The Miles Franklin Newsletter
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From The Desk Of David Schectman
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David's Comments in Blue
Right now, the Federal Reserve’s intervention in the corporate and government bond markets is suppressing yields. They are forcing the yield on the 10-year down, by buying them up. The yield on the 10-year Treasury Note isn’t far above the March lows. In real terms – adjusted for inflation – it’s negative. If you can’t get any real (inflation-adjusted) returns from Treasuries, and real estate and stocks are grossly overpriced, and are risky, where do you put your money? If you keep it in cash, you lose purchasing power every year – at least 8% according to Shadowstats. Is it any wonder why gold and silver are gaining favor as a necessary component of an investment portfolio?
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The Fed is clueless when it comes to the economy. Do they really believe their own BS?
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My biggest concern, and it is something few people are talking about, is that it won’t be long before we will not have product to sell to our clients who want to purchase it. My best
guess
is that when gold sets an all-time high a bit above $1,900 an ounce - or passes the $2,000 level, it will attract the attention of some of the large hedge funds and billionaires. That could happen by the end of the year, or early next year.
“Some banks are reportedly advising clients to hold up to 10% of their portfolio in gold,
according to Reuters
last week. Nine private banks spoken to by Reuters, which collectively oversee around $6 trillion in assets for the world’s ultra-rich, said they had advised clients to increase their allocation to gold. Of them, four provided forecasts and all saw prices ending the year higher than they are now.”
It is realistic to expect a handful of wealthy entities could buy up all the gold that the US Mint produces in a year. In 2019 the Mint produced 371,000 ounces of gold (in all forms and denominations). At $2,000 an once, it would take $742 million dollars to buy the entire years production. Add the annual production from the Royal Canadian Mint, the Austrian Mint, the Australian Mint and the South African Mint and maybe the total is a couple of billion dollars to buy it all up. That’s chump change on Wall Street. One large hedge fund could handle that. A few billionaires could buy most of it. Look what happened to the premiums on gold and silver in March and April when the US Mint and the Royal Canadian Mint shut down for a few weeks due to the Coronavirus. There were multi-week delays and the premiums rose to levels never seen before.
It is estimated that only 1.5% to 2% of Americans own ANY gold or silver. Most don’t even know what a gold coin looks like. What if only 5% of the population decides they would like to put 5% of their stock portfolio into gold? Does that sound far-fetched? Of course not. There isn’t enough gold or silver available to fill that kind of a demand.
What I am getting at here is that the DEMAND for gold and silver will FAR outstrip the ability of the mints around the globe to meet it. Forget about price, gold and silver will not be available from the mints, leaving the “secondary market” as the only source of supply. People like you and I who already own it will have to decide to sell it. How high will the price have to go to squeeze gold and silver out of our strong hands? And why would we sell it, in a rising market with the dollar plunging and the stock market and the economy in ruins? Where would we put the dollars we get for selling our metals? I have no idea. I’ll work on that when the time comes.
I know a lot of people who have no interest in owning gold and are fully invested in the stock market. They measure their wealth in dollars. I measure my wealth in ounces. Mark my words, the time will come when these folks will realize that their dollars are rapidly losing value and they will try and convert dollars into physical gold and silver. Lots of luck. And if they are lucky enough to find product to buy, it will be so expensive that they would have been far, far better off buying it now while the prices are still cheap and the dollar still has purchasing power. What if their stock portfolio doubles but the price of gold triples and silver quadruples at the same time? Even if they can buy metals, they will get fewer ounces for the dollars they receive when they finally sell their stocks – and that’s assuming the stock market continues to rise, which is very “iffy” as we are slipping deeper into a Great Depression.
I have given up trying to convince friends and family that they need gold and silver and that there is great risk in having their retirement money in the stock market. I have given up trying to talk politics with anyone who has a different viewpoint that I do. Besides, do you really think either party has a solution to the mess we are in now?
Calling it a mess is being kind.
