The Miles Franklin Newsletter
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From The Desk Of David Schectman
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Gold suddenly up 11% YTD based on the Crimex figure. Maybe closer to 18% in real physical? Stock/equity owners could have not only avoided disaster, but actually could have MADE a lot of money had they opted for the real money. Disaster insurance does have its benefits, eh? Of course, TSLA will be back at $900 in no time lol.
– James Mc
WTF! Washington has well and truly lost what little collective mind it had left. Its panic driven assault on financial sanity apparently has no limits whatsoever, which means there will be hell to pay when trillions upon trillions of mindless monetary and fiscal “stimulus” come flooding into an already debt and speculation enfeebled economy now.
David Stockman
“
I see the daily sales numbers. They’re like ten times higher than they’ve ever been, okay? So, people are buying these products. The products are becoming short. The premiums are going up. And we get orders from all over the place. We’re just shocked at the people who are finally reacting to that. And I think the fact that there’s going to be this retail demand from around the world will be a big factor in where we ultimately discuss where prices are going.”
– Craig Hemke
due to our conviction in rising gold prices, we are meaningfully raising our gold price deck … to $2,500/oz in 3Q20 … and we feel compelled to align our 12-month price targets to this view.”
The main driver will not be a potentially deep recession or another major drop in equity markets, but extremely low rates along with “unprecedented fiscal and monetary stimulus,”
– B Riley FRB analyst
CME resolving physical gold squeeze with delivery of 100- ounce, 400-ounce and 1-kg bars "According to reports, bullion banks across the board reported massive liquidity issues Tuesday in the physical market. The problem, according to many banks, was the Exchange For Physical (EFP) market, which allows traders to switch gold futures positions to and from physical.
Spreads in EFP are typically around $2, but on Tuesday, because of a lack of supply, the spread increased as high as
$40."
https://www.kitco.com/news/2020-03-24/CME-resolving-
physical-gold--queeze-with-delivery-of-100-ounce-400- ounce-and-1kg-bars.html So All the CME explanations about EFP's were all a lie. This IS a force majeure, and they're now trying to cobble a workaround. This ain't over by a long shot.
– Bill Murphy
The search is on for a drug for COVID-19. Researchers say it will take time, and the likelihood of a quick fix is low.
The process
On March 16, 2020, the first volunteer in the U.S. received a dose of an experimental
coronavirus vaccine in Seattle
. As many as 40 other companies are working on a vaccine around the world. Experts expect development to take 12-18 months at the fastest.
– St Paul Pioneer Press
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David's Commentary (In Blue):
Mike Savage has presented an interesting article built on the premise that the coronavirus was a planned event. Most people have trouble with any “conspiracy” theory, but this is a good one and he connects all the dots. Some will agree with his premise, many will not. But whether the virus was a planned, a mistake or an act of nature, the result will be the same. The Fed may well end up owning everything.
According to Forbes Magazine, Nancy Pelosi said the Coronavirus Stimulus Offered by House Financial Services Committee Creates a New Digital Dollar. My oh my. Kind of fits right into what Savage is talking about. The elite are getting very close to their stated goal of a one world currency and government. I have only one question for you: Got Gold? Honestly, there is so little left in the market place that if you don’t already have it you will most likely have to pay a lot for it, and wait weeks to get it. We warned you. The same goes for silver. You can try us (1-800-822-8080). We have somehow been able to come up with product and can still fill orders. The shelves are bare at the largest wholesalers and most of the biggest firms in the country.
And here’s a heads up for our clients who took advantage of our suggestion to trade their one-ounce gold bullion coins for semi-numismatic Saint Gaudens and $20 Liberties – the premiums have already jumped $200-$300 a coin above the bullion coins you traded in, and will continue to rise as long as gold is in demand. Good move!
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"Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world."
- Henry Kissinger
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LeMetropole Cafe
Mike Savage
Nude Beach!
I have written many times that we have likely been in a depression (forget recession) since 2008 and possibly since the year 2000. My thesis has been that with all of the “printing and buying” schemes by central banks, banks and hedge funds, this has masked the underlying weakness in the economy since then.
Lower interest rates and bailouts have emboldened “investors” to take more risk and pay higher prices for riskier assets. Many have no clue how risky their “assets” really are.
The “printing and buying” is just the tip of the iceberg as governments at all levels were empowered to spend like drunken sailors to keep their economies propped up with transfer payments (SNAP, Section 8, unemployment, etc.) This money gets spent numerous times through the system and has made the economic numbers look far better than they actually would have been without all of the games.
I have also written about how the numbers have to get exponentially bigger to get the same results. We are here!
Back in September the Fed said we needed some short-term funding and was offering overnight repos up to $50 billion “temporarily”. Note that this was months before we ever heard of COVID 19 but 12-18 months after we noticed the economy slowing at an alarming rate.
Fast forward to yesterday and the Fed has announced “UNLIMITED LIQUIDITY”. That is quite a statement for an entity that can do a computer click and “create” a trillion dollars at virtually no cost and with virtually no labor. My opinion is that this “money” is now on its way to its intrinsic value of zero. Anything that can be created out of thin air, in any amount and without effort is screaming “I am worthless” to me.
