March 12, 2020
The Miles Franklin Newsletter
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From The Desk Of David Schectman
“Dow futures plunge almost 1,100 points as Trump speech disappoints investors.” 
Dow futures are down over  1000 points ... S&P futures near   limit down ... WTI down 6%...
The Dow is headed toward 20,000 and below and if you believe Gerald Celente, and I do, pay attention to what he has to say about this:
Gerald Celente, sees $2,000 gold and onset of Greatest Depression by early 2021.
David's Commentary (In Blue):

The virus is not the cause – the cause is too much debt and reckless monetary policies courtesy of the Fed (and other central banks). The coronavirus just lit the fuse.
 
If you asked those who know me well, family and friends, they probably would describe me as someone who sees around corners and is usually right, but almost always early. Well, this time I am not early and I am right.
 
I have taken a lot of flack from my friends and some of my immediate family for being too negative (about the stock market and the coronavirus). I have been told “you amuse me” and “you are crazy.”  This is not funny and it is not to be taken lightly.
 
Do you want to know what is in store for us? Look at Italy. Look at China. Look at Iran and South Korea. We are Italy – in a few weeks.
Italy is on lockdown. According to an article in the Los Angeles Times, “This region, known as Liguria, is not the worst hit, but is just south of the areas that are. On Saturday, March 7, our streets and beaches teemed with tourists from the colder cities of the north. On Sunday morning, the government ordered the northern regions most affected by the virus sealed off. Two days later  the whole country  was locked down. 

On Wednesday night, Prime Minister Giuseppe Conte announced the nationwide closure of all shops, except food stores and pharmacies. Now our streets and beaches are deserted, with most of the locals behind closed doors.”
Susan and I are fortunate. We have the ability to self-quarantine for months. We just put our health club memberships on hold, to our great dismay, and went to a store that sells work out equipment and purchased an elliptical machine, and set of bar bells and a mat. We will work out at home. We have everything we need to isolate ourselves – food, water, toilet paper, prescription drugs, and the means to protect them. 

In 2013 I purchased a large quantity of food for myself and my two children. My son thought I was crazy but kept his thoughts to himself. My daughter thought I was crazy and told me so and laughed. She still thinks I’m crazy but is not laughing about the food. She is stocking up on necessities herself now. Right, but early, that’s me. But now it’s no longer early.

If you want to be safe, you must avoid crowds. Avoid people. That means family and friends – because family and friends are people and anyone can carry the virus. A couple of hours ago the NBA cancelled the rest of the season. Rudy Gobert, the All-Star center for the Utah Jazz tested positive for coronavirus. He has been in close physical contact, sweat, touching, everything, with his team mates and the players from opposing teams that they have played recently. Imagine how many people he (just one person) could have infected and how many people each of them could have infected.

There is essentially NO testing in the US. You have to be deathly sick, or have been in contact with someone who is known to have the virus or have recently traveled to China, Iran or Italy before you can get a test. How many millions of people are walking around already infected that are not showing up in the statistics? 

I am not an expert but I do think clearly and logically and I am very worried. I am prepared for the worst-case scenario. If anyone does not do this, they are playing Chinese Roulette. The thing is, we all have a CHOICE. We can go on living like this is nothing to worry about or we can stop and think about the danger and how to avoid it NOW.
I have read articles from credible sources that say 50% to 70% of Americans will come down with the virus. That’s 163,000,000 to 229,000,000 Americans. If most of the cases are mild (questionable) and only 15% get seriously ill – and if you do, it is a very nasty disease, one that should require many days of hospitalization, that is up to 30,000,000 people - and you don’t want to be one of them. And if you are one of the unlucky 3.5% who dies, you will have a lot of company – the numbers project to around 7,000,000.

Another article says up to 70% of Americans will get the virus and everyone will personally know someone who died from it. There is no cure. There is no vaccine. The vaccine is by most estimates, assuming they come up with one and the virus doesn’t mutate, is a year and a half or more away.

