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quotesQuotes of the Day 

"Indian silver imports are up a staggering 259% at 857 tonnes in the April-July time period. That amount is approximately one third of the global monthly production of silver.  Furthermore, July's Indian silver import amount of 275 tonnes is the second highest import figure of any month in the last 5 years."

-Jeff Lewis

 

"I believe going all the way back to Lenin and Marx, the Russians have known that the best way to defeat an enemy is to either debase or help debase your adversary's currency."

-Bill Holter, Miles Franklin 

 

"What is happening here in the gold market is truly remarkable, and will undoubtedly go down in the history books.  Gold is now in its sixth week of backwardation; and even if backwardation cannot happen in theory, the reality is it can when governments intervene in the market.  These interventions are aimed at making gold look weak and national currencies look strong; but the opposite effect has occurred, as government intervention has unleashed a tidal wave of bargain hunting throughout the world.  It is important to note that while gold backwardation lasted a few days in 1999 and again in 2008 -- both of which marked major bottoms - we now have had 31 straight trading days of backwardation, and gold has already risen $135 /oz."

-James Turk

 

"We have a major shortage of physical gold, which is reflected in gold lease rates being negative for an astounding 25 consecutive days.  We then had the revelation that the Bank of England had dumped a staggering 1,300 tons of physical gold into the market that they were supposed to be safely storing for other countries.  This just shows how truly desperate that situation has become for Western central planners, and just how badly their gamble to break the gold market has failed.  All of this is shaping up for an explosion higher in the price of gold."

-John Embry 

 

 
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KerrylutzWeekly Podcast with Kerry Lutz 

On Monday afternoon, August 12th, I taped my weekly podcast with Kerry Lutz of the Financial Survival Network, below:

 

Ranting Andy Hoffman - Back from China 



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wrap-upMonday Afternoon Wrap-Up 8/12/2013

As you may have noticed, my RANT format has modestly changed in recent weeks. The focus is shifting from quantity to quality, and will do so across the entire Miles Franklin newsletter. David Schectman, Bill Holter, and I are all making such changes; and next week, we plan to combine our efforts into a single newsletter - likely to be published each morning.

 

Our goal is to provide less information, and more commentary. Much of what we discuss is "common knowledge," but our personal thoughts are decidedly not. Thus, you can expect a much shorter daily newsletter, but one focused more on "key themes." Hopefully, readers will appreciate the effort we are putting into further differentiating our product; and for those that haven't read one or more of us, it gives you an opportunity to sample the "best of" each of us - all at once!

 

BURSTING BUBBLE, OR RETURN TO REALITY?

 

Back in May, the all-important ten-year Treasury bond yield approached its ALL-TIME LOW of roughly 1.5%. Six months into the Fed's unprecedented "QE4" program - i.e., purchasing $85 billion of Treasury and mortgage-backed securities each month - they had "succeeded" in pushing rates further from their underlying value than EVER before. Throw in a PPT mandated with supporting stocks - and the encouragement of private equity speculating - and they had fostered the growth of MASSIVE bubbles in nearly all asset classes. Never before have so many assets been mispriced relative to traditional valuation measures; let alone, amidst a global economic outlook as weak as we've EVER seen.

 

Around that time, housing prices leapt higher in many neighborhoods across America; fortunately, here in the Denver suburbs as well. Not "internet stock" type of increases, mind you - which no longer occur ANYWHERE; but fairly sizable moves for assets that had been dormant - at best - for years. Thus, whilst nominal GDP remained weak - and real GDP much weaker - residential homes were again "hot investments."

 

For perhaps three to four weeks, all my neighbors could speak of were rising home prices. The "fever" was back, and the same rank speculation was sprouting everywhere; i.e., "this area is one of the most desirable"; "this house has a finished basement," etc.; you know, just like in 2006. But then a funny thing happened; and all of a sudden, the fever died down. That darn ten-year rate surged higher; as TPTB set in motion the next crisis with phony, disingenuous "tapering" talk.

 

Why they would even joke about pulling the rug from the only "business" demonstrating improvement? Who knows, but methinks it has something to do with the hubris involved in believing all markets can be "locked down" with MONEY PRINTING, MARKET MANIPULATION, and PROPAGANDA.