Why do you think the Fed has slashed interest rates to zero? Because with the national debt closing in on $30 trillion, the only way to keep the government solvent is to eliminate interest on the newly borrowed money. Otherwise, a majority of the taxes the government collects will go to paying interest on the debt. (Forget about the military and Social Security and Medicare and pensions, etc.) In 2019 the government collected around $3 trillion net in tax revenues (after refunds). For decades, the average interest on a 10-year bond was around 8%. If we paid 8% now, that would equal $2.4 trillion in interest each year on our debt against total tax revenue of $3 trillion. Now do you see why the Fed has slashed interest on the 10-year bond not to 0.08%. And they are considering negative interest rates. Unbelievable.
At $30 trillion, every one percent rise in interest rates increase in interest paid on our national debt by an additional $300 billion. It used to be that our total annual
nationaldebt
would rise by $300 billion in a year, and that was considered a LOT. Last month the
deficit
, for the month was
$864 billion
– for the month. And we are starting phase two of the Covid lock down. A big drop in tax revenue is coming and it will take a few more trillion in stimulus just to keep nearly 40 million unemployed people (forget the MSM numbers, they are a lie) from taking to the streets with pitchforks - or AK47s and AR15s. Homeless starving people have nothing to lose, and you know how that ended up during the French Revolution.
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Trillions are now whooshing by at a breath-taking pace. The U.S. gross national debt - the total of all Treasury securities outstanding - jumped by $1 trillion over the past five weeks, from May 4 through June 8, and by $2.5 trillion for the 11 weeks since March 23.
The total U.S. national debt outstanding has reached $26 trillion, according to the Treasury Department. I've been fretting about this debt on my site since 2011. In recent years, I innocently added a green upward arrow with "Debt out the wazoo" to my gross-national-debt charts, unaware that this tongue-in-cheek label would turn into a factual, data-based technical term:
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And think about this: The huge mountain of debt that took decades to grow to this gargantuan size has exploded by another 10% in just 11 weeks.
On February 19, when the debt had soared by $1.3 trillion in 12 months to $23.3 trillion, I mused: "But these are the good times. And we don't even want to know what this will look like during the next economic downturn."
Turns out, we didn't get a regular economic downturn. We got the most epic and sudden economic downturn ever. And now we're beginning to know what this looks like in terms of the U.S. debt. -
Wolf Richter
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There is a lesson to take from this if you are open minded and rational: THE FED CAN NEVER ALLOW INTEREST TO RISE. If the Fed can’t allow interest rates to rise, why would any foreign central bank or sovereign wealth fund or wealthy individual ever buy a US bond? We are creating money out of thin air like a third world banana republic, plus paying no interest on the bond; no one will want to own them. So that leaves the Fed as the buyer of last resort (like in Japan) and they will continue to monetize the debt, which is now rising in the trillions a year. Does this mean that the dollar will lose its role as the world’s reserve currency? I’ll let you answer that one.
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The perfect storm: falling dollar, endless QE and negative real interest rates.
" The era of
the US dollar’s ‘exorbitant privilege’
as the world’s primary reserve currency is
coming to an end
.”
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If you wanted to create the perfect setting for gold and silver to thrive, this is what you would hope for. The game is over already, and it has barely started. We win. The Fed can’t stop buying assets and creating trillions of new dollars or Wall Street and the economy will collapse. The Fed can’t allow interest rates to rise, as I mentioned above, or there won’t be enough tax revenue left, after the interest payments on the debt, to run the country. The dollar may not totally collapse, since it is still the best of a bad lot of fiat currencies, but it will not hold its value against real money - gold. Gold is already at all-time highs in every currency but the dollar and the dollar will join the rest within months. Gold is demonstrating that every currency is self-destructing by over-printing. It takes more euro, pound, yen, ruble, dollar, etc. to buy the same ounce of gold. Gold IS NOT RISING; ALL THE CURRENCIES ARE FALLING.
