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Miles Franklin Daily Gold & Silver Summary

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Market Recap for

Thursday January 31, 2013


 

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Change

GOLD

$1663.80

-$12.60

 

 

 

GOLD - 1 year ago

$1736.70

-72.90

 

 

 

SILVER

$31.47

-$0.55

 

 

 

SILVER - 1 year ago

$33.13

-$1.66

 

 

 

PLATINUM

$1674.00

-$7.00

 

 

 

PALLADIUM

$741.00

-$6.00

 

 

 

RHODIUM

$1200.00

0.00

 

 

 

HUI

393.88

-4.56

 

 

 

XAU

149.68

-1.27

 

 

 

USD

79.22

-0.05

 

 

 

EURO/USD

1.3573

0.0009

 

 

 

DOW

13860.58

-49.84

 

 

 

GOLD to SILVER RATIO

52.87 to 1

0.52

 
tableTable of Contents


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Read more articles from Ranting Andy Hoffman
and Bill Holter on the Miles Franklin Blog site.
Gold is your defense
Private Meetings and Events

Miles Franklin seeks creative ways to partner with its clients to market Precious Metals to nationwide audiences.  If you are interested in hosting a private meeting - or sponsoring a Webinar presentation - with Andy Schectman, President of Miles Franklin, and "Ranting Andy" Hoffman, Marketing Director, please inquire via email to aschectman@milesfranklin.com or ahoffman@milesfranklin.com; or via telephone at 800-822-8080. 
quoteQuotes of the Day

TOP-10 "ONLY IN AMERICA" OBSERVATIONS"

 

1) Only in America could the rich people - who pay 86% of all income taxes - be accused of not paying their "fair share" by people who don't pay any income taxes at all.

 

2) Only in America could people claim that the government still discriminates against black Americans when they have a black President, a black Attorney General, and roughly 18% of the federal work-force is black while only 12% of the population is black.

 

3) Only in America could they have had the two people most responsible for our tax code, Timothy Geithner, the head of the Treasury Department and Charles Rangel who once ran the Ways and Means Committee, BOTH turn out to be tax cheats who are in favor of higher taxes.

 

4) Only in America can they have terrorists kill people in the name of Allah and have the media primarily react by fretting that Muslims might be harmed by the backlash.

 

5) Only in America would they make people who want to legally become American citizens wait for years in their home countries and pay tens of thousands of dollars for the privilege while we discuss letting anyone who sneaks into the country illegally just 'magically' become American citizens.

 

6) Only in America could the people who believe in balancing the budget and sticking by the country's Constitution be thought of as "extremists."

 

7) Only in America could you need to present a driver's license to cash a check or buy alcohol, but not to vote.

 

8) Only in America could people demand the government investigate whether oil companies are gouging the public because the price of gas went up when the return on equity invested in a major U.S. oil company (Marathon Oil) is less than half of a company making tennis shoes (Nike).

 

9) Only in America could the government collect more tax dollars from the people than any nation in recorded history, still spend a Trillion dollars more than it has per year - for total spending of $7-Million PER MINUTE, and complain that it doesn't have nearly enough money.

 

10) Only in America could politicians talk about the greed of the rich at a $35,000.00 a plate campaign fund-raising event.

- by a Canadian

 

 

What do you buy or use that is cheaper now than two years ago?

- Jim Sinclair, In the News Today, January 30 2013

 

 

It goes without saying that the mining companies that we own shares in will say or do absolutely nothing about this outrageous and grotesque interference in what once were free markets. We need never worry about the managements and boards of directors ever serving the best interests of their true owners...us...because they won't. John Embry said about a decade ago that the miners are either "ignorant, na�ve, or complicit". In actual fact, it's now worse than that, because the more obvious the price management scheme becomes to everyone on Planet Earth, the more they dig in their heels and pretend that it doesn't exit...and if they do acknowledge it, aren't prepared to do anything. Wow! You couldn't make this stuff up. Whatever happened to their fiduciary responsibility to their shareholders?

- Ed Steer, Yesterday in Gold and Silver, January 31 2013

 

 

Clearly, there is no total valuation concern in silver. If anything, the current near microscopic total valuation of all the world's silver bullion argues that something is amiss. Even if silver tripled in price while gold's price remained unchanged, the entire world's silver bullion (1,000 oz. bars) would still be worth only one percent of all the gold in the world. I think the relative total valuation benchmarks not only favor silver compared to gold, but also suggest that any future price bubble will most likely appear in silver rather than gold.

- Ted Butler, ButlerResearch.com, January 30 2013

 

Today I have this feeling. In one 30-minute period I got in excess of 700 emails. That was courtesy of a well meaning website that holds mostly the same views as I do. Of course I will do my best to get back to those that seem to have serious questions. As for the one that suggested all I had to do to reverse this downside manipulation was to disavow gold, that must be considered comical.

Right now charts are interesting, but what good are they when they appear as if a crayon was used to draw them.

This entire take down from the top is an operation. The operation is to separate you from you gold. As of today they have in fact done it in many cases. Do you think people can manipulate Libor for profit, but deny gold is being manipulated for the same reason?

To sum it up, Gold will trade at $3500 and higher. I know a "market jiggle" (the word for manipulation in the time of Livermore and Seligman) when I see it. You are being had. You have one defense for your positions without margin debt, and that is to stop watching and therefore do nothing.

A price operation is for a purpose. If that purpose fails the operation fails. It is up to you. Do you stand and therefore fight or do you run into their hands having chosen flight? Their game is to pressure gold for less than 10% expressed in terms of time versus how long they have been operating.