 

Since then, the real estate chatter has all but died in my neighborhood. Sure, a few straggler transactions are getting done. However, with mortgages rates having rapidly doubled, my sense is more people are worried about when the next "shoe will drop" than how high prices will go. And thus, the essentially 100% correlation between mortgage rates and home prices - in a far more dangerous economic backdrop than the mid-2000s. The average homeowner has far less equity, savings, and job prospects than back then; and thus, the current bubble stands on far more unstable ground. Thus, for those anticipating the "second coming" of real estate mania, you may have to wait a fewmore decades.

 

On point, I see the 10-year Treasury yield - on a largely "news-less" day - surged back above the Fed's "QE line in the sand" at 2.60%; closing at roughly 2.62%. Keep your eye on this rate; as unless the Fed maintains - or god forbid increases - QE4, the overwhelming likelihood is the "great housing bubble of 2013" could disappear as rapidly as it appeared.

 

WHY ARE PMs RISING SHARPLY?

 

If you listen to poisonous MSM commentary long enough, you'll start to believe market movements occur for specific "reasons." However, in today's fantasy world, essentially all market movements are in some way, shape, or form "influenced" by government intervention. TPTB will do anything to make you believe their manipulations are actually free market "reactions"; but in essence, they are anything but. This is why rising stock prices cannot be trusted; nor falling interest rates, commodities, or Precious Metals.

 

That said - you ask - why are Precious Metals rising anew? According to the aforementioned logic, it must be for a "reason." And according to the MSM, there are currently NO reasons for gold and silver prices to increase. After all - they say - the PM "bubble" has burst, the economy booming, and the Fed on the verge of "tapering" QE.

 

And the answer - drum roll please - is...BECAUSE THEY ARE UNDERVALUED; in fact, more so than at any point in our lifetimes. And yes, I'm even referring to those who were alive when the gold price was "pegged" at $35/oz. in 1933. You see, the fact remains that "economic mother nature" still has the last world over asset prices; particularly those that are finite by nature - such as the "precious" metals gold, silver, and platinum.

 

TPTB have gone for broke in their attempt to "kick the can" a wee bit longer, by increasing the supply of all PAPER assets they fear, and the demand of assets they favor. However, in the PHYSICAL world, they have no such power; in fact, no more than the Wicked Witch of the West in the Land of the Munchkins. The damage they have wrought on the mining industry by naked shorting "paper gold," "paper silver," and "PAPER PM Investments" like mining shares, ETFs, and futures contracts is coming home to roost. I continue to believe an "HISTORIC BOTTOM" was made in late June; and don't be surprised if an "historic high" is achieved MUCH sooner than most could imagine.

 

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.





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Miles Franklin seeks creative ways to partner with its clients to market Precious Metals to nationwide audiences.  If you are interested in hosting a private meeting - or sponsoring a Webinar presentation - with Andy Schectman, President of Miles Franklin, and "Ranting Andy" Hoffman, Marketing Director, please inquire via email to aschectman@milesfranklin.com or ahoffman@milesfranklin.com; or via telephone at 800-822-8080. 

commentaryTuesday Morning Commentary 8/13/2013

The reason I put my entire liquid net worth in Precious Metals in 2002 was fear of massive dollar debasement as the "terminal phase" of America's mad fiat currency existence took hold. 

 

As bad as the dollar's outlook is - i.e., destined for hyperinflation - I've come to realize there's not a CHANCE IN HELL it collapses before the world's "peripheral" currencies.  The dollar's "reserve" status enables it to withstand the Fed's self-immolatory policies longer than the others - but only because so many nations hold too many of them to efficiently dispose of.  This is why the U.S. inflation rate - the REAL one, that is - is closer to 8%-10% while many other nations (Egypt, India, Brazil, Argentina, and even China) are likely much higher.  However, once the "vacuum" of investment in smaller, weaker currencies is sucked out, the fiat cancer will "move up the totem pole" and envelop the dollar itself.

 

My PHYSICAL gold and silver has served me well through the early phases of the GLOBAL fiat currency collapse - and when the dollar inevitably succumbs, it may well save my life.  In the meantime, we wait to see which catalyst will start the ball rolling downhill; and for my money, that catalyst will emanate from the "other side of the pond"; with the only remaining questions being where and when.

