|Market Recap for
Monday October 29, 2012
|Table of Contents
Click on the Links Below to Scroll to the Articles
- The Holter Report: 4,000+++ tons per year of demand could not be satisfied by 2,500 tons of supply. Eric Sprott may have put it best when he said, "Someone is not getting their Silver or Gold."
- Andy Hoffman: ...today was one of those quarterly audits, so I thought you'd would want to see what a REAL, SEGREGATED ACCOUNT looks like - via a REAL, ON-PREMISES audit.
- Gold Highlights
- Jim Sinclair: The economy is a drug addict. The creation of money is history making in a modern economy and money creation acts exactly like a drug. Like a drug the more you take, the more you need. The more money you create, the more money you must continue to create until it goes to infinity.
- Jeb Handwerger: Serious Supply Concerns In Platinum Could Lead To Price Spike
- Rick Mills: Voluntary Servitude Begins With A Debt
- Rick Ackerman: Media's Silence on Benghazi May Not Save Obama
- Future Money Trends: "Strange Bedfellows: Dow Jones and the Precious Metals"
- Mail Box
- About Miles Franklin
Private Meetings and Events
Miles Franklin seeks creative ways to partner with its clients to market Precious Metals to nationwide audiences. If you are interested in sponsoring a Webinar presentation with Andy Schectman, President of Miles Franklin, and "Ranting Andy" Hoffman, Director of Marketing, please inquire via email to email@example.com or firstname.lastname@example.org, or via telephone at 800-822-8080.
|From David's Desk
I am taking the day off from writing. In case you missed them yesterday, check out Bill Holter's and Andy Hoffman's articles below.
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|The Holter Report
Central banks really DON'T TRUST other central banks!
Author : Bill Holter
Published: October 29th, 2012
I wrote twice last week and posed the question "What happens when central banks don't trust other central banks?" It looks like we are already finding out the answer to this question. It started last week with Germany, now The Netherlands is posing the same stance making noise about repatriating their Gold. Meanwhile, Romania has again (as they have several times before) is requesting that Russia release their Gold.
I don't want to beat a dead horse here but this is truly big stuff. It is also not that complicated and should have been expected by us "conspiracy nuts" who have for years said that 4,000+++ tons per year of demand could not be satisfied by 2,500 tons of supply. Eric Sprott may have put is best when he said, "Someone is not getting their Silver(Gold)." Paper receipts cannot take the place of a wedding ring or necklace, when all is said and done they will not take the place of real wealth.
I am surprised however that this is taking place in public view. I would have thought that the central banks would have (as they have forever) done their business behind closed doors. It is one thing for Chavez to order his Gold delivered, it is entirely another when The Bundesbank makes this request. It is also quite surprising to hear the words "audit," "Gold" and "Central Bank" all in the same stories and used publicly, covered in the mainstream. This I believe is not by "coincidence."
Over the summer we had a "correction" where the Gold price was absolutely locked down. I could be way off base but it is my belief that the physical Gold which backed and supplied this correction was of Libyan origin. It has now been fully used and behind the scenes, the lack of available physical metal for delivery is becoming well known.
I have a few questions that you might ask yourselves which I believe the central banks have already asked themselves. Would the U.S. sell all of their Gold to retain "monetary power?" Would they sell others' Gold to which they are "custodians" for for the same reasons? Is the financial system (in the U.S. and globally) more "honest" today than it was 20 years ago? 50 years ago? Or how about this, if you had leased out or sold all of your Gold surreptitiously, would you have reason to to start pointing fingers at others to turn the spotlight away from you?
I will leave you with this link to King World News blog quoting James Turk who believes that the German Gold was ALL leased out and sold years ago:
James Turk - The Entire German Gold Hoard Is Gone
This is fairly long but very important to read as it will explain the "roots" to a Gold market that has become more than 100 pieces of paper for every one real ounce of Gold. What started out as a "suppression scheme" has turned into all out fraud. I believe that initially it was thought "the Gold would be bought back and no one would be the wiser." As in any fraudulent scheme, "paying it back before getting caught" NEVER HAPPENS!
Associate Writer for Miles Franklin
Read more Bill Holter Articles on the Miles Franklin Blog
|Ranting Andy Hoffman, Marketing Director
Friday Afternoon Wrap-Up
I have noted numerous times how Miles Franklin officers - Andy Schectman and Joel Kravitz, to be exact - audit the vault each quarter; and two weeks ago - in "BREAKING NEWS" - informed you I had sent essentially all of my PHYSICAL gold to Montreal.
Well today was one of those quarterly audits, so I thought you'd would want to see what a REAL, SEGREGATED ACCOUNT looks like - via a REAL, ON-PREMISES audit. Below is the box with my name on it, holding my gold inside...
