June 26, 2019
The Miles Franklin Newsletter
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From The Desk Of David Schectman
Why did gold take a tumble yesterday? Looks like the “Cartel” is getting nervous. This gold rally is frightening them.
Never have the powers-that-be been as overbearing in the gold market as they were yesterday. Except for the night that Trump was elected president, there has never been a day like we had in the COMEX futures market in gold on Tuesday. I don't have any records, but it was most likely the biggest volume day in gold in the CME Group's history. It was massive, in-your-face intervention of the highest order. It was meant for one reason only -- and that was to break the back of the big rally that had developed over the last few weeks.
Whether it has succeeded or not, remains to be seen. But as I've said before, they can huff and puff all they want, but this current setback will be shown to be temporary when we look back at it later. This precious metals bull market still has a long way to run.
But what happened should have come as no surprise, as both Ted and I have been watching the build-up in the commercial net short position in gold with more than some concern. And as I mentioned again in yesterday's missive, the danger flags were snapping in an ever-increasing COMEX wind. But the ferocity of the attack yesterday surprised even me.  – Ed Steer
Here is an email I received from one of our clients, Dick H.
David - good morning...............................
"we have urged our readers to sell gold and buy silver."
It disappoints me that you say that. Gold is not an investment - at least that's what you've told me in the past. Why not sell gold and buy lakeshore property? Or?
I say: hold on to your gold, and buy silver.
Your comment?
Dick H
You are correct. Gold is not an investment, gold is an financial insurance policy; gold is MONEY. 
Lakeshore property is an investment. And more importantly, it is not liquid, not like gold. There is nothing wrong with holding your gold and buying silver. Nothing at all. But we consider gold and silver both to be “precious metals” and they both serve the same purpose in your portfolio. The relationship between the two is out of line now. What I was pointing out is that you can increase your “ounces” or precious metals potential value by moving from a temporarily overpriced asset - gold (over-priced ONLY in relation to silver), into a grossly underpriced asset (silver) without needing to spend more money. You could do both, or either. But buying more silver does not take advantage of the price is-match between the two.
My son Andy and I recently both purchased MS/63 Saint Gaudens $20 gold pieces with the proceeds received from the sale of approximately the same number of ounces of U.S. Gold one ounce Buffalo's. Anytime you can trade a bullion coin in for an uncirculated Saint at anywhere near the same price, jump on the opportunity. This was the first time I witnessed a price converge like that in the last 30 years.
We believe that there is nothing wrong with “re-balancing” a precious metals portfolio if there is a good reason to do it. Silver for gold, gold for silver, bullion for numismatics, and numismatics for bullion. We have utilized all of these swaps to good advantage for ourselves and for our clients in the last 10 years. 