So, the US government wants to send checks to the American people. $1-$2 TRILLION. The Fed conjures it up- the Treasury sends out the checks, people are happy to get it and we are all in debt another $1-$2 Trillion on top of the debt mountain we are already on long after the two-week hiatus is over and the “stimulus” is spent.
I am looking at yesterday’s actions as similar to Nixon taking us off of the gold standard in 1971. That allowed this gargantuan debt bubble to be foisted upon our backs and to grow exponentially since then.
It is similar in that the Fed and most other central banks have dropped any pretense of fiscal responsibility and have announced that there is NO amount too large to conjure up out of nowhere to continue pretending we are solvent. Obviously, with a trillion dollars a day being sent around the world and stock markets still tumbling even a trillion dollars a day can’t keep this debt monstrosity moving.
That trillion is being sent to foreign central banks and I believe is in addition to the $60 billion per month in treasuries, etc.
(Greg Mannarino, The Fed, Wall Street on Parade as sources)
It is truly amazing how TRILLION rolls off of our lips these days. It must be similar to Zimbabwe when everyone got their wish to be a billionaire only to find that 3 eggs cost a trillion Zimbabwe dollars.
Anyone who believes economic laws only apply elsewhere I believe you are in for the rudest awakening you can imagine.
It appears to me that we have entered the greatest depression. It also appears to me that the majority of people expect things to return to normal in a couple of months. As much as I wish that were true the damage done by the shuttering of the global economy has already been done.
On a slightly more sinister not I believe that this was a planned event. I had thought that after hearing about the Pandemic conference run 6 weeks before this virus broke out by The Bill and Melinda Gates Foundation and others, but am more sure than ever since Fed President James Bullard admitted on national TV that this WAS a planned event.
Why would they do that? According to Gregory Mannarino this was the plan all along for the central banks to be the buyer and lender of last resort and for the central banks to own EVERYTHING. In Japan, with a 20-year head start you can see that they are well on their way to owning Japanese companies (Top 10 shareholder in the Nikkei 225 Index) by clicking a button and creating hundreds of trillions of Yen- and buying everything in sight. I reported last week that the BOJ balance sheet was over 550 TRILLION YEN and we are supposed to believe, according to them, that they just didn’t do enough!
Already, they have bought ALL JAPANESE government debt for the last 3 years and own over 70% of all Japanese ETFs.
The USA appears to be going there. The Fed has announced that they will buy $4.5 trillion in corporate bonds, continue buying treasuries, will buy stocks and conjure up whatever is necessary to send out a couple of trillion to appease we peons as they bail out companies with more trillions yet again.
To me, buying mortgage-backed securities allows the Fed to own a huge amount of real estate when the collapsing economy produces an inordinate amount of defaults and foreclosures. At that time the Fed will have their masters at the banks foreclose and will likely own a majority of the USA realty market- with a click of a button! We become a nation of renters to our new unelected “leaders”.
As the economic damage done to small and large businesses alike because of this virus and continued economic lockdown, small businesses will be offered loans and if they can’t pay them back the Fed or their minions will foreclose and those businesses will no longer exist or be taken over by Fed friends.
The biggest thing I see is the corporate debt market where $4.5 trillion is earmarked here. As large companies fail it is likely that stockholders will be 100% wiped out. It is no secret that most of our large iconic companies are drowning in debt after years of borrowing to buy back stock and even pay dividends. This crisis will likely expose all those swimming naked as Warren Buffet likes to say. This will likely be a nude beach. The ones that are fiscally responsible (clothed) will be the odd ones.
The way our system works is that the stockholders are last to get paid in a bankruptcy and generally get wiped out 100%. In a reorganization, the secured bondholders get paid first. Generally, the bond (debt) holders become shareholders in a debt for equity swap and inherit a company that has no debt going forward. Convenient when all hell is breaking loose that there is no amount too large “help us out”.
I believe they are taking over our industry, our real estate and indeed destroying what’s left of mom and pop businesses across this once-great land.
There may not be much that we can do about this at this time. The only thing I can suggest is to be as self-sufficient as possible, make sure that you have your pantry full because prices may rise in a way you haven’t ever seen here in the USA. I also believe having cash and silver to barter with is a good idea.
Personally, I believe that if the US dollar loses too much value, we may actually get a new currency- as has happened many times in world history- particularly in Latin America and other places where their currencies were “printed up” like this. In this case I believe gold is the best asset for this purpose as I expect to get a lot more of whatever it is we are using with gold than a green piece of paper or a computer blip at the bank.
Like I have said- artificially propped up assets will likely fall hard (you are seeing that right now) and those assets being held down (and hoarded by central banks, major banks, hedge funds and billionaires- those in the know) like gold and silver will likely rise far more than you can imagine.
Are you ready?
Be Prepared!
New Coronavirus Stimulus Bill In Congress Creates U.S. Digital Dollar
Jason Brett 08:23pm EDT
As the markets continue to drop and the U.S. looks to Congress for agreement on a massive stimulus package to save the economy from impacts of the coronavirus pandemic, the newest offer by House Democrats includes a very forward-looking kind of stimulus: the creation of a ‘digital dollar’ and the establishment of ‘digital dollar wallets.’ In what will send shock waves through the cryptocurrency and blockchain industry, particularly for those following central bank digital currencies around the world, this signals the U.S. is serious in establishing infrastructure for a central bank digital currency.
