The Miles Franklin Newsletter
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From The Desk Of David Schectman
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It certainly appears that there's a line in the sand at $1,700 spot for gold -- and it's even more apparent that there's a 'Stop' sign at $15 spot in silver...which just happens to coincide with its 50-day moving average at the moment. All attempts to rally above those two numbers by any amount has met with resolute selling pressure. How long this state of affairs lasts, remains to be seen.
– Ed Steer
“When will the gold prices will finally be "catching fire?
The commodities complex will likely see another bull run in the next three to five years,
My suspicion is that the next five years will be very good for natural resources investors, with precious metals enjoying a two or three-year bull market and somewhere towards the end of that bull market, the rest of the commodities complex catching fire,”
– Rick Rule, president of Sprott U.S.
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David's Commentary (In Blue):
Does this make any sense to you? It was reported today on CNBC that
US private payrolls drop by 20.2 million in April, the worst job loss in the history of ADP report.
But the report was not as bad as estimates of 22 million job losses were expected. In today’s world that qualifies as good news. ONLY 20.2 million hard working people lost their jobs. Wall Street used that as cover to take gold down around $20. The DOW dropped only 218 points. The markets are managed – and for the time being, gold is being capped at $1,700 and the stock market will not be allowed to crash. This is only temporary and it is a window of opportunity for those of you still holding onto your stocks and short on gold. Chances are you will not have an opportunity to sell your stocks at such an overvalued price and buy gold at such a suppressed price again.
The US Treasury Department seeks to borrow a record $3 trillion
THIS QUARTER
. That’s right, for just this quarter. OMG. Debt got us into this mess in the first place and the solution to the problem is MUCH more debt. If this makes sense to you, you need help.
The wholesale price of beef has doubled in the past few weeks. Expect to see the prices rise in grocery stores and restaurants shortly. Yes, we can have inflation co-existing with deflation. Food prices, especially meat and poultry will rise dramatically while oil is tanking.
Many people believe that this is just another 2006 -2008. No, 2006-2008 was the “rehearsal.” Now we have the real thing. That said, look what happened to gold during that period. Gold doubled, rising from $500 an ounce to over $1,000 an ounce.
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The Fed and the ECB have indicated that they “will do whatever it takes.” Last Fall, even before the crash in March, the Fed instituted the REPOS and poured
billions
into the market to keep the banks and hedge funds and stock market from sinking from a lack of liquidity. Obviously, there was a crisis at that time, well before the Coronavirus entered the scene.
Now, central banks are printing money in the
trillions
out of thin air. There is only one way this can play out. The dollar will collapse. Some will say it already has. If you measure the dollar against the Swiss franc it is down 80% since 1971. Measured against gold, the dollar is down 98% since 1971. Wake up people, the dollar has collapsed but most people still think it's strong. The money being printed by the Fed and by the ECB has very minimal value and it’s not going to save the world. It has a temporary affect now – mostly to hold up the stock market for a brief period of time. It is mostly psychological effect only.
The current Paper to Gold Ratio (the number of “paper” gold ounces traded on the major world Gold exchanges divided by the actual world production of Gold in ounces per year is 88 to 1. The Paper to Silver Ratio is now 174 to 1. This is like a game of musical chairs. This is why I only own physical gold and silver and no longer own any ETFs.
People don’t understand what inflation is. Normal inflation is “demand led,” and it results in a higher price of goods and services. But hyperinflation is A CURRENCY EVENT. It is the result of the debasement of the currency. Viewed through the recent creation of trillions and trillions of dollars (and euros, yen and yuan) It’s obvious that we have hyperinflation now. It hasn’t yet resulted in a rush to dump dollars and euros, but it will. Just look at what is happening right before your eyes. It’s happening worldwide and this is just the beginning.
