The Miles Franklin Newsletter
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From The Desk Of David Schectman
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David's Commentary (In Blue)
Have you noticed that the price of Palladium is $30 below the price of gold? That hasn’t happened for quite a while and it would seem to indicate that the “market” believes the global economy is contracting, certainly in the automotive sector.
Maybe I’m giving too much credit to the moves in commodities, since they are all manipulated; but it makes sense. And if that is the case, and I believe it is, then a slowing economy will guaranty further Fed interest rate cuts and that is very good for gold.
Interest rates fell throughout the first decade of the new century and gold’s bull market began with the price lifting from below $300/oz ultimately to $1,900. When interest rates started to rise, a decade ago, gold headed south. So, it isn’t a stretch to say we will see more rate cuts and gold’s bull market, now in its early stages, will mature.
“Time” is an interesting thing. We think of it as being “linear,” but it is not. When I was young,time went by very slowly; a year was a very long time. As a boy, waiting for my next summer vacation to arrive seemed to take forever. When I was a sophomore in high school the thought of being a senior seemed a very long way off. And before I knew it, I was playing my last football game for Minneapolis North High School and graduation was only six months away. (By the way, in a couple of weeks we are having our 60
th
reunion. Half the class has passed on.) The same was also true in college. As a freshman, the thought of being a senior seemed way, way off in the distance. And then, in a blink, I was 22 years old, through with school - and married. Time seemed to be moving in slow motion yet viewed in the rear view mirror, it was rapidly marching on.
I couldn’t even imagine being 30. It seemed so far off. Thirty year olds were… well they were “old.” And then, in the snap of a finger, I was 30, had a five-year-old daughter and was changing Andy’s diapers. In those days, I measured time by the arrival of the next football season. I still do. I love Big Ten and NFL football. Yup, the Vikings first preseason game is just one week away and the Minnesota Gophers first game is only a month away. The clock keeps ticking and time keeps moving on.
But it’s different now than when I was a boy or a young man. Time seems to go by much faster now. It hardly seems possible but Susan and I will have been married for 54 years next Friday. Not just 54 years - 54 happy years. Now that is uncommon. Have you noticed that often, older couples dining at a restaurant don’t talk to each other? They are together, but not really together. They don’t seem happy. I hope those of you reading this are the exception. Susan and I certainly are. We talk, we relate, we laugh, we just plain get along. We like each other. Now that’s how you measure WEALTH. Not in ounces of gold, but in your relationships with your spouse and your children. By that standard, we are RICH. Family is everything.
I took this picture of Susan at our favorite neighborhood restaurant yesterday afternoon. She still looks damn good for (almost) 74. I always felt she was the best looking girl in her age group. The older she gets, the more she stands out -from her age group. Lot’s of beautiful women at 30, not so many at 50 and very few at 70. She is blessed with a great gene pool.
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Speaking of “gene pool”, Susan comes from a long-line of Rabbis. Her grandfather was an orthodox Rabbi in Poland. Before the war (WW2) he was offered a job to move to Williston North Dakota to head up a congregation for a handful of Jews who lived there. (Do you remember the Gene Wilder movie, The Frisco Kid? It was one of my favorites and it was about Rabbi Avram Belinsky -Gene Wilder - who lands in Philadelphia intending to travel to San Francisco, where he plans on starting a synagogue.)
Susan’s grandfather brought his family with him and they lived on a farm. Susan’s father,
The Moose,
as I affectionately called him, claims that he was the heavy weight champion of Williston. We never believed him, I mean he never weighted more than 160 pounds soaking wet. But he always had colorful stories to tell. He reminded me of (for you old-timers) the movie icon of the 30s and 40s, Edgar G. Robinson. He looked just like him and his personality was similar too. Rough and tough on the outside, but a creampuff on the inside. He was a one-of-a-kind.
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A few years later, her grandfather sold their farm and he moved the family to Minneapolis. Immediately after they sold the farm, they discovered oil on the property. Susan could have been “an oil heiress.” She will have to settle for being a gold and silver heiress.
Getting back to “time,” We live in a “what-have-you-done-for-me-lately” world. And “lately” means five minutes ago. By tomorrow, today’s news is already old and forgotten. Time is now measured by Donald Trump’s next Tweet.
We have been conditioned to think that way about the price of gold too. What did it do TODAY? But you really don’t want to think about gold in a “short-term” sort of way. Take a look what the price of gold has done in the last couple of days. Down, then up, and today, being a Friday, who knows what? What does this tell us? Absolutely nothing – other than the Commercials and the Managed Money Funds are fighting for short-term profits. Gold is not about short-term profits. It is a long-term hold insurance policy. And yes, it is best to buy it when the price is down, but in case you forgot, gold has been moving up now for several years. The trend is UP. The longer you wait, the more you will pay.
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Let’s take a look at the last 5-years.
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Gold is up nearly $400 an ounce in this time period. Not bad.
And lets take a look at the price over the last 10-years.
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This is the highest the price has been in the last seven years. And viewed by this chart, there is virtually no “resistance” between the current price and $1,600. But we are conditioned to think short-term. What did gold do today or yesterday? That doesn’t matter. What matters is the TREND. Look again at the 5-year chart and the trend is screaming “bull market.”
So what makes me so certain that this is really a bull market? It’s a few things – like Trump’s trade war, which is escalating, and the likelihood of a war in the mid-east, which will send the price of oil to $200/barrel or higher and then there is the Fed and its new policy of lower interest rates. Several of the “gurus” who write about gold think we are headed back to QE again. The dollar is under attack by Russia and China and other Middle East and Asian countries. If (when) the dollar falls, gold will rise. When the stock market falls, and it will fall hard, gold will rise. There are so many factors that favor a gold bull market and gold’s recent price action finally seems to be taking them into account.
In the midst of all of this positive gold news, July gold bullion sales were at a 12-year low. The mentality of the US investor is buy stocks, who needs gold? But, as I wrote yesterday, gold is hitting record highs in other currencies. It may be nearly $500 below it’s all-time high, but that is only when priced in dollars. That will change too.
It is a fact, most of the precious metals companies are having a difficult time paying their bills, but that is not the case at Miles Franklin. So far, year to date, we are having our biggest year ever. Our clients believe in gold and silver. We must be doing something right! Our unwavering belief in gold (and silver of course) is contagious. At my age, 77 and counting, my motto is: Just One More Bull Market. Yes, one more is all I need. Actually, I don’t need it, but it would sure be nice. After 36 years in this business, my gut and my experience tell me that we are already in a bull market. And gold bull markets run for a number of years. All that’s missing is “gold fever.” That comes with rapidly rising prices. We will see that happen in the next year or two. This is just the early stage. Take a look at how the last bull market unfolded, 20 years ago. It took nearly four years for gold to go from $300 to $400. As the bull market matured, the price rise went vertical. At the beginning of the last bull market the base was around $300. This time around, the base is $1050. How high will gold go? No one can know in advance, but $5,000 (maybe even higher) does not seem like a pipe dream.
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Here is a very interesting article that I borrowed from our friend Bill Murphy over at LeMetropole Café. I really like this one a lot.
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Michael J. Ballanger
Central Bank Folly: blame the Boomers…
Michael J. Ballanger
GGM Advisory Inc.
“Destroyers seize gold and leave to its owners a counterfeit pile of paper.” – Ayn Rand
The baby-boom generation, of which I am a less-than-proud member, blew it.
There was a time long, long ago when the mention of the word “baby-boomer” evoked a sense of pride of membership. Amidst the prosperity of the post-WWII era, birth rates in North America soared while the sons and daughters of many men and women that fought in the war became the dominant demographic force by the year 1966. When I was in Grade 10, I wrote an essay that pointed to the defining moment where the excitement and unbridled optimism of the Space Race, advances in modern medicine, and unparalleled economic growth was snuffed out forever by an assassin’s bullet in Dallas in the autumn of 1963. With the end of Camelot, the boomer generation suddenly began to question things. They threw away the Beach Boys “Surfin’ Nirvana” lifestyle to the darker messages of Bob Dylan, CSNY, the Doors, and Hendrix as they watched while the Viet Nam war claimed over 58,000 U.S. servicemen and caused massive civil unrest to permeate the inner cities and the campuses of America. Through the unwillingness of the baby-boomers to accept the garbage spewn out by the radio and print media as well as the fledgling television industry, young people rose defiantly to implement an end to a war that had become a national embarrassment and political nightmare. I arrived in Saint Louis in the fall of 1971, a mere four years before Saigon fell and by then, the historically-conservative (pro-war) city of Saint Louis had seen a demographic shift in camps as the campuses and high schools were filled with long-haired radicals heavily recruiting the youth of the era to “tear it all down” in order to effect the much-needed political and social changes that were so overdue by then. On the other side of the demarcation line were the rednecks, the police, the National Guard and, of course, the military. The sidebar to all of this is that the boomers also took down a president in the form of Richard Nixon so to say that the boomers had serious “stroke” is an understatement. The medium was FM radio, Rolling Stone magazine, and weed and that was all that was needed to effect change and it mattered not where. We, as a generation, were a FORCE.
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Is silver in a bull market? SRSrocco has a lot to say about that. We are only .65 cents away from the takeoff price.
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SRSrocco
SILVER PRICE 2019: Is This The Year For A New Bull Market?
After waiting for seven years since the silver price traded above $30, precious metals investors are wondering if 2019 will be the year that shiny metal finally enters into a new bull market. However, for silver to enter into a new bull market, certain signs and indicators need to take place. I discuss this in detail in my latest video.
Interestingly we have seen several precious metals analysts suggest that something quite interesting is taking place in the silver market. For example, Alasdair Macleod wrote an article;
A Whale Is Accumulating Silver Futures
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Ed Steer
What a day yesterday! The new tariffs on China came as a big negative surprise...as did the PMI numbers -- and away went gold and silver to the upside. But, once again, it was the price action after the COMEX close in gold, silver and platinum that was eye-opener...particularly gold.
I would suspect that the vast majority of this price action had to do with paper positioning in the COMEX futures market -- and had virtually nothing to do with actual world supply and demand. That's certainly true of palladium -- and WTIC.
There's no question that there are forces going on underneath the surface of the precious metal markets in particular -- and all commodities in general, that we just aren't privy to. I consider the price action since gold broke above the $1,400 spot mark, to be some sort of financial precursor of things to come -- and I'll leave it at that.
But make no mistake about it; JPMorgan et al are shorting these rallies in silver and gold with ever-greater ferocity. It's now within the realm of possibility that one of the smaller traders in the Big 8 category will be forced to cut and run, as their paper losses are mounting at an alarming rate, especially after yesterday's price action. This was something that Ted mentioned on the phone yesterday.
Critical Reads
The newly-installed chairman of the CFTC, Dr. Heath Tarbert, in office for only two weeks, submitted
an op-ed to
Fox Business News
the other day
, in which he laid out his goals for the agency. Dr. Tarbert comes to the agency with an impressive educational and professional background and as a Republican nominee; I had assumed he would continue in trying to lighten the regulatory burdens on the big guns in the financial industry. Instead, I came away with a very different take upon reading his opinion piece.
Here's the key passage - "[T]he CFTC must issue long-awaited rules to limit derivatives positions that help unscrupulous traders corner commodity markets. The trick will be making sure these rules do not strip those markets of the flexibility needed to perform their fundamental risk-management functions."
I'd be lying if I said Tarbert's words didn't resonate with me. It wasn't that long ago that I had complained to the public integrity section of the FBI/DOJ about the CFTC's failure to do its job when it came to JPMorgan and silver. Position limits were a non-issue while JPMorgan came to completely dominate the silver market - selling short in unlimited amounts and acquiring almost all the available physical silver in the world. Nevertheless, one must not become so jaded to not recognize clear evidence of someone trying to do the right thing.
Chairman Tarbert's words about position limits come at a noteworthy time. In the 35 years I have followed silver, there has always been a large concentrated short position in COMEX silver futures. That's why I alleged the silver price was manipulated. There was never a legitimate economic reason for the large short position. Had position limits been enacted, it would have eliminated the concentrated short position, allowing the price to rise. But while the large and uneconomic short position still exists in COMEX silver futures, it has recently been joined by a large concentrated long position. The one big difference between the very large concentrated short and long positions in COMEX silver futures is that only the long position seems economically justified. When the price of anything becomes extremely depressed, it makes a lot of sense for market participants to buy that asset and makes no sense for market participants to sell short that asset.