You want to help? Stop them here. Stand and do nothing on fully paid positions. - Jim Sinclair, In The News Today, January 31 2013

 

 

To date in January, U.S. Mint sales of American Eagle silver coins jumped to a record 7.4 million ounces - the largest monthly total since 1986, when the Mint began selling the coins. That compares with 1.6 million ounces sold in December. And remember... the Mint suspended sales for over a week (resuming on January 28).

 

Sales of American Eagle gold coins are also soaring... The Mint sold 140,000 ounces of gold coins so far this month, up 84% from December and the highest monthly total since July 2010.

Gold and silver sales are soaring (in the case of silver, to the point where the government can't keep up with demand)... But prices aren't budging. It makes no economic sense. If you're looking to add to your bullion position, now is a good time to consider doing so.

- Porter Stansbury, StansberryResearch.com


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daviddeskFrom David's Desk 
David Schectman
David Schectman 

 

 

Be sure and read Ranting Andy Hoffman's article on peak silver. Andy hit it out of the park this time!

_______________________________

Normalcy Bias

I have been giving a great deal of thought this week to why people like Backwoods Jack, who is well read and very bright, refuse to acknowledge what to me is so clear - and easily documented. His latest comments to me, after I informed him that I will no longer discuss ANYTHING economic with him are:

Can we keep gold and silver on the playing field as I value your judgment on commodities.  I will be buying more from you; It is just the "gloom and doom" I can live without. I hear enough about America drifting downward into 3rd world status.

Without going into detail, my answer was no! It is impossible to discuss gold and silver without discussing why one needs to own them. It's like asking your doctor for a prescription without explaining what the symptoms are. I believe, like my good friend Terry says, Backwoods is suffering from a case of Normalcy Bias. It's as widespread as the common cold.

For those of you who aren't familiar with the phrase, here is the definition of normalcy bias:

The normalcy bias, or normality bias, refers to a mental state people enter when facing a disaster. It causes people to underestimate both the possibility of a disaster occurring and its possible effects. This often results in situations where people fail to adequately prepare for a disaster, and on a larger scale, the failure of governments to include the populace in its disaster preparations. The assumption that is made in the case of the normalcy bias is that since a disaster never has occurred then it never will occur. It also results in the inability of people to cope with a disaster once it occurs. People with a normalcy bias have difficulties reacting to something they have not experienced before. People also tend to interpret warnings in the most optimistic way possible, seizing on any ambiguities to infer a less serious situation.

How clear it is - Backwoods says, "It is just the 'gloom and doom' I can live without." It's not that he can't comprehend what I say; it's that he doesn't want to comprehend what I say. He automatically moves toward any source of information that paints a rosier picture.

He is, for lack of a better phrase, a "cockeyed-optimist." God bless the optimist! But in this case, I think God will bless the open-eyed realist. Like so many, Backwoods would rather kill the messenger than face the truth. The sources he turns to for information are all mainstream bankers and brokers, all of whom benefit from a strong economy and pitch an upbeat story.

Wish it were so, but if you give any credibility to John Williams (Shadowstats) note that his latest release says:

  • Although Recovery Never Took Place, Official Double-Dip Recession Likely Will Be Clocked from Second- or Third-Quarter 2012
  • Reported Contraction in Real GDP Designed to Discourage Fiscal Reform?
  • Fourth-Quarter Nominal GDP Growth Collapsed to 0.46% from 5.91%
  • Real Durable Goods Orders Contracted Year-to-Year, Despite Temporary Orders Boost from Year-End Defense Spending

 

If you want to ignore what is occurring, and fall victim to the Normalcy Bias, there will be a severe price to pay. Backwoods, and all the rest of you like-minded optimists, it's time to get real. Gold and silver are an insurance policy to protect you in the storm that is approaching. Close the shutters. Take care of business now, while you still can, don't ignore the warning signs and don't seek out advice from the very sources that have been wrong through every crisis and bubble. They didn't warn you in advance before and they are pulling the wool over your eyes now too. That's a fact Jack, Backwoods Jack!

The year-over-year change in real GDP was 1.5 percent. There has never been a time since measurement commenced in 1948 when the annual pace of real GDP has fallen that low without the economy ultimately slipping into recession. Sub-2.0 percent readings are historically the warning signal.

-Rich Yamarone at Bloomberg, quoted at BusinessInsider.com, January 31 2013

I think I'll ad...

Today's comments from Newsmax here - they seem to fit the theme of my rant:

We are in danger!

U.S. National Debt is nearly $17 Trillion - soon Twenty Trillion Dollars!

That puts you and your financial security in GREAT Danger.

This "Fiscal Cliff" and our national debt problem are truly dangerous to you and your way of life. Here it is in perspective:

First, let's list the financial statistics of the U.S. Then we'll convert the numbers to compare them to a family budget.

Prepare to be shocked.

Financial Statement of the United States of America:

* U.S. Tax revenue:

$ 2,170,000,000,000

* Federal budget:

$ 3,820,000,000,000

* New debt:

$ 1,650,000,000,000

* National debt:

$ 16,571,000,000,000

* Recent budget cuts:

$ 38,500,000,000

 

Let's now remove 8 zeros and pretend it's a household budget:

* Annual family income:

$ 21,700

* Money the family spent:

$ 38,200

* New debt on the credit card:

$ 16,500

* Outstanding balance on the credit card:

$ 165,710

* Total budget cuts so far:

$ 385

 

"Uh-oh. We're in BIG trouble. $165 thousand dollars in credit card bills?!?" says any reasonable family.

"I'm thinking $385 should do it," says OUR Washington family.