Once foreigners realize what is happening, they will rush to the exits and dump the dollar (US Treasuries). The US bond market will come under enormous pressure. At some point the only buyer left will be the US Fed. The Bank of Japan is the only buyer of Japanese bonds now. The Fed will be forced to print more and more money to buy these bonds. This is monetization. Printing dollars to buy our bonds. This has been going on since the 70s and a much more measured rate, but now it is going to accelerate. We are going to have deflation and inflation at the same time. There will be deflation of real estate, the bond market and the stock market (the bubble assets) caused by debasement of the dollar and the value of money going down.
So far, the gold market hasn’t reacted to all of this, but it’s coming. We can see the increased demand for physical gold, but the price is being held in check on the COMEX. But not for long. All of a sudden, out of the blue, the gold price and the silver price will shoot up and it’s coming soon. The money printing has just started. I am not a pessimist, I am not doom-and-gloom, but I can read the facts and see what is happening. This can’t end well because we are sitting on the biggest financial bubble in history. There is absolutely no solution, and that is 100% clear. No solution, but the outcome is crystal clear.
I keep hearing that 30 million Americans that have lost their jobs in the last 6 weeks. No, the numbers are understated by as much as 50% and it is more like 50 million Americans have lost their jobs. For every 10 people who have successfully filed unemployment claims, three or four people have been unable to register and another two people have not tried to apply. Plus, the EPI survey indicates that an additional 8.9 million to 13.9 people have been shut out of the system. This is worse than the Great Depression.
According to Jim Rickards,
“
A new survey shows that of those who received IRS stimulus checks, 38% added to savings, 26% paid off debt, and 18% planned to spend but not yet. As I warned, there’s no “stimulus” in the “stimulus.”
This is a Classic liquidity trap. It’s Deflationary.
People think because its America the dollar can’t collapse; we can’t turn into a Venezuela or Zimbabwe. History has taught us that no country immune is from a currency collapse. If you think that can’t happen here, you are in for a rude awakening. By believing it can’t happen here makes it even more likely that it will. This country is living on a credit card with all the bailouts of the banks and hedge funds and large corporations. Debt is rampant everywhere. Car debt, credit card debt, mortgage debt, college tuition debt, pension plan debt, state and municipal debt. We are drowning in debt. Now that the economy is shut down, the debt is about to devour us. And the Fed knows it, and is “fixing” the problem by pouring on more debt. Take a look around you. Tent cities are popping up everywhere, people are sleeping in their cars, people are getting by using pay day loans, people are in long lines at food banks and many are driving up in nice cars. It’s not just the poor who are looking for a handout. Much of the middle class is living beyond their means as well and all it took was missing a couple of paychecks. The music is about to stop. There will be many millions of people who will be devastated. People are getting destroyed financially and yet the stock market still goes up.
I have been writing that we are headed into deflation followed by hyperinflation. Mike Maloney sees things the same way. So does Egon von Greyerz. All of us see the same issues and the same outcome. All of us are warning our readers. We are doing our best to give you a heads up. I realize that human nature makes it difficult to accept a harsh reality. But you should. If you sit idly by and do nothing you will live regret it.
Mike Maloney says,
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“Next up is a banking crisis. When people stop paying their mortgages and credit card balances the banks will be in trouble. We will have a banking crisis and it could eventually lead to a banking holiday. Do you have two-month’s worth of cash at home just in case?
Tax revenues are flat since 2015 and we have just entered a recession and the recession we’re in is the greatest recession since the Great Depression. It’s going to end up being a depression and I wouldn’t be surprised if it turned out to be the Greatest Depression. The Fed won’t tell you we are in a recession because it takes two quarters of GDP contraction before we have an “official” recession.
The official US Debt clock shows our national debt has increased by two trillion in just a couple of weeks. Meanwhile tax revenue is falling rapidly. So here we are with tax revenues falling and deficits exploding.
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According to Egon von Greyerz,
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Global hyperinflation is looming due to the governments’ ongoing debasement of currencies around the world.
When financial institutions, bond markets, and derivatives markets come under pressure, the current struggles in the global economy will look insignificant. We’ve seen this happening throughout history, and we know how badly things inevitably turn out. If money created out of thin air works, why don’t we just print the whole GDP so people can stop working.