I can offer lots more data and charts and article after article, but this is really all you need to know. The things that are propelling gold and silver are here to stay! The last gold bull market lasted 11 years. This one is only a couple of years old and has, if history be your guide, a decade left to go. Jump on the bandwagon before it gets too crowded. You will be in for the ride of a lifetime.
Here are a couple of charts that illustrate the upward trend. Pick your number: $2,466, $3,344, $10,000?
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The chart below shows gold’s big correction over the last 10 years. It’s almost over. Soon, gold will be making record highs again. The chart predicts that gold goes AT LEAST to $10,000 an ounce as the government’s debt crisis goes “critical” over the next five to 10 years.
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Now, a few words on silver
The silver/gold ratio is down to 93.68 to 1. Four months ago, it was as high as 125 to 1. Since then, silver has outperformed gold by nearly 26% and the trend is continuing. $2,000 gold is a realistic short-term target, and so is $30 silver. At that level, the ratio will drop to 67 to 1. The ratio fell to 38 to 1 in 2011.
Silver is now within $1.20 an ounce of its multi-year high. A breakout above $20.57 should quickly bring $25 and then $30. From there, $50 is the next target. It is coming.
Keith Neumeyer, CEO of First Majestic Silver expects triple digit silver. He is a very smart guy and I own his stock. He says silver is not an industrial metal, it is a
strategic metal
(computers, batteries, military, cell phones, etc.) and at these prices, it is too cheap to be recycled. Silver is mined from the earth at an 8 to 1 ratio to gold, yet it is priced at a 93.5 to 1 ratio. Silver is too cheap! He says they are not making money at $21 an ounce silver. Silver is only an $18 billion-dollar industry. It is a very tight market, producing just one billion ounces a year. He expects silver to outperform gold by 300% to 500%. So, do I. I am not giving you investment advice here, but this is MY expectation and I invest accordingly. I love gold. I love silver much more. I own both just in case I am wrong and somehow gold outperforms silver. I do not want to miss this bull market so I own a lot of both.
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Here are Ted Butler’s most recent “free to the public” comments on silver
The Silver Pressure Cooker
July 10, 2020
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The silver market appears ready to blow its top, much like a pressure cooker whose relief valve stopped functioning even as the heat and pressure continued to build. The gold market is also likely to overheat, but at least in gold, its relief valve - the price of gold - appears to be functioning somewhat and has bled off much of the pressure. After all, the price of gold is up substantially on a year-to-date basis and is not that far from all-time highs. While gold looks poised for further gains, perhaps substantial, its price relief valve has allowed much pressure to be released.
It’s quite different in silver, since prices are barely changed on a year-to-date basis and current prices are still close to 65% below the highs registered, both 40 years ago and again 9 years ago. Nothing could demonstrate the malfunctioning of silver’s price relief valve relative to gold than the recent 5000-year undervaluation of silver to gold.
As for why silver’s price relief valve has ceased to function (and gold’s valve is somewhat sticky), that’s obvious – the release mechanism was gummed up due to concentrated short selling on the COMEX. For years the concentrated short selling was led by JPMorgan, but the bank has recently abandoned the short side, leaving 8 other big shorts to deal with a mess when the lid blows off.
What are the heat sources causing the pressure to build in the silver market? For the past few months, the main heat source has been the massively insane quantities of physical silver purchased by and deposited into the world’s silver ETFs, led by the largest, SLV. More physical silver (220+ million oz) has been deposited into these investment vehicles over the past few months than at any time in history. Let me repeat that – never in history has so much physical silver been bought and deposited into silver investment vehicles in such a short time.
Common sense would dictate that much more physical silver being bought in less time would exert much greater upside price pressure. To be sure, silver prices are up from the March lows, but are flat from yearend and still down 65% from the peaks of 9 years ago.
This is not complicated math or advanced pricing formulae – more of a commodity being bought in the shortest time ever should result in a sharp price advance, most likely the sharpest in history. Absent such an expected advance, explanations for why this hasn’t occurred should be apparent. But that’s the problem, namely, no good – or at least legitimate explanations come to mind. Clearly, the price of silver – the release valve on the pressure cooker – is not functioning. Stated differently, this is yet another clear proof that the price of silver is manipulated.
It is because the price of silver has been manipulated - artificially suppressed - for so long, decades in fact, that an unprecedented level of pressure has been created. This pressure for higher prices, more than ever seen in any other commodity has to blow up at some point and all the signs suggest the explosion may be at hand. What signs?
The first sign is that it has become really difficult not to notice that the price of silver is not functioning as would be expected, given the surge in documented physical buying. Oh sure, there will always be a few who insist silver is priced correctly for what have to be the most nonsensical reasons imaginable, but for every recalcitrant bear, there are multitudes of newly converted silver bulls. In fact, I’ve observed more commentators previously skeptical or wishy-washy on the prospects for silver, turned such avid bulls that I wonder how it is that they made the conversion to bullishness so seamlessly.
It’s not hard to be extremely bullish on silver currently and the reasons for being bullish have never been more compelling. Even the Silver Institute, which to my recollection has never issued price predictions on the metal, is now calling for silver to rise in price due to the obvious explosion in physical investment buying, both on a retail and a wholesale basis. The only thing being left out by the Institute, of course, is why the price of silver is so cheap to start with. As is the case with many, the issue of price manipulation can never be acknowledged no matter how obvious.
Every day, more are coming into the bullish silver fold and I have yet to observe any defections. Certainly, and most likely, the well-informed recent buyers of the 220 million physical ounces don’t appear set to abandon their bullish conversion. Unlike the previous two runs to $50, the buyers at this point are not chasing prices higher, but are accumulating in a highly measured manner – the antithesis of “hot money”. I’m convinced that the hot money phase lies ahead and when it does kick in, it will further blow the lid off prices.
It’s no secret that JPMorgan has supplied the 220 million ounces bought and deposited into the world’s silver ETFs these past few months, for the simple reason it is the only entity capable of doing so. The question is how much longer it will continue to do so. The moment JPMorgan stops supplying physical silver to the market and refuses to add new COMEX short positions, it does not appear likely that the remaining big shorts can keep the lid on prices. That this is becoming increasingly apparent to more observers and investors daily just adds to the pressure.
There is no question the price lid will be blown off the silver pressure cooker at some point, so even though it’s admittedly impossible to predict exactly when that will be, more relevant is what to expect as the lid comes off. Simply put, this will be something never seen. Even in the two previous silver price runs to $50, the short sellers never fully capitulated and managed to then rig prices sharply lower in a fraction of the time it took for prices to rise. Since so much silver has been acquired before prices have climbed much on this go-around, the prospects for massive downside liquidation appears rather limited.
My definition of the lid being blown off of the silver pressure cooker includes the big short sellers collectively throwing in the towel and moving to buy back shorts. That has never occurred, but it will at some point. In fact, we have yet to ever witness any real concentrated silver short covering on higher prices and this is probably the clearest proof that silver has been manipulated for all these decades.
The big shorts have always been able to ride out price rallies in silver over the decades, no matter how large, without ever collectively rushing to buy back short positions, in complete defiance of short selling norms in every other market (except gold). It’s frequently (and erroneously) said that all markets are manipulated, as a way of downplaying and dismissing the silver manipulation. But that ignores the fact that in COMEX silver (and gold) the big shorts have never collectively bought back shorts on higher prices. But that day is coming and may now be at hand.
Since we’ve never witnessed a collective short covering of the concentrated short position in silver, we can’t draw on actual experience to gauge what effect that would have on prices – all we can do is imagine. At the very least, such an unprecedented occurrence should be a shock to the price system. A true attempt at collective short covering by the big shorts should cause the price to vault upwards like never before. Where silver prices have jumped by dimes in the past, think dollars instead, and within almost impossible to imagine short time frames. In a genuine attempt at collective short covering by the big shorts, price jumps of dollars at a clip would have to occur.
