June 14, 2019
The Miles Franklin Newsletter
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From The Desk Of David Schectman
David's Commentary (In Blue)

One Down, One To Go
“When bad things don’t happen you don’t cancel your insurance policy - Ian McAvity”
It’s 7:15 in Minneapolis. The price of gold is…. Drum roll please… $1,354.70. Gold is up $12.60, almost $60 in the last month.
One down, one to go
Gold pierced through the one-year high ($1,341.90) and now has sights on the five year high ($1,565.40). It’s been six years since gold closed above $1,400. We should see that fall soon too.
There are many reasons why, but let’s cut to the chase and simply say, the brain-dead managed money funds, which were foolishly short, are panicking and covering. The “possibility” of a war with Iran scares them to death, not just because of the broader implications, but because if (when) oil spikes due to a conflict, gold will soar. And then the crowd follows the price, and when it moves up rapidly, they decide it’s time to take a position, to follow the “winner.”
Me, well I own gold for different reasons and don’t wait for an “event” to suddenly discover it. I am always long and usually add to my position when the price gets too low. This last foray back below $1,300 could be the last time we see gold this low. I know it’s not nice to gloat, but I am considering sending Harry Dent a gift of gold foil covered chocolates. I mean we’re all wrong from time to time, but Dent is so far off that he deserves a special award for his call.
Zero Hedge

The US has very difficult choices to make on both fronts. Jaw-jaw or war-war?

US officials claim Iran caught in the act retrieving damning evidence...
2 Tankers Damaged After Suspected Torpedo Attack Near Strait Of Hormuz; Oil Soars
Update: The Front Altair, the Marshall Islands flag tanker damaged in Thursday's attacks, has now sunk , according to Iranian television. Later, others denied these reports.
If accurate, the sinking could have a serious impact on oil prices and the environment, as the ship contained twice the amount of oil as Exxon-Valdez.
While some sources cited torpedoes as the weapons used in the attacks, another said officials suspected the use of a magnetic mine, similar to the devices used during last month's attacks.

Well, this is not exactly news, at least not around here at Miles Franklin. We’ve been talking about Russia and China and Iran and other countries dumping the dollar and finding ways to do commerce outside the dollar. The free ride that has given us all an incredible standard of living since the end of WWII is coming to an end. Remember, since the dollar is the world’s reserve currency, we can buy all the stuff we want and print the money to pay for it. This is counterfeiting on a grand scale. But when the party ends, you better have gold, or silver or something, as in “things.” Tangible assets will be very valuable. Paper assets, less so.
“The main thing is, [the US Dollar] does not serve the interests of the future ..."
Kitco published this a couple of days ago. E.B. could be right. 
E.B. Tucker, director of Metalla Royalty and Streaming, said all the pieces are in place for a rally, which will come soon and fast. 

“The thing I want you to think about is what happens to the market and where is the opportunity when gold hits $1,500. It’s going to hit it fast, I mean, it’s up $60, roughly, in the last three trading days, so this move is going to happen quickly, and it’s going to catch people off guard,” Tucker said. 

On comparing gold to bitcoin, Tucker said that the yellow metal has been around for thousands of years and people should stop comparing it to bitcoin, which is not in the same asset class. 
“It’ not even a question, it’s like walking versus air travel, it’s not even comparable,” Tucker told Kitco News on the sidelines of the 121 Mining Investment conference in New York. 

Bitcoin’s finite limit is also not sufficient to classify the cryptocurrency as a safe haven asset and store of value, Tucker noted. 

“What people don’t realize is that there’s only about, I think, $160, $150 billion worth of bitcoin available in total supply, and with gold there’s $8 trillion. People say ‘well, there’s less bitcoin than gold, and that’s better,’ well not really, because you look around the world and you have asset managers, people have to move in and out of these assets, and [bitcoin] is not a functional place to store money,” he said. 

In response to bitcoin’s rising functionality as a means of payment at retail stores, Tucker again said that the comparison cannot be drawn with gold. 

“I don’t need to do that with gold, because gold is a place to store wealth, so I don’t need to take my wealth and buy sandwiches, I need to use my wealth to preserve myself as a man of substance through the down periods. That’s the purpose of gold: it’s real money you can trade it into something, into another type of money whenever you need to,” he said.

Yra has summarized the impending Dollar decline perfectly.
“I have cautioned for several years that it is not INFLATION that is the impetus for a GOLD rally but investor fears about central banks losing control of monetary policy in a fiat currency world.”
Inflation, as we have all experienced in the past, brings with it significantly higher prices.
But a loss of faith in fiat currency brings hyperinflation, something we have never experienced.
We will witness an impeding tsunami of rising prices in ALL commodities…gold, silver, copper, nickel, and all the others.
What you won’t see anymore is the trite phrase “Keep the Change”.
That “Pot of Gold” is sitting right under your nose.
Those coins in your pocket will amaze you.
Unlike paper fiat, it’s not economically feasible to remove coins from circulation and replace them. Even so, their inherent base value will drive them out of circulation.
Remember Gresham’s Law…bad money drives out good.

