free download Ten Rules for Silver Investing which will help you understand the best ways to access this special precious metal.
David emphasises disciplined investing, focusing on quality companies with profits, not speculative “story stocks.” He advises beginners to start with physical silver for affordability, then consider ETFs or mining stocks for leverage.
We discussed the rigged monetary system, where fiat currency loses value over time. A house costing 20 ounces of gold in the 1970s still costs roughly 20 ounces today, unlike fiat dollars, which have lost purchasing power. David warned of currency debasement and a potential global depression, urging a 10% portfolio hedge in precious metals. His insights, drawn from 40 years of experience, underscore the power of patience and compounding for long-term wealth.
Discover actionable tips to build wealth with discipline and patience. Visit this special link set up exclusively for listeners of this podcast. There are for free resources, including a 15-minute call with David!
TRANSCRIPT FOLLOWS AFTER THIS BRIEF MESSAGE
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EPISODE TRANSCRIPT
David Morgan: Once silver became used in industry, then you started to see this change in the gold silver ratio where we've been over a hundred a few times. And what's interesting is silver comes out of the ground back in the 13th century at a ratio of 12 ounces of silver per ounce of gold. Now we're down to ounces of silver per ounce. So based on the natural ratio, that's dropped almost in half. Silver's price is over 80 to 1. And yet you go back to 13th century and it was about 15. So obviously silver'not valued as money right now. It's valued for its industrial quality zone.
Phil: G'day and welcome back to Shares for Beginners. I'm Phil Muscatello. What is the monetary system and is it rigged? How can knowledge of how the system works help beginners to invest more wisely? Joining me today to talk all things precious, metallic and monetary is David Morgan. Hello David.
David Morgan: Hello Phil.
Phil: David Morgan is a renowned analyst in the precious metals industry and the publisher of the Morgan Report. He has over 40 years of experiening consulting for hedge funds, high net worth investors and mining companies, while also educating the public about honest money and sound financial systems. He's the author of the Silver Manifesto and a frequent guest on cnbc, Fox Business and msnbc. So tell us about your backstory and how you came to this point in your life critiquing the monetary system.
David Morgan: Well, the coin has changed when I was 11 years old from 90% silver coins into what I call the Johnson slugs. And that really kind of piqued my interest about money and so I kind of caught fire at that point. Not like I thought about it daily as an 11 year old kid, but as I got older and started learning more and more, I really started to focus on banking and how the system works. So that was basically what started me on this path and I've been on it pretty much ever since.
Phil: What uh, are Johnson slugs there'of uh.
David Morgan: Kopro nickel coins that were under the Johnson administration. After the Kennedy assassination, the silver was taken out of the coinage. So Instead of having 90% silver coins from 1965 onward, they were silver looking but they were copper and nickel. We call them cupro nickel and I call them slugs because they don't have any precious metals in them.
Phil: Yeah, because there was a Time wasn't there when precious metals were pretty intrinsic to money. You know, like you'd get a piece of silver or a piece of gold and yeah, we've really lost that kind of solidity to the monetary system, haven't we? Exactly what inspired you to start the Morgan Report and dedicate your career to educating people about building wealth?
David Morgan: I think one thing is that I have a belief system that may be different than many, but I really believe that Most people have 1, 2, perhaps 3 opportunities to strike it big in the financial system. But most don't see the opportunity. I mean almost anyone would say geez, if I just learned about Bitcoin, you know, in the first know three or four years and put in a modest amount, look at where I'd be today. So that's one I think everyone can recognize. One for myself that I did do, uh, take the opportunity almost a cellular phone industry, it was just starting when I was a quite a young man in my 20s and I brought the opportunity to my dad and we talked about it and my dad saw it for more than I did actually. And he said, you know, this to me looks like the opportunity of a lifetime. I'm going to definitely invest into the set of phone business which we know now almost everyone on the planet has one or two cell phones. So that's just two examples. So when I started the Morgage Report I just wanted to give opportunities to people. I do not do a general letter, my letter is on the resource sector. So things we need rather than things we want. So I think first of all thank for coming on the show today. And uh, when it comes to investing, I think most beginners think the hardest thing is picking the right stock. And in reality the hardest part is really getting the right mindset. So that's what I try to teach in the Morgan Report. And I give opportunities for people from all scales. You top tier companies that are blue chips, mid tier companies and even speculations. But I wait the portfolio so you can't really make a big mistake in the speculative section we wait it where it's money you can afford to lose. So if that's 50 bucks for you, that's 50 bucks for you it's 500 for you, that's
00:05:00
David Morgan: 500. But whatever it is, if you follow the guidance, our M members have done fairly well, especially looking at the long term where the compounded annual growth rate for gold has been about 10% for the last 25 years, whereas for real estate it's about 8%. And for the S&P it's about 7%. So gold is actually outperformed. And if you look at the gold stocks, they usually outperform gold itself. So we've done well over the long term.