Both Speaker Pelosi’s ‘Take Responsibility for Workers and Families Act’ and the ‘Financial Protections and Assistance for America’s Consumers, States, Businesses, and Vulnerable Populations Act (H.R. 6321),’ introduced by Chairwoman Maxine Waters of Financial Services Committee, introduced these concepts today as a way of delivering the economic stimulus payments to U.S. citizens.
The bill establishes a digital dollar, which it defines as ‘a balance expressed as a dollar value consisting of digital ledger entries that are recorded as liabilities in the accounts of any Federal Reserve Bank or ... an electronic unit of value, redeemable by an eligible financial institution (as determined by the Board of Governors of the Federal Reserve System).’ Additionally, a digital dollar wallet is identified as ‘a digital wallet or account, maintained by a Federal reserve bank on behalf of any person, that represents holdings in an electronic device or service that is used to store digital dollars that may be tied to a digital or physical identity.’
A mandate also requires all ‘member banks’ establish a ‘pass-through digital dollar wallet’ to all customers eligible for the stimulus. Member banks include those banks that are ‘members’ of the Federal Reserve and regulated by the Fed. Additionally, ‘Non-Member’ state banks - those that not members of the Federal Reserve and regulated by the FDIC - could opt-in to offer pass-through digital dollar wallets as well.
The Federal Reserve banks themselves would also make available a digital dollar wallet to any U.S. person eligible for the payments as well. Additionally, the U.S. Postal Service would aim to help unbanked individuals and/or those without proper ID to establish their identity be provided a digital dollar account, and would set up ATMs for customers to access their funds.
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There are two topics I want to address tonight (Tuesday evening). Harry Dent and Donald Trump.
Several years ago, I decided to subscribe to Harry Dent’s newsletter. He does have some good things to say – and some things I vehemently disagree with. It is always a good idea to read folks whose views are different than yours. It can give you some perspective. Well, Dent’s latest report says prepare for the coming deflation. He has been writing about that since I started reading him. In a sense, he is right, the stock market is collapsing and so is the economy and headed towards a 1930s Depression. But it will not be deflationary. I have added a few articles in today’s daily which go into detail, but suffice it to say the Fed had proudly stated they will print as much money as it takes to paper over all the losses. That, dear readers, is inflationary – even hyperinflationary and not deflationary.
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He is the Regional head of the Minneapolis branch of the Federal Reserve.
Mike Savage made a good case for this. No, Dent is dangerously wrong – inflation is baked into our future and his $300-$400 an ounce gold prediction was always ridiculous. $3,000 to $4,000 now looks to be way low.
Now, on to the next topic. I will start by saying I voted for Donald Trump. He has done some very commendable things along the way. But his chance to be a great leader has slipped through his fingers. He knew about the coronavirus at least two months ago and did nothing. A week ago, he was publicly stating that it was no big deal. Then he back peddled and said he knew about it all along and laid out a long list of things that would be done. If he knew about it all along, why did he wait two months and allow the virus to get a head start here that makes it impossible to contain it?
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WHO warns U.S. could become next virus epicenter; India declares nationwide lockdown.
President Trump continued to play down the dangers of the coronavirus pandemic as experts warned of a worsening crisis in the U.S.
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The one voice in the Administration who seemed to know what was going on, and spoke honestly about the threat, though he was much more conservative that he could have been, was Dr. Anthony Fauci. His honesty does not jibe with Trump’s latest pep talk that says we can all go back to work by Easter. Get real. We won’t be leaving the house until a safe and effective vaccine has been developed. And that is, as most experts agree, at least 18-24 months away.
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The Times Editorial Board
Editorial: Dr. Anthony Fauci is the coronavirus truth teller we need. Let him do his work
MARCH 24, 2020
3:12 PM
One of President Trump’s smartest moves in response to the COVID-19 pandemic was naming Dr. Anthony Fauci to the White House’s coronavirus task force. The head of the National Institute of Allergy and Infectious Diseases, Fauci is a public health hero who has led the agency through six presidents and won’t bend the facts or deny science to appease egos.
He didn’t do it when
he warned President Reagan
that HIV was a serious public health threat that required fast federal action. And he’s not doing it now as he stands with Trump at regular task-force briefings, sometimes contradicting or correcting the misleading information coming from his commander in chief.
In a
meeting with pharmaceutical official
s earlier this month, Trump repeatedly insisted he was hearing that a coronavirus vaccine would be ready in just a few months. Finally, Fauci stepped in. “Would you make sure you get the president the information that a vaccine that you make and start testing in a year is not a vaccine that’s deployable,” he said to the pharmaceutical executives. “And that is going to be, at the earliest, a year to a year and a half, no matter how fast you go. “
More recently, Fauci has poured cold water on Trump’s enthusiasm for the potential of an anti-malaria drug, chloroquine, to treat COVID-19 patients. As Fauci has pointed out, the evidence of the medicine’s ability to safely and effectively treat COVID-19 patients is still just anecdotal.
Fauci also has been a leading advocate of the restrictions on movement and commerce that have cratered the economy, to Trump’s growing frustration.