Here is another email exchange I had yesterday with a good friend
Check this article by Paul Craig Roberts out…
This author claims to be the only sane person in the room. I have come across his kind before. I move away from guys like this. FAR FAR AWAY.
But what if he’s right?
in 1987 I was a speaker at a financial seminar in Zurich. Every speaker at the event talked about how gold was going up - everyone but ONE. James Dale Davidson was the only man in the room who claimed to be sane, and said absolutely not. Gold is headed down. After the seminar ended, the attendees were asked to rate the speakers. Davidson got the lowest ratings. He was the only ONE in the room who presented a different view.
He was right and everyone else was wrong. Life is much easier than basing choices on a catch phrase full of surprises. I hear where you are coming from, but that stance is only right until it isn’t. And Paul Craig Roberts is not a crank. He worked for the CIA and was involved in government from Reagan on. He, better than most, understands the shadow government and the gross incompetence that runs this country.
I will say this - let’s hope he is wrong. But all the “normality” and affluence we take for granted is threatened now. What Trump does with the Iran mess has huge consequences for all of us. Trump and his advisors now control YOUR destiny. I like it better when I control my own, but this is really one of the black swans that could turn everything upside down.
Yes, we live in interesting times.
Gold is up another $15 this morning. It has broken through just about all of the overhead resistance that is holding it down. Once past $1350 sky is the limit.
Bonds and gold and the dollar are all signaling that something is not right. As asset classes, they represent a move to safety. Big money uses them that way. 
Gold is the ULTIMATE CANARY IN THE MINE SHAFT. The canary is looking wobbly on its perch now. 
If you choose not to value gold as a financial or insurance asset, at least follow it closely as the key indicator of when the shit is hitting the fan.
I define myself as an optimist who is a realist that makes me a pessimist. Funny, but as much as I love to see gold rise, I do not want it to rise too much, because when it does, we are all somewhat fucked.
$1432 gold is the “line in the sand” if you value Technical Analysis.
Current gold price - $1432.80
Here are a couple more charts for you to consider. They are all different but in reality, they are just slightly different interpretations of the same message. It really does look like the long-awaited bull market in gold has arrived.
Looks like clear sailing all the way up to $1800. Celente says the launch point is when gold is above $1450. SRSrocco says the decouple point is $1360. Jim Wyckoff says $1530 possible by this summer. Come to think of it, the days are getting shorter and it is already summer.
Kitco News)  - As the  gold  market powers to a six-year high, it's prudent to examine longer-term charts to gain an important perspective on where prices have been and where they may be headed. The monthly continuation chart for nearby  Comex gold futures  shows prices are trending up and have just pushed above what were stiff technical resistance barriers at the highs scored in recent years. That upside "breakout" from those resistance areas gives the bulls much more power to achieve their next upside price objective on the longer-term chart. That would be chart resistance at the $1,530.00 area. The power with which the bullish upside breakout has occurred suggests the $1,530.00 level will be reached this year, and possibly by the end of the summer.
Safety first: markets wary of world politics and policy and dash for bunkers
LONDON (Reuters) - Gold, Switzerland’s franc, Japan’s yen, top-rated government bonds, and even bitcoin — investors have dashed for havens and alternative assets this week as anxiety grows about trade wars, U.S.-Iran tensions and negative interest rates.
Although world stocks and bonds remain near record highs thanks to promises of ever more central bank largesse, the sudden dash for these financial bunkers shows all is not as calm as a cursory reading of headline indexes suggests.
Fears of a global trade war have been simmering for over a year but the latest standoff between Washington and Beijing may come to a head at the G20 summit in Japan this weekend. New U.S. tariffs on Chinese imports could kick in next month if there’s no progress between the two sides.
Military tensions between the United States and Iran have also gone up several notches after Tehran’s downing of an unmanned American drone last week and claims that U.S. retaliation was stopped at the last minute. A fresh wave sanctions on Iran’s leaders and a war of words between the two sides have followed.
The trade and geopolitical worries are compounding investor concern about a looming global economic downturn and whether central banks are easing policy again quickly enough to offset it. Even if they are, the expanding universe of bonds with a negative yield — effectively penalizing investors for holding them — is unnerving for many.
“It comes at the worst possible moment because we are late-cycle, we are worried about global growth, and the U.S. are fighting on many fronts,” said Frederic Ducrozet, a strategist at Pictet Wealth Management, referring partly to the trade conflict between the U.S. and China.
He said that under normal circumstances, the reaction to the dispute in the Middle East would have been confined largely to oil prices. But because of worries over global growth and the tail risk from trade negotiations, flows are being directed instead into safe assets.
“This Iran conflict is the cherry on the cake,” said Ducrozet.
Nowhere has the move been more marked than in gold. The precious metal struck a six-year high of 1,438.63 on Tuesday, up a whopping 11.2% over the past month. “Safe” currencies the Japanese yen and Swiss francare around 2.% and 2.7% higher respectively over the same period.
Ducrozet even pointed to bitcoin’s resurgence — up 40% over the last month — as possibly partly driven by the search for alternative investments.
(Graphic: Bid for safety -  tmsnrt.rs/2FxefIl )
The promise of fresh stimulus from the world’s top central banks has fueled an all-inclusive rally in public assets, with equities and bonds rising in tandem. That is unsettling for portfolio managers who use the more typical inverse relationship between stocks and bonds to balance and insulate their funds.
The fear is that if they correlate on the way up, they will do so on the way down — hence the search for more alternative assets to diversify portfolios.
“It seems that the world is so awash with money, that it is creating financial asset price inflation wherever you look,” ING economist Robert Carnell said in a note last week.
“Something is wrong here. Moreover, the likelihood that if and when this is realized, the positive correlation between all assets means that my portfolio diversification will all count for nothing is rather disturbing.”
What’s more, there are growing worries that central banks under pressure from politicians and markets alike are finding it harder to read the signals on inflation and growth due to the lack of visibility on policy and trade.
Federal Reserve chief Jerome Powell speaks later on Tuesday, following stinging criticism from U.S. President Donald Trump.
On Monday, Trump again criticized the Fed for not cutting interest rates fast enough saying the world’s most important central bank “blew it” and didn’t know what it was doing.
It’s a new ballgame now that gold has shot through $1,360 and then $1.400.
After five long years, the gold price has finally broken through a key resistance level and is now heading towards $1,400. When the Fed announced possible rate cuts starting in July, after the market closed, the gold price shot up and continued higher during Asian trading. If gold closes above $1,400 by the end of the month, it could be setting the stage for another large bull market.
While many precious metals investors don't follow technical analysis, traders and major markets movers are certainly paying attention.  And, the gold price has been stuck below the key $1,360 technical level for the past five years :