The key is to look at the underlying mechanical aspects of what a collective covering of the concentrated short position means to the price and not the price itself. By mechanical, I mean how quickly the 8 big shorts can close out and cover a significant portion of the 70,000 contracts (350 million oz) they were short as of last Tuesday (to say nothing of the 200 million oz held short if JPM has leased the metal that has found its way into the silver ETFs). Only a small portion is capable of being covered on any given day. The good news is that future COT reports will provide the evidence (or lack thereof) of short covering as it occurs.
One reason I believe there is more of a pressure cooker analogy in silver than in gold, other than price pressure being relieved in gold as gold prices have risen much more than silver, is the dimension of the concentrated short positions in each. Over the past few months, an amount of physical gold roughly equal to the concentrated short position of the 8 largest shorts, close to 25 million oz, has been deposited into the COMEX gold warehouses. In fact, I believe the reason for the large physical inflows and large deliveries to date is related to the concentrated gold short position. Certainly, no one can claim 25 million oz of gold is impossible for the big shorts to come up with. After all, 25 million ounces of gold, while a very sizable $45 billion in dollar terms, is less than 1% of all the gold bullion in the world.
It’s different in silver, where the 350 million oz concentrated COMEX short position (to say nothing of an additional 200 million oz short position if my claims of leasing are accurate) seems to preclude that amount of physical silver being available to the big shorts. This is what separates silver from gold, namely, it is conceivable for the concentrated short position in gold to be offset by physical metal, where that would seem to be impossible in silver. The big silver shorts coming up with the equivalent amount of physical metal at close to current prices is about as likely as me discovering the vaccine for Covid-19 or becoming the new hairdresser to the stars. So, we sit and wait for the inevitable short covering and silver price explosion.
Ted Butler
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How do we fix this? If you have an answer, drop me an email with your take on how we wiggle out of this. I see no way out. Commercial real estate is collapsing. Retail is collapsing. Residential housing will be next as one third of all homeowners say they don’t know how they will be able to make their next house payment. 40 million people are out of work and most of them work in service jobs (bars, restaurants, salons, health clubs, retail shops, etc.) and most of these establishments will not re-open. Where will they find work? If they do, can they survive on minimum wage? How will they make their credit card payments or mortgage payments or utility payments or insurance payments or student loan payments? How can the banks survive the onslaught of bankruptcies and defaults? How do we fix this? It doesn’t matter who wins the election as far as the economy goes. It is beyond fixing, and now we enter phase two of the shutdown. And there probably will be a phase three and four, etc. For most people, who are not already prepared, it is too late. I’ve been preparing for this for the last 20 years.
My big fear, going forward is civil unrest. If you think the George Floyd riots are disturbing, wait until there are tens of millions of unemployed people taking to the streets coming after what YOU have.
My wife says, “Don’t you ever have anything positive to talk about?” So, I sat her down last night and we watched a few shows on YouTube, including Jeremiah Babb and Tucker Carlson. Some people get it, they see what is happening out there. I asked her, “Where is the good news out there?” “Do you want me to be an optimist or a realist? I am not a pessimist.” I am a realist who understands what is happening, and it isn’t pretty. I am not worried about my finances or my family’s well-being. We are all o.k. I do worry about insurrection and personal safety and the virus. But those are things pretty much beyond my control, though I take precautions relative to Covid-19, just in case. Andy and Zhanna take it more seriously than Susan and I do, but we figure better safe than sorry. You see, most people have been conditioned by the media to think that way to and even when the shutdown was lifted, the stores and restaurants were still far from attracting enough traffic to survive. How can a restaurant or health club or retailer survive with half the people or less patronizing their business? They can’t.