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For the umpteenth time over the last twenty years...the only thing standing in the way of monstrously higher precious metal prices is "a price suppression caused by the concentrated short selling by a handful of banks on the COMEX futures market." That's all that matters, there ain't no more
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The reason I endorse gold and silver and Bitcoin is because they are insurance, they are outside the Fed and the Treasury.
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Up until 1971, US dollars were actually backed by gold, making them literally “as good as gold.” When the link between gold and the dollar was cut, it was clear that it would end in the ruin of the dollar. This had to end with politicians eventually printing unlimited amounts of paper money. Welcome to the endgame.
One of the reasons most Americans believe that there is no need for gold is because retail prices have remained flat - in spite of soaring borrowing levels, while trillions of dollars of debt were allowed to run up without sparking what governments call inflation.
Hyperinflations usually arrive after massive printing of an unbacked paper money and it ends up with the inevitable crash. That’s what happened between 1922 and 1923 in Germany. Hyperinflation followed by a depression, leading to WW2.
It’s happening again right now in America.
The Fed is printing at least $4 trillion to keep credit flowing and the Fed is making direct loans to US businesses – with money the government does not have.
Politicians will merrily have the $4 trillion cash printed; equaling around 13% of the total current American debt level, which risks a tragedy for America – also other nations that are comparably running their own printing presses. And when the $4 trillion runs out they will print another $4 trillion or as much as it takes. They aren’t fixing the problem, they are simply buying a few months, and nothing more.
In a world where governments can’t even balance their budgets, how can those debts ever be repaid? They can’t, they won’t.
The word “inflation” has been changed from its classic definition of “overprinting” to now mean “rising prices.” Government economists, evidently unaware of this semantic error, could thus legally get away with unlimited printing!
That is a crucial point that is not understood by most people.
The reason inflation has been kept somewhat under control for such a long time is because it has been moderated by an occasional deflation which rebalanced the economy. But now we are facing an insurmountable problem. The world is already in a deflation regardless of what the MSM and Washington tell you. They use the rising stock market as proof that things are not all that bad and the economy will recover.
While we hope there’s no hyperinflation, the best way to protect yourself is by exchanging paper money for gold and silver – because governments can’t print the metals. But who will sell it to you? America’s vast gold holdings are not for sale, assuming they are still there (which seems unlikely). The government banks in Russia and China have also been accumulating gold. We are all in a race to acquire gold and our competition has deep pockets. They are the central banks and the very wealthy, who will soon move vast sums of money into gold – once the stock market starts to crash. Gold will back the world’s next paper currency, and those with gold will make the rules. It will not surprise me if a cigar box full of one-ounce gold coins will be worth much more than a brief case full of hundred-dollar bills. And if hyperinflation really takes hold, a single gold coin could be worth more than the brief case full of hundred-dollar bills.
Many nations are already in a deflation despite denials from government economists. Take Japan for example. Their remedy has been to cut rates, which was bound to fail. Lower interest rates have failed to halt deflations, because the remedy is not lowering rates, it is fixing currencies. The remedy is never to prescribe more of the same medicine that created the problem in the first place. Deflation leads to money printing to jump start the economy which leads to inflation – or even hyperinflation. The level of printing that the Fed is undertaking now sound more like hyperinflation.
Here is a Bombshell Report in Newsweek:
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DR. FAUCI BACKED CONTROVERSIAL WUHAN LAB WITH MILLIONS OF U.S. DOLLARS FOR RISKY CORONAVIRUS RESEARCH. Just last year, the National Institute for Allergy and Infectious Diseases, the organization led by Dr. Fauci, funded scientists at the Wuhan Institute of Virology and other institutions for work on gain-of-function on bat coronaviruses. In 2019, with the backing of NIAID, the National Institutes of Health committed $3.7 million over six years for research that included some gain-of-function work. The program followed another $3.7 million, 5-year project for collecting and studying bat coronaviruses, which ended in 2019, bringing the total to $7.4 million.
What is this Gain of Function Research? According to the National Institutes of Health, “Certain gain-of-function studies with the potential to enhance the pathogenicity or transmissibility of potential pandemic pathogens (PPPs) have raised biosafety and biosecurity concerns, including the potential dual use risks associated with the misuse of the information or products resulting from such research.”
“SARS-CoV-2, the virus now causing a global pandemic, is believed to have originated in bats. U.S. intelligence, after originally asserting that the coronavirus had occurred naturally, conceded last month that the pandemic may have originated in a leak from the Wuhan lab. (At this point most scientists say it’s possible – but not likely – that the pandemic virus was engineered or manipulated.)
Dr. Fauci did not respond to Newsweek’s requests for comment. The NIH said scientific research indicates that “there is no evidence that suggests the virus was created in a laboratory.” What else would you expect them to say?
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The following article was taken from the JSMineste website. It is well written and the writer’s views are similar to our views here at Miles Franklin.
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Aden Sisters
The perfect storm
Gold has always been the world’s favorite safe haven. This has been true for thousands of years, and its especially true today.
During these unprecedented times, gold is again showing its true colors… It’s strong and bullish. It’s near a seven-year high and all signs indicate it’s headed a lot higher. In fact, we believe the upside for gold will be wide open in the upcoming years.
Currently, gold is on its way to the 2011 highs above $1900. And if gold now stays above $l680, this target could be reached sooner rather than later. After that, it’ll then likely skyrocket.
There are basically three major reasons why and they’ve all joined together to form the perfect storm.
First, there’s been a massive debt build up all over the world. This was already very serious, way before the coronavirus news started making headlines. But since then, emergency financing has soared worldwide.
The Fed, for instance, has been printing money like mad. And other countries have been doing the same.
This will all end up fueling big inflation down the road. As the great Richard Russell used to say, inflate or die, and we're clearly in an inflate or die situation.
That’s because the world’s central banks feel they must do whatever it takes to keep the economy from falling apart. And if inflation is the end result, they’ll worry about that later.
For now, coronavirus and its economic effects are the big concern. This is a major event and it’s something that hasn’t happened since the Spanish Flu in 1918.
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THE BOTTOM LINE...
All of these repercussions are going to be very bullish for gold, especially considering this perfect storm we’ve entered. It’s going to change many things.
droppable-1588860860564
Most important, it will become increasingly obvious that gold is one solid way to protect yourself and your wealth. Gold is now in a very special situation.
Sure, it’ll probably be volatile at times as the pandemic evolves, but look at this as a time to get set for the really big major rise that’s still to come. In other words, buy on weakness. We think you’ll be very glad you did. And if you already have gold, keep it and enjoy the ride.
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Zero Hedge
“Permit me to issue and
control the money
of a nation, and
I care not who makes its laws.”
When the next panic hits, and it will hit,
there won’t be any gold available at any price...
Great - more good news...
"We expect policymakers to target and applaud mid-single digit inflation, which, combined with interest rate suppression, will be the only way to outgrow the mounting debts. "
Sam Zell, the billionaire known for buying up troubled real estate, said the coronavirus pandemic will leave the same kind of impact on the economy and society as the Great Depression 80 years ago, with long-lasting changes in human behavior that imperil many business models.
"Too many people are anticipating a kind of V-like recovery," Zell said in an interview with Bloomberg Television. "We're all going to be permanently scarred by having lived through this."
Just as the depression left behind a generation that couldn't shake the experience of mass unemployment, hunger and desperation, the burdens this crisis has forced on society may be similarly hard to forget. Zell, 78, said it won't be easy for people to live as they did before the "extraordinary shock" of the pandemic.
He expects some amount of social distancing and working from home to persist long after the acute phase of the outbreak is over, possibly for years. Retail, hospitality, travel, live entertainment and professional sports are some of the industries he sees continuing to struggle.
