September 10, 2019
The Miles Franklin Newsletter
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From The Desk Of David Schectman
Gold is in a brand-new bull market. Actually, it would be its third one in row. There is no stock- market term for this configuration, and long ago we baptized its beginnings a “Super Major Bull Market,” of at least three bull phases. It would be prudent to own some gold and silver. – Jim Dines

He who is first always looks wrong because the future is inherently ‘unbelievable.’ – Jim Dines

“The world has seen a ‘paradigm shift’ where nothing is the same as before, and the Fed has difficult choices to make. On the one hand you could make the case for, which obviously the president would make, that yes, interest rates are too high and it’s now against the backdrop of almost zero if not zero or negative rates in other countries and the U.S. is at a competitive disadvantage. On the other hand, you could say that even now with the rates coming down, the rates are still very, very low by historical standards and it’s still a nightmare for savers and for anybody that’s looking for income in the market.”  Will Rhind, CEO of GraniteShares

While down a bit from recent near millennia levels of undervaluation extremes for silver relative to gold, just how cheap silver has gotten compared to gold is still mindboggling. I am not surprised in the least about the proliferation of articles pointing to the extreme market structure as about to cause a severe decline in the price of gold; nor would I disagree that might turn out to be the case. After all, the COMEX gold market structure is bearish and a severe selloff can’t be ruled out. – Ted Butler
Despite all their huffing and puffing, no moving averages of any kind were broken to the downside on Thursday.
As to whether this is the beginning of a major engineered sell-off by JPMorgan et al. remains to be seen. From what I see ahead of us regarding the Fed Funds Rate, the U.S. dollar and the rush to zero-bound interest rates in all fiat currencies...yesterday's price action was but a speed bump on the way too much higher prices. And that opinion is independent of any further down-side price action over the next few days and/or weeks. – Ed Steer
Where Does Gold Go From Here? — Ron Paul’s "Cautious" Prediction
"Gold is an 'insurance policy' as the dollar will continue go down in value as it is printed" and it will end in a monetary "calamity"
"Gold is not money due to any man-made laws. Gold is money despite man-made laws, and is a product of the voluntary marketplace"
Ron Paul has a "cautious" and "modest" prediction for gold and encourages people to own physical gold not as a speculation but for savings and insurance purposes.
David's Commentary (In Blue):

In 1992 Leap of Faith , staring Steve Martin, hit the big screen. There is a scene where he reads the minds of members of the audience in the revival tent. He says, “You want to know the same thing that’s on everyone’s mind – When Is It Going To Rain?” That’s what all of us are thinking now, but replace “rain” with When Is The Stock Market Going To Crash? When is it going to happen? 
Looking beneath the hood, there are several reasons why the stock market is treading water. Low (even negative) interest rates encourages corporate borrowing and they use the cheap debt to buy back their companies stock, which moves the price up. Their compensation plan rewards them when their stock moves up, even if the company loses money. The U.S. is the best of a bad lot. Our economy and currency is still doing better than most of the alternatives so foreigners are apt to place their capital into our stock markets. Negative interest rates herd investors into stocks because the returns on sovereign bonds is near zero or even negative. Investing no longer has a “safe” option that pays a decent return. Investors are forced into the casino called the stock market because they don’t have a reasonable alternative. 
However not all investors are moving money into an overpriced stock market. Some have decided they may as well buy gold or silver. You can see it by the recent large moves up in the metals.
Big Money has evidently been shifting out of stocks and toward safety – even unwisely pushing already overpriced “junk bonds” to new highs! Germany’s entire range of bonds has an unheard-of negative yield; people now need to pay to lend money to governments!

That is unsustainable.

