December 27, 2019
The Miles Franklin Newsletter
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From The Desk Of David Schectman
This Tide Will Turn.
 
We caution our clients that 2019’s uniquely favorable market conditions are unlikely to be sustainable. Gold performed extremely well in the face of this year’s market jubilee, which transpired in supportive conditions of a stable U.S. dollar and benign inflation. For twilight surfers, however, we believe gold’s lifeguard role has never been more important – Peter Grosscopf
 
ANZ sees gold rising steadily throughout next year and peaking at $1,620 in December.
“Our gold model points to USD1,600/oz in 2020. Our model – based on real interest rates, USD and inflation expectations – shows gold’s value at USD1,470/oz. With a slightly weaker USD and only a tepid increase in bond yields, it forecasts gold will hit USD1,600/oz in 2020.” - Australia and New Zealand Banking Group (ANZ)
 
If you want to understand the relevant history on why the New York Fed is currently throwing hundreds of billions of dollars each week at Wall Street's trading houses, here's a quick tutorial on the rapid financial collapse on Wall Street in 2008. Wall Street banks were very much aware in 2008 that they had created a house of cards by placing trillions of dollars of their derivative bets with weak counterparties. But they didn't know just how much exposure each bank had or which counterparties would collapse first because the derivative bets were mostly private contracts between two counterparties. (That situation remains today.) So the Wall Street banks simply stopped lending to each other and credit markets froze.
 
That forced the Federal Reserve to throw a cumulative $29 trillion in all directions to bail out not just U.S. banks on Wall Street but the foreign banks that were on the other side of these reckless and irresponsible derivative trades. – GATA.org
David's Commentary (In Blue)

I am on vacation until after the first of the year but will write one last year-end recap next week.
 
Both gold and silver closed above their respective 50-day moving averages for the third day in a row on Thursday.
 
Gold is now $23 above its 50-day moving average -- and silver broke above and is $0.57 above its 50-day moving average. The 50-day moving average is a big deal to the traders.  Finishing the year safely above their 50-day moving averages AND the key $1,500 and $18 support levels will be a great way to start off the New Year.
Was 2019 a good year for gold?
 
Here is where gold stood on Jan 1, 2018. I’d say gold performed very well and will finish the year around $200/oz higher.
Gold’s next upside price objective is a close in February futures above resistance at $1,527.80.
The Silver bulls' next upside price breakout objective is a closing price above resistance at $18.50 an ounce.

The Smartest Bet in Gold
 
By E.B. Tucker, editor, Strategic Trader
 
I am very confident about gold right now.
After spending six years in a crippling bear market, gold came to life over the summer.
 
With little press attention, gold quickly shot from $1,270 in early May to nearly $1,550 in early September.

I’ve gone on record predicting gold will surpass its 2011 high of around $1,900. That’s about a 30% gain from here. And I expect that to happen in 2020.

A new bull market is underway… and I don’t see it slowing down anytime soon.
One of the key catalysts to a significant rise in the price of gold is a falling dollar. Once the dollar surrenders its role as the world’s reserve currency or as the petro dollar, inflation will reappear with a vengeance and gold is off to the races.
Zero Hedge
 

"Along with universal convertibility of the yuan, a move to 10% gold reserve backing by China would be a magnet to all currency traders..."
Reason No. 1 in the following list is to me the biggest factor in gold’s strong performance this year. Banks can now list their gold holdings, along with cash and US Treasuries, as a riskless asset. Is it any wonder that central banks have been increasing their gold holdings?
 
This article pretty much covers all the bases as it lays out the reasons to be bullish on gold in 2020.
Casey Daily Dispatch
8 Reasons a Huge Gold Mania Is About to Begin

By Nick Giambruno, chief analyst,  Crisis Investing
An epic gold bull market is on the menu for 2020.
I’m not talking about a garden-variety cyclical gold bull market, but rather one of the biggest gold manias in history.

This gold mania will be riding the wave of an incredibly powerful trend… the re-monetization of gold.

The last time the international monetary system experienced a paradigm shift of this magnitude was in 1971.

Then, the dollar price of gold skyrocketed over 2,300%.

It shot from $35 per ounce to a high of $850 in 1980. Gold mining stocks did even better.
Today, gold and gold mining stocks are still very cheap. I expect returns to be at least as great as they were during the last paradigm shift.

So let’s get right into it, starting with the first four catalysts that will send gold prices higher…

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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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