It really is quite remarkable, given the president’s limited tolerance for aides who upstage or contradict him, that he has put up with what may seem to him like brazen insolence. The evident conflicts, along with rumors among White House aides, have led to speculation that Fauci may be on the way out, although both Trump and Fauci
have downplayed
any perceived tension between them.
We certainly hope that the president is not thinking of sidelining Fauci. In a massive public health crisis like this one, the best experts and the most credible scientists need to be on the dais with the president, telling us all bluntly what we need to know. So far, to his credit, Trump — whose disrespect for both science and facts in the past has been well documented — has stood by Fauci, even when the doctor has disagreed with him.
The simple reality is that when it comes to the science behind outbreaks of emerging infectious diseases, there are few experts equal to Fauci. The 79-year-old has been at the forefront of the federal responses to a series of viruses that have threatened the nation, including Ebola and two recent coronavirus outbreaks, SARS and MERS.
Surely the president knows he has more to lose than to gain if Fauci’s fact-based, cautious and authoritative analyses were absent from the table as we continue to fight this pandemic.
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A vaccine is unlikely for at least 18-24 months
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This just in from the St. Paul Pioneer Press newspaper:
The search is on for a drug for COVID-19. Researchers say it will take time, and the likelihood of a quick fix is low.
The process
On March 16, 2020, the first volunteer in the U.S. received a dose of an experimental
coronavirus vaccine in Seattle
. As many as 40 other companies are working on a vaccine around the world. Experts expect development to take 12-18 months at the fastest.
And Idiot Trump tells people to go back to work in three weeks. No one is going anywhere for 12-18 months. Until there is a vaccine self-quarantine is the only way to avoid getting the coronavirus.
This pandemic is
going to change life in America permanently
, and the truth is that COVID-19 is just one element of
“the perfect storm”
that is now upon us...
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There is so much being written that it makes my head spin, so let me try and make it simple.
The virus is doubling every three days. That is a fact, and that’s here as well as in Europe. That means it increases ten times every two weeks. There is no “herd” immunity (the population does not have anti-bodies to fight it off) and there is not vaccine. By Easter, when Trump wants everyone to go back to work. That’s three weeks from now. The “official” number of cases is 55,000 which you could probably multiply by 10 or 20, minimum, but ever using that number, 55,000 WILL become 555,000 in two weeks and 55,000,000 in four weeks. Who are they kidding?
Millions will be infected, millions will die, the economy will be in lock down for up to 18-24 months. Or am I missing something here?
How in the world can the stock market hold up under those circumstances? In spite of what Larry Kudlow says, the stock market and the economy are on the edge of a cliff. Who, in their right mind would jump back into the stock market today when NOTHING HAS CHANGED. The stimulus package will not get the economy back on track, not as long as the virus is with us for another year or two. The PPT was out in full force today. Rising stocks are the perfect backdrop for Trump’s optimistic outlook. Whew! Don’t fall for it. The people who will hold onto their stocks will be the same people we see standing on the curb at intersections holding a cardboard sign that reads, “Will work for food.”
What good does it do to cheer people up and give them hope. They will know the truth soon enough, two or three weeks out at the most. I expect the Churches will be closed come Easter. The entire country could be in lock down by then. Isn’t it kinder to tell them what to prepare for and how to do it? That’s what we get when we expect elected politicians to take care of us.
When is the best time to own gold?
Gold is the safest form of money. It is in demand during times of crisis – like now, and during periods of (monetary) inflation – like now. Well, like it or not, here it is. Like I have written so often, it’s over when the fat lady sings. The fat lady has sung. She has belted out her song and left the stage. This is the recipe for hyperinflation.
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The US government and Federal Reserve will tremendously increase the supply of the US dollar. This is happening at the same time that production of goods and services worldwide is declining. When you have more dollars chasing fewer goods and services, prices inevitably rise.
In other words, the value of the US dollar will drop significantly in the near future, as guaranteed by the US government and Federal Reserve. Smart people are looking to acquire assets that will protect them against the falling value of the US dollar--meaning gold and silver.
– Patrick Heller
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Egon von Greyerz
“THE WORLD CANNOT BE SAVED” – VON GREYERZ ON USAWATCHDOG WARNS: GLOBAL FINANCIAL SYSTEM “BROKEN & BANKRUPT
”
More than a year and a half ago, EvG warned on USAWatchdog that “risk is exponential and unmeasurable” because of the estimated two quadrillion of derivatives and debt in the global financial system. He also warned that
“at some point, all hell will break loose.”
Looks like hell has indeed broken loose because of the China virus, and now EvG contends,
“
The system is bankrupt… The system is broken and bankrupt.
This did not start now with the Coronavirus. It didn’t start in August and September (of 2019) when central banks said we would do everything we can with the Fed QE, repos and the ECB (European Central Bank) QE…
This started a long time ago.
The system was broken at the beginning of this century. The 2007-2009 crisis was the first signal that the financial system was not functioning.
They threw $25 trillion at it in financing and guarantees, etc., but I always said 2007-2009 was a rehearsal. We are now approaching, sadly, the real thing. This is the end of a two to three-hundred-year cycle. So, we are going to see some extremely difficult times. The Corona virus is a horrible catalyst, but that is all it is. It’s not the reason for the problem.