Phil: Tell us a bit about the mindset that you teach.
David Morgan: Well, it's about not chasing the hottest name or reacting to the headlines. It's about creating a process that you can trust. The very best investors understand two simple truths. First, you must protect yourself from risk before you ever think about the reward. And second, real wealth is built slowly through discipline, patience and the power of compounding. If you're just starting out, you don't need to predict the next Tesla or Amazon. You need to learn how a market works and how to manage risk and how time does factor heavily lifting you in the long term as I just outlined. So you don't want to focus on finding the next lottery ticket. Focus on building a foundation that lasts for the long run and that's how people become professionals in this business.
Phil: I know it's pretty common, isn't it for people who suddenly discover the stock market and then the idea is that you're going to be finding that life changing company that you just invest in and then in a couple of weeks you're going to be rich. It's really a strange mind mindt that people have and I know I've been guilty of this in the past.
David Morgan: Wealth is built quietly over time. In most instances. I bitcoin might be an exception. But bitcoin's been around for more than 10 years now. So a dollar invested with discipline in patience today will outgrow $10 throwning randomly at the biggest fad stock. And we really want to set a methodology that works over the long term and stay disciplined. When I started Investing I was 16 years old, which is quote unquote illegal because you have to be 18 to sign a contract in the United States. However, in California, where I was living at the time, my dad signed what's called the Uniform Gift to Minors Act. And if your parents signed that document, the state or the government would allow you to trade stocks. So my dad did itus. I was so interested in uh, money as I said earlier, and I started trading the Dow Jones industrial average at 16 years of age and I held that for a few years. And then, you know, being a kid and all that I decided to cash out. But I often think if I just left that what's rather modest amount, you know, I'm in my 70s now, how that compounding and just the DJI would have done over all those years. Believe me, it would have been quite substantial.
Phil: You were an outlaw investor from a young age then. What sort of instrument did you use to. Did you just buy the 30 stocks on the Dow or.
David Morgan: I did not at the time. There was a mutual fund that you could buy and it just weight the Dow. So you just bought a 8 share of 10 shares, 100 shares whatever it was of this mutual fund. And I forget the exact name of the fund, it's been so many years. But it was a uh, basically a duplicate of the doubt. There's a small management fee. But it took kind of the headache out of being a DJI investor. And I thought it was just a smart way to go, which actually it was.
Phil: And of course these days there'd be an ETF or many ETFs to cover exactly the same kind of thing. So you mentioned that you talk about resource stocks and I know there's a lot of people, financial professionals who avoid stocks in the resources sector because there seem to be the term price takers that uh, they're all dependent on the price of the commodity behind that. Do you see that as a bug or a feature?
David Morgan: Well, I think that it's not a sector that's very well understood. And you know, if you look at commodities, these are things we need. I mean you look at the soft, you know, cotton, cocoa, coffee. I mean we probably live without coffee and cocoa, but cotton, you know, most.
Phil: Of the clothing that weself there with coffee.
David Morgan: Yeah, okay. And so, but the problem is that uh, there aren't really easy ways to invest in the commodities without the futures market which is way beyond the scope of this interview and really beyond almost anybody. That's the pros, pros game. It's really something I would uh, encourage all of your viewers listeners to not do. But there are companies that do stuff in the resource sector. For example, I saw food prices that were going to skyrocket about a year before they did. And some of my members said uh, well what do we do
00:10:00
David Morgan: to hedge increasing food prices? I said by Arthur Daniels Mitchell ADM and ADM at the time I recommended it, I forget the exact price, I think it was 35. But anyway, I looked at it over the last couple of years and it's definitely actually outpaced what we're quoted as the price inflation in the food sector. So that's an opportunity. But the biggest feature I'd like to talk about is that people, especially in the precious metals, but in the resource sector as well, there's a lot of bottom feeders, people that have really cheap stocks and really big stories and you want to stay away from those. Again, you want to go to discipline things that you understand. And if you're going to buy a company, you want to buy a company that produces a bottom line profit. So what's interesting about the stock market, and I learned this for some of the greats, is that if I'm going to buy a company, I'm going to buy a company with the money I have to get the absolute best, most profitable company I can. So I'm looking at women's retail. Might buy a dress store that's got a track record and is producing a return of 10 to 15% a year. Whatever it is. However, people don't buy the best of the best in the stock market. The pros do. But most retail investors, especially starting out, buy a story stock or they buy a cheap stock. And I think there's a psychology when a stocks it, you know, 25 cents or whatever that uh, oh my goodness, you know, I've only got a thousand to invest. Look at all these shares that I have. But it's again quality rather than quantity. And you really want to put your money in companies that produce a profit. That's really how uh, the stock market is supposed to function. It does at times, but as things have gone on in this inflationary environment, we don't see the stock movements like we did let's say in the 50s, 60s or 70s. It's a new market now for various reasons.
Phil: Take control of your investments. Shareight has you covered. It's Investopedia's number one tracking tool for DIY investors get four months free on an annual premium plan at sharesite.com sharesforbeginners. Yeah, we're famous here in Australia for many resources companies. You know, we're very good at digging things out of the ground and selling them around the world. And that's very interesting that you say that you've got to look for beyond the story because often, you know, here in the pub, a tip, you know, such and such a company is a good company. I've hear, I've heard that from someone that this is going to shoot the lights out. How do you work out, uh, like you mentioned, that it's got to be making some money. What is it in the profit and loss statement that you're looking for that demonstrates this?
David Morgan: Yeah, so analyzing a mining company is different than analyzing a, um, retail stock or an automobile company or an airline or you know, consumable or whatever. And so there's a little bit. It's a little more difficult, but when you get to a producer and I've got a stock or a company in Australia and I've got a company, let's say in North America, and a gold stock, they're producing the same exact thing, gold. So now it's the exact same product. That takes a lot out of the equation to have to worry about. Now all I have to worry about is what is a resource base and what's the profit margin. I also have to look at how long they could stay in business. So a mining company, the best mining company in the world, ends in failure. In other words, when that last ounce of profitable gold is removed out of the ground and then that company's out of business. Now, the large companies completely go beyond a mine and they buy other mines. So they continually are looking to replenish the resources that they do take out of the ground. But it's really not that difficult. You're comparing apples to apples. So who's mining gold the most profitably and what's the sustainability of the company? Are there political risks? There's more that goes into it, but it's really not that hard once you get a handle on. As far as the ones that are story stocks, these are exploration companies and I would encourage anyone kn, new or seasoned to basically stay away from those companies. They are very, very risky and it's a good way, really go broke. And that was another reason for starting the Morgan Report when I was very young and aggressive and I wanted to, you know, shoot the moon in the beginning, very quickly. In other words, I wanted to get rich quick. I bought a lot of these stories and most of them actually shot up for a while while gold was running higher, but they fizzled and fell away and some of them became absolutely worth zero. And, uh, then when I started the Morgan Report, I didn't want any of my readers to experience that.
00:15:00
David Morgan: So I stuck to the hard lessons I had learned as an early investor into what works and what doesn't.
Phil: And there's also a great deal of time and capital investment that's involved from, you know, a geologist coming up and saying, oh, we've got a good seam here that's going to produce a lot of gold. I mean, it can take years before that's actually going to turn into profitability, isn't it?
David Morgan: Absolutely. There's a curve that we use called the Laann curve, and it shows how a company that's profitable goes from discovery all the Way through to producing. It's very interesting to discovery. The stock shetss up really high and gets overvalued. Then reality sets in and the market reprices it down. That's what really is in the ground. And then it kind of swlls around, up and down for a long time until the mine is actually built. Now, uh, if the mine is built and everything on the preliminaries are accurate or near accurate, then the company will slowly start building up. So there's a lot to the investing game in the resource sector. But if you know like all the rules or the quues, you can do well.
Phil: And you'd like to look at companies that produce whatever um, precious metal is. For example, what is the relationship between the price of say gold and a gold producer? And why are the returns and I guess the losses, why are they so disparate?
David Morgan: Just for the record, we look at almost everything in the resource sector that's metals related. So we've looked at lithium and copper, even zinc and lead, cobalt. So we look at them all. But primarily these days we do look at gold and silver. And that's interesting in a good gold producer is you usually get about 3 to 1 leage. So if you buy an ounce of gold and it goes up 10% from $3,000 to $3,300 US or Australian dollars, that same gold stock will go up about 30% so you get the leverage in it. So gold goes up a uh, triple, you might get 300%, you might get 900% on a top tier, cash rich unhedged mining company.
Phil: Nice m to hear about. I'm interested to hear your views on the monetary system as well. Let's get back to basics again. What is the monetary system?
David Morgan: Well it's what most people think of as the economy, but the economy is really goods and services traded amongst people on a volunteer basis. But the monetary system is what we consider money. But really if you look at money from a historical aspect, money is supposed to retain value and the current system doesn't because it's not tied to anything of value. Money is not gold or silver as it has been many times in the past, that maintains value. And the current system, which is called a fiat system, which means by edict or I announce or iedict, I say that this is money. And of course that's backed up by force by governments around the world. The Aussie dollar is legal tender at law and you need to pay your taxes with it, so you have to earn it. But those systems always depreciate the currency. So the Aussie dollar that bought, uh, a house in the 1970 for $40,000 probably cost 400,000 now. And it's the same house. So what happened? The house didn't change. What changed? Well, the price changed because the currency lost more and more value over time. Money doesn't do that. Money maintains the same value over time. So if that house costs, for example, 20 ounces of gold, it would probably cost 20 ounces of gold back in the 1970s. I think I said it probably costs 20 ounces of gold today. So that proves that gold, in the long term, I mean, it fluctuates up and down like everything. But in the long term, it will maintain its buying power.
Phil: And you believe it's rigged as well. And at this point, I always, like another guest, showed in the past how currency was debased. And that was because kings, for example, would issue currency, and then slowly they'd be starting to replace the gold or the silver with, uh, copper, for example, hence debasing it. Is that part of how you see the rigging of the system?
David Morgan: Yeah, there's just more and more dollars that are printed at cost. So in the United States, the Treasury prints the money and sells it to the Federal Reserve at cost, which is about 5 cents per bill. And, uh, they sell it 5 cents whether it says 1, 500, 10, 20, 50, or 100 on it. So I can buy a $100 bill for 5 cents, and then I loan it to the banking
00:20:00
David Morgan: system at face value and interest. So how would you like that business? Start buying $100 bills for a nickel, and then you put them into the system and get, you know, 4% return on them on top of that.
Phil: So how is the system rigged?
David Morgan: Well, it's rigged because that's counterfeiting. And if you and I did it, we'd be in jail. But there's a special relationship between the banking system and the Federal Reserve, which allows it to have a monopoly on printing the money, and we're forced to take it. But it's still counterfeiting any way you slice it.
Phil: Yeah. I'm surprised at the number of people who are not getting this concept. They have no idea about how this works. And that every time a home loan is issued, for example, that's new money that the banking system is creating as well. And for some reason, people don't seem to get this.
David Morgan: Well, they don't. I mean, they're taught to, you know, believe in authority, and someone has to be the banker. And, you know, there's all these ideas that are floated out there and they're uh, reinforced all the time. But you're right, when you sign up for a house, the bank has the asset until you pay it off. So their risk is almost zero. But to create the loan just by you signing your name, period. So it creates it out of nothing. House wasn't created out of nothing, but the loan to buy the house was. And it's very unethical, it's immoral really. But again, most people just sloughff it off, don't even know about it. This is where I pursued my career because I learned that at uh, a very early age, like an eighth grader. And you know, not many eighth graders says that the Federal Reserve Board is a private corporation, it's not even part of the U.S. government. And when you said that they thought you were absolutely insane. You couldn't possibly be right about that. Of course now with the Internet, almost anyone that starts to look into money at even a cursory level understands that to be the fact.
Phil: So how do you think this undermines personal and economic freedom for uh, ordinary people like us?
David Morgan: Well, the best system is a free market system where people get to volunteer their action and their labor is compensated fairly throughout their working career. And that's usually uh, an asset based currency like gold and silver. But it could be done other ways. A paper currency actually could work in theory, if the paper that was issued was commensurate with the labor force and the construction and all that goes on in the economy. In other words, there was a one to one correspondence between an hour's labor, a widget, a house, an automobile or whatever. If the money supply equaled goods and services, it actually could work. And that's why the systems usually start off pretty good caus. Everything seems to be on sound principles. But what happens is governments start to pay for things that they can't afford. So they borrow money into existence and then the citizenry is required to pay that money back. So that's why the tax rates keep going up and up and up. But they can only tax so much. It can't tax 100% of your labor. You know, you were a slave at that point. So they depreciate the currency. So you're making more quote unquote min today than you were 25 years ago. But it probably purchases less goods and services than it did 25 years ago. So the basement of the currency ends up where the money becomes worth less and worth less and worth less, and then it's worthless and when it's worthless, that's when people wake up and say, oh, my goodness, how did this happen?
Phil: Does it work in a little bit in reverse, in terms of asset prices? Like, asset prices just keep on going up because the value of the money is going down. So if someone has already has assets, they're just going to by default become richer?
David Morgan: Um, absolutely. It's the stock market in the United States still making new highs. And most people that are in the stock market are quite happy and they feel they're ahead of inflation. And in many cases, they probably are. But if you look at it from the aspect that an analyst like myself does it, you would know that the stock market peaked in the year 2000, uh, 25 years ago. Because if you go back to the golden constant and you price the stock market in terms of gold, it is actually falling in price. There's a book on a bookshelf back here called the Invisible Crash, written by Jim Dines. And in that book, the Invisible Crash, he does exactly that. He prices the stock market in terms of gold. And realize if the ounce of gold is the same mass anywhere in the universe and its value over time is constant, that's a constant. What's the stock market doing against that constant? It's actually
00:25:00
David Morgan: going down, even though the number goes up and up and up, and the number goes up and up and up because there's more and more cash or currency chasing or going into the stock market. So it's got to go up.
Phil: That's an interesting ratio, then, that you're. You're sharing with us about the relationship between the value of the stock market and an ounce of gold.
David Morgan: Yeah, I mean, I know this is a beginner podcast, but KGER is something that you can learn about at any level. Keger is a compounded annual growth rate. So that's what I say, you know, keeping this simple, you know, if you put a dollar in the bank and let it compound over time, the interest will keep building over and over and over a long period of time, you'll come out with, you know, a substantial sum. The problem is if the money is debasing at the same time it's compounding. You may not be ahead like in the house example that I gave you. And so you got to be a little careful. I teach people to save in real money and spend in currency, but it is something that looking at gold as a cager. So the compounded annual growth rate of gold for the last 25 years has been 10%. The compounded annual growth rate of the S&P 500 over the same 25 year period has been 7%. Well, 10% is a bigger number than 7, especially when it's compounded. So you could see a curve of if I put 1000 in the stock market, it'd be worth this. I put 1000 in gold, it would be worth that. And that's the point I wish to convey is that when you're in what I would consider to be a rigged system, as we've explained, you really want to pay attention to the end game, which I think we're approaching. Because in the end game the problems with a debbased currency accelerate. So Instead of seeing 5% inflation in year it gets to 10 and 15 and 25 and all of a sudden again you go from that my uh, money's worth less into I think it's going to become worthless. Now what do I do?
Phil: Again, thinking about beginners, how would you see the best way to approach a precious metal like gold? Is it through an etf? It's actually going and buying some bullion yourself or with gold miners?
David Morgan: Well, for me I've always taught the same things. So to remain consistent, gold is usually too high priced, especially for a beginner. There's exceptions. There might be somebody that's got a really good job or been saving in the bank is ready to invest. But for most, silver is probably the easier, most affordable way to keep in the sound money system for yourself. And I say that's probably the best way to start. So once you've started to build some precious metals, after that I care, but it's really more up to you. From that point you could go into an ETF or a mining company or even leverage, which I wouldn't recommend. But certainly once you've established, let's say a core position that if things don't go well, you're still protected. I think I'll just shout out to this for all of your viewers and listeners. I wrote kind of the ten commandments of precious metals investing. It's free on the Internet. If you're just type in 10 rules of silver investing by David Morgan. It's all over the place. There are s several websites that have it t and it will give you kind of the easy way to buy and not make a rookie mistake when you're looking at buying gold or silver. And again I only recommend 10%. So if you are wanting to buy into the real estate market or the stock market, primarily stocks with your channel, that's fine and you can do well there are stocks that outperform the gold market. I totally admit that. But again you want to stick to the principles. But you also especially now with should be hedged. And hedged only takes about a 10% position. So if you had let's say 10% in your portfolio and you start investing in some top tier companies and you're doing really well, then what you want to do is rebalance. Usually once a year, but you do it every couple of years. And what you do is you look at where you're at. So let's just say we're doing stocks in gold. So you start with 10% in gold and 90% in stocks. And after two years when you do the ratio so it gold is outperformed stocks like I said, CAGR of 10 and KGR of 7. After two years you find that gold's now 30% of your portfolio and stocks are 70% of your portfolio. So now you rebalance and what you do is you sell off enough gold to get down to the 10% and you take the 20% gain of gold
00:30:00
David Morgan: and you can put that into the stock market. Now personally I wouldn't recommend that because I know what gold does over the long term. But that's the way you can balance your portfolio.
Phil Musatello: Are uh, you confused about how to invest? Life Sherpa can ease the burden of having to decide for yourself. Head to lifeshhera.com.au to find out more. Liferpa, uh, Australia's most affordable online financial advice.
Phil: Okay, let's talk about silver because you've been talking a lot about silver lately. What is it that interests you about silver?
David Morgan: Well when I got interested in the financial system and the monetary system, I was pretty much sold on gold and why gold did well and focus almost entirely on the gold market. And then the huh, Hunt brothers came into the silver market and really moved that market. And after the Hunt situation I started to ask myself, well why did they buy silver and not gold? They did buy some gold. So uh, I just became fascinated with I wonder why. And so I started looking into the silver market and I discovered a lot of things about why silver really did outperform gold. There is a book that called Silver profhits in the 70s by Jeromea Smith. I actually have a copy of it. And he wrote several books. Silver profits in the 80s, the new boom in Silver, the Coming Currency Collapse Ownership Theory of Money. I've got almost everything he ever wrote and many others in uh, Honest Money or Hard Money or Sound Money camp. Vern Myers, who's Now deceased, he lived here in Spokane where I am, uh, about how the system is actually works and how to navigate the future based on a fiat money system. So it's just something that basically instilled.
Phil: In me because silver also has other uses than just being a precious metal. It's actually used in industrial processes as well, isn't it?