Total budget cuts so far: $385

Really?!?

$165,000 of debt and we're only cutting $385.00?

AMAC thinks this is irresponsible and harmful to every American. Especially to those over the age of 50 relying on a fiscally sound America in order to be able pay their monthly bills - whether you rely on savings, investments or Social Security.

This gives you an idea of how bad the situation is. It will only get worse!

 

Ed Steer posted the chart below that shows how gold, bonds, stocks and the U.S. dollar index have fared since 1970. Interesting, huh? and show this to your friends who still own stocks and haven't bought any gold.

 
Click on image to enlarge 

   

Sincerely,

 

David Schectman

Miles Franklin

 

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holterreportThe Holter Report

bill holter
Bill Holter

I Must Take Zerohedge to Task
Published: January 31st, 2013

 

 

Elliott's Paul Singer On How Money Is Created... And How It Dies

Zero Hedge is a great website and probably THE premier website for diverse and correct (in my opinion) thinking in matters financial.  They are timely and dig for the truth using common sense.  The Tyler Durden(s) consistently blow common mainstream (incorrect) thought to pieces with pure logic, examples and in many cases outright proof.  However, I read the above piece last night and choked on my beer within the first 3 paragraphs!

Yes we know, "money" today is merely a bunch of 1's followed by zeroes.  As I have said many times and maybe not simple or to the point enough that "everything (paper) is worth nothing."  The 3rd paragraph starts out explaining how almost no one has figured out how money is created and then died (or will die) except for Paul Singer.  They wrote, "However, one person has. That one person is Paul Singer. Paul is not some fringe blogger, some academic with a chip on his shoulder and an inferiority complex, nor some lunatic gold bug."  Uhmm, excuse me Tyler(s), we are not "academics" for sure but we can certainly be considered "fringe bloggers and Gold bugs."  So yes, the premise laid forth by Paul Singer HAS been thought of and has been written about MANY times before in many different ways, let me explain.

I will use the word "derivatives" in place of CDS, CDO, MBS etc.  It is more than obvious (and was so back when Lehman Bros. blew up) that "derivatives" were a huge source of the "money supply" that blew the bubble to such great heights.  Derivatives and leverage of all sorts can be (and was) pinpointed as the exact reason that many asset prices went to, traded at and were thought of (at the time) as "the new normal."  In fact, these very same derivatives are what are still being used to keep the system levitated and to prevent total collapse.  These derivatives will all eventually fail as they can never perform (never ever could as Jim Sinclair is fond of saying) and will be a part of "when money dies."  I assure you that "Gold bugs" far and wide were never fooled into just looking at the "M's" as money supply and knew early on that derivatives were the real driving force to asset price expansion.  This was so because derivatives ARE high powered money that had "power" in excess of 100 (or even 1,000) to 1 which is obviously more powerful than the "tame" workings of fractional reserve banking.  I could go on and on here but just know that "we" already knew that derivatives were THE main culprit to an expanding "money supply" that was used to blow up the balloon.

That said, Paul Singer is obviously a brilliant and very successful guy.  He manages over $20 billion and has a great track record over many years.  Out of being too lazy, I have not checked to see how much of this $20+ billion is invested in Gold or Silver but let's do a little math.  10% of $20 billion is $2 billion, if that were split evenly between gold and silver it would mean an investment of $1 billion in each.  Looking at silver today, if Mr. Singer doesn't have any yet, how could he even attempt it now?  Over a year or maybe 2 years he could get it done but he'd be competing with the likes of Eric Sprott who spaces his purchases out so that he doesn't completely blow the lid off the market.  But wait, what if Mr. Singer wanted to "do the right thing" and have a higher percentage of Gold and Silver in his portfolio since he does understand the game and apparently "the end game" as well?  Could he really go 30%?  50%?  Or all in?  I don't see how, were he to try to do it through the almighty COMEX which "sets" price he would clean out their available for delivery inventory with a mere $1 billion purchase!

I am writing this because I am sick and tired of "Gold bugs" being considered and called "fringe lunatics."  Maybe not all "bugs" figured out that derivatives were one of the core problems initially, (many did) but they knew something just wasn't right.  And speaking of "right," Gold "bugs" or more properly "hard money advocates" have been more "right" for the right reasons than any other group on the planet for well over 10 years.  Many in this group called the "unforeseen" real estate bubble as early as 2004 or '05.  It was the hard money advocates who called the banking system and derivatives collapse AHEAD OF TIME.  It was the "bugs" who initially figured out and WROTE that what was happening back in 2007 and the responses in 2008 would eventually lead to sovereign defaults, bankruptcies and chaos.

It is total crap in my opinion that "Gold bugs" should be stigmatized as fringe lunatic idiots since we were "right" first, right all along and right for the right reasons.  We can be insulted, spat upon, stigmatized and laughed at.  We can be marginalized and portrayed as lunatics until the cows come home, BUT, we were more correct and correct longer than any "intellectual group" or individual that did not and does not believe in hard money.  Were "hard money" was what the world used since 1971 instead of fake money, derivatives and leverage could never have gotten so out of hand and destroy the entire financial system.

So Tyler(s), yes you have finally pissed me off by pissing down the necks of my fellow Gold bugs and for that you can kiss my horse's big muscular arse.  When all is said and done, it will be the "Gold bugs" who teach the world how the cows eat the cabbage!


