David Morgan, CEO of The Morgan Report, is one of the all-time great silver market commentators and investors. He elaborated on all of these points in a must-listen interview with our friend Mike Maharrey over at the Money Metals Podcast. As silver prices experience fluctuations, industry experts are closely monitoring the implications of inflation and monetary shifts on this precious metal.
In the course of the conversation, Morgan pointed out that silver recently surpassed $40 per ounce only to settle back near $38. He applauded this “stair-step” trajectory, arguing that it’s an overall healthier development than a parabolic jump. Morgan says these small, incremental increases of demand are the healthiest for the market because they create more sustainable long-term growth.
Current State of Silver Supply
The one thing the silver market is not having challenges with right now is supply. As an industry, we use close to 600 million ounces of silver annually. Countering this are about 600 million ounces of silver inventories in exchange-traded funds (ETFs). Morgan also noted that there are about 1.3 billion ounces of silver held in bar form. The implication here is that the market is only a year’s worth of above-ground supply in commercial bars.
This increasingly tight supply heightens fears over future price and availability. If this demand continues to increase, the current limited supply will make silver prices more volatile. Morgan’s conclusions highlight the possibility of further price increases as the new reality of market forces takes hold.
Inflation and Economic Pressures
The discussion focused on larger macroeconomic trends impacting the silver and gold markets. Morgan noted this extreme financial distress especially among U.S. retailers and restaurants, which have seen a surge in bankruptcies. He stressed that these economic setbacks are symptomatic of a broader turn within the financial system.
Although Morgan has been wrestling with retail downturns, the story is more nuanced. Diesel prices have increased almost $1 in only one month, a 20 to 25 percent increase in his region’s average. This wave exacerbates price increases in multiple areas, especially the cost of food and housing. With costs reaching an all-time high, consumers are feeling the squeeze like never before.
As TMSA founder and economist, car analyst, and policy innovator Phil Maharrey recently noted, seeing the M2 money supply growing again is inflation by definition. This expansion of the money supply has understandably been met with worry about rising inflation. Ultimately, it would be damaging to both consumer spending and investment in precious metals.
Future Outlook for Silver and Gold
2024 forecast Morgan said he was cautiously optimistic about the fate of both silver and gold markets in the future. He thinks inflation is basically going to hell in a handbasket. With the prospect of precious metals protection against that economic tumbling down is the necessity of the hour.
Morgan’s observations are a good reminder for all investors to stay alert to cycles in the market. For one thing, persistent inflation and crisis conditions have been increasing financial pressures. This environment has created an incredible opportunity for those seeking to invest in silver and gold as safe-haven assets.