David's Commentary:
The year was 1970. That was the year that my son Andy was born. I was an assistant buyer working for Target Corp., which was headquartered in Minneapolis, and at the time, consisted of only 29 stores. I drove a red Mercedes 250SL and had an Afro that rivaled Jimmi Hendrix.
We had recently built a four-bedroom colonial house in a new development 20 minutes northwest of Minneapolis. The area used to be farmland and there were no trees on our cul de sac, outside of the tiny saplings that we and our neighbors planted in front of our houses. Susan hated that. This was the era when the middle class strived to move out of the city and into the suburbs, have two kids and live the good life. We fit the mold.
We made friends with a couple who had just moved to Minneapolis from Cleveland. The husband worked for Medtronic as an engineer. He was very smart and forward thinking – and he also wore short sleeve shirts and always had a pen and a slide rule in a vinyl holder that fit in his shirt pocket. You get the picture. To this day, I remember two things. Don’t forget, it was 1970. He told me that one day every home would have a computer in it to turn on and off the lights and appliances and replace the typewriter. We used computers at Target for inventory management - but a computer for your home and personal use? How unlikely was that! He also had several 100-ounce silver bars. For the life of me, I could not understand why anyone would buy silver bars. In fact, I didn’t know that they even existed.
He was not the first person I knew who bought silver. A gun collector I knew was collecting silver dollars in the late 60s. They were selling for more than their one-dollar face value. I had a few that my uncle Irv gave all the kids in the family every time he returned from a vacation in Las Vegas. They used silver dollars in the slot machines pre-1966. That’s when the government removed silver from our coins. Silver was worth more than the face value in U.S. coins. I sold my stash of half a dozen for $2 or $3 each. That’s the last time I thought about silver until the fall of 1983.
And then there was a man I knew of from going to the local gun shows. He lived in Duluth (165 miles north of Minneapolis, not far from Canada) and as it turned out, he got into big trouble with the authorities (may have even gone to jail) because they caught him bringing gold coins into Minnesota from across the border. This guy’s a criminal, I thought. Imagine that! Seven years later, on January 1, 1975, these restrictions were lifted, and gold could be freely held in the U. S. without any licensing or restrictions of any kind.
After two years at Target, I went to work for Champion Products (Rochester, NY) selling imprinted sports ware and athletic uniforms to the schools and camps in Minnesota and Western Wisconsin. Over the next few years, I developed a friendship with the Athletic Director at Rosemount High School. One day, in 1980, he told me that he had needed some cash and asked me if I could help him out and buy three gold coins that he had. I didn’t know gold coins from borscht, but I was happy to help him out. As I recall, there was a $5 Indian, a $10 Indian and a one-ounce Krugerrand. They didn’t cost much, maybe several hundred dollars. I put them away in a cigar box and forgot about them – until the fall of 1983.
1983 was the year that both Susan and I found ourselves unemployed. Up until that time, we both worked and did very well – you know, a new house in the suburbs, two cars, and a vacation every year. We had been living the America dream. It didn’t take long before our money ran out. Susan sent out letters to all of our creditors, informing them that we couldn’t make the payments but would do the best we could and would take care of things as soon as we could. When I say we had no money, I mean we didn’t have $50 to our name and our attorney strongly urged us to file for bankruptcy. That’s when I remembered I had a few gold coins in a cigar box, set aside on a shelf in the storage room in the basement. I had no idea what they were worth, so I brought them to a coin dealer a couple of miles from our home. He paid me based on the “spot price” of gold and the weight of the coins (not the numismatic value which was a lot more). Isn’t it funny that the LAST financial assets I had to my name were those three gold coins. Why did I hold onto them until the very end? As Richard Russell used to say, there is something special about gold. It is man’s DNA. At the time I didn’t realize the significance of what that meant, but I sure was thankful that I had them. It took care of another month’s worth of rent and food.