...and here is the gold itself - my gold. Thus, for anyone asking questions like "how can I trust you?"; I've laid it ALL on the line for you. Only you can determine the best way to PROTECT yourself; and I've gone to great lengths to make that decision easier...
On the topic of the London "gold fix," my good friend Bix Weir put together the following tables of London (LBMA) and New York (COMEX) silver trading; demonstrating just how ridiculous it has become.
As you can see, the COMEX typically trades PAPER contracts amounting to half of silver's ANNUAL, GLOBAL production in just two days; while in London, we're to believe PHYSICAL-backed contracts amounting to a quarter of silver's ANNUAL, GLOBAL production trades each day.
Please look away, as there's "no way" naked shorting is going on here. And oh yeah, I have a bridge to sell you...
2011 PAPER vs. PHYSICAL statistics
PHYSICAL silver mined (WORLDWIDE)
COMEX (New York):
Daily PAPER Volume
Full-Year PAPER Volume
Daily "PHYSICAL transfers"
Full-Year "PHYSICAL transfers" - Gross
Full-Year "PHYSICAL transfers" - Net
Finally, I'd be remiss if I didn't show you this week's COMEX "COT" figures; for the third straight week, showing the "Commercials" covering PAPER short positions - typically, a sign prices have, or are close to, bottoming.
In gold, the government - er, "Commercials" covered 4,987 short contracts through Tuesday; bringing the total of net shorts covered to 36,605 in the past three weeks...
...while in silver, they covered 1,595 short contracts through Tuesday; bringing the total to 2,341 shorts covered in the same three weeks...
It's Friday night, and I'm exhausted; but not enough to forget to tell you to...
PROTECT YOURSELF, and do it NOW!
Call Miles Franklin at 800-822-8080, and talk to one of our brokers. Through industry-leading customer service and competitive pricing, we aim to EARN your business.
Monday Morning Commentary
Bill Clinton famously coined the term "It's the economy, stupid" in his 1992 Presidential campaign; and no truer words have been said. However, what used to imply people voting out the incumbent during bad economic times has morphed to an entirely different situation today.
Care of an INFLATION MACHINE gone berserk; i.e, the government's ONLY means of staving of inevitable, imminent COLLAPSE...
...HALF of all American depend on entitlements to SURVIVE. Thus - as in 1933 Germany, "It's the economy stupid" now ensures the majority votes for whoever promises more FREE MONEY...
What does it mean when half of Americans live in a household that gets government assistance?
...which is EXACTLY what Mitt Romney was criticized for stating last month. HOW DARE HE TELL THE TRUTH!...
Romney's 47% Victims More Like 96% Who Get Government Boost
...which is PRECISELY why I hold ALL my liquid net worth in PHYSICAL Precious Metals...
...and why DESTINY will not be denied...
Think Gold's Pricey Now? Wait Until It Hits $5000: Schiff
And one final thought before another day of Sandy-aided "ELECTION LOCKDOWN" passes. Below is a picture of a Manhattan bread aisle before today's hurricane; which eventually will be restocked...
Source: Zero Hedge
Now, consider what it - and ALL store shelves - might look like during a catastrophic CURRENCY CRISIS.
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BFI Wealth, Zurich - Swiss Annuities and Managed Accounts
Miles Franklin and BFI Consulting of Zurich, Switzerland, have partnered for the past two decades in offering access to offshore annuities and managed accounts. Born at roughly the same time in the early 1990s, both firms have successfully PROTECTED clients via quality, secure, private accounts holding PHYSICAL Precious Metals, annuities, and other managed products. BFI is a global leader in the sale and maintenance of Swiss annuities and privately managed accounts - particularly to U.S.-based clients; and through its Global Gold subsidiary - utilizing worldwide storage leader Via Mat - offers international Precious Metal storage services in Switzerland, Hong Kong, and Singapore. As with Miles Franklin's Canadian offshore storage program, Global Gold offers allocated storage OUTSIDE the banking system.
Sobering Up The Western World Economy
October 28, 2012, at 2:54 pm
by Jim Sinclair
My Dear Extended Family,
I have followed you since your newsletter in the 1970s. I am puzzled by your response to Bill where you talk about the dire results of stopping the fiat money printing.
Since the results of stopping are bad you are implying that continuing the fiat until ultimate failure with runaway inflation is better.
Is that what you mean to say?
Thanks for all you do for us,
Dear CIGA Jim
My job is to tell it like it is.
The economy is a drug addict. The creation of money is history making in a modern economy and money creation acts exactly like a drug. Like a drug the more you take, the more you need. The more money you create, the more money you must continue to create until it goes to infinity. You go cold turkey on money creation, you unleash the economic wrath of hell in the entire Western world. It all comes down in one great implosion.
Russia and China would act immediately economically to take full and powerful advantage of your error in application. You have to wean a drug addict off the drug in order to not kill him in recovery.