Bottom line, lenders are not getting enough returns making loans, so in desperation they have been resorting to buying risky junk bonds at sky-high prices, and have increasingly gambled in general stock-market speculation, partially explaining recent higher prices. There is veritably no safe source of high income these days, so many investors are concluding they might as well hold gold instead of a taking a guaranteed loss in bonds . - Jim Dines
Have you ever thought about why investors actually buy negative interest rate bonds, and a lot of them are being sold? For most of us, it is not on our radar screen, but what if you had a large sum of money (a bank or corporation, for example) and had to park it somewhere. A few hundred thousand is not a problem, but how about a few hundred million or billion? It is crazy, but that is the world we live in. We pay institutions to take our cash. And what is even crazier is that people do this instead of buying gold. 
All of my personal experience leads me to the conclusion that virtually all of the wealthy mainstream stock market investors simply will not even consider owning gold or silver. I don’t care how smart they are or how much evidence you present to them that it makes perfect sense to own “some” gold as a hedge or an insurance position in any portfolio – they simply refuse to do it. That’s why I often say we “preach to the choir.” Will the mainstream investor, the stock investor every buy gold? Maybe. Maybe when the price is several thousand dollars an ounce and when MSM is promoting gold and when the stock market is melting down. Most likely they will buy gold or silver ETFs, which is really not buying gold or silver, it’s buying dollars that track the price of gold and silver. I honestly don’t get it. 
As a business, we don’t need the typical stock market client. There are enough people in our tiny market to keep us busy. And when the bull market is in full force and prices are setting new highs, the demand from our own little market will tax our ability to provide coins and bars to our existing client base. We’ve seen it happen before – long delivery delays from the mints, nothing available from the primary sources. The only product we can find comes from client sellbacks and they go out the door to waiting hands as fast as they come in. And at very high premiums. Look at it this way – a few very wealthy investors or a couple of large hedge funds could scoop up all the available gold and silver in a moments notice. It will just take a few, and if the dollar is rapidly falling and the stock market is collapsing, I would expect it to play out that way. Yes, one could be too late to the party.
Does this make any sense to you? Gold is now below $1,500 and silver is below $18 and a week ago gold was touching $1,546 and silver was over $19. What changed? Fundamentally - Absolutely nothing. By the end of the year, I expect those levels will be back, and then some. All of the other markets are just speculations, just casinos set up for the pleasure of the hedge funds. “There are no markets, just interventions.”
Personally, I refuse to play in these manipulated, phony markets. I am out; I am on the sidelines, sitting patiently with mostly physical gold and silver waiting for the day that reality enters the marketplace. And it will. The only question is, will the reality be allowed to surface before the 2020 election? I guess it depends on whether the power behind the banks and Wall Street want another four years of Donald Trump. Fundamentally, things are a mess. The central banks are big buyers of gold. And many are dumping dollars. That’s all I need to know - the short-term ups and downs of gold and silver are nothing more than an annoyance. 
Gold and silver will come into their own next year. Russia, China,Turkey and India have all been buying tonnes of gold lately. So have many other central banks, in spite of the media proclaiming that gold is out of fashion. Certainly not with the central banks.
On top of that, many international currencies have been signaling trouble by declining against the US dollar. This represents frightened money seeking a flight to safety in the coming currency wars. And then there are the 2,337 new cryptocoins that have hit the market. 
 “ There will be currency crises again and again, until the ultimate one. Government economists don’t believe this, which is why we have such a low opinion of the Fed: its obsessive tinkering with interest rates, instead of comprehending the danger of an upheaval in the entire paper currency system. It was easy for anyone to have foreseen. And the recent nomination of Goldbug Judy Shelton to the Fed is too-little-too-late for a return to a link with gold; a vast avalanche of old paper money already overhangs the world.”

“Our guess is, the coming flight from paper money would lead to some kind of new currency. Probably just for transfers of land and corporations, backed by gold, barrels of oil, or something else of tangible value, possibly a crypto such as bitcoin, or even America’s gold in Fort Knox. We’re not certain yet, but the odds are increasing that the next paper money will be linked to gold. And thus silver also.” – Jim Dines
Almost every topic that von Greyerz discusses in his essay, below, we have recently covered. We think very much along the same lines. Is there any other “rational” way to look at things?  
Egon von Greyerz
Silver – Golden Opportunity
There is one spectacular investment opportunity today that virtually no one talks about. It represents less than 0.1% of global financial assets. This investment has a potential upside of 36x or 3,500%. The downside is extremely limited since supply is finite and demand strong. It is selling at around production cost and has a real intrinsic value. It has also been money for thousands of years.