The reason for the problem is a broken financial system… and now we are starting the final stage of the end of this financial system
.”
EvG also says the reaction to the China virus is the same worldwide. EvG says, “You are seeing food shops with empty shelves…”
“
…People are panicking.
So, that is the first reaction to the Coronavirus, but they have not realized the big problem is in the financial markets. It is in a system that has no liquidity or money, and it has to print more and more. At some point, people will realize there is no money, and you will have the same reaction.
People will be lining up outside of banks or they will go to their ATM machines to get money and, of course, they will have to reduce it.
Now, in most countries, there is no cash. So, it is easy for them to shut off the system. There will absolutely be shortages of cash for people, otherwise, you will have bank runs.”
EvG contends,
“They have managed to maintain totally false markets with no real price discovery, certainly since 2009, by just flooding the market with so much money. We don’t have any real markets. We don’t have any real prices. It’s all fake. It’s all fake because it’s all supported by fake money.”
So, real money, that EvG says is physical gold and silver, is going to be revalued much higher. EvG says,
“Technically,
gold and silver will soon start the next leg up…
What is happening right now is every single government is printing more and more money. You have one rescue package after another, and that’s just the beginning.
So, now, central banks are your best friend if you want to own precious metals because they are going to do everything they can to debase the currency.”
EvG also predicts that
before it’s over, the stock market will be down 90% or more.
EvG says,
“In 1929, the market crash took 2 ½ years to go down 90%. The bubble is much bigger now, so it could go very, very fast…
The risk is at a level now where the world cannot be saved
.”
Off camera, EvG went on to say the biggest financial problem the world faces is in the bond market. EvG says,
“The biggest crash will be in the bond market, and this crash will happen faster than anybody will believe.”
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Zero Hedge
"I’ve never seen that before"... "There is no price discovery in the market right now."
Unlimited everything, including corporate bonds.
The Fed will purchase $75BN in Treasurys and an additional $50BN in BMS, for a total of $125BN every day, or an unprecedented $625BN in just one week, more than the Fed's entire QE2 which was just over $500BN in purchases over 7 months.
"There's no end to our ability to [flood the system with money]"
Those
living paycheck to paycheck
are the first to lose their jobs and have hours cut. They are
justifiably worried
...
Crash conditions will likely inspire more and more people to demand physical delivery
on precious metals over the course of 2020, as
fears of paper market shutdowns
due to the pandemic grow.”
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Is it better to buy silver now than gold?
It depends. The question is, can you even buy physical silver now? If you can, it should ultimately perform better. The silver to gold ratio stands at 113 to 1. It has come down from around 125 to 1 a few days ago. It should end up anywhere from 40 to 60 to 1, so yes, silver is better - if you can get it. But getting gold is nearly as difficult. Given a choice, go for silver. But get something, if you can find it. Try us, we can help, for a few days anyways. (1-800-822-8080)
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SRSrocco
Unprecedented Demand for Silver Bullion Will Push Prices Higher
The precious metals market continues to experience unprecedented demand for silver bullion products. Even with the Fed increasing its liquidity injections by providing “Open-ended” QE to infinity, the Dow Jones Index today is still selling off considerably…. down 900+ points. There is no way the Fed and central banks can backstop the markets with liquidity and asset purchases if the physical economy is shutting down.
The collapse in the U.S. economy and financial markets have brought about a record buy spree in physical silver bullion never witnessed before.
In the past few weeks, precious metals dealers have totally wiped through the available stock. Now, these dealers have to resort to pre-selling future supply with the understanding that metal purchased today will not be delivered for weeks, a month, or several months.
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"It's Selling Like Toilet Paper": If You Haven't Bought Physical Gold Yet, It's Probably Too Late
Over the past decade, one of the most fascinating observations in the world of precious metals has been the bizarre decoupling in the supply/demand dynamics and thus pricing, between paper and physical gold.
As gold became increasingly financialized in recent years - through futures, ETFs, derivatives and so on - and as the impact of "financialized" gold became the dominant price-setting factor in a world where the nominal volume of "paper gold" traded is now orders of magnitude greater than "physical", a bizarre decoupling emerges every time there is a major market stress event. A pattern that has emerged is that during periods of "bathwater" liquidation, when levered asset managers are forced to dump paper gold to cover margin calls in different parts of their book, sending the price of gold sharply lower also happens to be when physical gold buyers step up amid concerns over the viability of either the financial system and/or the reserve currency.
The result, as discussed last week, is that "
the price of physical gold decouples from paper gold
" resulting in an arbitrage that physical gold buyers, i.e., those who don't have faith in gold ETFs such as the GDX or simply prefer to have possession of the metal, find especially delightful as it allows them to buy physical gold at lower prices than they would ordinarily have access to.
The immediate next step is a surge in demand for physical gold that results in precious metal vendors and exchanges becoming sold out in very short notices. Take for example the largest US precious metals exchange, APMEX, where any attempt to buy gold in size, or rather weight (because the truly rich who need to park several millions can't be bothered with individual gold coins and instead go for the 400 oz brick or 1 kilo bar), finds, well, nothing because everything is sold out,
and not just for bars...
But don't take our word for it: as that beacon of pro-fiat, anti-hard money dogma, the Financial Times, reports this morning, traders have reported and lamented a growing global shortage of gold bars, as the coronavirus outbreak both disrupts supply and stokes demand, "with one business comparing the frenzied buying of the yellow metal with the consumer rush for toilet roll."
Of course, the fact that gold makes for very expensive toilet paper and is thus available to a far more exclusive audience, one that can spend substantially more on the yellow metal, was lost on the FT, so here's the recap: there is a wholesale flight out of "paper" and into physical among some of the world's richest people.
One thing the FT does get right is that "retail investors in Europe and the US have bought up gold and silver bars and coins over the past two weeks in an effort to protect their money from the collapse in global stock prices and many currencies." And with the Fed now set to unleash unprecedented dollar destruction by injecting over $625 billion in freshly printed fiat into the system
this week alone
...
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... concerns about the collapse of currencies will only grow.
But what is more concerning is that it's not just a demand problem: supply chains are also freezing, and Europe’s largest gold refineries have struggled to keep up because of the region’s widening shutdown. Valcambi, Pamp and Argor-Heraeus are all based in the Swiss town of Ticino, near the border with Italy. Local authorities announced in recent days that production in the area was to be temporarily halted.
Unfortunately, just like everything else, gold refiners are also shutting down, ensuring that any gold shortages will persist for months at least.
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The perfect storm.
Central banks are buying gold by the ton. Refineries are shutting down, the gold mines in S. Africa have closed and many more will all over the world. And demand is already off the charts. The Fed is inflating like never before, along with the Bank of Japan, the ECU, Germany, Great Britain, just about everyone. The gold bull market is here. Now.
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We were just informed by one of the four Swiss refiners that they were stopping production and would not be able to supply any more bars until further notice.
As they say - you can't buy insurance on a burning house...
Just heard the same from another major Swiss refinery - they are also closing the plant due to the virus.
The Royal Canadian Mint refinery is also closed due to the virus from March 20 for at least two weeks.
CLARIFICATION: One Swiss refinery is near the Italian border and is offline, the other is in the center of Switzerland and will take orders for which one must pay upfront but since they are fully booked for four weeks, there is no visibility on delivery timing.
#counterpartyrisk
With supply collapsing and demand soaring, one would hardly think that the price of gold would plunge, and yet that's precisely what happened much of last week as funds dumped paper gold, leading to the abovementioned paradoxical divergence in paper and physical prices.
And since gold vendors are constrained by the price of spot which is largely determine in the paper market, the result is that retailers are reporting shortages and delays of up to 15 days on shipments as demand has surged. Markus Krall, chief executive of German precious metals retailer Degussa, said it was struggling to meet customer appetite for gold bars and coins and had to turn to the wholesale markets. Demand is running at up to five times the normal daily amount,
he said.
“We are being creative to find new sources but what is driving it all are the measures by authorities to stop coronavirus. This is so unpredictable,” added Mr. Krall.
Rob Halliday-Stein, founder and managing director of Birmingham-based BullionbyPost, said the situation was unprecedented. “Basically, we’re selling as soon as we get stock on location in secure vaults — but we’re restricted to what we can get hold of, it’s a bit like toilet roll.”
Another irony: while London’s gold vaults are full of gold bars, they are of the 400-ounce "good delivery" variety traded (and rehypothecated) among large banks (and central banks) such as HSBC and JPMorgan, not the smaller bars that retail customers buy, which tend to be 1kg (35 ounces) or lighter.
"I don’t think you will find a kilobar presently in Europe and the US for love nor money,” Ross Norman, a veteran gold trader, said. "It’s quite extraordinary."
And speaking of Apmex, its CEO Ken Lewis told the FT that in the past week that “product has become increasingly difficult to source as the market becomes more volatile day by day”.
The company said it had purchased more than 1m ounces of silver grain and bars, more than 20,000 American Gold Eagles coins, thousands of gold bars, and “anything else we can find utilizing our many partners and mint relationships”.
And all of that gets sold out the moment it becomes available for sale.
JM Bullion, another US-based precious metals retailer, said customer orders would be delayed by 15 days, and introduced a minimum order size (as did Apmex).
BullionStar, a Singapore-based precious metals retailer, said it is paying a premium to buy back silver and gold coins from customers in an effort to replenish supplies, according to Ronan Manly, one of its analysts. “There’s a disconnect between prices in the physical gold market and the prices you see on your screen,” he said, repeating
precisely what he wrote here
several days ago.
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I always like to hear what Doug Casey has to say. He has been around the block a few times and knows the gold market as well as anyone.
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"This Is The Biggest Thing Since 1776..." Doug Casey Explains How COVID-19 Will Spark The Greater Depression
Panicked people are emptying supermarket shelves and stockpiling toilet paper. Hand sanitizer is impossible to find anywhere.
Is the impact of the fear and hysteria greater than the risk of the virus itself?
COVID-19: Spain extends state of emergency until 11 April
Doug Casey
: Yes, very much so.
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The virus itself is what we can call a first-order effect.
I don’t want to spend much time talking about the flu itself because, even though worst-case numbers like a million deaths in the US are tossed around, it’s not the biggest problem.
