"In recent weeks, a YouTube user known as Drutter has been making the news with his videos, many of which track the growing divergence between the market price of silver and physical demand for Silver Eagles from the US Mint. "
"SIN: To start off with, could you give our readers a brief explanation of what Drutter’s divergence is?
David Morgan: It looks to me like
the main point is that you have good buying, particularly in the coin
realm, Silver Eagles, and yet you see this divergence between an
increase in Silver Eagle purchases and a decrease in the price of
silver, and you have long consolidation periods. Mike Maloney made the
point that the bull market’s intact, there’s massive buying in Silver
Eagles and the price has been decimated recently, particularly the last
couple of years and in particular the last few months.
Therefore, based on this Drutter’s divergence, it seems to me Mike
Maloney was implying we’re getting ready for another upsurge. That’s how
I see it — it’s basically a divergence between physical buying,
particularly looking at coins, and the price."
"Let me explain. I went around the world saying that no one knew how
high was high when silver was still trading near the $5 level and the
breakout point was $5.55 the ounce. It finally broke out at $5.55 the
ounce — I forecast that would happen in September 2003, and it did.
The price shot to $8.40, then it came back and briefly touched the
$5.55 level and then it moved up. The next big move up was up into the
twelves or so; then it came back down and touched $8.40. Then it moved
all the way up to $21 before coming back down to touch into the nines.
Then it moved all the way up to the $48 level.
I mentioned in the members video that we might see it touch back down
to the breakout point, which was at QE2 at $19 an ounce, roughly. I
said, “believe it or not, if this silver market holds true to form, I
wouldn’t rule out that we’ll retrace all the way back to this $19
level,” and that’s pretty much where we’re at right now.”"
David Morgan on Drutter’s Divergence and the Silver Price