David Morgan: The thing about silver is that they bought it because they wanted monetary protection. Because silver at the time they started buying it only been out of circulation for a few years. So most people in that era thought of it as money. And secondly, the industrial component that you mentioned is compounding. So if you go back 25 years ago, 35% of silver's use was industrial. Now it's 65%. Go back 25 years and what you'll find out is that only 550 million ounces of silver rem min on an annual basis. Now there's 850 million ounces mined on an annual basis. So we've increased production of silver 300 million ounces annually and yet the ratio or the percentage has gone from 35 to 65%. So if you take that simple math and you look at the mining of 550 million ounces, let's say that was a steady state condition and that's all we had today, then that 65% actually becomes close to 100%. So in other words, industry would be using up all the silver that's mine. It's not because we've increased the mine supply, as I just stated, but it's something to, to contemplate. Right now we've been running a deficit for four years, which means we have to eat the above ground stockpile. So in theory we're going to see where silver is actually going to outperform gold because the industrial demand will not cease. The silver that's required and essential for all the high tech systems that we have in the world isn't going away. And silver still the cheapest, most effective, most efficient way to do an electrical, electronic, cell phone, microwave based, flat screen TV world.
Phil: I believe there's a ratio, uh, that exists between the price of gold and silver. Can you tell us about that and whether that's of any use to consider?
David Morgan: Well, I consider it quite substantially just for two reasons. One, it tells you what the value is gold to silver. So if silver is overpriced or underpriced relative to gold or vice versa. But secondly, I think it's important from a monetary history perspective. So if you go back to the 13th century, so 1300 A.D. and you look at gold silver ratio from that point until now, you'll find out for the 1300s, 1400, 15, 16, 17, almost to the 19th century, the ratio never got above 20. And the reason is, and I had to think about this, it's obvious after I thought about it for a minute, is that when gold and silver were exactly the same function, meaning they were money and only money, or you could
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David Morgan: say that they were both money and jewelry or money and jewelry, but they both had the same exact function. The market said that 20 ounces of gold, excuse me, silver by an ounce of gold or 16 are somewhere in that ratio. Once silver became used in industry, then you started to see this change in the gold silver ratio, where we've been over 100 a few times. And what's interesting is silver comes out of the ground back in the 13th century at a ratio of 12 ounces of silver per ounce of gold. Now we're down to 7 ounces of silver per ounce of gold. So based on the natural ratio, that's dropped almost in half. Silver's price is over 80 to 1. And yet you go back to 13th century and it was about 15 to 1. So obviously silver'not valued m as money right now. It's valued for its industrial quality zone.
Phil: That's quite a back test. Back to the 13th century, what are your thoughts on cryptocurrencies and digital currencies and also government released kind of, uh, whether they central bank digital currencies.
David Morgan: So when the Bitcoin whitepaper was released, I was one of the first to know about it because the circles I run in and a lot of financial newsletter writers that are contrarians, we know each other. And so I looked at the uh, white paper and kind of I would lean toward being a libertarian more than a donkey or an elephant, but I'm really apolitical. I really don't like the political scene, especially the way it is now in all countries, yours included. But regardless of my political thoughts, the white paper looked pretty good. I mean it looked like gold and digital form. You were your own bank. Peer to peer exchange, no bank interference. But all of those statements from the original white paper are basically the opposite now. It's highly traceable. The whales own it, the banking system basically owns it. That isn't used for peer to peer transactions. It's too expensive and too slow. So I'm not very favorable to Bitcoin or most of the cryptocurrencies. I'm um, fine with the blockchain and I'M sure it's going to be implemented. I don't like CBDCs because I don't want the central bank to have more power than they already do. I want the power of money. It's too important to put in the hands of the authorities. The power of money should be in the hands of the people, which is what we have On a sound money system. If you have gold and silver circulating freely on a voluntary basis and you and I determine what the value is, if I'm going to buy a book from you or you know, a tape or whatever it is, and we agree that's a free market system based on value, I don't think we're going to go back to that. I think we're pretty much destined for either a central bank digital currency which is kind of being resisted. So there'll be a digital currency that's a private enterpr but it'll still have the same control mechanisms that you have at the central bank. It just won't be the bank doing it. It will be the private bank or private corporation that will look at what you spend, where you spent it, how much it was, what the purchase was, and then it'll tag a lot of things onto it. So it could be programmed, meaning it could attach a carbon credit, in other words. Well, I had a steak dinner at this restaurant nearby and steaks, you know, cow emits this much carbon and then you know, m truck to take it over the restaurant and on and on and go. So carbon score is this. My carbon score is too high. I m not be able to buy meat at the restaurant further down the road because the authorities have determined what the right amount of carbon I can use as an individual is in any given month. I mean, it sounds bizarre, but that's the direction it's going.