We need a new monetary system complete with a strategic plan of transitions from here and now to there. There is no politician out there that will do this no matter what is promised before the election. That will not change in November.
I was short listed in the Nixon Administration for Secretary of the US Treasury. A major article in the New York Times listed me as someone in consideration. I have a plaque from my membership on the Senatorial Economic Advisory Board. If I was in office, I would have done everything to prevent this, regardless of the cost personally
If I was made Chairman of the Federal Reserve in January 2013, I would wean the system slowly down while working to recreate the monetary system with required total gold value for government treasuries tied to a world index of total Western World M3. That is a simplification, but it would be the heart of my plan.
Jim, I know this stuff. I am not retreating from conservative principles. I just know that the mishandling of any situation due to dogmatic beliefs can set off a nuclear explosion. I would walk the Western World Financial System back to sobriety, not try to blast it back which would fail miserably.
I could do it.
In The News Today
October 28, 2012, at 2:39 pm
by Jim Sinclair
Jim Sinclair's Commentary
To remind you, there are buyers there much more powerful than the spread trading manipulators in gold.
Azeri State Oil Fund Says 10.9 Tons of Gold Bought as of Oct. 1 2012-10-22 10:51:29.650 GMT By Zulfugar Agayev
Oct. 22 (Bloomberg) - Azerbaijan's State Oil Fund, known as Sofaz, started investing in gold in the first quarter and bought 10.9 tons of the bullion as of Oct. 1.
The value of the fund's assets grew 11.4 percent since the start of the year through the first nine months to $33.2 billion, Sofaz said in a statement e-mailed today. Sofaz had 815.7 million Turkish lira and a $201.3 million purchased at the end of September, according to the statement.
The fund was established in 1999 to manage the Caspian Sea nation's state income from oil and natural gas sales.
To contact the reporter on this story: Zulfugar Agayev in Baku at +7-95-771-77100 or email@example.com
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Reliable Financial Advisors
In a world of heightened speculative and counterparty risks, finding someone you can trust may be the most important research you do. Miles Franklin does not sell stocks, but is frequently asked if we know of reputable, full-service brokers. WE DO NOT CONDEMN OR CONDONE EQUITY INVESTMENTS, but want investors with such interest to be honestly and competently handled.
In resource stocks, the folks at Sprott Global Resource Investments - managed by Eric Sprott and Rick Rule - are the best in the business. In various capacities, we have worked with Eric Angeli, Jeff Howard, Kenton Toews, Mishka vom Dorp, Jason Stevens, Anthony Marsh, and Andrew Jackson - all of whom are diligent, ethical, and knowledgeable. That style of business is indicative of the reputation Global has built over the past 25 years. You can feel comfortable with any of their brokers, reachable at 800-477-7853.
For all other stocks - including large cap gold, silver and other resource equities - Nick Shermeta, from Northland Securities here in Minneapolis, is as trustworthy and knowledgeable as they come. Nick is a Senior Vice President with more than 20 years experience, but will treat you as if you were his only client. You can reach Nick at 612-851-5908, or by email at firstname.lastname@example.org.
The common denominator is decades of Wall Street experience, which should give you comfort that well-seasoned and weathered hands are helping manage your portfolio. Notably, we do not receive compensation for these recommendations. We just want you to know that if they are good enough for us, they should be good enough for you too.
Platinum Price May Outperform Gold and Silver As Strike In South Africa Intensifies
Friday October 26, 2012 14:40
We are seeing some healthy profit taking in gold (GLD) and silver (SLV) after making an explosive breakout over the summer. Investment demand after QE3 is increasing as investors seek alternatives to fiat currencies, which are being devalued by Central Banks all over the world.
We may see consolidation and volatility in the markets until after the U.S. Presidential Election, when most investors realize that not much will change. All over the world governments are looking to boost unhealthy economies and this will continue regardless of who is in office.
Major infrastructure projects will probably be announced after the election both in the U.S. and China to boost employment. Additional means to boost the velocity of money and encourage risk on investments will be promoted by punishing hoarders of cash and treasuries.
In addition, we have serious supply concerns as the majors delay large mines and South Africa one of the largest producers of gold, platinum (PTM) and palladium (PALL) is facing the worst and most violent labor crisis in decades. This will not end quickly and may continue to plague the South African mining industry. This will not only put pressure on the supply of gold, but could cause platinum to spike as more than 80% of the world's supply originates from this questionable jurisdiction.
A Recent CBSMarketwatch interview where I was quoted stated:
"...Jeb Handwerger, a natural-resource analyst and editor of GoldStockTrades.com , said that reduced supply from South Africa, combined with rising investment demand from emerging markets, could spur platinum prices to outpace gold.
"Platinum is still 20% below pre-credit-crisis highs, while gold and silver are approximately 80% higher," he said. "This deviation from historical means will not last forever....Meanwhile, gold output in South Africa is a worry too. As of mid-October, strikes among Africa's largest gold producers have cut the nation's gold production by half, according to Bloomberg."
Read the full article on CBS Marketwatch by clicking here...
We stated for many years that investing in South Africa may be a risky proposal and it was no longer a mining friendly jurisdiction. Over the summer we initiated coverage on two North American platinum and palladium as we believed the tumultuous situation in South Africa with violence would escalate and platinum/palladium prices would breakout. Since the strike gold jumped from $1600 to $1800 and platinum jumped from around $1400 to $1700. Now it has pulled back to strong support.
In August the Marikana Miners walked off the job to protest low wages and poor working conditions. Over 36 strikers were killed. This was the most violent clash with police since the early 60's.
The strikes have spread all across South Africa. Many major gold and platinum companies were already dealing with lower production and higher costs. This turmoil is already putting more pressure on the supply side of platinum and increasing demands coming from the growth of the auto industry in emerging nations.
Platinum producers such as Lonmin who owns Marikana have had to deal with a low platinum prices and rising labor costs as platinum is $100 below the price of gold. Before the credit crisis platinum was more than double the price of gold. Since that time, the South African strikes are continuing to be a major thorn in the side of the South African miners such as Anglogold Ashanti (AU), Gold Fields (GFI), Harmony (HMY), Impala (IMPUY) and many more.
The workers have refused pay raises and it does not appear that the strikes will be ending anytime soon. Do not forget that working conditions in South Africa are much more challenging than other regions as miners descend to much greater depths underground where ventilation is a major concern.
Remember in 2007, over 3000 workers were trapped underground. This led to some mines being shut down including one of the nations largest gold mines. South Africa used to represent over one third of gold production in the early nineties, now it is probably close to a tenth.
This implies that new discoveries around the World will need to make up for this decline. In addition to supply pressure on gold, South Africa is the third largest exporter of coal. But the real concern right now is platinum. Remember South Africa supplies about 80% of platinum to the world.
Platinum supply is only a tenth of gold and a hundredth of silver . Platinum is not only a monetary metal, but it has a strong connection to the automobile and jewelry industry, which is showing, increased demand especially from emerging nations.
General Motors sold more cars and trucks in China this past year than in the United States for the first time ever in its 100+ year history. This signifies the fundamental shift in demand coming from the rising middle class in China. This rise in demand will need increasing supplies of platinum and palladium, which is used in the catalytic converters to reduce noxious air emissions.
The reduced supply from South Africa combined with increased investment demand for platinum coming from the emerging economies could spur the platinum price to far outpace gold.
It's time for our readers to pay attention to platinum as it begins to receive more notice from the mainstream media. Platinum is still twenty percent below pre credit crisis highs while gold and silver is approximately 80% higher. This deviation from historical means will not last forever.
Gold and silver have gained investor's attention as a store of wealth, while platinum has been significantly overlooked and undervalued. The public is still viewing platinum as an industrial metal disregarding the fact that platinum has a history of being used as a store of value for over 300 years. Many still do not realize that platinum is 30 times rarer than gold, yet currently it is trading more than a $100 cheaper than gold.
During good economic times platinum has been usually double the price of gold. Before the credit crisis, platinum reached a high of $2252 when gold was below $1000 an ounce. Despite current pricing, demand especially from emerging nations has far outstripped supply for many years. Now that South Africa which controls more than 75% of world platinum supply is in danger, the rarest precious metal may soar outpacing gold.
We believe very strongly in diversifying across the metals universe to reduce volatility. Portfolios should include not just gold, but silver, platinum, uranium, rare earths, copper and other critical metals needed for emerging, modern industrial nations. We may see gut wrenching inflation due to historic monetary accommodations.
In such an environment where we transition from deflation to inflation, platinum may outperform. This may be the beginning of the outperformance of platinum over gold. Platinum's inflation adjusted high is around $3000. It is trading now below $1650. Given the global currency debasement, platinum could double from these levels to just keep pace with gold and silver. The reason platinum is not the flavor of the day is that it is not yet as liquid as gold and silver.
Major hedge funds and large banks have not participated yet. Once they enter the arena...watch out for an explosive move. Now it is time to Look For Platinum Projects In Mining Friendly Jurisdictions. The implications of the South African supply crisis will accelerate investments in politically stable platinum projects, which we continue to highlight.
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Voluntary Servitude Begins With A Debt
Richard (Rick) Mills
Ahead of the Herd
As a general rule, the most successful man in life is the man who has the best information
Should we leave the creation of new money in the hands of bankers or place its creation solely with our government?
"The financial system used by all national economies worldwide is actually founded upon debt. To be direct and precise, modern money is created in parallel with debt...
The creation and supply of money is now left almost entirely to banks and other lending institutions. Most people imagine that if they borrow from a bank, they are borrowing other people's money. In fact, when banks and building societies make any loan, they create new money. Money loaned by a bank is not a loan of pre-existent money; money loaned by a bank is additional money created. The stream of money generated by people, businesses and governments constantly borrowing from banks and other lending institutions is relied upon to supply the economy as a whole. Thus the supply of money depends upon people going into debt, and the level of debt within an economy is no more than a measure of the amount of money that has been created." Michael Rowbotham, 'The Grip of Death'
US Federal Reserve - the Fed
On the night of November 22, 1910 a delegation of the nation's leading financiers, led by Senator Nelson Aldrich, left New Jersey for a very secret ten-day meeting on Jekyll Island, Georgia.
Aldrich had previously led the members of the National Monetary Commission on a two-year banking tour of Europe. He had yet to write a report regarding the trip, nor had he yet offered any plans for banking reforms.
Accompanying Senator Aldrich to Jekyll Island were:
- Frank Vanderlip, president of the National City Bank of New York, associated with the Rockefellers
- Henry P. Davison, senior partner of J.P. Morgan Company, regarded as Morgan's personal emissary
- Charles D. Norton, president of the Morgan dominated First National Bank of New York
- Col. Edward House, who would later become President Woodrow Wilson's closest adviser and founder of the Council on Foreign Relations
- Benjamin Strong, a lieutenant of J.P. Morgan
- Paul Warburg, a recent immigrant from Germany who had joined the banking house of Kuhn, Loeb and Company, New York directed the proceedings and wrote the primary features of what would be called the Aldrich Plan.
After the Jekyll Island visit the National Monetary Commission "wrote" the Aldrich Plan, which formed the basis for the Federal Reserve System.
"In 1912 the National Monetary Association, under the chairmanship of the late Senator Nelson W. Aldrich, made a report and presented a vicious bill called the National Reserve Association bill. This bill is usually spoken of as the Aldrich bill. Senator Aldrich did not write the Aldrich bill. He was the tool, if not the accomplice, of the European bankers who for nearly twenty years had been scheming to set up a central bank in this Country and who in 1912 has spent and were continuing to spend vast sums of money to accomplish their purpose." Congressman Louis T. McFadden on the Federal Reserve Corporation: Remarks in Congress, 1934
After several failed attempts to push the Federal Reserve Act through Congress, a group of bankers funded and staffed Woodrow Wilson's campaign for President. He had committed to sign a slightly different version of the Federal Reserve Act than Aldrich's Plan.
In 1913, Senator Aldrich pushed the Federal Reserve Act through Congress just before Christmas when much of Congress was on vacation. When elected president Woodrow Wilson passed the FED.
The Federal Reserve Bank (FED) is a privately owned company (Wikipedia describes the Fed as a complex business-government partnership that rules the financial world) that controls, and profits immensely by printing money through the US Treasury and regulating its value.
"Some [most] people think the Federal Reserve Banks are U.S. government institutions. They are not ... they are private credit monopolies which prey upon the people of the U.S. for the benefit of themselves and their foreign and domestic swindlers, and rich and predatory money lenders. The sack of the United States by the Fed is the greatest crime in history. Every effort has been made by the Fed to conceal its powers, but the truth is the Fed has usurped the government. It controls everything here and it controls all our foreign relations. It makes and breaks governments at will." Congressional Record 12595-12603 - Louis T. McFadden, Chairman of the Committee on Banking and Currency (12 years) June 10, 1932
"... we conclude that the [Federal] Reserve Banks are not federal ... but are independent, privately owned and locally controlled corporations ... without day-to-day direction from the federal government." 9th Circuit Court in Lewis vs. United States, 680 F. 2d 1239 June 24, 1982
The FED began with approximately 300 people, or banks, that became owners (stockholders purchased stock at $100 per share) of the Federal Reserve Banking System. The Fed is privately owned - 100% of its shareholders are private banks, the stock is not publicly traded and none of its stock is owned by the US government.
The US government pushed through the Sixteenth Amendment(which exempted income taxes from constitutional requirements regarding direct taxes) restarted an income tax on Americans to pay the interest to the FED and reorganized the IRS to collect the monies - the interest - "owed" to the FED from its citizens.
Sir Josiah Stamp, president of the Rothschild Bank of England and the second richest man in Britain in the 1920s, said the following in 1927 at the University of Texas:
"The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin. Bankers own the Earth. Take it away from them but leave them the power to create money, and with a flick of a pen, they will create enough money to buy it back again. Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in. But if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit."
The FED banking system collects billions of dollars in interest annually and distributes the profits to its shareholders - the interest on bonds acquired with its newly-issued Federal Reserve Notes pays the Fed's operating expenses plus a guaranteed 6% return to its banker shareholders.
The US Congress gave the FED the right to print money at no interest to the FED. The FED creates money from nothing, loans it out through banks and charges interest. The FED also buys government debt with money from nothing, and charges U.S. taxpayers' interest.