A friend of mine, one of our local wholesalers, stopped by this afternoon and we were talking about the economy. He said one of his friends owns Murray’s a legendary steak house in downtown Minneapolis, and it is impossible to break even with the traffic they now get, even on a Saturday night. Another of his friends owns a large restaurant and their rent is $360,000 a year. They can’t survive. Taxes, insurance, rent, unemployment insurance for employees, none of these small businesses can make it under the new “normal.” Remember, the consumer is 70% of the economy and the consumer is not out shopping at the malls or eating at the restaurants. Under the best of circumstances this would be a disaster, but we entered this shutdown deeply in debt as a nation and with most Americans living paycheck to paycheck, barely able to make the interest payments on their credit card debt, or able to write you a check for $500. And this was BEFORE the shutdowns took effect. How do we fix this? I do not have an answer, so I must assume we don’t. Start from that point and ask yourself how can the stock market keep rising? I guess until the Fed stops buying stocks. And if they don’t, then kiss our friend the US Dollar goodbye. This is the old “caught between a rock and a hard place” scenario that the Fed finds itself in. No way out. They have painted themselves into a corner. Checkmate. I shouldn’t have equated the Fed to ducks, it is an insult to the ducks.
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We are entering The Greatest Depression because
there is no exit...
... and people will have to look at themselves in the mirror, or tell their kids what they did when this was all going on: "I described the hand movements of an idiot being paid a fortune to eat soup with a fork."
The unprecedented implosion of U.S. commercial real estate during the coronavirus pandemic is likely to get worse as newly delinquent CMBS loans are surging as the list of retail store closures continues to rise.
Trepp's June CMBS remittance report showed CMBS delinquencies hit a high of 10.32%, not seen since 2012. It was noted that that retail CRE loans were in rough shape.
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Many retail shops are heavily indebted, some have already declared bankruptcy, while others are quickly shrinking their operating size, by reducing store footprint to rein in cost as the virus-induced recession, blended with a plunge in consumption, along with a shift to online, is resulting in a rapid acceleration of the retail apocalypse.
Coresight Research's latest forecast has upwards of 25,000 retail stores could close by year end.
Forbes has released an updated list of confirmed store closures. So far, it looks like 8,708 store units have or will shutter operations this year, and could quickly surpass 2019 totals of 9,302, in a matter of months.
This all suggests there's no V-shaped recovery this year - one might want to hunker down for a prolonged downturn.
This
Zero Hedge
news item showed up on their Internet site at 5:25 p.m. EDT on Wednesday afternoon -- and another link to it is
here
. A related
ZH
story is headlined "
Plunge in Consumer Credit Continues as Americans Repay Record Amounts of Credit Card Debt
" -- and linked
here
.
Spot gold prices are rallying this morning, as the dollar dives, pushing to within a tick or two of May's highs...
A breakout from here would take the price of the barbarous relic to 2012 levels and quickly beyond...
Click to enlarge
.
I’ve already made nearly $250,000 profit on this stock in the last week or so. It was 0.06 one month ago, on May 28.
You and I can make a lot of money from our business (in your case it takes a lot of your effort to make it, in mine, I make it while I sleep) but the big money “can” come from owning the right mining shares at the onset of a bull market. And this is the onset of the mother of all precious metals bull markets. This is not subjective or wishful thinking. The Fed’s unlimited money printing policy, with their own guarantee that it will continue as long as necessary (that will be years, if not forever to avoid a collapse of the stock market and the economy) and that guaranties that god and silver are in their “golden era.”
All it takes to make a fortune in gold and silver is patience. I made it once, from 2000-2011. Stage two is now here again but this move will be much bigger.
Look at what happened today This is not ordinary volatility. They tried to smash gold and it came right back in their face.
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They cannot hold it back now. Before the year is up, gold will pass $1800, then $1900 and then $2000. By then, the hedge funds and billionaires will take notice. When they do, lots of luck trying to buy physicals. If you can find them, the premiums (and shipping delays) will be big time. Between my 2,000,000+ shares of American Creek and 100,000 in TRX I won’t need Miles Franklin any longer. Not to mention my physical holdings of around 1,000 oz of gold and 55,000 ounces of silver.
I have been an unwavering believer, through good and bad, but I always had a clear understanding of what the end game would look life. All it took was patience. I load up, I wait, I win.
I have never been wishy washy about this. I was merely like the boy who cried wolf. The wolf is sniffing at the door now - actually he is pounding on the door.