 

THE NECK AND NECK BATTLE FOR "MOST LIKELY TO CATALYZE THE BIG ONE"

 

Yesterday, I discussed how the "world's worst governed country" - India - was rapidly moving up my list as the most likely to catalyze the inevitable, global run on fiat currencies.  For some time, the Greek "PIIG" has been my "top pick," but now the race appears to be running neck and neck; and the fact that not one, but both nations are producing news-worthy fodder each day highlights just how close we are likely getting to the next, killer "Black Swan."

 

Overnight, the Rupee plunged to yet another ALL-TIME LOW against the dollar; on the heels of still more suicidal government decrees.  This time, they raised gold and platinum import taxes to 10% from 8%; and care of today's "QUOTE OF THE DAY" regarding exploding silver demand, the silver import tax to 10% from 6%.  The "UNINTENDED (INDIAN) CONSEQUENCES" I have long written of will only worsen exponentially as a result; as FEAR of the Rupee's demise among the world's most gold-loving people's will only accelerate.  PM smuggling has become pandemic in India, where it is estimated some 90+% evade government surveillance.  Thus, I expect Indian PM demand to rocket higher, and the Rupee to continue its death spiral.

 

Meanwhile, the MSM is "celebrating" that Greece's 2Q GDP "only" shrunk by 4.6% year over year - slightly "better than expected."  No matter that such a result is among the world's worst, in a nation already on the verge of collapse. 

 

Moreover, as we see with essentially all U.S. economic data these days, the "devil is in the details."  When one "lifts the hood" on this farce of a report, they see it was not seasonally adjusted.  In other words, it is not "apples to apples" with prior numbers.  Moreover, quarter over quarter figures was not even released; and thus, there is no way of gauging the economy's trajectory.  And judging by the fact that Greek unemployment just hit a new ALL-TIME HIGH, I'll "take the under" on which way it's going.

 

Topping off this "death cake," flailing Greek officials are trumpeting their confidence that Greece is on track to achieve a "primary budget surplus" this year.  I had never heard this term before, so I had to look at up.  And when I did, I found it to be the ultimate in Orwellian "doublespeak"; as by definition, it means a surplus excluding interest payments on debt.  In other words, Greek is saying that if you could just eliminate its $500 billion (and rapidly growing) debt, the nation is "rich"; which should give readers a hint at what is likely to come...

 

ALTHOUGH SOMETIMES, THINGS ARE MUCH SIMPLER...

 

As bad as the outlooks are in India, Greece, and a host of other basket cases, said "Black Swan" could well be the most obvious of all; i.e., a "BURSTING OF THE BIGGEST BUBBLE IN HISTORY" - the U.S. Treasury bond market. 

 

"Taper" or not - and the end result will surely be NOT - the world's most important market is in decline; likely having reached an historic top in June.  Frankly, it's immaterial what the U.S. economy does; as at this point, only the Fed's maniacal QE buying is preventing all-out implosion.  Whether or not this year's "taper scare" was simply orchestrated to allow "commercial" banks cover to escape their naked PM shorts will likely never be known.  However, in the END GAME, all it did was highlight just how fragile the threads holding Treasury bonds up are.  Inevitably, they WILL crash - no matter what the Fed does.

 

This morning, retail sales were worse than expected, but as I write at 9:15 AM EST, Treasury bonds are getting DESTROYED; with the 10-year yield having rocketed up to 2.69% just before the NYSE open - i.e., just below its multi-year high of 2.74%.  Get ready for some MASSIVE, covert, "turboQEing" today; and god help TPTB if they fail to hold 2.74%.

 

As for PMs, they have fought through every imaginable Cartel operative this morning; and yet, gold is still just a few bucks lower than yesterday's close.  Meanwhile, silver is again up - this time, by $0.12/oz.; as what may well be an historic short squeeze appears to be forming.  The U.S. Mint just reported silver Eagle sales through August 12th are on pace for yet another four-plus million ounce month; and if said short squeeze does indeed ensue, don't be surprised if January's RECORD HIGH level of 7.5 million ounces - in just 19 days - is not surpassed this Fall!

  

 

 

 

Remember, this is not only the most dangerous period for the global economy of our lifetimes, but the beginning of the seasonally strongest period for PHYSICAL gold and silver demand...

 

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.

   
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rantSilver Prices Way below the Cost of Production

In the tiny "shadow world" of Precious Metals commentary, it's incredibly rare to find high quality financial analysis - in the Wall Street style I personally spent two decades honing. Last year, I came across the great Steve St. Angelo of SRS Rocco Report; who continues to do the best work on Precious Metal mining costs of ANYONE I have read. And given I have seen essentially everything over my "TEN YEARS OF HEAVEN AND HELL" in the PM sector (now eleven), I do mean anyone.