The FED is the only for profit corporation in America that is exempt from both federal and state taxes.
The Chicago Plan
In 1933, economists at the University of Chicago put forward confidential proposals to roughly 40 individuals concerning banking reform. After receiving feedback from a number of individuals the proposals were re-written, the supplement "Long-time Objectives of Monetary Management" was added as well as an appendix, "Banking and Business Cycles."
Collectively, these recommendations have come to be known as the Chicago Plan.
Irving Fisher was a strong advocate.
"The Best Economic Minds In The Country devised a reform plan. Henry Simons from the University of Chicago created the proposal and prominent economists from other universities joined him in what became known as the "Chicago Plan." Economists like Paul Douglas of the U of C.; Frank Graham and Charles Whittlesley of Princeton; Irving Fisher of Yale; Earl Hamilton of Duke; and Willford King of NYU, to name a few."The 1930's Chicago Plan Vs. The American Monetary Act,Stephen Zarlenga
The Chicago Plan called for only the government to be able to issue the currency - banks would no longer be able to create money by making loans.
"The essence of the 100% plan is to make money independent of loans; that is to divorce the process of creating and destroying money from the business of banking. A purely incidental result would be to make banking safer and more profitable; but by far the most important result would be the prevention of great booms and depressions by ending chronic inflations and deflations which have ever been the great economic curse of mankind and which have sprung largely from banking." Irving Fisher
The Chicago Plan recognized the distinction between money and credit:
- The power to create money was to be removed from private banks by abolishing fractional reserves - the mechanism through which the banking system creates money
- The loan-making function (banks) was to be separated from the money-creation function (government). Bank lending was to be from deposited long-term savings
Although easily implementable the Chicago Plan was never seriously considered by the day's government, instead, watered down alternative measures (institutionalized Federal deposit insurance and the separation of commercial and investment banking) were introduced in the Banking Act of 1935 which created the Federal Open Market Committee (FOMC) who were charged with controlling the money supply through open market operations using government securities.
After a mid-1930s recovery from the Great Depression the US again entered Recession in 1937-1938 and the key elements of the Chicago plan resurfaced in the July 1939 draft titled 'A Program for Monetary Reform', this document was never published and never resulted in legislation.
"It is time to part with the fallacy that economic growth and employment creation are the main duties of central banks...Economic agony and financial disorder will continue until central banks decide to rehabilitate monetary conditions and restore direct control of the money creation process." Dust off the Chicago Plan, Hossein Askari and Noureddine Krichene, atimes.com
Milton Friedman wrote "The creation of fiat currency should be a government monopoly."
Today monetary reform advocates are revisiting the 1933 'Chicago Plan' and the 1939 'A Program for Monetary Reform'.
Perhaps it's time some kind of monetary reform was on all our radar screens. Is it on yours?
If not, maybe it should be.
Richard (Rick) Mills
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Media's Silence on Benghazi May Not Save Obama
by Rick Ackerman on October 30, 2012 12:01 am GMT
What do these current news stories have in common: the World Series, Hurricane Sandy and Benghazi? Answer: Each has been covered by the news media in a way that reminds us why we trust journalists even less than we trust bankers, politicians and used-car salesmen. Recently the press has embarrassed itself with boldly mistaken predictions about the Series; courted skepticism by relentlessly hyping "Frankenstorm"; and disgraced itself as never before by deliberately ignoring an apparent White House cover-up of the attack on America's diplomatic mission in Libya.
Let's start with baseball's matchup between the San Francisco Giants and the Detroit Tigers. Heavy underdogs last Wednesday when the seven-game series began, the Giants on Sunday night completed a four-game sweep of the Tigers. Days before the series began, the sports pages were filled ad nauseum with paeans to Detroit's murderous batting lineup
and to ace starter Justin Verlander, whose fastball supposedly was unhittable. Granted, he'd shut down Oakland in the divisional playoffs and the Yankees in the pennant series. But so what? Oakland is a rookie team with no October veterans in the starting lineup, and the Yankees looked so bad in getting obliterated by the Tigers that the New York Post kissed them off the other day with the headline "Dear Yankees, We don't date losers. Signed, New Yorkers."
Will Hurricane, Too, Be a Dud?
Will Hurricane Sandy prove to be as big a dud as Justin Verlander was on the mound versus the Giants? With the storm set to engulf New York City today, we'll lay even odds that it fails to live up to its sensational billing as the possible Storm of the Century. Just a hunch. We grew up on the Jersey Shore ourselves, on a small island just two blocks wide at its narrowest, and so we are not unfamiliar with the destructive power of hurricanes and, even more so, Nor'easters. But when we checked with some of our old neighbors by phone yesterday, they were planning to ignore evacuation orders and ride it out. A childhood friend who lives just a block from the ocean, an experienced sailor and denizen of many powerful storms, says a few sandbags piled in front of her door will probably be protection enough.