You can believe this or not. Maybe the numbers are too high – or maybe too low. Makes no difference, whatever they turn out to be it will be horrible. What you cannot afford to do is to guess wrong.

Make the time to watch this video by Chris Martenson. He is credible.
by  williambanzai7  - Mar 11, 2020 1:57 pm

"If the facts alarm you, the problem isn't with the facts"--Chris Martenson
This is not a medical newsletter, it is a precious metals newsletter, so what does all of this have to do with gold and silver?

First of all, let me set you all straight on how gold and silver are performing in the midst of the crashing stock market. People keep asking me why gold and silver aren’t doing better with the stock market on the ropes? Just 3 weeks ago, the Dow was about 29,000 on February 21. Silver was 18,50 on February 21. Gold was 1,640 on February 21.

Well, at the close of the markets yesterday (on Wednesday) the DJIA closed at 23,553. Silver closed at 16.52 (highly manipulated price by JPMorgan) and gold closed at 1640.

Forget about silver for the moment, no one is selling physical silver in quantity to cause the price drop, which amounts to -10.8%. 
" So what accounts for silver being dirt cheap relative to gold? Exactly the same thing that accounts for the absolute price levels of each metal, namely, futures positioning on the COMEX. Yes, I'm well-aware of the major issues of the day, including a developing worldwide pandemic, economic uncertainty, wildly fluctuating stock markets and declines in interest rates never before experienced. It would be impossible not to be aware of such things. But more than ever, the near sole driver of gold and silver prices is futures contract positioning on the COMEX. And more specifically, the positioning that is directly tied to the fate of the seven big shorts in COMEX gold and silver futures and the unusual role of JPMorgan.
 
Case in point - last week's near epic decline in silver prices is more than fully explained in last Friday's COT report (which coincided with the decline), as more than 32,700 net silver contracts were dumped by the managed money traders, in response to JPMorgan's and the other commercials' rigging lower of the price. That's the equivalent of more than 163 million oz of silver being dumped on the market - nearly two and a half months of world mine production, the most intentionally induced selling in history. How could silver prices not collapse under the onslaught of such deliberately induced selling? " --  Silver analyst Ted Butler : 07 March 2020
The DJIA is down 18.8% and down another 1,000+ points already in the aftermarket coming into New York. Gold, well gold is exactly the same price as it was on February 21. It hasn’t gone up (actually it did, but the PPT couldn’t let that happen with the Dow crashing so it has been sold off a bit) but it has held its value. That is what gold is supposed to do in a crisis and this is a crisis, actually two crisis’ that are growing worse by the day. Even if gold would have dropped more, it would be a win. In a market crash or severe bear market the winner is the asset that LOSES THE LEAST. 
Here is what I expect will happen. The global economy is shutting down now. Stock markets around the world are tumbling. Oil is collapsing. Central banks will do what they do – print more money. The Fed will do the only thing it can do, lower interest rates (not much ammo left in their pouch) and ramp up Quantitative Easing in addition to REPO to help support the economy and the stock market. It won’t work. Once the Fed starts monetizing debt and flooding the market with more QE (they have already started with REPO) then gold will rocket up to new heights that will startle you. Why do I think that will happen? Because it happened before.
 
The Dow peaked at 17,671 in December, 1999. It crashed to 9,252 in March 2009 in the midst of the 2008-2009 financial crisis. Gold was around 750 when the Dow crashed and the Fed instituted QE. Look at the graph below and see how gold reacted to the money stimulus courtesy of the Fed. 45-degree rise that lasted for three years - and gold rose by over 250%. If gold reacts the same way this time, with a starting point of 1650, gold would hit 4,125. 
Now that I’ve gotten that off my chest, I am going to present you with another one of my RIGHT BUT EARLY predictions. I fully expect to be right on this one too.

Use Italy or China as an example. We are them, just lagging behind by a few weeks or a month. What do you see over there? A virtual shut down of everything. Italy, in fact, just suspended mortgage payments (because people aren’t working and don’t have the money to pay the mortgage). Do you think people will be working at the Mint in West Point? Do you expect people to go to work at UPS warehouses or drive a truck to make deliveries? Do you expect US mail deliveries? I fully expect that, for a while, the precious metals industry and virtually all business, will shut down. You will not be able to buy or sell. Let that sink in.

This is the time to act. NOW. If you want or need more gold or silver buy it NOW while you can still get it. It will soon be much more expensive and then unavailable at any price. If you think you need cash now, to get you through the financial disruption, and need to sell gold or silver to get liquid, call us and sell it NOW while we still can handle the order – before the system shuts down. I love my gold and silver but I am prepared for a short period in which even me, a player in the industry, will not be able to buy or sell for my own needs. 

I have never written an article like this. Andy and I talked for over an hour tonight and both came to the same conclusions. After 30 years, we both have a feel for our industry. Our instincts tell us this coronavirus is far worse than most now are willing to believe. Miles Franklin can survive a shutdown in our industry that could last for weeks or months. We will be fine and we will be here when life gets back to some semblance of normal. But I urge you to set aside enough cash, and top off your gold and silver now, before the prices go ballistic (more demand than supply) and supply dries up completely as the supply chain goes into cardiac arrest. 

Do not take a chance. Take every precaution you can now. This is real, it is not a drill.
Zero Hedge
 
 
...we are   deeply concerned  both by the alarming levels of spread and severity, and by the  alarming levels of inaction...
 
 
If we eventually see similar numbers throughout the entire western world, the   global economy will collapse , there will be  great civil unrest  all over the globe, and tens of  millions of people will die ...
 
 
"After 11 years, 13% annualized earnings growth and 16% annualized trough-to-peak appreciation, we believe the S&P 500 bull market will soon end."
 
 
 
The growing funding panic also meant that general collateral has continued to rise...
“I wouldn’t be surprised to see the overall markets down 50% by summer”
SRSrocco
 
Of course, most of the financial analysts are saying that once this “Global contagion” finally subsides, then the Dow Jones Index will be at new highs next year. My reply to that would be…

LOLOL

My analysis of the current situation suggests that we haven’t BEGUN to see the CARNAGE in the markets. I wouldn’t be surprised to see the overall markets down 50% by summer.  And my forecast of the oil price to reach the low $30s may turn out to be way too conservative

WARNING: If You Haven’t Been Preparing For This Global Contagion, You Better Start

I haven’t been writing too many articles recently on my typical subject matter, because it’s not important right now. I find it utterly hilarious to see many of the precious metals analysts only focusing on gold and silver. The global contagion is far worse than problems just with the monetary system or the precious metals. However, it is important to own physical gold and silver now if you don’t have any.

I gather many of you have seen the images of Costco stores being wiped out of toilet paper, hand sanitizers, water, rice, etc. This is just the FIRST STAGE. I have seen some sources stating that due to the virus breakout in Seattle, many stores have empty shelves as people buy canned foods, packaged foods, cleaning supplies, etc. When we see a large percentage of stores across the United States will be a lot of empty shelves, then we have moved into the SECOND STAGE.
 
When Chris says that the “U.S. is in DEEP TROUBLE,” he’s correct. Our system is not prepared at all for this global contagion virus, and I believe, from looking at several different scenarios, the U.S. will be in serious trouble by the end of May. Of course, we are going to see more cities being quarantined or shut down over the next 6-8 weeks, but the stock markets and economy will be contracting at an alarming rate by that time.
 
My gut tells me that Americans won’t have more than 1-2 weeks to prepare before it gets really crazy. Now, I am not saying you have two weeks to prepare, but it may take 2-3 weeks before a lot of the shelves at Grocery stores become empty and will take time to restock.
LeMetropole Café
 
Now word is the Fed is taking our interest rates down to zero. Hard to imagine a better investment than gold, and then silver, of course, once JPM gets done with its 9-year drill.
 