Regards,

Bill Holter
Associate Writer for Miles Franklin

Read more Bill Holter Articles on the Miles Franklin Blog
goldhighlightsGold Highlights

BFI Wealth, Zurich - Swiss Annuities and Managed Accounts

Miles Franklin and BFI Consulting of Zurich, Switzerland, have partnered for the past two decades in offering access to offshore annuities and managed accounts.  Born at roughly the same time in the early 1990s, both firms have successfully PROTECTED clients via quality, secure, private accounts holding PHYSICAL Precious Metals, annuities, and other managed products.  BFI is a global leader in the sale and maintenance of Swiss annuities and privately managed accounts - particularly to U.S.-based clients; and through its Global Gold subsidiary - utilizing worldwide storage leader Via Mat - offers international Precious Metal storage services in Switzerland, Hong Kong, and Singapore. As with Miles Franklin's Canadian offshore storage program, Global Gold offers allocated storage OUTSIDE the banking system.  

hoffmanRanting Andy Hoffman, Marketing Director

andy hoffman
Ranting Andy Hoffman

Peak Silver?
Published: January 30th, 2013 
 

I spent a decade as an Energy analyst; or, more specifically, oilfield equipment, services, and drilling. Thus, I was exposed to a tremendous amount of research on "peak oil;" which - shale oil notwithstanding - is yet to be proven either way. Unfortunately, "peak" commodity studies cannot possibly incorporate ALL moving parts; nor foresee unexpected changes in demand, population, and technology trends.

 

That said, such studies can be extremely valuable - pointing out key hurdles to future production growth, and/or production cost. That is, not only is "peak oil" a valid research topic, but "peak cheap oil."

 

Heck, from the time I commenced my Energy career on the buy side in January 1996, until I left Salomon Smith Barney as a sell-side analyst in February 2005; the marginal cost of oil production stair-stepped higher; from levels to NEVER again be seen. For nearly the entire duration of my 1996-2005 energy career, WTI Crude traded between $10/bbl and $35/bbl; not exceeding that high until late 2004; as compared to today's recessionary price of nearly $100/bbl - and the 2008 peak of $150/bbl. Thus, if anyone tells you "peak cheap oil" is not real, they are delusional.

 

Oh, by the way; when I left Salomon in February 2005, the Wall Street consensus for the "long-term" (3-5 years) oil price was... drum roll please... $18/bbl. Why so low, you might ask? TAR SANDS - which were hailed as a "sure thing" to swamp the market...

  

wti crude oil   

 

The reason I bring up "peak oil" is because "peak silver" is starting to be seriously debated; kicked off by the U.S. Geological Service's ADMISSION (in the late 2000s) that silver is likely to be the first extinct element on the periodic table...

 

Silver will be the first element in the periodic table to become extinct

 

Sadly, my analyst skills have been dulled by a dumbed-down world in which little attention is paid to fact, correlation, and causation. I appreciate the opportunity to perform research for this blog; but "precious" little quality PM research is both available and worth reading.

 

Thus, I was thrilled to come across Steve St. Angelo late last year; who writes under the moniker "SRSRocco," published on the excellent Silver Doctors website. He has very strong opinions about "peak oil" and "peak silver" (he believes in both); particularly what he views as wild assumptions about the ballyhooed shale oil boom.

Regarding the latter, it's all about depletion and marginal production cost; of which fracking is terribly handicapped in both categories - per his calculation of EROI, or "Energy Returned on Investment" (the amount of energy required to produce an incremental barrel)...

 

N. Dakota Bakken Oil Boom Will End in a Bust, Just like '49 Gold Rush

 

Mining, too, suffers from a dramatically declining EROI; indicating a significant increase in energy costs over time...

 

Peak Silver Revisited: Impacts of a Global Depression, Declining Ore Grades & a Falling EROI - Steve St. Angelo

 

Moreover, ore grades have plummeted; as the "low hanging fruit" has all been mined...  

  

united states silver mining stats   

To wit; during the 1840s U.S. "gold rushes," metal was typically visible (as in Placer formations). Conversely, today's mining operations target microscopic ore; as the "visible gold" was long-ago mined. Thus, costly "open-pit" mines are the norm for both gold and silver; which are dramatically less efficient...

  

mines  

 

Care of the aforementioned issues, GLOBAL silver production has just marginally increased throughout the 12-year silver bull market - while prices have soared from $4/oz to a peak of $50/oz. Astonishingly, GLOBAL silver production grew at just a 2.4% annual rate from 2000 through 2011 (the last year data is available); compared to a MASSIVE 19.5% CAGR for the silver price itself...

  

global silver production   

Consequently, the historic silver/gold production ratio- as in, centuries-old - has declined from 16:1 to nearly 9:1; with no signs of stabilizing. A MAJOR reason for this plunge is that roughly 70% of silver production is by-product from base metal mines (principally lead/zinc); compared to gold, of which just 20% of production is by-product...

 

silver production   

 

Throw in the fact that nearly all incremental production is CONSUMED by industry...

 

2011 Silver Demand vs. Production

Category

Ozs. (mill.)

Industrial Applications

487

Photography

66

Jewelry

160

Silverware

46

Total

758

Global Mine Production

762

 

...and it's no surprise that GLOBAL inventories are nearly exhausted...

 

silver inventories   

 

Most credible silver analysts believe there is somewhere between 1.0 and 1.5 billion investable silver ounces above ground - that is, in bar or coin form; which, at today's prices, is worth a measly $30-$45 billion. And by the way, nearly all of that supply is sitting in private vaults - NEVER to see the light of day.

 

Thus, when the U.S. Mint RUNS OUT of supply - for the third time in four years...

 

US Mint Out Of Silver Coins - Suspends Sales

 

...and "ADMIRAL SPROTT" tells you silver sales are surging...

 

Eric Sprott: Why Are Investors Buying 50 Times More Physical Silver Than Gold?