Which brings us to Benghazi. Nowhere on the front page of Sunday's New York Times, which yesterday endorsed Obama, do we find even a passing mention of this growing political scandal, perhaps the biggest since Watergate. Unlike Watergate, however - a story the news media pursued relentlessly only because they hated Nixon so much - in Benghazi, quite possibly because of gross negligence directly attributable to the President, Americans actually died: Ambassador Chris Stevens, foreign service officer Sean Smith and two former Navy Seals, Glen Doherty and Tyrone Woods, who evidently defied orders in a heroic attempt to defend the mission. Obama slept on the news and went to Las Vegas the next day to campaign, even as his lackeys continued to insist that the September 11 firebombing in Libya was a spontaneous attack by Islamists angered by an anti-Mohammed film that had surfaced on the Web. We now know not only that the attack was planned in advance by al Qaeda to coincide with 9/11, but that earlier attacks had prompted requests for additional security at the mission. The requests were ignored, but Obama is insisting they never reached his office.
A Mayday Plea
We shall see. In the meantime, another story has surfaced suggesting that the President himself may have denied support requested by the Benghazi mission when it was under siege. This would have happened even as U.S. drones were monitoring the fiery attack in real time. If someone did indeed let a mayday plea from the mission go unanswered, CIA director David Petraeus says it wasn't him. "No one at any level in the CIA told anybody not to help those in need," a CIA spokesman told the press.
With a week to go before the election and Obama slipping badly in the polls , don't expect the New York Times and other left-leaning purveyors of the news to press the White House for answers. But their reputations and credibility will be further damaged, and badly, if Fox News and Matt Drudge continue to pry loose details that implicate the President in the needless deaths of four Americans who evidently had feared for their lives.
It would be an ironic end to Hillary Clinton's political career if Fox and Drudge back her into a corner before next Tuesday, forcing her to cough up an account of Benghazi that dooms Obama's reelection bid. Earlier, presumably at the President's behest, she took blame for the lapse of security at the mission. While this allowed the President's zealous partisans in the New York Times newsroom to back off the story, Fox and Drudge have continued to pursue it. Now, they appear close to breaking a scandal that will make Watergate look like penny-ante stuff. It seems possible that even with an unashamedly biased news media going all-out to suppress the Benghazi story, enough details will emerge in the days ahead to fully embroil Obama in scandal by the time voters go to the polls.
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"Strange Bedfellows: Dow Jones and the Precious Metals"
By Joshua Enomoto, FutureMoneyTrends.com Contributor
While the traditional thought process amongst gold and silver bugs is that precious metals provides a hedge against the "system," both in terms of rampant inflation of fiat currencies, as well as a precipitous decline of the stock market. The reality is that these revered assets would only effectively protect against one of these events, and certainly not both at the same time. Runaway inflation would lead to higher prices in EVERY asset class as the dollar is being devalued and would require nominally larger amounts of greenbacks to purchase an identical product before the inflation. A stock market crash, however, suggests deflation, a situation where everyone wants to sell and no one wants to buy, and while it is certainly possible that the Dow and gold could eventually share a 1:1 ratio, where one gold ounce could buy one share of the entire Dow index, the problem is, nobody knows for sure how the actual numbers will stack up. Would it be Dow 1,000: Gold 1,000? Or Dow 6,000: Gold 6,000? Of course, in a deflation, every asset's price is reduced as supply exceeds demand, and therefore, the value of the dollar increases.
The current market paradigm is that precious metals are acting as "risk-off" assets, meaning that investors fearful of volatility are seeking shelter in fiat currencies, namely, the US dollar. One doesn't have to personally "believe" in this trend, but rather acknowledge that it exists and look for trading opportunities as a result.
Let's start off by looking at a 3-month snapshot of the Dow Jones Industrial Average:
Generally speaking, the Dow has been trading steadily upwards above its 50 day moving average, with much of the bullishness being attributed to the markets pricing in a potential QE3. That potentiality became a reality on September 13th, and since that fateful day, investors on Wall Street have been trying to push the index past the 13,600 resistance level, but failed repeatedly. Finally, on October 19th, the Dow dropped to 13,350, or a 2% drop from its quantitatively induced high. The doji star the day prior proved ominous. As you may know, doji stars occur when the opening and closing price of a trading session are identical or close to identical. In and of themselves, they reveal very little aside from the fact that there was ultimately very little enthusiasm by either the bulls or the bears to push the price one way or the other; however, in this particular context, it revealed hesitation in moving forward with the prevailing trend. Another big drop on the 23rd confirmed that the bears established near-term control of the sector, with their eyes firmly set on the 200 DMA, sitting just under the 13,000 mark.