Of all the insane things occurring in global markets the most insane of all may be: the gold/silver ratio just hit 100-1. Another joke becomes reality. The farcical explanation about gold and silver being "liquidated" to meet margin calls is once again MSM reason du jour.

Oil was down 30%, the Dow off 1,300 points for hours before the attacks on the metals began. Gold and silver were correctly soaring. Financial stocks such as JPM and GS were getting taken to the woodshed. If anybody was needing to panic with gold and silver it would have been the SHORTS. Gold was $1700 and going parabolic. The silver signal was the tip-off that this was a coordinated attack. While there could indeed be spec long funds getting out of all positions, they would have been dwarfed by the all-out panic BUYING of the metals.
J OHN RUBINO MARCH
Even The Best-Case Scenario Is Pretty Grim
 
Let’s say President Trump is right about the coronavirus "miraculously" fading away as temperatures rise in the Summer. Will things then go back to the old normal of globalization, free trade and finance-driven "growth"?

Almost certainly not, because the psychological damage has already been done. Over the past couple of weeks, the modern globalized economy with its multi-nation supply chains and just-in-time inventory systems has been forced to recognize that such a system only works in a nearly- perfect environment. Consider, for instance, the iPhone: It is designed in the US, its constituent raw materials are mined and processed in numerous other countries and the resulting components are then shipped for assembly to vast Chinese factories.

Break any link in this chain and the whole thing grinds to a stop. One unavailable commodity or component, one out-of-service assembly plant, one country with closed borders or out-of-control civil unrest, and a multi- billion-dollar revenue stream evaporates.

To varying degrees, the same threat hangs over pretty much every major product these days. Most of the world’s pharmaceutical building blocks come from China and India, for instance. Car parts are made in multiple countries before being shipped to assembly plants near consumers. Virtually all of this depends on an environment where trade flows are unhindered, capital is free to find its most efficient home, and shipping is frictionless.

That’s the system the developed and developing worlds have collaborated to build in the past few decades. And now — in the blink of an eye — everyone recognizes it as ridiculously fragile and therefore way too risky to maintain.

Put yourself in the expensive shoes of a multinational company CEO. You’re staring into the abyss on this Monday morning, praying to your version of God and promising that if He lets you off the hook this time, you’ll mend your ways. You’ll simplify those supply lines, bring as much action as possible back home, and end your reliance on debt-ridden "global manufacturing platforms" with unreliable public health systems. And you’ll start stockpiling inventory against what you now understand to be inevitable future disruptions.

These aren’t idle promises, to be forgotten the minute the crisis is past. Your board of directors and most of your shareholders now understand that globalization means "excessive risk" and while they may give you a pass on some bad earnings comparisons in 2020, they won’t accept a repeat performance in later years.

So…major companies in pretty much every corner of manufacturing will be forced to scale back their work in Asia and the rest of the developing world and bring much of it in-house or at least physically closer. This is by and large a good thing for the US and maybe Europe, but more than offsetting a modestly expanding manufacturing sector at home will be the financial impact on China’s vast and massively over-indebted contract manufacturing sector and hyper-leveraged municipalities that spent the spent the past decade building roads, airports and entire cities with borrowed money.

Which means the best-case scenario is the long-awaited Chinese financial crisis. And with the rest of the world just as over-leveraged as China, the implications of the second biggest economy shifting into reverse and possibly descending into chaos are hard to predict in detail but easy to envision generally: turmoil in the currency, fixed income and stock markets which force the major central banks to push interest rates into negative territory and require governments to run deficits that dwarf those of the Great Recession.
If any major fiat currency is still functioning at the end of this process, that will be the real miracle.
Ed Steer

I had a short e-mail exchange with Jim Rickards on Tuesday. Here it is in its entirety -- and posted with his permission...
 
Hi Jim...What do you read into this, if anything?   A Shift in the Global Financial Order Is Upon Us -- John Authers, Senior Editor...Bloomberg ...especially these three paragraphs below...
 
"The Oil Standard era ended in the early 1980s. Markets - and everyone else - had lost faith in the ability of central banks to control inflation. Paul Volcker arrived at the Fed, raised rates more than anyone thought he would dare, provoked a recession, and convinced everyone that central banks could control inflation after all. In conjunction with the Reagan/Thatcher approach to economic management, and then the collapse of the Soviet Union and the resurgence of China, that ushered in a quarter-century of triumphalism for a new model anchored by broadly trusted central banks.
That foundered in the financial crisis of 2007-09. Now we have reached a new juncture, where the fear is that central banks cannot control deflation. For the post-crisis decade, the U.S. has managed to stay distinct, thanks in part to the privilege of the world's reserve currency, and in part to the superior success of its corporate sector. It has done this even as Japan and Western Europe have sunk into negative interest rates, while the emerging markets have stagnated. The twin shocks of the epidemic and the oil price now appear to have wounded confidence that the U.S. can stand alone.
 
It certainly looks as though the world has at last arrived at a point that it appeared to have reached a decade ago.  Some new financial order, to replace Bretton Woods and the system that Volcker built to replace it, is now needed . A decade of monetary expansion has delayed the issue.  It is hard to see how it can be delayed much further. It would be wise to brace for disruption to match what was experienced at the end of the 1970s and the beginning of the 1980s ." [Emphasis mine. - Ed]
 
Hi Ed...
 
"I've heard the same complaint privately from Ben Bernanke and John Lipsky (former acting Managing Director of the IMF).
 
The elites agree the system is unstable (or "incoherent" as Bernanke told me), but they don't have a good replacement.
 
The biggest problem is that when you try to benchmark the dollar (up? down? sideways?) there is no benchmark. They're trying to measure something with no measuring stick. If the dollar is up against the euro and down against the yen at the same time, did it go up or down? That's the problem.
 
There is a way to benchmark the dollar and all other currencies so that they can be measured against the benchmark and against each other. It's called gold (by weight).
 
And, there's a way to beat deflation and get inflation overnight. FDR did it in 1933 (intentionally) and Nixon did it in 1971 (by accident). It's called gold. If the Fed bought gold at $5,000 per ounce and made a two-way market, gold would be $5,000 per ounce. The point is not to enrich gold holders, but to get widespread inflation. The world of $5,000 gold is also the world of $150 oil and $75 silver. Every other price goes up at the same time.
 
So, gold can solve the benchmark problem and the inflation problem. But, that won't be tried until things get much worse. Authers anticipates a "new" system, but he doesn't know what it is or how to get there. The answer to both questions is gold." -- Jim
 
So the last card that the Fed and the Wall Street banks have left in the deck is the gold/precious metals one. JPMorgan is certainly in a position to play it -- and benefit handsomely from it as well. But will they or not is the question -- and how bad will things have to get before they're forced to? However, they and their cronies haven't been squirreling away gold and silver for all these years for no reason.
 
That moment may be in our future, but until that moment arrives, we're going to be on care and maintenance. During that period they're going to be swallowing up all the physical precious metals they can, plus their associated equities -- and covering every possible short position that they can in the COMEX futures market...which is what they're in the process of doing now.
Andy Schectman: Silver Sales Rise As Stock Market Collapses
While the prices of gold and silver have been hammered in recent weeks, what’s interesting is that the bullion dealers have been reporting a surge in sales. Especially in silver. Fortunately Andy Schectman of precious metals dealer MilesFranklin joined me on the show to share what he’s seeing in terms of customer order flow. And whether people are buying or selling physical gold and silver, even on the days when the Comex prices are down. So to discover what’s happening, click to watch the interview now!
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About 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.

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