Yes, I am of course talking about silver. It is probably one of the most undervalued investments that you can buy today. Since the top in 2011 at $50, silver went as low as $14 in 2015. But we must remember that silver was $4 in 2002. Many investors have been burnt by silver, buying high and selling low. I heard of investors who bought at $50 as they expected a breakout above the 1980 high at $50. A fall of up to 70% since then obviously hurts but fortunately all silver investors will be amply rewarded in coming years, whatever their buying price was.

If you hold silver today, or if you intend to buy,  you are now looking at one of those times in history when an investment is likely to make spectacular gains for an extended period of several years.  At some point, probably this year, silver will move up several dollars in a day or two and later tens of dollars. Over the next 5 years silver could exceed $500.


But let me warn you already now. Silver is not for widows and orphans. The move up will also see periods of vicious corrections that will keep you awake at night, if you are a nervous investor. Thus there will be a massive volatility so the gains will also involve regular pains.

So definitively better to buy now before the real move starts. We have already seen a $4 move from the lows at the end of June, but that is nothing compared to what is coming.

The biggest threat to American’s wealth is not the stock market. It is not the bond market. It is to our currency, the mighty US dollar. If you own stocks or bonds, your wealth is in dollars. When the dollar loses its petrodollar and reserve currency status (and the Russians and Chinese are working to accelerate the move) precious metals will be the only liquid, safe alternative to preserving wealth. 
There is a massive substitution of U.S. dollar assets by gold  – a strategy which has earned billions of dollars for the Bank of Russia just within several months.”
“Remember,  nothing lasts forever …”
CIGA Wolfgang Rech
It is not just Russia Wolfgang!
Russia, China Continue “Massive Substitution” Of Dollar Assets By Gold
September 9, 2019
“I think it’s clear to everyone now” exclaimed Russian President Vladimir Putin , (and French President Macron recently said so publicly ), “that the leading role of the West is ending . I cannot imagine an effective international organization without [Russia], India and China.”
And while most politicians are all talk, in the case of both Russia and China, their actions speak louder than their words.
China ‘s foreign exchange reserves jumped to $3.1072 trillion despite the falling yuan and escalating trade war with the US, while raising its gold holdings by nearly 2.89 million troy ounces (99 tons) in nine months . That’s nearly five percent more since the end of last year.

Ed Steer

There is no price discovery in anything any more and, as Chris Powell said back in 2008...which is now 11 years ago..."there are no markets anymore, only interventions". Gary Kasperov's quote above is a more modern version of that..."When a managed economy begins to fail, the only direction is to manage it more and more. It's how 'democratic socialism' leads to repression."
It's impossible to put today's economic, financial and monetary situation in some sort of human context, because there is nobody alive today that has lived through such times as existed in 1929 before the crash. Our generation is flying by the seat of its pants, hoping that the algorithms, market interventions -- and the world's central banks can keep this up indefinitely.
But anyone of a certain vintage, including this writer, knows perfectly well that a brick wall lies somewhere in our future. The two commentaries that appeared on the Internet during the last week or by Bank of England governor Mark Carney from Jackson Hole discussing a new currency regime no longer based on the U.S. dollar -- and former president of the New York Fed, Bill Dudley comments that "There's even an argument that the election itself falls within the Fed's purview. If the goal of monetary policy is to achieve the best long-term economic outcome, then Fed officials should consider how their decisions will affect the political outcome in 2020." These are thinly disguised messages that big changes are coming.
These two straws in the wind, along with JPMorgan plus others scooping up all the physical gold and silver they can get their hands on, are indications that some sort of paradigm shift is headed our way. The only thing that is not known is the timing.
But it draws closer at an ever-accelerating rate, with all interest rates world wide now zero-bound, or worse within the next six months or less. No fractional reserve banking system can survive this -- and the resulting inflation/hyperinflation of various world currencies is not far off. Not even the almighty U.S. dollar will escape this monetary black hole that it is now in orbit around. It will be a race to see what blows up first...the bond market, world currencies...or the various and sundry stock markets. There is no escape now that the spiral downward has begun...none.
But as I and lots of others have said over the last year or so, this out of control financial and monetary system based on the U.S. dollar, is certainly on its last legs. And as I keep repeating just about every week now, when this whole 'Everything Bubble' final does find its theoretical pin, it will come by design, rather than circumstance.
Despite the rather horrid setbacks in the precious metals -- and their associated equities these last few days, the fact that Alan Greenspan, still a gold standard-bearer on the inside, would come out and say what he did on Friday, is the final straw in the wind that makes me content with my "all in" position in the precious metals.
And in the face of what's coming down the pipe in the next six months, it's a certainty that the price management scheme that currently exists in the all four precious metals will come to an abrupt end sometime in the next six months.
Ted is of the opinion -- and I'm certainly not disagreeing with him this time, that this engineered price decline will be the last one before we blast higher, so I'm more than prepared to bear the pain in the short term.
Because, as the ancient Persian adage goes..."This too, shall pass."
We believe silver is better than gold - for most people - but there are other considerations. Silver is heavy, bulky and very volatile. But, as an investment, it will outperform gold.
Why Silver Is Better Than Gold