Interestingly, if we take a look at gold's 3-month chart, we see a very similar pattern:
The yellow metal started to rally around mid-August, after a half-year of frustrating consolidation from February's highs. The price continued to surge higher based on speculation of central bank money printing that eventually was realized through major announcements by the European Central Bank, the Federal Reserve, and the Bank of Japan. Since all commodities are priced in US dollars, the announcement of QE3 was the biggest catalyst for gold. Unfortunately, at least for the near-term, it has proven to be the final one. The major psychological target for the gold bulls was the 1,800 price point, but it proved elusive, with the 1,780 level instead proving strong and consistent resistance. Gold's decline came a bit sooner than the Dow's, as on October 5th, the metal failed to secure and hold a recent run-up. From then on, aside from a few isolated sessions, the price of Gold continued to roll downwards.
Whatever fundamental catalyst that failed to get the Dow above 13,600 clearly put a ceiling on gold's nominal target of $1,800. Let's get real here: the driver that got both the index and the metal up and running was speculation of QE3. And the reason they both failed earlier in the year and now is risk, specifically the Eurozone debt crisis sending scared money scrambling into the waiting arms of the dollar.
But as with any crisis, there is an opportunity, for those that are patient and have a steely resolve. Both the Dow and gold have suffered through a correction but will resume their upward trajectory. The fundamental players are the same, namely the Federal Reserve's commitment to QE3 and low interest rates. With the economy dragging its feet, the only option, aside from universally unpopular austerity programs, would be to aggressively increase the scope of quantitative easing.
Let's take a look at the technicals, starting with the Dow Jones:
Based on the Slow Stochastic oscillator, the current status of the Dow is extremely oversold. In fact, over the last 3 years, if you were to simply "buy" the index based on when the Stochastic was below the 20 level, 75% of the time, you would have realized an immediate profit. As the RSI is also nearing an oversold status, more often than not, the chances are good that the index will rise from here.
It's the same story with gold:
With the yellow metal, the conditions are even better. Analyzing the same 3-year period, buying on sub-20 Stochastics would have been a good decision 80% of the time. And whether you were bullish on equities or on commodities, the simple fact is, even if you were to have bought when the Stochastics gave a "false" reading, you would eventually be in the black only a few months later.
Perhaps the best opportunity, however, is silver:
Since it tracks the price of gold 70 to 80 percent of the time, it too is poised to rise from its currently oversold status. While it is more volatile than its illustrious cousin, the current spot price of $32.10 is worth taking a look at. The bears met significant resistance trying to push the price under $32, and momentum indicators suggest that the downturn is losing steam and that a reversal could be in play shortly.
In conclusion, whether we like it or not, the Dow is currently trending parallel to the precious metals and the same fundamentals that affect the index have had a similar effect on gold. That being said, it is the Fed's solemn pledge to prop up the economy by propping up the stock market, which means the Dow will be roomies with gold in the foreseeable future.
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I do not doubt the integrity of the Brinks storage facility, but one has to consider the fact that by storing a lot of metal at one place (even if it is Canada) makes that hoard a big fat target for governmens, especially desperate ones. And is not Canada in fact just a satellite of the U.S? When push comes to shove, will they not just obey the orders from Washington? So maybe one should advocate many different locations for the metal. For more on what Canada is becoming, read the excellent piece from Anthony Wile
For one, Miles Franklin offers storage options in the U.S., Canada, Switzerland, Hong Kong, and - shortly - Singapore. It is up to you to decide what you feel most comfortable with.
As for storing a lot of metal at one facility being a target; yes, although that goes for ALL such facilities. If you are referring to Brink's, we are currently storing $50 million or so versus metal (versus ZERO at this time a year ago); which may sound like a lot, but is just a tiny, tiny amount in terms of government funding. Moreover, it is NOT a banking factility, and likely represents less than 1% of Brinks total storage business.
And again, I am simply marketing it so hard as I believe it is the BEST options available; which may not be agreed upon by all, but is definitely my view. Diversification is always a good thing, but may or may not be the right option here. Again, there is no right answer; to each his own.
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|About Miles Franklin
Miles Franklin was founded in January, 1990 by David MILES Schectman. David's son, Andy Schectman, our CEO, joined Miles Franklin in 1991. Miles Franklin's primary focus from 1990 through 1998 was the Swiss Annuity and we were one of the two top firms in the industry. In November, 2000, we decided to de-emphasize our focus on off-shore investing and moved primarily into gold and silver, which we felt were about to enter into a long-term bull market cycle. Our timing and our new direction proved to be the right thing to do.
We sell over $100 million a year in gold, silver, platinum and palladium. We are rated A+ by the BBB. We are recommended by many prominent newsletter writers including Doug Casey, David Morgan, Jean Paul Louvet, LeMetropole Caf�. Our reputation for service, education, quality product and pricing is outstanding.
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