David's Commentary (In Blue):
I started working in the precious metals industry in the fall of 1983, and it is shocking just how much the industry has changed in 2018.
How so?
The largest firms, IRI and Blanchard for example, primarily sold numismatic coins and not much bullion. The coins were sold as investments with profit as the major selling point. Bullion as a hedge against inflation, or as a form of financial crisis insurance was secondary.
The personal computer was just entering the marketplace. Apple’s “mouse” made it easy to use for idiots like me. I bought my first computer in late 1989, when I formed Miles Franklin. I used it primarily for word processing, to store my data base and for order entry.
There was no Internet. Anyone born in this century has never known a day without a cell phone and the Internet. I started Miles Franklin when neither even existed.
No one published a daily newsletter. Newsletters and reports were distributed by US mail. The mailing cost to send out a report five days a week was prohibitive.
I looked forward to receiving my favorite quarterly and monthly newsletters. That was often enough. In those pre-Internet days, I had to pay for all of the newsletters and reports; it was not free.
I read every word of every article that I received from the preeminent writers of the time - Richard Russell, Jim Dines, the Aden Sisters, Vern Meyers, Gary North, Doug Casey, Future Economic Trends, Howard Ruff, Mark Skousen, Jerome Smith, Martin Weiss and Don McAlvany. No one told me I had to read these newsletters, but I was determined to know more about my industry than anyone I worked with or spoke to.
Trust me, 35 years ago it was most uncommon for a precious metals broker to dig as deeply as I did into the “why” (own gold or silver). Everyone else sold the “what.” They sold “product.” I sold “need.” From the day I went to work selling precious metals I decided THE most important thing for me to understand was
why
people needed these shiny bars and coins. Profit alone was not a good enough answer for me. And so – I took a different path and started a company that was based on educating its clients, not just selling its clients. This was not the way business was done when I started Miles Franklin. The big firms were just telemarketing firms, and boiler room operations. What is fairly common today did not exist when I set the template for how to do business in Precious Metals.
If you were serious about learning what was really happening with the economy and precious metals, you would attend the hard asset conferences sponsored by Howard Ruff or Blanchard and others. You could rub shoulders with and hear all of the “experts” in a weekend.
By the mid-eighties I was a featured speaker at these events. It was exhilarating because the audience thirsted for the kind of information that we were presenting. It was not to be found in the main stream media. Remember, in those days there was no Internet, no cable or satellite TV, no financial TV channels, nowhere to go for information on precious metals.
It may seem strange today, but we all got along fine without an iPhone or Emails or Texts or Facebook or Twitter or financial news networks. As a point of interest, I was speaking at a financial conference in Hong Kong in 1987 when I saw my first fax machine. It was so revolutionary that I wondered who would use such a device? We got all we needed, by mail, once a month.
By the way, my wife Susan, who spent decades in sales and marketing, said the Fax machine was the death of being able to reach a buyer on the phone to set up an appointment. They stopped answering their phones and you could only reach them by fax or by leaving a voice mail. Try getting an appointment to present a new product to a buyer at Target or JB Hudsons under these conditions. But, if you were good enough, you survived the new technologies.
The problem as I see it with today’s up-to-the-minute barrage of information is that people are conditioned to think “short-term.” The focus now is on the “trees” and people are forgetting about the ‘forest.” When it comes to precious metals, the short-term, for-profit approach does not work very well. Too bad the younger folks don’t understand this.
The average person has been programmed to think as an “investor.” It never used to be that way unless you were very wealthy, and those folks were few and far between. As I was growing up if you had any extra money your choices were pretty much between buying a savings bond or maybe even a mutual fund. They were long-term hold investments.
My generation (the Baby Boomers) was still close enough to the memories of the Great Depression that we were more concerned with return
of
investment rather than return
on
investment. My wife’s grandparents lost their home in St. Paul, MN to the bank owing just a few hundred dollars on it. They never recovered from that experience.