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The second-order effects
- like the economy shutting down from hysteria - are actually much more serious.
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The third-order effects
- new laws and state action - will have the longest-lasting consequences. We can talk about them in a minute.
As far as the virus itself is concerned, I’m sure everybody has read lots of articles and listened to podcasts from experts. So, knowledge—such as it is—about the virus is fairly widespread. Except very little is certain, even now. FWIW, I say that as a lifetime science aficionado, reading in many areas of science for years.
Just in the last generation, we’ve had hantavirus, the bird flu, swine flu, Zika, West Nile, MERS, SARS, and H1N1.
We’ve also had anthrax—which everybody’s forgotten about. Of course, it’s a bacterial infection as opposed to a viral one. They’ve all had their day in the dark sun of mass hysteria.
The point I’m making is that there are thousands of viruses floating around. They mutate constantly. Most of them pass through the population and go viral, so to speak—and we never even notice that they exist.
Now this one is said to be ten times worse in terms of death rate than a normal flu. Is that true? It seems that if you get it, your odds of dying are much worse but still minimal.
Normal seasonal cases of the flu kill maybe 50,000 people a year in the US. But we don’t even notice that.
So, what’s the worst-case scenario regarding this virus?
Nobody really knows because it is a new virus.
They’re still figuring it out, but maybe between 1% and 2% of the people who get it will die, mostly the old, the sick, and the obese. If you’re in one of those categories, you should take it very seriously.
The interesting thing about this virus is that very few have died so far, anywhere; the numbers would have been unnoticeable outside of the media hysteria. Not even a rounding error on a rounding error. The important thing is that it’s said to be spreading exponentially, doubling every three days or so. So maybe things will change radically in a week. Or not. It’s said at least 50% of the US population will get it, although 80% of them will be completely asymptomatic.
If you read all the conflicting reports from China, Italy, and other places, it’s pretty clear we don’t know much. There’s just one thing for absolutely certain: The world has been gripped by a genuinely titanic and insane hysteria.
Anyway, even the worst case from first-order effects - people dying - is being dwarfed by the second- and third-order effects.
The important thing about this virus is not the first order of effects—people that it kills directly. It’s the consequences of the hysteria that it’s causing.
That’s what’s really serious.
International Man
: What are the secondary or tertiary effects of the coronavirus?
Doug Casey
: We just talked about the first-order effects of the virus. Death for a relatively small number of people. An unfortunate part of life on this planet.
Let’s talk about second-order effects. What the virus - or rather the hysteria surrounding it - is doing to people’s livelihoods.
Airlines are shut down. An airliner, all in, costs them $10,000 a day, whether they use it or not. Same, to some degree, for hotels. A restaurant closes down, but the owner still has to pay his mortgage. And the staff mostly lives on tips. How are they going to pay the rent—and if they don’t, then how’s the landlord going to pay his mortgage? The consequences of businesses shutting down, and going bust, are just huge.
For many years, the US has been what’s called a “service economy.” Most people don’t produce actual hard goods like houses, cars, food, and raw materials. We mostly do services. It’s a so-called “consumer economy.” A rather stupid concept actually—the term takes the emphasis off production and puts it on consumption.
When you have a depression, what happens?
Consumers cut back consumption to the very barest basics.
Services are the first to go. Hospitality and travel alone is supposedly ten percent of the world’s economy. People will now keep their cars for years, and maybe, sell the spare car.
Forget about new wardrobes. The clothing and fashion businesses get slammed.
Everyone will try to sell their big showy houses and get something practical.
Distortions cranked into the economy by decades of money printing are going to be liquidated. Everybody is going to cut back to the basics. A lot of people are going to have to find new ways to support themselves.
It’s especially serious since, it’s said,
most of America is one paycheck away from not being able to buy the next meal.
Plus, they have lots of debt—which is somebody else’s asset. Counterparty risk is a big deal.
The collapse of the stock market isn’t just tagging speculators. Most older people don’t have enough savings for retirement, and most of what they have is in the market. Will they lose their homes, and wind up eating cat food? Poverty, not flu, is what really kills masses of people. This is why these second-order effects are so important.
The hysteria is unnecessary and foolish.
But sometimes hysterias seem to come out of nowhere, like the witch crazes of the 17th century. Did the economy shut down for any of the past viruses that I mentioned?
The answer is no—not even for the Spanish flu, which was largely forgotten until just now. Now, that was serious. It was a chaotic wartime environment, and medicine was primitive—we didn’t even know viruses existed.
Now, as was probably the case in 1918, almost everybody is going to wind up getting the flu because the flu is a virus. By definition, it goes viral.
The main reason given for shutting down everything is to “flatten the curve”, so the numbers don’t spike and overwhelm hospitals. If you’re a serious casualty, you can go to a hospital. But, frankly, they can do nothing for you, except put you on a ventilator, and hope that gives you time to recover. It’s said there are about 150,000 in the US, and you may need it for five or six days.
But life goes on, and the economy will recover.
More serious than the first-order or second-order effects are third-order effects.
In other words, what the government is going to do. For one thing, they’ll probably set up a new national health regulatory agency, and/or give the FDA new powers. Bad move. The FDA is to medicine what Amtrak is to railroads. It should be renamed the Federal Death Authority since it probably kills more people every year than the Defense Department does in the typical decade.
Governments all around the world are putting in onerous new laws and regulations about travel, movement, and business. These things have to be paid for, which means higher taxes. But that’s almost impossible in a collapsing economy. So, not just the Americans—everybody is going to print up boatloads of new money.
Because so many people have no savings and are living from paycheck to paycheck, it’s probably the perfect excuse to set up a guaranteed annual income. People have been already been prepped for the ridiculous concept.
International Man
: The stock market had its biggest drop since 1987. Has the everything bubble found its pin?
Doug Casey
: Yes.
A major second-order effect of this virus is that it just happened to be the pin that broke the biggest financial bubble in world history. And it’s very hard to reinflate a burst bubble.
I don’t care how much money the government prints. That’s just going to cause catastrophic retail inflation.
Will it solve the debt problem? Only the way a heart attack will take your attention off cancer. If you lose your job and your business isn’t making money, your debt is still there, and it’s still compounding with interest. That’s why it’s likely The Greater Depression will start out like the US in 1929.
The thing that worries the authorities is that we might have a catastrophic 1929 style credit collapse; they’re printing tons of money to counter that.
We could have in sequence, first, the 1929-style credit collapse and then the 1923 German-style runaway inflation.
This is the worst of all possible worlds, and not unlikely.
It’s entirely the fault of state intervention in the economy and the Federal Reserve creating a bubble economy with all this phony money. That’s where the blame should go. But of course, the blame won’t go there.
The blame will go to capitalism.
It’s also a perfect excuse for Modern Monetary Theory (MMT),
which essentially holds that the government can print up all the money that it wants, and there really won’t be any bad effects.
Not only is the government herding people like cattle, but the people are screaming for the government to “do something.”
People expect the government to fix the problem. As if it was magic. But there’s no problem the government can’t make much worse.
The government is, quite naturally, further removing responsibility from the individual.
There are going to be vast consequences from this stock market meltdown. Most people already had inadequate retirement funds, and what they had was in the market. There will be recriminations about who was to blame, lawsuits, and lots of new laws as the public screams for Congress to “do something.”
Every government and, indeed, every large company and organization feel that they have to do something or they’re going to be accused of sleeping at the switch. That’s why they’re going wild on the side of caution and control.
In today’s ultra-litigious environment, they’re afraid they’ll get sued if anybody catches something, and it’s traced back to their restaurant, their gym, their conference—anything.
In times like this, Trump—who has zero understanding of economics and is an authoritarian by nature—is ultra-dangerous. He’s capable of doing almost anything to show how decisive he is.
International Man
: What other types of responses will we see from governments?
Doug Casey
: They’re likely to promote a vaccine. I’m not against vaccines, per se. Edward Jenner and his creation of the smallpox vaccine showed their efficacy 200 years ago. Vaccines against seasonal flu are proven to be only 30–60% effective, at best, but that’s not the problem. Because the hysteria around this thing has been so catastrophic, they’re likely to force everybody to take the vaccine.
Now, this is where it gets really serious because if you don’t take the vaccine or if you escape taking it, you probably won’t get a vaccination card. If you don’t get a card proving you’ve had it, maybe you can’t get on a plane or a train or even go to a public gathering without showing your card.
No doubt, they’ll create a new agency like the TSA. Once it’s created, the thing will be self-perpetuating and won’t go away.
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The chart that tells you how all of today's economic troubles are going to end is not the bar graph of new deaths from coronavirus in Italy versus deaths in the U.S. It's the chart that shows the number of potential deaths among the banks and insurance companies that have gorged themselves on risky derivatives and serve as counterparties to each other in a daisy chain of financial contagion.
The chart above is why the Federal Reserve is throwing unprecedented sums of money in all directions on Wall Street. Because despite being a primary regulator to these massive bank holding companies, the Fed has no idea who is actually in trouble on derivative trades, other than looking at a chart like the one above.
The chart above also justifies the Democrats refusing to sign off on the fiscal stimulus legislation that would have given U.S. Treasury Secretary Steve Mnuchin a $500 billion slush fund where the names of the recipients of bailouts could be withheld from the public.
In January 2007, prior to the last financial crisis, Citigroup's stock was trading at the split-adjusted level of $550 a share. At yesterday's stock market close, Citigroup's stock price was $35.39. If you are a long-term shareholder in Citigroup, you're still down 94 percent on your principal, not including dividends. After receiving the largest taxpayer and Federal Reserve bailout in banking history during the Wall Street financial crash of 2007 to 2010, Citigroup did a 1-for-10 reverse stock split to dress up its share price. In other words, if you owned 100 shares of Citigroup previously, you now owned just 10 shares at the adjusted price. If Citigroup had not done that, you would have seen a closing price yesterday of $3.54 cents instead of $35.39.
Citigroup is not alone in loading up on derivatives again. Together with JPMorgan Chase, Morgan Stanley, Goldman Sachs and Bank of America, these five bank holding companies now control a notional (face amount) of derivatives amounting to $230 trillion, representing 85 percent of all derivatives held by U.S. banks.
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Private Safe Deposit Boxes
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Unencumbered / Segregated Storage
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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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