 

...to the point they are nearly surpassing those of gold, by dollars spent...

 

Year

Gold (millions)

Silver (millions)

Au/Ag Invest. Ratio

Closed-End Funds

$1,508

$763

 

U.S. Mint Sales

$2,014

$701

 

TOTAL 2010

$3,522

$1,463

2.4

Closed-End Funds

$937

$180

 

U.S. Mint Sales

$2,246

$1,410

 

TOTAL 2011

$3,183

$1,590

2.0

Closed-End Funds

$645

$773

 

U.S. Mint Sales

$1,641

$996

 

TOTAL 2012

$2,286

$1,770

1.3

 

...think LONG and HARD about where silver's absolute price will go; let alone, the gold/silver ratio (given its centuries-old average is 16:1)...

  

gold silver ratio   

Is "PEAK SILVER" here? I don't know, but Steve St. Angelo certainly believes so; particularly if the global economy is headed for a major recession...

 

usa world depression   

 

Irrespective, I believe silver is the MOST UNDERVALUED ASSET of ALL TIME; and have ZERO doubt that whether "PEAK SILVER": has been passed, "peak cheap silver" certainly has...

 

BREAK EVEN COST FOR SILVER RISES TOWARDS $30 AS COEUR, HECLA & SILVER STANDARD SHOW NET INCOME LOSSES

 

PROTECT YOURSELF, and do it NOW!

 

Call Miles Franklin at 800-822-8080, and talk to one of our brokers.  Through industry-leading customer service and competitive pricing, we aim to EARN your business.


 

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Reliable Financial Advisors

In a world of heightened speculative and counterparty risks, finding someone you can trust may be the most important research you do. Miles Franklin does not sell stocks, but is frequently asked if we know of reputable, full-service brokers. WE DO NOT CONDEMN OR CONDONE EQUITY INVESTMENTS, but want investors with such interest to be honestly and competently handled.

In resource stocks, the folks at Sprott Global Resource Investments - managed by Eric Sprott and Rick Rule - are the best in the business. In various capacities, we have worked with Eric Angeli, Jeff Howard, Kenton Toews, Mishka vom Dorp, Jason Stevens, Anthony Marsh, and Andrew Jackson - all of whom are diligent, ethical, and knowledgeable. That style of business is indicative of the reputation Global has built over the past 25 years. You can feel comfortable with any of their brokers, reachable at 800-477-7853.

For all other stocks - including large cap gold, silver and other resource equities - Nick Shermeta, from Northland Securities here in Minneapolis, is as trustworthy and knowledgeable as they come. Nick is a Senior Vice President with more than 20 years experience, but will treat you as if you were his only client. You can reach Nick at 612-851-5908, or by email at nshermeta@northlandsecurities.com.

The common denominator is decades of Wall Street experience, which should give you comfort that well-seasoned and weathered hands are helping manage your portfolio. Notably, we do not receive compensation for these recommendations. We just want you to know that if they are good enough for us, they should be good enough for you too.

richrussellRichard Russell (dowtheoryletters.com)

January 30, 2013

 

Silver is beginning to look interesting to me. About a month ago, I showed charts of silver mining stocks that had exploded. This suggested to me that something bullish was coming up in silver. Since 2003 silver has gained 1012%, and in doing so it has outpaced gold.

 

At present the overgrown supply of silver is dangerously low. This sets us up, say silver experts, for a huge squeeze on the silver shorts. On the Comex there is currently a giant silver position, a position that almost dwarfs the available supply of free silver.

 

The chart below looks interesting. Silver reversed a declining trendline and then silver dropped to test its 200-day MA, where it held.

  

silver   

 

As I write, March silver is up .993 to 32.17. A rise in silver will almost surely rub off on gold, since there is a ratio that constantly connects them. Therefore, I will keep a sharp eye on silver in coming days and weeks. By the way, the outfit that holds an enormous short position in silver on the Comex is JP Morgan. And I wonder is JPM working secretly for the Fed?

Subscribe to the Dow Theory Letters for the full article.

 


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sinclairJim Sinclair (www.jsmineset.com)

How To Effectively Defend Yourself In The Gold Market

January 30, 2013, at 1:01 pm
by Jim Sinclair

If you wish to be effective in the gold market there is a very simple way. The gold price is not attacked just for some pleasure of seeing the quote down. From simple shorts to complex 2nd and higher derivative positions it requires somebody to do something to profit on lower price. It requires you to panic to accomplish the downside among the paper gold traders

To frustrate the short do nothing at all. When the gold market rallies you can doubly frustrate the short if again at the beginning of the rally you do nothing.

You need only not to trade the paper gold market to thwart at least your contribution to panic. You need only to hold your fully paid shares in a gold or silver entity if it qualifies as sound to frustrate the short hedge fund.

 

You can defend yourself effectively by doing absolutely nothing.

Gold will rise to $3500 and above. Make sure you are there when it happens. Simply stop quoting it because that is the temptation to trade it. If you starve the paper exchanges of paper contract trading the game ends there. If the patsies do not show up on the paper exchange to be skinned, the skinning will stop. Join gamblers anonymous if you have to. Ladies and gentleman, prepare to defend yourself by doing nothing.

You frustrate any take down if you cannot be taken down. Stop giving the paper exchange your business and the paper exchange will stop. Here is an absolute way to beat the devil by "Gold and Silver Non Violent Resistance." Then we practice "Non Cooperation" as you exit the financial system as fast as you can, adopting direct registration or certification where it still remains. Keep your bank cash not in the bank, but rather in fully paid gold coins and sell a few when you need funds. Bite the tax bullet and get out of those retirement plans, which really are plans to confiscate or direct your retirement funds into instrument of confiscation and treasury bonds.

My courage comes from the founding of the 13 colonies' independence. The pamphleteers of today are the bloggers not selling anything to their readers.

Sincerely,

Jim

_________________________________________________

In The News Today

January 30, 2013, at 1:00 pm
by Jim Sinclair

Jim Sinclair's Commentary

You have to love the MSM MOPE that this was unexpected as if it is an error to be corrected to the plus side.

 

U.S. Economy Unexpectedly Contracted in Fourth Quarter  
By NELSON D. SCHWARTZ
Published: January 30, 2013

 

The United States economy unexpectedly reversed course in the final quarter of 2012 and contracted at a 0.1 percent rate, the Commerce Department said Wednesday, its worst performance since the aftermath of the financial crisis in 2009.

The drop in gross domestic product was driven by a plunge in military spending, as well as fewer exports and a steep slowdown in the buildup of inventories by businesses. Anxieties about the fiscal impasse in Washington also contributed to the slowdown, one reason stockpiles grew more slowly.

Despite the overall contraction, there was underlying data in the report suggesting the economy is not on the brink of a recession or an extended slump. Residential investment jumped 15.3 percent, a sign that the housing sector continues to recover, for one. Similarly, investment in equipment and software by businesses rose 12.4 percent, an indicator that companies are still spending. Although economists expected output to decline substantially from the 3.1 percent annual growth rate recorded in the third quarter, the negative number still caught Wall Street off-guard. It was the weakest economic report since the second quarter of 2009.

"I'm a little surprised," said Michael Feroli, chief United States economist at JPMorgan. "It grabs your attention when you have a negative number across everyone's screens."

Stocks were down only slightly in early trading on Wall Street, as some traders shrugged off the unexpected drop.

More...

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The Euro Is Far From Finished

January 31, 2013, at 1:10 am
by Jim Sinclair

 

My Dear Extended Family,

 

Read and weep you expat euro snobs that swore the euro was finished. Those who looked me in face as if I was mad at lunch when bullish long term on the falling euro. Gold is why the euro is doing what it is doing, and mark of gold to the market will be universal among the strong currencies. Those that do not have or buy gold resisting marking their gold reserves to the market are sentencing their currency to the bottom of the batch.

 

I was shunned as too stupid to be alive when at $1.19 euro I warned there was a currency war that MSM was MOPEing the euro, but not to death. Plus the euro would beat the US and GB assault it was under.

 

You should have seen the face yesterday on the Bloomberg Money Bunnies when a talking head said $1.37 on the euro. $1.37 is too conservative, as is $3500 on gold.

 

Gold is going to and through $3500 in the reasonably near future. The point of this entire operation was to shake the tree to accumulate not in the paper market for gold, but real free gold in the cash market.

 

When I told you RGLD at $100 was too rich, too early, I am sure those who bought it when recommended the day Barrons bashed it saying it was worth no more than $5.60 laughed off my $100 observation. RGLD is a interest sensitive gold bank and should be played that way. It will return to $100 and above because there is no political will to accept higher rates. The Fed will buy any and all treasury instrument offered to them in order to keep rate low.

 

Here is another observation that few, if any, will listen to. The race for leadership in the gold share bull market coming will be between Mucks and Trucks. Something like a Saturday night monster truck show at the country fair.

 

Sincerely yours,

Jim

 

1.3572 +0.0084 (+0.62%)
2013-01-30 10:09:38, 0 MIN DELAY

 


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January 31 2013

The Wrap

Here are the 6-month charts for both silver and gold with yesterday's price action included. We broke above...and closed above gold's 200-day moving average yesterday. And we broke above...and closed above silver's 50-day moving average. As you know, JPMorgan et al can paint a chart with the best of them...and only the brain-dead technical funds are stupid enough to believe chart patterns in a rigged market...but such idiots still exist.

Click on image to enlarge.
 

 

Click on image to enlarge.
  

 

Where we go from here price-wise is anyone's guess...but based on what I saw yesterday, these rallies are going to end the same way as every other rally, because "da boyz' are going short against all comers. We shall find out soon enough.

***

Here's a very interesting pictorial that reader Oto Godfrey sent me yesterday...and you'll need to use the 'click to enlarge' feature to do it justice. It's worth a minute of your time.

Click on image to enlarge.
 

 

 

 


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phillipsJulian Phillips (www.kitco.com)

The Big Picture behind Germany Taking Half of Its Gold Home

Monday January 28, 2013 10:32

 

 

Bundesbank announced last week that they'll repatriate 674 metric tons of their total 3,391 metric tonne gold reserves from vaults in Paris and New York to restore public confidence in the safety of Germany's gold reserves. The transfer from the Federal Reserve is set to take place slowly over a seven-year period and will only be completed in 2020.

  

The Bundesbank, the central bank of Germany is to store half of its gold reserves in its own vaults in Frankfurt.

It is planning a phased relocation of 300 tonnes of gold to Frankfurt from New York and 374 tonnes to Frankfurt from Paris by 2020.

In doing so, the Bundesbank will have 50% of its gold reserves in Frankfurt, 37% in New York and 13% in London.

The Bundesbank said that it is focusing on the two primary functions in relocating its gold reserve, to build trust and confidence domestically, and the ability to exchange gold for foreign currencies at gold trading centers abroad within a short space of time.

Germany is the second largest gold holding country with 3,391.3 tonnes, behind the US with 8,133.5 tonnes.