While the surging gold price has received most of the spotlight in the market, silver will outperform the king monetary metal over the longer term. Key fundamental factors make silver the more attractive asset and investment to own versus gold when we look closely at the data. However, that doesn’t mean precious metals investors shouldn’t own gold. Investors need to own both precious metals, but I believe silver will provide better returns than gold in the future.

Now, there is this notion put forth by many precious metals analysts that central banks will be forced, at some point, to back their currencies by gold. Thus, the idea is that gold will reset at a much higher price. While that is a possibility, backing debt-based currencies with gold will not solve our coming energy crisis. And, let me tell you, it’s an energy predicament that we have no real solution.

You see, it doesn’t really matter if we back fiat money with gold. The REAL ISSUE has always been ENERGY.  The massive increase in debt and derivatives are a symptom of the Falling EROI (Energy Returned On Investment) of oil. Basically, while gold may solve certain issues in regards to “Confidence” in money, it doesn’t fix our energy problems.

I touched on this briefly in my newest video,  Why Silver Is Better Than Gold . However, most of the video explains new charts that show fundamental factors on why silver is a better investment than gold as well as some key price levels for the short term.

Mike Savage

I always say, “Watch what they do- not what they say. I have mentioned numerous times about central banks buying 571 tons of gold last year and that they are buying substantially more this year through June. By doing this, it appears to me to be a capitulation of sorts in that they know some serious trouble is brewing in the economy, and that this time, the “print and buy” scheme likely may not work.

This is the only reason I can come up with that central banks, who can conjure money up out of nowhere, and buy virtually anything without regard to cost, would be buying a hard asset like gold.

My guess is that gold will be a major part of reinstituting confidence in the financial markets if the third bloodbath in the last 20 years takes place. China, Russia and many other countries are actively talking about a gold-backed crypto. Could that be why Russia has been buying gold for years and has bought a million ounces per month in 2019? Could it be why many central banks and countries are buying gold at a record pace and bringing their foreign-held gold back home?

Many will say- you have been saying this for years- get a grip! I agree that I have been warning about this for quite some time and reiterate my statement that this economy could have come unglued at any time since June of 2013. I understand that this has been a long time coming but as I always say- Just because the train is delayed doesn’t mean it’s not coming. If anyone would like to know what happened in June of 2013 please feel free to call and we can discuss it. I have written about it numerous times.

I obviously didn’t even think about a scenario where $17 trillion in global debt- mostly government but also a large amount of corporate debt would trade at negative rates. I underestimated the powers that be and their ability to keep asset prices of stocks, bonds and real estate elevated while suppressing the price of gold and silver at the same time.
So, you may ask, what makes right now any different than the last 10 years as the central banks continue to “print and buy” many assets, suppress others, and generally are manipulating virtually all asset prices?