Peak Prosperity disagrees with SRSrocco’s’ timing. They say the gold bull market started last August. Gold quietly entered a bull market after breaking above $1200.
Peak Prosperity
"Somebody" Finally Cares About Gold
...and now that $1,400/oz has been breached, there's plenty of room to run...
Grant Williams pithily summed up the situation that has been plaguing gold since 2013:  No One Cares .
Yes, it’s highly likely that the price has been suppressed. But not enough buyers cared to fight the bullion bank/central bank cartel or make life difficult enough for the politicians — and thus, the regulators — to change things.
So gold languished. For years.

This is the article that I sent to my friend Lou (beginning of daily emails)
They say:
All countries possessing a modicum of foresight are in the process of de-dollarizing their economies and are converting strategic reserves  from US or US-dollar government bonds to primary commodities like gold.”
The Fed and the defense of the dollar

The US dollar-based economy has a  huge debt problem  caused by post-2008 economic policies. All central banks have lowered interest rates to zero or even negative, thus continuing to feed otherwise dying economies.

The central bank of central banks, the Bank for International Settlements, an entity hardly known to most people, has  stated  in writing that “the outstanding notional amount of derivative contracts is 542 trillion dollars.” The total combined GDP of all the countries of the world is around 75 trillion dollars.

With the dimensions of the problem thus understood, it is important to look at how Deutsche Bank (DB), one of the largest financial institutions in the world, is dealing with this. The German bank alone has assets worth about 40 trillion dollars in derivatives, or more than half of annual global GDP.

Their solution, not at all innovative or effective, has been to create yet another bad bank into which to pour at least 50 billion dollars of long-term assets, which are clearly toxic.
Reuters  explains :

“The bad bank would house or sell assets valued at up to 50 billion euros ($56 billion) – after adjusting for risk – and comprising mainly long-dated derivatives.

The measures are part of a significant restructuring of the investment bank, a major source of revenue for Germany’s largest lender, which has struggled to generate sustainable profits since the 2008 financial crisis.”

Thus, not only has Deutsche Bank accumulated tens of billions of dollars in unsuccessful options and securities, it seeks to obtain a profit that has been elusive since 2008, the year of the financial crisis. Deutsche Bank is full of toxic bonds and inflated debts kept alive through the flow of quantitative easing (QE) money from the European Central Bank, the Fed and the Japanese Central Bank. Without QE, the entire Western world economy would have fallen into recession with a chain of bubbles bursting, such as in public and private debt.

If the economy was recovering, as we are told by s0 called financial experts, the central-bank rates would rise. Instead, rates have plummeted for about a decade, to the extent of becoming negative loans.

If the Western financial trend is undoubtedly heading towards an economic abyss as a result of the monetary policies employed after 2008 to keep a dying economy alive,  what is the rescue plan for the US dollar, its status as a global-reserve currency, and by extension of US hegemony? Simply put, there is no rescue plan.

There could not be one because the next financial crisis will undoubtedly wipe out the US dollar as a global reserve currency, ending US hegemony financed by unlimited spending power.  All countries possessing a modicum of foresight are in the process of de-dollarizing their economies and are converting strategic reserves  from US or US-dollar government bonds to primary commodities like gold.
Maurice Jackson of Proven and Probable

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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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