Germany's central bank will repatriate part of its $200 billion gold reserves stored in vaults in the Federal Reserve in New York and the Banque de France in Paris.

Before German reunification in 1990, 98% of Germany's gold was stored abroad. The Bundesbank then started to bring its gold home and in 2000 transferred 931 tonnes from the Bank of England to Germany. It will continue to hold about 13% of its gold reserves in London, even after 2020.

With the introduction of the euro (12 years ago) the Bundesbank sees no need to hold any reserves at the Banque du France as it will no longer need them there for exchange for foreign currency, after all France uses the same currency now.

"This is above all a historical anomaly which is now being corrected," said David Marsh, chairman of think tank OMFIF, which issued a report earlier this month in which it foresaw growing importance for gold due to uncertainty stemming from the rise of China's Yuan as an alternative to the dollar.

Why?

  • There have been widespread stories that the Fed does not have the gold to return as gold held for governments is usually, 'unallocated'. This suggests that the German gold reserves were not 'allocated'. Ordinarily, central bank monetary reserves should be held in an 'allocated' format to evidence to whom they belong. As it is, held in an 'unallocated' form, in simplistic terms, this means that should the Fed fail, foreign central banks holding their gold there would be that unsecured creditors. This concern has been voiced inside Germany. It has been noted that the gold of Germany has not been audited in the past and it should be, on a regular basis. The German Court of Auditors told legislators that the gold had "never been verified physically" and ordered the Bundesbank to secure access to the storage sites. It called for repatriation of 150 tons over the next three years to test the quality and weight of the gold bars. But Germany has decided to move more than in this recommendation. It is said that Frankfurt has no register of the numbered gold bars.

 

  • We noted that it is going to take 7 years or 10 shipments a year to move it to Germany. This is odd because it can be done much faster. Are they allowing the banks from which it is being drawn to pull it back from those to whom it has been leased? If this is the case and they have to go out and buy the gold to supply Germany with, will we see the three central banks [the Fed, the Bank of England and the Banque de France] enter the open gold market as buyers of the gold they can't access in that time or has seven years been decided on because this matches the maturation of the leases?

 

  • The function of gold reserves is to ensure the flow of trade in such critical times that it is the last remaining asset a nation has that is acceptable to overseas creditors, when other national assets fail. As Greenspan put it, it is 'money in extremis'. But is it necessary to keep all a nations gold outside the country for this purpose? The decision to repatriate half the gold only leaves gold available in the world's financial centers for such purposes, while the gold held at home is available to be sent elsewhere. The problem of holding gold at home is that if it is needed for creditor payment it resides in the jurisdiction of the debtor, not a happy position.

 

  • As we said above, it appears reasonable to think that as France is in the same currency, there seems little point in holding any of Germany's gold in France. With the U.K. still using the pound sterling, keeping Germany's gold there still makes sense. The same applies to the U.S., which remains the wealthiest nation in the world, at the moment.

 

  • Are the nations where the gold is held the right places to store it? What if they face crises themselves? Is the move being made because of expectations of crises in those countries? What future monetary scene did Germany see that prompted the moves we see now? Nearly all the world's nations are acknowledging that China is headed to the top of the wealthy nations pile and is going to take the Yuan to a major global reserve currency, but the prospect of holding German or any other developed nation's gold in the People's Bank of China takes a leap of faith and an admission that power and wealth has moved East into politically unknown waters that is just too much at this time.

 

 

As we said above, the move of this gold to Frankfurt will allow time to ensure the central banks where the gold is held, to get hold of the gold if they do not have it at the moment. The prospect of developed world central banks now competing with those of the emerging world in the gold market may well start the next leg of the gold bull market because this new, persistent, price-insensitive buying has the power to take gold to a whole new level! We watch to see. If this does happen, then the whole nature of gold in the money system will change even before the changes are 'officially' accepted. Gold will be in a 'de facto' pivotal position in the monetary system again. It will be a short time from that point before it is 'officially' accepted then. The way will have been paved for China to arrive on the scene and gold to have a vital function in the monetary system between two very different and unconnected, politically and economically, power blocs, the developed world and the emerging world with China as its hub.

The last time the world was divided on this basis was at the start of both world wars. The consequences to the monetary world then were so devastating and saw the destruction of national currencies on both sides, in Europe.

History teaches us another lesson. Ahead of the second war, when it became apparent that extremists had taken power in Germany and war became a probability again, gold came into the picture very forcefully. We  are all aware of the 1933 confiscation of gold then, with the stated objective of expanding the money supply through the devaluation of the dollar in the U.S. but one side of that event has not been the subject of full public examination.

What happened to European Gold from 1935+?

Is the fear of future crises in those countries a motive for the move of Germany's gold back home? It certainly was so in Venezuela's case, fearful of the U.S.'s power over its gold and reserves. We don't expect any further statement on the reasons from Germany because that's the nature of central banks. But history tells us that there are other reasons, which discount the future. These confirm the move of gold back to the monetary system and why confiscation of private gold has become a probability in the future too.

When the U.S. dollar was devalued in 1935, it was done so only in terms of gold. It was not devalued against foreign currencies. Exchange rates were then fixed against each other. Other governments did not devalue their currencies against gold. The result was that while gold was trading outside of the U.S. in the foreign currency equivalent of $20, there it was trading at $35 in the U.S.

With markets relatively unsophisticated in those days, alongside limited communication abilities the original "arbitrageurs" [dealers between two markets] found they could buy gold at the foreign currency equivalent of $20 and sell it into the U.S. for $35. Is it any wonder that they U.S. gold stocks roared up to 26,000+ tonnes?

Was this a financial error in an undeveloped world? We have no doubt it was not. It was the ideal quick way to shift the gold reserves of Europe away from the war zone to the relative safety of the U.S. The war arrived in Europe four years later.

But foreign governments weren't stupid. European governments permitted this move, even though it was seen as a market event. Remember that gold was the basis of money then so such a shift had to happen with government approval. This had to happen within the monetary system in force at the time. The fact that it happened so smoothly implied total government cooperation.

We see it also as an example of how the banks work completely with monetary authorities to ensure complete control over the monetary system. The same is true today as we see the efforts of governments primarily directed at repairing the banking system and government finances with scant attention to the national economies below them.

With a war on the way Europe sent its gold to the U.S. without governments being seen to do it. The move came about as a result of 'market forces'.

But you may rightly say that surely that wasn't the end of the story? Of course not!

With a huge U.S. army based in Europe after the war, the flood of dollars from the U.S. to Europe happened from the forties right through to the sixties [Eurodollars] continued. European nations, including France, Italy, Switzerland and Germany led by President de Gaulle, kept selling their U.S. dollars for gold. Once Europe's gold returned to it [as the war was out of the way and reconstruction just about complete], Europe had its gold back. Then the change in the monetary system changed and the dollar, the exclusive currency in which nations could buy their oil to run their economies with closed the gold window and excluded gold from the day-to-day system but remained in national vaults. It was then that the experiment, now 42 years old, in un-backed paper currencies began. European central banks were then rewarded by the extraordinary rise in the gold price in the seventies and eighties.

This two-way process of gold to and from the U.S. only became visible with hindsight.

Julian Phillips

www.GoldForecaster.com

www.SilverForecaster.com

 

 


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mailboxDavid's Mail Box

 

Mr. Schectman-

I'm preparing to sell my house (on the market this spring) if/when I sell I'll be contacting you (Miles Franklin) about another silver purchase.  Until then- I have a question.

In Darrly Schoon's article on John Exter, it says;

"Paul Volker, then Under-Secretary of the Treasury under Nixon, had asked Exter's advice on the matter. Exter recommended the US raise the price of gold to accommodate the growing pressure on the US dollar. Volker said that wasn't politically possible. Exter then told Volker that Volker had no choice but to close the gold window. Two weeks later, Nixon did just that."

 

What an odd thing for someone that works for the Secretary of the US Treasury to say when they controlled THE largest stockpile of gold in the world (8,000+ tones?) UNLESS of course, they didn't.  If it WAS gone (the reason raising the price wasn't possible) it would explain his next comment perfectly, no gold to control- they HAD to close the window before it was public that the US had no gold- thus no backing at all to the US dollar.  Things that make you go hmmmm.

Is there something I'm missing in that statement? Some other reason they couldn't raise the price?  By doing so, what would happen?  Other countries would sell their gold to the US for the new, higher price (sounds like a GOOD thing by creating demand for the USD while adding more "wealth" to the US), the US and other countries would have been freed to print more money supported by the new, higher price (another good thing), so where's the "not possible" come in? 

This statement alone would seem to me to be very telling.  Comments?

 

Thanks for your insightful comments.

This was at the very time when foreigners were dumping the dollar "like a hot potato." They were seeking out gold as a safe haven and with inflation rising rapidly in the US they wanted nothing to do with the dollar as a store of value. Our bond market was falling apart and ultimately; it took interest rates over 15% to sell them. We had to stop the bleeding, support the dollar (with higher interest rates) and stop gold in its tracks, before it hit $3000 as the Aden Sisters predicted.

What Exter was saying was we had to let the official exchange price of gold ($35/oz.) rise to a level that would be so high as to discourage foreigners from redeeming their dollars for gold. The government knew that in the process, we would lose too much gold and could not let that happen. (Though they probably have sold and leased much of it out since then,)

Had Nixon NOT closed the gold window, our gold would have flown the coup to France. Our stock of gold had already dwindled to half of what we had at the end of WWII. Our trading partners were thrilled to exchange 35 DOLLARS for an ounce of our gold. Once the dollar and all currencies were no longer pegged to the dollar, gold rose to a peak of $850, in early 1980. They had to stop the flight from dollars to gold and did so by allowing interest rates to rise so high that people once again started buying US 30-year bonds and had less need to accumulate gold. Gold tumbled, the dollar stabilized and we were treated to a couple of decades of relative stability - until Greenspan opened the monetary floodgates and spoke up against regulating the banks and brokerages and created the first bubble, the Internet Dot.com bubble.It collapsed in 2000 followed by the real estate bubble collapse in 2008. Stick around for a short while and you will witness the next bubble to collapse and it will be the grand-daddy of them all, the bond market bubble. It's coming and once the Fed stops QE and interest rates start to rise, like they did in the 70s, the explosion will be felt around the globe.

 

David


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aboutAbout Miles Franklin

Miles Franklin was founded in January, 1990 by David MILES Schectman.  David's son, Andy Schectman, our CEO, joined Miles Franklin in 1991.  Miles Franklin's primary focus from 1990 through 1998 was the Swiss Annuity and we were one of the two top firms in the industry.  In November, 2000, we decided to  de-emphasize our focus on off-shore investing and moved primarily into gold and silver, which we felt were about to enter into a long-term bull market cycle.  Our timing and our new direction proved to be the right thing to do.

We are approaching $200 million a year in precious metals sales.  We are rated A+ by the BBB.  We are recommended by many prominent newsletter writers including Doug Casey, David Morgan, Ron Hera and LeMetropole Caf�.  Our reputation for service, education, quality product and pricing is outstanding.

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