- A new type of financial newsletters were appearing. They focused on gold and silver and inflation. Richard Russell, Doug Casey, Gary North, Howard Ruff, The Aden Sisters, Don McAlvany, Vern Myers, Jim Cook, Jim Blanchard, Jim Sinclair, Jim Dines and many others were pumping out information that promoted gold and silver as a legitimate investment class.
- The inflation of the 1970s caught everyone by surprise. Suddenly, gold and silver were taking the leading role as protection against inflation. Prior to the inflation of the 70s, people only remembered the “deflation” of the Great Depression. Inflation was not a concern.
The birth of the precious metals telemarketing industry was a huge factor in growing the industry. I know. I had a front row seat, working for the largest, most successful firm in the industry. Gold and silver were being marketed on a national basis. It was no longer a local coin dealer business.
- Wall Street stock brokerages started promoting mining shares, many of which turned a small investment into a small fortune. Up until the late 70s who every heard of South African mining stocks. ASA became a huge hit. People who had never seen or held a gold coin in their hands were buying gold and silver stocks. And if they timed it right, they did exceptionally well. Richard Russell coined the phrase, “There is no bull market like a gold bull market.” Well, at least not until the dot.com bubble and the Internet mania arrived.
Hundreds of thousands of investors decided to own gold and silver, and mining shares as a way to “diversify” their portfolios and for protection against inflation. This was still a small market, but it grew from nothing, and the growth was very impressive.
- Gold and silver companies sprung up like weeds. Most of them had little if any business experience and many were outright crooks. Since the precious metals industry is not regulated, there were plenty of people who took advantage and sold people over-graded and over-priced coins and in more than a few cases, took money and never delivered product, or they offered to hold clients coins and then disappeared with the funds.
The lion’s share of the business, the physical end of it, was done by two companies. Investment Rarities here in Minneapolis where I worked, and the Blanchard Company in New Orleans. Both were sophisticated telemarketing companies. Both companies were featured at the suddenly popular “Investment Seminars.” I know them well, as I was a keynote speaker at many of them. Gold and silver were now “reputable investments.”
There was little price competition – without the Internet, so it was difficult to compare prices. Since most of the dealers were small firms, who did not do a lot of business, they had to charge large commissions to survive.
By the late 90s, the Internet changed all that. But old habits are hard to break and most of the clients that came aboard in the 80s were used to working with a personal broker and they were not comfortable using a computer or the Internet.
I know. I was one of them. But I am flexible and with some difficulty, I learned how to use the computer and the Internet.
But the new buyers who entered the market after 2000 were younger and Internet savvy. Many of them made their purchases on the Internet without personal contact. But buying gold and silver requires more than just a few keystrokes on a computer. Buying gold is different from buying batteries or underware from Amazon. Work with a person, a personal broker. You can get good advice and follow up and still find competitive pricing. Don’t settle. Get it all.
When I started Miles Franklin in 1990, I had a computer. It’s a good thing Apple had invented the “mouse.” If I had to use keystrokes, I would have been hopelessly lost. I used it mostly as a word processor to create my
Miles Franklin Quarterly
. Yes, that’s right. I was writing once a quarter and the newsletter was a hard copy that our clients got in the mail. It was well received.
In those days very few precious metals dealers offered any worthwhile information on the economy, interest rates, inflation, deflation, the dollar - all of which have a bearing on the price of gold and silver. I built Miles Franklin on a foundation of providing the best possible “information,” and unmatched service plus very competitive pricing. I hired a select group of experienced brokers, who I worked with and new personally. They knew that the customer came first. We are still here, nearly 30 years later, so my business model was a good one.
With the growth of the Internet, my son Andy convinced me that I should write more often, so my Quarterly became a Weekly and eventually a Daily. We stopped mailing out hard copies and only publish on the Internet.
The market place was changing – the focus was rapidly moving toward up-to-the- minute information. The “Big Picture” and “Primary Trends” that Richard Russell wrote about were replaced by “how much did my investment go up yesterday.” The information revolution that was part of the Internet got people thinking short-term. That’s fine if you are a trader, and many ordinary folks tried day trading, and most lost their ass in the process. But short-term thinking has no place in a portfolio built around physical gold and silver.
Trading gold and silver is best left to the big boys. Why trade a commodity (yes, at that level gold and silver are treated as commodities, even though we view them as money) when the market is fixed, the pricing is managed, and the regulatory agencies could care less. They levy heavy fines for rigging interest rates and currencies, but when it comes to the gold and silver shenanigans on COMEX they suddenly become deaf dumb and blind.
There are some things going on that make no sense to me. For example, how can firms like Rosland Capital, Lear Capital and Goldline run gold and silver adds on Fox News all day long, at $6,000 for a 30-second spot? They advertise bullion and cannot mark it up more than a couple of percent, so there is no way that they can sell enough product to recover their advertising costs. They are either using the “bait and switch” sales method, of offering one product at a low markup and switching the buyers to high markup alternatives. Or they are backed by deep pocket venture capital pools that don’t mind losing money (for years) in order to establish an industry presence. My advice: If a firm advertises on national TV, find another dealer. Better yet, find one who not only offers a competitive price on their products, but also has well-trained, experienced brokers who can work with you on a one-to-one basis. Make sure that they have been in business at least two or three decades. Check them out at the Better Business Bureau and see if there are any negative comments on their business practices on the Internet.
Miles Franklin is one of the few companies in the precious metals industry that is doing well. I decided from day one that we would keep our expenses down and run a low-overhead operation so we could survive the down cycles in the gold and silver market. Firms that grew too large and had too high an overhead are in big trouble now.
We have been in business long enough (nearly 30 years) that we have established a large following and client base. At some point, you reach a “critical mass” and have enough clients to keep a steady stream of volume at all times.
We have the most experienced and professional brokers in the industry and they develop long lasting relationships with our clients.
We are always looking for new ways to improve our business model. We were one of the first firms to offer offshore storage and pioneered the industry’s best program with Brinks in Canada. We just put together a one-of-a-kind loan program where our clients who store gold and silver in our Brinks accounts can take out a low interest loan on their stored metals. If you need some cash, for a short period of time, the last thing you should do is sell your core gold or silver to get the funds. Now you can keep your metals, use them to collateralize your loan and repay it at your convenience. When I asked my personal banker for a $100,000 line-of-credit, which I didn’t need but thought it would be a good idea, he said sure, but I had to deliver $70,000 worth of gold coins as collateral, and had to pay a high rate of interest, even though I never used the credit line.
We partnered with Sprott to develop a new product, like an ETF, one based on block chain for safety and privacy and one that allows you to receive PHYSICAL gold when you sell out.
We scour the industry to find specials, like very underpriced numismatic coins when available, and then show our clients how to change the “mix” of their portfolios adding more ounces or more value or potential without spending any new money.
If you want to succeed in this market, you can’t do things the way they were done in the 80s and the 90s. We not only evolved with the times, we were a leader in innovation.
You can have it all – innovation, very competitive pricing, an experienced personal broker and the best storage program possible. Look no further.
Here is a headline I read yesterday.
Is this “the” black swan event that will topple the stock market and the economy and jump-start another bull market in gold and silver? One thing is certain; a falling stock market will be very good for gold. One way or another, it’s just a matter of time.