"How soon will anybody get on an airplane? How soon will anybody stay in a hotel? How soon will anybody go to a mall?" he asked. "The fact that these places may be open doesn't necessarily mean that they'll be doing business."
This Bloomberg news item was posted on their Internet site at 5:00 a.m. PDT [Pacific Daylight Time] on Tuesday morning -- and is the first offering of the day from Swedish reader Patrik Ekdahl. Another link to it is
here
. Gregory Mannarino's post market close rant for Tuesday is linked
here
.
Some of the largest hedge funds are raising their bets on gold, forecasting that central banks' unprecedented responses to the coronavirus crisis will lead to devaluations of major currencies.
Paul Singer's Elliott Management, Andrew Law's Caxton Associates, and Danny Yong's Dymon Asia Capital are all bullish on the yellow metal, which has risen around 12 percent this year.
They are wagering that moves to loosen monetary policy and even directly finance government spending, intended to limit the economic damage from the virus, will debase fiat currencies and provide a further boost to gold.
"Gold is a hedge against unfettered fiat currency printing," said Mr. Yong, founding partner at Dymon Asia, which is up 36 percent this year, helped by its bet on the gold price.
New York-based Elliott, which manages around $40 billion in assets, told its investors last month that gold is "one of the most undervalued" assets available and that its fair value was "multiples of its current price."
In a letter, Elliott cited the "fanatical debasement of money by all the world's central banks" as well as low interest rates and disruption to mining caused by coronavirus. Profits from gold positions helped the hedge fund to a gain of about 2 percent in the first quarter. ...
The above five paragraphs are all of this gold-related news item that's posted in the clear over at the
ft.com
Internet site. It was posted there early on Tuesday morning BST -- and I found it in on the
gata.org
Internet site. A link to the GATA dispatch is
here
.
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Marin Katusa says you need to focus on the swap lines to understand what is coming in the gold market.
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Marin Katusa
To understand the war on gold that is coming, all you have to do is focus on the swap lines. The swap line is set up by the US Fed, and currently, there are 15 nations that are approved for swap lines. This is just the beginning. What a swap line means is the Fed, the US Govt. have pre-approved the nations as allies who have accepted the terms and conditions to be able to draw down money. Japan has drawn down over 200 billion on their swap line in the last 30 days. The reason they are doing that is because they need access to US dollars. These are “positive” swap line countries. In the last 30 days, the 15 positive swap line countries have drawn down almost 500 billion from the Fed. At this rate, by summer, these 15 countries will have drawn down a trillion dollars. The “negative” swap line countries, who will not get a swap line include China, Russia and Iran, etc. Those nations will be accelerating the “War On Gold.” with increasing taxes, increasing ownership, and even outright nationalization of foreign owned assets.
The US Dollar is the world’s reserve currency. It represents over 60% of the foreign exchange reserves in China, Italy, France, Russia, and Germany. The next highest is the euro at 20% and then the Japanese yen. From 2000 to 2008 the central banks were net sellers of gold. Since then they became buyers of gold. Now, due to the Coronavirus, we are in deflation and commodity prices have never been lower – relative to the US dollar (and gold). The emerging countries (including Russia and China) can protect themselves by building up their military and can protect themselves against the US Dollar by buying gold. In the last few years Russia have increased the gold component of their foreign reserves from under 4% to almost 20%. The Chinese are less than 3%. China will have to buy more gold. China is the largest producer of gold in the world and they keep all of it. China would have to buy 128 million ounces of gold just to catch up to the ratio of Russian gold to GDP. That is more than one years global production.
The first thing that the negative swap line countries will do is to tap into gold and gold mines and increasing their taxes and their ownership and in some cases even nationalizing the mines. Katusna’s point here is that if you own mining share in companies that have mines in these “negative swap line” countries, there is an added layer of risk involved.
What it tells me is that the DEMAND for gold will increase greatly with all of the “negative swap line” countries motivated to source as much gold as possible to reduce risk from the US Dollar.
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Tell me how the economy will ever recover is this report is correct? I think it is credible.