Phil: Okay, what else are you seeing in your crystal ball? I mean, there's those kind of urges which are coming and as well with the outcomes of the currency debasement that we're seeing.
David Morgan: Well, I'm seeing a huge contraction in the global economy. This, uh, New World Order or One World Government certainly is kind of out there in the blogosphere and it's moving that direction, but not as efficiently as it was a decade ago. I mean, there's a lot of nationalism now where we produce, we want things come back and be producing in the United States, we're putting tariffs on everybody. So there's more of it. It's got to be here first, you know, my country first. That kind of an attitude, regardless of that political structure, what we're seeing is less production throughout the globe.
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David Morgan: In other words, China's not producing as much the United States. I mean we're really getting hit hard. All the corporate restaurants that we have, many of them have gone bankrupt and closed down entirely. And those that are remaining, they have closed a large number of stores, for example, going from like 600 down to 250, closing out of 350 stores that were unprofitable. So we're seeing. And that really is not only a recession, it could go into the big D where we get a global depression. And that of course is not something anybody wants. But I think we are heading toward the depression. It's nothing to fear greatly. It scares people to hear the word. But in a depression, what happens or what you could even make more boldly a financial prices that all the wealth stays in place. So yeah, there's less restaurants and less, you know, tanning salons and less movie theaters, but they're still there, whatever remains. So all the wealth that's uh, there now will continue. It's just, it gets repricd. So if automobiles cost too much, the automobile manufacturer may go out of business and hey, off this wholesale off has lot of automobiles and trucks. So what happens is the wealth stays in place but the ownership changes. And that I think is what is possible to take place. But since the banks have so much control over the system, they may be able to continue by basically printing up money, buying everything reiss un it perhaps at a new price. Because remember, they get their money for free and we have to work for it and then start a new system and say, oh, we're so sorry this happened, but we're going to kiss it and make it better. We're going to reprice things. And all you have to do is sign up for the new system. Go down to your local post office, give us an iris scan. By the way, if you're under this amount of annual income, we'll now provide a uh, universal basic income for you. You don't even have to go to work. Things are going to be great in just a couple of months. Sign up.
Phil: David, this has been a bracing discussion. How can people find out more about your thoughts and ideas and the Morgan Report?
David Morgan: Well, I encourage everyone to go to themorganreport.com and uh, I've put up a special landing page for your viewers and your listeners. So what you want to do is go to theorganreport.comares you not to spell out the whole thing. Shares for beginners we're just going to B slash shares S H A R E s all lowercase Morgport.com shares and I've got three free gifts for you. I've got a paper on investing basics. I've got a movie to watch that explains this probably better than I've done. And then if you're so inclined, I will give you my time. Not one of my staff, but me personally. A 15 minute one on one call. And since you're in Australia, it'd have to be, you know, the time change. But I've talked to Australia often, London often and so it'd be you my late afternoon in your morning and we could have a chat about whatever you know, how to get started. Resource investing, general stock market questions, options, futures. I mean I've been in the financial for a long time and I have a good knowledge base. Not saying I know everything, but I've got a lot of experience.
Phil: David Morgan, that's fantastic. Such a great amount of resources from a guest. Thank you very much for joining me today.
David Morgan: Uh, my pleasure. Thank you.
Phil Musatello: Thanks for listening to Shares for Beginners. You can find more at sharesfforbeginners.com. if you enjoy listening, please take a moment to rate or view in your podcast player or tell a friend who might want to learn more about investing for their future.
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