This is an excerpt from David Morgan’s latest update to his subscribers. In it, he describes his gold 2014 forecast. David Morgan is the editor of the highly respected The Morgan Report which offers 16 specialized reports for free for new subscribers, as well as a free trial of one month (more info here).
It is always difficult to forecast a year out what we expect from gold, silver and especially the mining shares. As many of our more recent interviews have discussed we do think the bottom has been obtained in silver (June 28th 2013) and gold may test the $1179 level but for all practical purposes gold has made its bottom as well.
We certainly are aware that many of the major banks are forecasting gold to continue to move down in 2014 and reach levels of one-thousand dollars per ounce or even lower. In our view this is fear mongering and designed to keep the majority of investors away from the precious metals but additionally shake out the last of the weak hands by giving up their positions.
Going back into the past when silver was at the $20 level and that was breaking into new high ground, we saw the $21 level achieved on a spike and silver gave up its price from that point in 2008 until August 2010. This was about 2 ½ years before the price of silver finally made it back to the $21 level. Once the level was achieved at this later date silver kept going all the way to the $49 level.
Although not huge believers in cycle work, the point is not so much that we are due to start an upward cycle but the way silver trades our work indicates silver is gaining strength. Certainly, we think not only have long term silver investors been here before, but if we were to repeat the last cycle silver moved up almost 600% once it completed the bottoming process. This type of move, suggests the $100 level which is our long term forecast from the beginning of this bull market and it may be conservative.
Not only has silver moved in this manner previously but that gain was achieved in approximately nine months. This time however our view is that silver needs to work its way back to the $30 level and at this time (More frequent updates are given to Basic Plus Members) it may take nine months or so just to achieve that price level.
However, most of the awake and aware know the financial system is nearing the breaking point basis the demonstrations in Europe, the Middle East, and even some areas of South America. Japan is certainly quietly straining under the current Abe-o-nomics. Basically, we think that the black swan event is possible at any time in 2014. Yet, based on the extraordinary ability of the powers at large to spin and manipulate the masses we are most inclined to see a “Gray” Swan.
Our idea of a gray swan is that regardless of the mainstream media propaganda many more people become aware of the true circumstances of governments at large on a global scale and seek solutions. The most proven strategy is individual action which involves parking money into precious metals. Therefore we fully expect the next leg up to begin in 2014 as new buyers come into the market motivated by their own discovery of the current control mechanisms and their evolution to do something about it on a personal level.
This of course is where silver has an advantage over gold, as it is far more affordable to the average person, yet it is much more difficult to obtain in Europe due to the Value Added Tax, and also difficult in Asia as the inroads to invest in the physical metal is not as robust as it is for gold. India is the exception as silver has been the traditional store of value for most of the population up until the last decade where gold has been so prominent. Silver of course did come on strong in India after the government of India decided to tax gold purchases and the population went for a massive amount of silver. It will be interesting to see if there is any follow through in 2014. We know the physical silver supply is much tighter than the current price suggests. Once there are premiums in some of the physical holding funds such as Sprott Physical Silver Trust (PSLV) or Central Fund of Canada, we think additional purchases could take place.
Gold has a different following than silver in many ways. First and foremost gold is traded and bought by nation states for a variety of reasons but the primary one is of course monetary stability/hedging against the U.S. dollar demise. The ongoing move of physical gold is given almost no mention in the main financial circles, yet the gold bugs are well aware that China especially continues to build their gold inventory.
Gold although mentioned often by the elites as having very little real “value” in a modern financial system by such notables as Warren Buffet, really is coveted by the highest echelons of the global banking empire. This is critical to understand as we mentioned in an earlier The Morgan Report (TMR) that there is “fight” going on between the Anglo-American empire which has dominated the global financial scene for so very long, and the emerging BRICS that know gold ownership is vital to being on top of the global banking system.
It is our view that the great unraveling could take place where things are much less centralized and moved to a local level. However, you can rest assured that the megalomanias see it differently and wish to maintain power over everyone’s lives.
Need we mention again-”Interesting times…”
The PGM’s (Platinum Group Metals) have done the best over the 2013 year, and we still expect a breakout of palladium to be a subtle clue that the whole complex is finally done consolidating and higher prices will begin. We favor palladium slightly over platinum and only those that are content with their gold/silver holdings could consider these metals. In our view the best way to gain exposure is through the mining shares with the Wellgreen Platinum project being one we have followed and still like having received shares for “free” due to our Prophecy Coal investment.
In summary we fully expect the precious metals to strengthen and the mining shares at some point to begin to lead. We will know a great deal after the first quarter of the New Year, as the precious metals have a strong historic trend of moving up during the first quarter.