The price of silver is the only commodity down nearly 70% from price peaks of both 8 years and 39 years ago. It is the only metal where primary miners can barely make a profit at current prices. Relative to other precious metals, particularly gold, silver is priced at such depressed levels so as to defy a reasonable explanation. In such circumstances it makes sense for large buyers to appear and absolutely no economic sense for there to be large short sellers. The only possible reason for large short sellers to exist in a commodity that is depressed in price is to depress the price further. Thus, should the new chairman of the CFTC mean business about enacting legitimate position limits, I hope he sees the difference between a large position that makes economic sense and one that doesn't. The concentrated long position has not driven prices to unreasonably high levels, while the short position has depressed the price.
This latest public offering from Ted is
definitely worth reading
. It showed up on the
silverseek.com
Internet site at 2:42 p.m. MDT on Thursday afternoon -- and another link to it is
here
.
Central banks continued to load up on gold in the first half, helping push total bullion demand to a three-year high, according to the World Gold Council.
Nations added 374.1 tons in the first six months as Russia and China kept building reserves and Poland made a massive purchase. The trend is expected to continue, with a recent survey of central banks showing 54% of respondents expect global holdings to climb in the next 12 months.
Central banks around the world have added to reserves as economic growth slows, trade and geopolitical tensions rise, and authorities seek to diversify away from the dollar. Gold rallied to a six-year high in July, as expectations for lower U.S. interest rates and concerns about the economy boosted bullion's appeal.
Nations have expanded gold holdings by about 14% since 2009, and the hoard is now valued at roughly $1.6 trillion.
Poland bought 100 tons in the second quarter, the most by a central bank since India's purchase in 2009, the WGC said in a report Thursday. Poland's addition followed a smaller purchase last year. Countries like Russia and China are regular buyers, but that's aided by a mining industry that Poland doesn't have, said Alistair Hewitt, director of market intelligence at the council.
"Poland's buying isn't just opportunistic," he said. "It is supported by the same underlying motivation that many central banks share, which is as a store of value, diversification and, in some instances, to protect themselves from political risk."
This gold-related
Bloomberg
news item showed up on their website at 9:00 p.m. PDT on Wednesday evening -- and was updated about three hours later. I found it in a
GATA
dispatch -- and another link to it is
here
.
It was the unkindest cut of all.
Yesterday, the Federal Reserve whittled down its key lending rate by 25 basis points, in what was probably the biggest mistake in Fed history.
As you know, the Fed only makes mistakes.
It was set up in 1913 as a backstop for the banking system... to provide emergency funding for otherwise solvent banks.
But in the Great Depression, 10,000 banks went under anyway. And now, the Fed aims for full employment, ever-rising stock prices, recession-free growth, the reelection of all politicians, the enduring admiration of the press, and the love of the common people.
By the way, it is also charged with maintaining the integrity of America's money. But only by undermining the dollar at a near-constant rate of 2% per year, it says, can it achieve its other goals.
Thus, its mission is confused and doomed from the get-go. There is no reason to think that a group of PhD hacks could ever create a single job, let alone millions of them.
This
interesting and worthwhile
commentary from Bill was posted on the
bonnerandpartners.com
Internet site early on Thursday morning EDT -- and another link to it is
here
.
Just as investors thought it was safe to buy-the f**king-dip after Powell's plunge, President Trump steals the jam out of their donut/doughnut by announcing new China tariffs...
"... on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country "
In a series of tweets, Trump laid out the state of the China trade deal... in a word - terrible...
And just like that - the gains were gone...
This chart-filled
Zero Hedge
article was posted on their Internet site at 1:34 p.m. on Thursday afternoon EDT -- and it comes to us courtesy of Brad as well. Another link to it is
here
. In a very related article is this
Bloomberg
story headlined "
Trump Ratchets Up Trade War With New Tariffs on Chinese Imports
" -- and I thank Swedish reader Patrik Ekdahl for that one.
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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.
We are rated A+ by the BBB with zero complaints on our record. We are recommended by many prominent newsletter writers including Doug Casey, Jim Sinclair, David Morgan, Future Money Trends and the SGT Report.
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