With all gold buying taking place, among nations, it is only a matter of time before the price must move much higher.

Bullion The Bully: Beijing Answers Trump’s Tariffs With Massive Gold-Buying Spree
June 11, 2019

China’s vast gold stockpile saw another boost in May, marking an ongoing increase for a sixth straight month, according to the latest data published by the People’s Bank of China.

Last month, the central bank raised its bullion reserves to 61.61 million ounces from 61.10 million in the previous month. As of the end of May, the nation’s stockpile was valued at $79.83 billion compared to $78.35 billion a month earlier. In tonnage terms that marks an increase of 15.86 tons, after almost 58 tons of gold were added over the five months through April.

In May, the country’s total foreign exchange reserves, the world’s largest, reportedly edged 0.2 percent, or $6 billion higher, reaching $3.101 trillion. The increase shifted the expectations of analysts polled by Reuters, who projected the reserves to drop by five billion to $3.090 trillion.

The latest boost to Beijing’s gold stash reportedly reflects China’s move towards diversifying its bullion and foreign currency holdings amid the protracted trade dispute with the US.
Here is another worthwhile article from Zero Hedge. I love it when people look at gold with some perspective. Nothing stays the same. What goes up goes down and what goes down goes up. Things do cycle and we are on the cusp of a sea change, one where stocks go down and gold goes up. It’s like the Earth Wind and Fire song – That’s The Way Of The World
Zero Hedge
The global monetary regime has collapsed three times over the past 100 years, in 1914, 1939, and 1971. They seem to happen about every 30 to 40 years on average. It’s now been over 40 years since the last collapse, so we’re due...
Here is another great Greg Hunter interview. I wonder if the Fed Heads understand that they really don’t know what they are doing? How could they? They are implementing policies that have never been tried before. When you do things like that, you have no idea how they will end up. Like my friend Lou loves to say, “You can’t know what you don’t know.” 
Greg Hunter
The Fed Can’t Save Us –John Rubino
J une 12, 2019

By Greg Hunter’s  USAWatchdog.com  
Financial writer and book author John Rubino is worried about record debt at every level of the economy. Rubino says, “The next recession is overdue because this is the longest expansion on record. . . . We loaded up car buyers with sub-prime loans. Students now have $1.5 trillion of student debt. Credit card debt is at record levels. Government debt is at record levels. Corporate debt is at record levels. . . . All of these guys have borrowed more money than they ever have in history. So, the idea we are going to convince people to borrow a lot more money by lowering interest rates is at best problematic and at worst insane. We are headed that way because they have no other tools. So, when things slow down, they are going to start cutting again and printing money and buying up assets with that money. We’ll see if it works again. It shouldn’t have worked the last time. . . . We are in a range of unexplored numbers. . . . How much further can this go? Is there a limit out there? We are going to find out in the next recession.”

Rubino is not impressed with the Federal Reserve’s latest promise to slash interest rates and print money to save a teetering economy. Rubino contends, “The markets ought to be terrified by this, but in the U.S. because the rates are not yet zero, the market is not yet terrified. We are not far from 0%. . . . The Fed can’t save us. We’re at the point now where we would be at a 1930’s style depression or a Weimar Germany hyperinflation or something new and equally bad. We have taken on insane amounts of debt, more than any society in history has ever tried to take on. So, we just don’t know what is going to happen. If the central banks cannot stop the next recession, we will find out what happens when this much debt goes bad. . . . The Fed’s biggest fear is that things will spin out of control, and they won’t have the tools to stop it.”
Hey, listen to this guy. He didn’t get this rich by being stupid.
Kitco News
Gold Price Going To $1,700 Soon Says Billionaire Paul Tudor Jones – Bloomberg
( Kitco News ) - Another billionaire investor is sounding the alarm for the U.S. and global economies and is looking at gold as the safe-haven play.

Paul Tudor Jones, fund manager and create of Tudor Investment Corp
In an interview with Bloomberg News, Paul Tudor Jones, fund manager and create of Tudor Investment Corp., said that his favorite trade in the next 12 to 24 months is gold. He added that if the price can break through $1,400 it will push to $1,700 an ounce "rather quickly."
“[Gold] has everything going for it,” he said.
During the interview Jones said that the global economy, which has been built on global trade, is on the verge of breaking down as global trade tensions continue to escalate. He said that President Donald Trump’s recent threat of further tariffs on $300 billion of imported Chinese goods could be the “material event,” that could push the U.S. economy into a recession.
“We’ve had 75 years of expanding globalization and trade… and now all of a sudden it’s stopped,” he said. “That would make one think that it’s possible we go into a recession; it would make one think that rates in the United States go back down to the zero bound level; gold in that situation is going to scream. [Gold] will be the antidote for people with equity portfolios.”
Jones’ comments come as gold prices hold on to recent gains and is seeing its best weekly performance in a year. August gold futures last traded at $1,337.30 an ounce, up 0.45% on the day. Gold prices have pushed higher as markets have aggressively priced in interest rate cuts from the Federal Reserve.

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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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