 

On Friday, "MEXICAN SILVER - PRODUCTION COLLAPSE!" was based on Steve's fantastic work; while yesterday, I followed through with this theme in "JUNIOR MINING - AND FUTURE PRODUCTION - DEATH." Given how incredibly important this topic is - yielding nearly irrefutable evidence that an "HISTORIC BOTTOM" was reached in late June - I am publishing a third straight RANT on this topic. And wouldn't you know I'm again utilizing Steve's fine work to illustrate my point.

 

In the past month, he has followed the earnings reports of essentially ALL the world's major silver producers - and after analyzing the data, has come up with the following, ominous conclusion...

 

SILVER MINING INDUSTRY: Unsustainable at Present Market Conditions 

 

For months, I have written of how the breakeven cost for the majority of global silver miners is approaching $30/oz. This analysis essentially PROVES it; as seven of the world's 12 largest primary silver miners have net income breakeven costs exceeding $26/oz. - while three are well above $30/oz...

 

 

 

A case in point is Coeur D'Alene Mining; by resource size, the world's eighth largest silver miner.  CDE barely generated a profit in the first quarter of 2013, when it realized silver prices of $30.30/oz.  However, it reported a MASSIVE loss in the second quarter - when silver realization averaged $22.86/oz.  Using these metrics - ceteris para bus - Coeur required a $29.59/oz. silver price just to report breakeven results.  And thus, it's just a matter of time before it, too, joins the "hit parade" of MAJOR miners reporting MASSIVE write-offs and exploration/development cost reductions; inevitably contributing to significantly lower industry-wide production.

 

In my view, the upcoming collapse of GLOBAL gold and silver production could be as big of a story - or bigger - the simultaneous demand explosion that MUST follow such a MASSIVE, worldwide fiat Ponzi scheme.  In the case of silver, it is already in EXTREMELY short supply; which is why the U.S. Mint was forced to shut down for 12 days earlier this year, and why prices for PHYSICAL bullion - and "junk" silver, for that matter - remained elevated throughout this summer's PAPER PM smash.

 

When "the Big One" hits - and supply essentially vanishes - the great majority of the world's population (as in 98 %+) will be kicking themselves for not PROTECTING themselves when they had the chance.  Of that, I am 100% sure!

 

 

   

 

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.

 

 

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mailboxRanting Andy's Mailbox

Andy;

 

I read your "Mexican Production - Supply Collapse" commentary with a sense of intrigue; this is something I've been saying would happen since the recent collapse of silver/gold to levels below the reported cost of production.  There have been numerous columns and commentaries about the current situation, but all tend to overlook the final outcome.  That is; as the mines try to cover expenses at prices lower than their production costs, particularly at a time many have made leveraged buy-outs or mergers with borrowed money, one has to ask who will ultimately control the resource and means of extraction?   Could the financiers who are pushing the prices to these levels also become future owners of the organizations, facilities and reserves that are being pushed toward bankruptcy?

 

Any child who played MONOPOLY knows that capitalism in its raw form will always lead to failure of ALL players because the 'winner' can no longer generate revenue when the others are bankrupt.  I guess the bankers never learned that concept.

 

Ian

 

 

Ian,

 

All good points; although frankly, I don't think it's that complex. To me, it's all self-defense on the part of TPTB. Each day, they wake up trying to figure out how to kick the can one more day. Naked shorting miners was a great way for some time, but now they have DESTROYED the means of production; and thus, accelerated their own suppression scheme's demise.

 

Andy

 

 

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About Andy Hoffman

Andrew ("Andy") Hoffman, CFA joined Miles Franklin as Marketing Director in October 2011.  For a decade, he was a U.S.-based buy-side and sell-side analyst, most notably as an II-ranked oil service analyst at Salomon Smith Barney from 1999 through 2005.  Since 2002, his focus has been entirely on Precious Metals, and since 2006 has written free missives regarding gold, silver, and macroeconomics under the moniker "Ranting Andy."  Prior to joining the company, he spent five years working as an Investor Relations officer or consultant to numerous junior mining companies.   An archive of Andy's "RANTS" can be found on the Miles Franklin Blog here.

 

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