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David H. Smith: The Financial System Starting to Crack

Tom welcomes David H. Smith, Senior Analyst for The Morgan Report, back to the show. David discusses the relationship between platinum and palladium and why the prices between them are currently inverted. Platinum being quite rare, is usually more expensive than both gold and palladium. This trend seems to be in the process of returning to normal.

Silver’s ratio became an outlier last year when it reached the unprecedented level of 120 to 1. He feels that silver may be setting up to change its relationship ratio with gold permanently. He expects a lower ratio soon, which will bring silver prices much higher relative to gold.

Silver mining is moving into the fourth year of declining grades and reduced mine production. Very few mines are primarily silver, and minimal exploration has occurred in recent years. This lack of new discoveries affects both silver and copper. He says, “It’s all coming together in a perfect storm.”

Silver acts as a line of defense for gold, and significant cracks are appearing in the silver defenses. A breach will expose numerous concerns regarding gold ownership and integrity. This could deal severe blows to the trust and faith in the financial system. He believes the gold sector is even worse than the silver market.

David discusses the rapid growth in physical bullion sales and how dealers were caught unprepared. The Reddit short squeeze movement has brought a lot of education and attention by Millenials to the silver markets.

David notes that Blackrock has changed their strategies and may have begun accumulating physical. There is a broad trend of small funds and family offices now moving into the market. Everyone is becoming involved.

David believes the miners, particularly the juniors, remain very undervalued and explains why they should outperform.

David feels optimistic that after a rough period, the world will once again become calm. We only have to get through the worst of the coming storm.

Time Stamp References:
0:00 – Intro
0:36 – Silver & Palladium
7:40 – Will Silver Break Gold Out
12:45 – Stages to silver’s rise
15:40 – Davos Meeting Basel III
17:40 – Digital Silver
18:45 – Physical Bullion & Premiums
20:07 – Blackrock & Big Money
21:57 – Miners & Leverage
28:12 – Bob Moriarty
32:50 – Australian Discoveries
36:52 – The Pareto Principle
40:43 – LODE Crypto Project
46:33 – 2020 Crisis & Gov’t
48:40 – Wrap Up

Talking Points From This Episode

  • Ratios of Platinum, Palladium, & Silver.
  • The lack of new mining discoveries.
  • Gold’s silver defenses are failing.
  • Basel III Regulations and Metals Awareness.

Guest Links:
Writings: &

David H. Smith, Senior Analyst for TheMorganReport. In addition, David is a contributor to Money Metals, The Prospector News, and the LODE Cryptographic Silver Monetary System (CSMS) Project. He investigates mines and exploration sites in Argentina, Chile, Peru, Mexico, Bolivia, China, Canada, the U.S. and shares his research with readers, the media, and investment conference attendees, both F2F and Virtual.

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