A couple of weeks later, Susan and I were at a party at a friend’s home. He mentioned that he knew of a local company that sold gold coins on commission, and he thought that they might be hiring. I was so desperate by then, broke with no job offers in sight (1983 was a deep recession and no one was hiring) that I followed up the lead and applied for a job at
Investment Rarities
. In 1983, along with
Blanchard
, they were one of the two largest precious metals companies in the industry. Success in life can be attributed to making just a couple of “right” decisions over a lifetime. This was one of those events. It was fate. There was no way in the world that I would have considered selling gold coins on commission – unless I was desperate, and I was desperate.
Well, you know how that worked out. I found my calling. I was always a conceptual thinker and tended to think way outside the box. That didn’t work well in the jobs I had before. All that mattered in all of my previous jobs was hard work. That was not necessarily my strong suit. Within one year I was number 9 out of 65 brokers, starting from nothing. By year two I was training all of the brokers on a new way to present gold and silver. I taught them that it was necessary to explain the virtues of precious metals - OTHER THAN PROFIT. By my third year I was representing IRI at the major investment seminars all over the U.S. I even spoke at financial conferences in the Cayman Islands, in Hong Kong and in Switzerland. I had found my calling. I was teaching. I was selling conceptually. I was educating.
In December 1989 I left IRI and started Miles Franklin. Initially the new company specialized in selling Swiss annuities – and some gold and silver. I brought along one of the IRI brokers and Susan suggested that I bring my son Andy into the business too. He was just 19. Andy will turn 49 this August. He has been with me for 30 years and has not only learned the business from me, he has taken it to another level.
All of my experience, from 1970 on, subtly influenced my views on gold and silver. From wondering why anyone would own precious metals, I found myself cashing in three gold coins at my moment of greatest need. When I went to work tasked with the responsibility of selling gold coins to the retail public I asked MYSELF a question. Why would anyone need to buy a gold or silver coin? Unless you were a collector, but that was different. I decided that in order to properly present gold and silver I had to really learn about their history, as money, and teach myself what made them special and worth owning. After all, If I didn’t understand the WHY myself, how could I even think of selling them to anyone else?
I started reading every book and newsletter I could get my hands on. I got up to speed in a hurry. I was the only broker at IRI who was presenting gold and silver as a hedge against inflation, as a crisis hedge, a way to privately pass down wealth, and as a financial asset that offered far more than profit as a reason to buy them. I was probably the first gold and silver salesman in the industry to understand that in order to be successful, and of value to a client, I had to learn how to educate my clients on the things other than profit that made them special.
I believed that if I was going to sell gold and silver, I should own gold and silver myself. I have been buying them for myself on a regular basis for the last 36 years.
In 1988, while still employed at IRI, I started to write a popular monthly newsletter called
Future Economic Trends
. I had befriended Dr. John King, who published the newsletter. He suddenly passed away. FET was an unusual newsletter in that its focus was on DEFLATION. All the other newsletters (except one written by Vern Meyers) focused on inflation. I took on the task to continue writing the newsletter, and I published FET for the next three years. I had the unique opportunity to view gold and silver through the prisms of inflation and deflation. Actually, they work in either scenario. You saw both sides of this at play in 2007-2008. First, there was a deflationary crash that nearly brought down the financial world, and then it was followed by inflation in stocks and bonds (the Fed flooded the markets with trillions of dollars, leading to a bubble in the bond market and the stock market that are yet to be dealt with).
When I left IRI to start
Miles Franklin,
I took along the FET mailing list and was a known entity to its readers. For those of you who aren’t aware – the company name is a combination of my middle name, Miles, and the name of a friend who was a silent backer in the beginning, whose middle name is Franklin. It just sounded right. And now, 30-years later, the name
Miles Franklin
means a lot in our industry. There are few firms who have a better reputation, one that was earned through hard work, honesty, and the willingness to do what we say, price our product more than fairly and take the time to educate our clients. And that’s my story for today.
Geeze, even Jim Cramer is bullish on gold. What is the world coming to?