I will give you my reasons why I believe a major event is near and why I believe that, try as they might to hold this off to after the 2020 election, I do not believe they can get there.
#1 Gold and silver are moving substantially higher. While there is still massive selling from time to time the downturns have been fairly tame and the up-moves are getting more substantial. This may be because a few traders are actually going to be sentenced for admitting to manipulating the price of gold and silver. It also may be that the physical demand from countries, major banks and central banks are starting to overwhelm the paper market where the prices have been set for the longest time. This is the ONLY market that I am aware of where the derivative determines the price rather than the actual asset determining the derivative value. This is totally backwards and allows a lot of action (basically naked shorting) to take place to move the price. (In the last 8 years the desired direction has been down)

It is my opinion that gold and silver were kept down to keep the focus off of the depreciation of currencies. The US dollar has lost 97% of its purchasing power against gold since 1971. ($35.00 divided by $1500.00= 2.3%- that is the purchasing power of a 1971 US dollar vs. gold) In English, compared to gold your dollar from 1971 is worth 2.3 cents today. I also believe China and many others were totally cool with the Western banks playing their games as they were able to accumulate tons at reduced prices. Many banks have afforded themselves that same luxury.

#2 All economic reports about manufacturing, global trade, shipping, sales, etc. have been dismal since the latter part of 2018. The downturn is steepening and many are starting to notice. The “printing” allows for demand to APPEAR strong as assets get bought up with money from nowhere but this is where the buck stops. In a normal economy that money would be spent numerous times throughout the economy. Today, a few at the top maneuver assets while creating fewer jobs, making fewer sales because of a lack of consumer demand and enriching themselves at the expense of the rest of us. This is why “experts” can look at numbers and at face value and they look ok- maybe even good. As you pull back the curtain you realize that virtually all of the wage growth and rising asset prices have been held by the top 1 to 5%. Almost everybody else has been left behind by stagnating wages and rising prices- even though those at the top want the prices to rise faster!

This is also a reason that the auto industry and many other industries are seeing massive rises in layoffs not only overseas but right here in the USA. I saw that Del Monte is closing a plant near where I grew up in Illinois where they can vegetables. Many stories like that are starting to be told daily.

#3 In the “watch what they do” category again- who would know better than those running companies what the future outlook for business is? According to Trimtabs Investment Research, which tracks stock market liquidity, corporate insiders have sold, on average, $600 million PER DAY shares of their company’s stock in August. The last time this happened, again according to Trimtabs, was in 2007!

This appears to be the 5 th month this year where corporate insiders will be offloading over $10 billion in a month.

This is a sign that all is NOT well. If prospects were bright the insiders would be buying- not selling.

#4 The President and his “advisors” appear to be coming unhinged. It appears that any time the stock market drops there are calls made to the banks that run the Fed, there are always reasons to be upbeat about a China deal and “all is great!” It is unfortunate that China in almost every instance disputes what is being said. It is my opinion that this is about FAR more than trade. It is actually about China challenging US hegemony. More than likely this “trade war” will not get resolved peacefully if history is any guide. Let’s hope that history does NOT repeat this time. The next war is likely one where humanity will lose.

#5 It appears that all central banks are about to unleash “money printing” and asset purchases that may break all records. While this may or may not provide a short “sugar high” the ultimate outcome is likely the ruination of most fiat currencies. (Another reason that major banks, central banks, countries, hedge funds and billionaires are buying gold and silver).

To summarize, corporate insiders are selling stocks at record levels.

Many bonds (over $17 trillion as I write this) make YOU pay the interest to the entity borrowing YOUR money- (I couldn’t make this up!)

The “smart” money- those who SHOULD know what is coming down the pike are buying gold, silver and hard assets in record amounts.

Does this give you any ideas about why I talk about diversifying out of traditional stock and bond portfolios and getting really diversified?

Should you sell all of your stocks and bonds and just buy gold? More than likely not. Everyone has different goals and time horizons but with stocks, bonds and real estate at near all-time highs it may pay to book some gains and reduce your exposure to areas that appear to be overvalued and buy assets that appear to be undervalued. (Buy low- sell high!)

Don’t be the person who may be saying “how did I not see this coming- it was the third time in 20 years”

Be Prepared!
Mike Savage

Financial Advisor, Raymond James Financial Services, Inc.
2642 Route 940
Pocono Summit, Pa 18346
Phone 570-730-4880
Fax 570-243-8141
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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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