The stock market is rising because of the trillions the Fed is pouring into Wall Street and the banks. The banks own the Fed. The Fed will not let them fail, and cannot let the stock market fail so stocks are rising in spite of a great depression in our midst. But that comes with a price. Massive money creation - not in the billions, in the trillions. That is exactly what gold needs to go ballistic. Gold is up $400 in the last 12 months. (actually $356).
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Anyone holding traditional currencies like dollars, euros or yen — is losing wealth, every single day.
Even if your bank is not yet charging you to hold your money, the worthless currencies issued by today’s governments lose roughly half their purchasing power, roughly each decade!
Look at this chart that shows how much your saved dollars lose value over the years...
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And if all of that weren’t bad enough...
With the permission of our government, the banks, credit card firms, and other money institutions now get away with ripping off the public at every turn...
Banks pay you nothing in interest... yet charge you $3 or more just to get your own money out of an ATM machine... or $50 to send a bank wire.
Credit card companies get away with charging 20% interest on late payments... but if the credit card company allows someone to fraudulently open up a new credit card in your name, they call it “identity theft” and it’s somehow your fault!
Credit card companies charge businesses 2% to 3% of every purchase made. Trust me... many businesses, including mine, will soon never, ever accept a credit card that charges my company 3% of every sale.
It should be so obvious to anyone who bothers to take a careful look... today’s entire financial system is corrupt, broken, and simply will not last.
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In closing, in response to many emails I have received asking for more information on American Creek, here is the latest from Kelvin Burton. I am not advising anyone to buy this stock. I do not give investment advice. Exploration stocks are very speculative and less than one in a hundred ever make it to production. I personally like their story and it is my biggest mining share holding. I do not receive any compensation for mentioning them, nor will I be selling any of my shares anytime soon, as I believe it is cheap below $2.50 a share. Do not invest any more than you can afford to lose on any exploration stock. High risk, high reward. They are not for everyone.
David,
Someone sent me an email this week entitled “Recent Winners” listing 7 companies with tremendous increases in the last few months. The three partners involved with Treaty Creek were all in the top five (622% for American Creek)! With gold and companies in the precious metals mining sector getting beat down a bit over the last week or so, I guess it was time for a breather for American Creek Stock. Having said that, there are many industry experts who are saying that we’re just getting started. This is still a little-known project.
Since we last spoke the first round of results came out on our Treaty Creek JV project located in the Golden Triangle of NW British Columbia. It has the potential to be a world-scale gold / copper / silver project with a lot of logistical, environmental, political, and geological advantages over many existing projects. In fact, it’s part of the same geological system that includes Pretium’s Brucejack mine and Seabridge’s KSM project which contains the largest undeveloped gold deposit in the world by reserves!
Last week Tudor Gold (our JV partner and operator on Treaty Creek) announced two additional drills have been mobilized to the project bringing the total to four diamond drill rigs. They also announced they are practically doubling the program from 20,000 meters to 35,000 meters. A recent investment of $9.3 million CAD from Eric Sprott (largest external shareholder in the project) will allow them to reach their goal of a maiden resource calculation later this year.
The Goldstorm is the main zone being developed on Treaty Creek although another area called the Perfect Structural Storm (PS2) will also be tested. The Goldstorm system gets wider, deeper, and richer as it extends north and east and yet the initial drills in the south had some impressive results including
0.845 gpt AuEq over 973.05m including 1.4 gpt AuEq over 217.5m.
To put that into perspective that’s like putting two Willis (Sears) Towers (Chicago – 2
nd
tallest building in USA) on top of each other and adding a football field (on end) at the very top of almost one gram of gold equivalent! That’s a lot of gold!
There were numerous holes with just over or under a gram gold including
0.899 gpt AuEq over 247.5m
and longer holes including
0.691 gpt AuEq over 642m
. The next round of holes will be located further north where the system gets bigger and richer.
The Treaty Creek Project is a Joint Venture with Tudor Gold owning 3/5th and acting as operator. American Creek and Teuton Resources each have a 1/5th interest in the project creating a 3:1 ownership relationship between Tudor Gold and American Creek. American Creek and Teuton are both fully carried until such time as a Production Notice is issued, at which time they are required to contribute their respective 20% share of development costs. Until such time, Tudor is required to fund all exploration and development costs while both American Creek and Teuton have “free rides”.
I mentioned that all three companies have been doing really well but according to sector charting expert John Newell (Fieldhouse Capital Management) American Creek is the best value of the three. In a chart he recently put out he shows the relationship between all three companies and how American Creek is currently undervalued making it the best investment of the three. He also indicates how he thinks all three companies will be valued should the Treaty Creek project be valued at one and two billion dollars CAD within the next 18 months.
I think that covers the main points of the press release and we can look forward to getting assays coming back from drilling further north along with drilling on the PS2…and no, I don’t know when those will be out. We might be drilling on our Dunwell Mine project by then but that’s a topic for another day.
All the best,
Kelvin Burton
Investor Relations
American Creek Resources.
Notes and Quotes
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The virus was not predictable, but what is happening to the economy is entirely predictable. Sooner or later something was going to burst the bubble.
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The second quarter was the strongest for equity markets since 1998; however, one analyst notes that the equity market has not been a major headwind for
gold
as the precious metal kept pace, seeing its best quarterly performance in four years.
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The historical data in the last 20 to 40 years shows that seasonally gold and silver tend to do poorly in June and very well in the summer months in July and August and extending into September. Indeed, late June and early to mid-July tend to see quite a degree of selling and weakness prior to strong gains from mid- July and into August and September.
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The Federal Reserve can pump up the financial sector. That's easy - just give Wall Street trillions more fake dollars.
But it can't pump up the real Main Street economy. Main Street needs real wealth. And that requires saving, investment, work, sweat, and training to produce valuable goods and services that people are willing and able to buy.
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New unemployment claims have been over one million a week for the last 15 weeks. Do not believe the lasts press release that 4.8 million new jobs have been created. You cannot trust anything that the media says about the economy or jobless claims.
·
Fake money produces fake wealth; it can't produce real wealth. And as the Fed pumps more and more money into the fake, financial economy... the real economy drowns in an ocean of debt and phony price signals.
– Bill Bonner
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The fact that the total commercial net short position in silver is still half what it was at the end of February and JPMorgan is now flat as opposed to being 18,000 contracts short as it was back then, with silver prices back to Feb levels and up $6 from the March lows is a market structure set up almost bullish beyond words. Add in the absolutely massive physical buying (200 million+ ounces) in ETF buying since the March bottom and this combination is an overall bullish silver set up, the likes of which I have never seen. Selloffs are always possible, but it’s hard for me to see them lasting long.
– Ted Butler
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Bullion banks are between a rock and a hard place. For years they’ve been playing the hedge funds as an angler hooks and plays a fish. That game has ceased and there is no easy way for them to get level. For the moment they are trying to put a lid on the price, but the cost has been rising open interest, and therefore rising mark-to-market positions. The August active contract runs off the board at the end of this month and bullion banks are likely to be forced into large delivery volumes again. Furthermore, the exchange for delivery arbitrage facility between Comex and the LBMA is broken, allowing Comex premiums to London spot to go unchallenged. It is
increasingly possible the gold contract is evolving into deep crisis,
and that force majeure might have to be declared if, as seems increasingly inevitable, a wider banking crisis ensues.
– Alasdair Macleod
·
Gold and silver prices' upwards trajectory looks promising as long as central banks around the world continue to provide accommodative monetary policy; gold is headed to new all-time highs while silver has 30% more room to grow within a year, according to Todd Horwitz of BubbaTrading.com.
"Silver also looks great. I would expect silver to make a run at $25 before it's all over," he said. "$25 silver is certainly in play in the next six, seven months if we continue at this pace, because remember, there's always going to be pullbacks...but as long as we see this manipulation of currency, people are going to be looking for metals."
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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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