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Drudge Report
Pandemic Could Last Two Years
As
coronavirus restrictions
around the world are being lifted, a
new report
warns the pandemic that has already killed
more than 230,000 people
likely won't be contained for two years. The modeling study from the Center for Infectious Disease Research and Policy (CIDRAP) at the University of Minnesota also says that about 70% of people need to be immune in order to bring the virus to a halt.
Influenza pandemics dating back to the 1700s, as well as data about the new coronavirus, can help forecast how Covid-19 may spread over the coming months and years. Out of the eight past flu pandemics, scientists said seven had a second substantial peak about six months after the first one. Additionally, some had “smaller waves of cases over the course of two years.” After the initial outbreak.
A key factor in their prediction for the current pandemic revolves around herd immunity, which refers to the community-wide resistance to the spread of a contagious disease that results when a high percentage of people are immune to it, either through vaccination or prior exposure.
"The length of the pandemic will likely be 18 to 24 months, as herd immunity gradually develops in the human population," the report says. "Given the transmissibility of SARS-CoV-2" — the virus that causes COVID-19 — "60% to 70% of the population may need to be immune to reach a critical threshold of herd immunity to halt the pandemic."
It will take time to reach that point, since data from blood tests show only a small fraction of the overall population has been infected so far, and a possible vaccine is still
months
if not
a year or more
away. It is not yet clear whether people who've recovered from the infection will be
immune
or how long such protection would last.
The report lays out several possible scenarios, including one in which a
larger wave of illnesses may happen in the fall or winter of 2020
and then subsequent smaller waves in 2021. The researchers say this model — similar to the pattern seen in the devastating
1918 Spanish flu pandemic
— would "require the reinstitution of mitigation measures in the fall in an attempt to drive down spread of infection and prevent healthcare systems from being overwhelmed."
Two other scenarios in the report involve either recurring peaks and valleys of outbreaks, or smaller waves of illness over the next two years.
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We have favored silver over gold for many months now. Meanwhile, gold has outperformed silver. Did we make a mistake? If history is to be our guide, then no. Think of this as the turtle and the hare. Silver being the hare.
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Takeaways From The Current Gold/Silver Ratio
Gold was at its most expensive, relative to silver, when the ratio hit 126:1 on March 18 of this year. At that time, it took 126 ounces of silver to buy one ounce of gold.
In November, 1979 Silver was at its most valuable versus gold, when one ounce of silver could buy only 15 ounces of gold.
Silver is currently the cheapest it has been in the last 44 years.
Gold is now only 10% below its all-time high while silver is 70% below its previous high, reached twice before.
Silver is lagging behind. The gold/silver ratio is currently at 113:1 (one ounce of gold can buy 113 ounces of silver). That makes silver historically cheap. The 44-year average of the ratio is 55:1. The current price of gold is $1700 so just returning to its 44-year average silver would rise dramatically to as high as $31 an ounce.
Silver hit $50 an ounce twice before. Now, Jim Dines predicts silver will top $50 for a third time on its was to $300/oz or higher, depending on what the Fed and Treasury decide to do. Dines called the $50 top for silver both times before.
We expect the gap in the G/S/R to be narrowed; probably with silver’s catch-up rise
During the pandemic’s stock market panic selling, investors sought gold, the classic safe haven. Gold provides liquidity available from no other asset class. In mid-April, gold coin sales increased despite premiums at 5% to 10% over spot gold (premiums are typically 1%), plus some gold mining stocks reached all-time highs. Silver was perceived as more of an industrial metal. Soon, it will return to its usual role as the “poor man’s gold.”
Silver is a strong "Buy" now at $15
.
Silver is the superstar in waiting, destined to rise to incredible heights longer-term. Gold bullion will lead silver bullion early on, but silver will catch up. Once silver breaks above its previous high of $19.54/oz, last seen on 4 Sep 2019, it should be off to the races.
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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.
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.
For your protection, regardless of where you live, we are licensed, regulated, bonded and background checked per Minnesota State law.
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Miles Franklin
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