Now, anyone who is Middle Class or above has “an investor” mentality. Most people jump from stock to stock, from asset class to asset class, without a long-term view or big picture perspective. An interesting example of this is Doug Casey. He used to promote hard assets and was one of the loudest voices in the gold and silver industry. I spoke at several financial seminars where he was also featured including Orlando and Las Vegas and in Hong Kong. What is Casey promoting now? Pot stocks and Cryptocurrencies. Where ever the action is. Investors are fickle. I understand that. Gotta keep recycling the money.
Ruff turned his back on gold and silver in the 90s and started touting stocks. A big mistake.
There are only a couple of names from the list I presented above that are still writing about the metals today.
Why is that? Because most of the writers in my industry focus on “profit” as a reason to own gold and silver. I have always maintained that they are an insurance policy to protect against the unknown or deflation or inflation. That’s boring. But it is also the only proper way to sell physical precious metals. If you want to “invest” in gold and silver, check out the mining shares. They can be bought and sold for profit whereas the physical core should be kept for an emergency or passed along to your children.
Writers who rely on paid for subscriptions in the gold and silver industry are, to put it mildly, struggling. We have never charged for our newsletter. It is one of the pillars that I build Miles Franklin on: Education - First-Class Service – with Fair Pricing.
The education goes beyond our newsletter. All our brokers are all very experienced. Bob, Michael and Kathie all started with me in the precious metals’ industry in the early 80s. My son Andy was just 20 years old when he joined me in 1990 when I launched Miles Franklin. You will be hard pressed to ask anyone at Miles Franklin a question about our business and industry that they cannot answer.
Today, if you are not a baby boomer, you probably have no experience with gold and silver. Anyone younger than 50 more than likely does not own any or has an inkling why they need it. That is where education comes in. The day is coming when anyone who doesn’t own some gold and silver will regret it, and wonder how did they miss it?
As for “service” – if you purchase based solely on price on the Internet you will never receive a call from your personal broker. There will be no one to tell you your portfolio is weighted too high in gold or silver and that it is time to switch things around. No one will tell you when certain products, like junk silver or semi-numismatic double eagles are a must buy. Profits can be had in a core position by REPOSITIONING the ounces. As an example, with the silver to gold ratio currently sitting at an incredible 84.74 to 1, you should be moving some of your gold core into silver. When the balance returns to normal, some say 16 to 1 but I believe 50 to 1 is not a wild number, the value of your core holdings will increase dramatically. Does it really make sense to save a percent or two on a purchase from an order-taking firm and bypass the benefits of having a professional on hand to notify you when there are specials available or unique buying opportunities, and or that your portfolio needs re-balancing? Eric Angeli, my Sprott broker, calls me whenever he comes up with an idea that he thinks will benefit me and makes suggestions on what to buy or sell in my mining share portfolio. I appreciate that he stays on top of my mining shares portfolio. That’s what a professional broker is supposed to do. He earns his commissions. That’s the business model we expect our brokers follow here at Miles Franklin. They are one of the benefits that comes with doing business here as apposed to ordering from an impersonal order desk on the Internet.
Last week I ordered four mint boxes of Silver Eagles. I ordered another four boxes today. Is my crystal ball telling me that this is the bottom? No. But here is what I do know. On an absolute basis, relative to gold silver looks like an all-time bargain. Silver has ended the week lower for 14 consecutive weeks, and that is unheard of. This is the cheapest silver has been in the last two plus years. And the silver to gold ratio is the most favorable in the last 20 years as it is just below 85 to 1. With fundamentals like these, who needs a crystal ball?
“Setting Up For The Next Major Silver Bull Market” lists a number of reasons why this is a perfect time to load up on silver.
SRSrocco
Setting Up For The Next Major Silver Bull Market
While the precious metals are totally off the radar by the majority of investors, silver is setting up for one major bull market. Yes, it’s hard to believe as the gold and silver prices have been trending lower while the broader markets grind up higher, but if we look at the fundamental and technical indicators, the stock market and precious metals are now at extreme opposites.
The situation in the silver market is so much more favorable today than when it was trading at $20 at the peak in 2007. I will go one step further and say that the current silver indicators are even better than when the silver price fell to $9 towards the end of 2008.
If we look at the Dow Jones-Silver Ratio, it is at a much higher level today than what it was in 2007 or 2008:
