May 29, 2019
The Miles Franklin Newsletter
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From The Desk Of David Schectman
David's Commentary (In Blue):

Every so often, reality sneaks up on me and bites me in the ass.  This is one of those moments.  The world I live in is like the Roman Coliseum, but on steroids.  Entertainment for the masses in the computer and Internet age.  I subscribe to Netflix (of course), Apple TV, Hulu and DIRECTV.  Got to have my DIRECTV because what would life be like without the NFL (only broadcast on DIRECTV).  And then there is my beloved music.  But now, with Tidal, I can stream millions of songs for a small monthly fee.  If I choose, and I often do, I can watch the Minnesota Timberwolves NBA team in action on DIRECTV four or five times a week from November into June.  I can watch my Minnesota Twins MLB team six times a week from April into November, also on DIRECTV.  This year, they are actually worth watching.  Of course I follow the news and am current with all of the important information that affects my industry.  But my point is – there is so much entertainment available that if it weren’t for the fact that my business shines the light onto more important things, I would be, like so many of my generation, too busy being entertained to even think about what is happening to our world and environment.  And that’s the way da boyz want it to be.

I asked myself, how can retail stores, like Target, (I single out Target because I was an assistant buyer for them for three years in the late 60s) survive when peoples buying habits are evolving toward Amazon and their home delivery?  Recently I needed batteries, socks, under ware, polo shirts, sweatshirts, audio components, music, shoes, car polish, IPhone cables, Apple TV box, light bulbs, deodorant, hair gel, speaker stands - I’m just getting started here - and bought it all right here on my Apple computer.  Well, I did make two trips to my local hardware store for small stuff, and I did buy a few items at Lulu Lemon, but most of my spending is virtual, not shopping in a mall or retail shops. 

My two youngest grandchildren live on their IPhones.  They don’t talk on the phone - they text, Tweet, Instagram and FaceTime and they rarely use Email, which really makes me feel out of touch.  Be honest now, don’t many of you feel naked without your IPhone? I do and I’m two generations behind these kids.  

I have to admit it, the people who say we are dumbed-down, live in a world of “sound bites” and emotional headlines are correct.  And we aren’t aware of it.  My generation, less so than the two that followed, but yes, even me and many of my friends are submerged into this brave new world.

So what brought this topic up today?  An article I read in Zero Hedge.   
"...  the  most narcissistic generation in American history ... feel entitled to everything, but they  don’t want to work for it ..."

You did check this out, right?  I emailed it to a friend of mine, a prominent Cardiologist with a big practice in Aventura, FL.  He and I are joined at the hip politically, economically and socially. He replied, “Yup, I see it every day in my office.”  Personally, I am not out and about enough to notice it and my kids and grandchildren do not fit the mold, but then I live in a bubble.  My family and friends are not exactly the typical midwestern voter. Minnesota is a very liberal state. They are great at taxing the residents to make sure those who need assistance will get it, which is why for most of my life, people would flock into the state because of the generous welfare. What I don’t usually think about is the “I want it for free” and “I deserve it” attitudes of the Millennials. I should have known better.  I see what’s going on with the college loans where many of these kids go deeply into debt, don’t take advantage of their education, and now will vote for the first Democrat who offers to forgive their debt. Forgive it?  Someone will have to pay for it.  You and me.  The taxpayers.

As the above article suggests:  we may be in for a rough time when this generation votes for who runs our country.  I probably won’t be around to see it, but my kids and there kids will.  This is all too much for me now.  I think I’ll Segway into my world, of nothing but black swans, unsolvable problems on the horizon and the price of gold and silver.  Come to think of it, my financial world is all about re-directing my focus away from what is happening in the world I live in, toward this kind of “entertainment.”  In a way, reading all of the stuff I do in my industry is just as distracting as my sports and entertainment.  The clock keeps ticking, life rushes by, and even though everything around me is so different than it was when I was a young man, I hardly am aware. Too many distractions.  Until something jumps up out of nowhere and bits me in the ass.  Like this article.

DOWN TO BUSINESS

As you know by now, the price of gold is set by short-term oriented traders on COMEX.  They don’t base their actions on what could happen next week.  They buy and sell on what is happening right now. So, the price of gold and silver bob and weave back and forth, waiting for the next big trend to actualize.  War with Iran?  Trade war with China?  Overpriced stock market?  A dollar that could head south?  Any of these topics will move gold and silver, but not today.  Traders trade, that’s why they’re called traders. Actually they should be called computers.  Most of the traders are now looking for a new career.  

By the time gold takes off, you will know why. The “event” will be today’s news, not tomorrow’s news.

To show you the state of the precious metals market, Bitcoin is spiking while gold and silver remain in limbo.  Interesting how the hedge funds move into nothing backed by nothing while avoiding real money.  The insanity has no limits
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Gold has been treated as an investment and not a hedge during the U.S.-China trade spat, which could be why gold is not rallying as much as expected, according to FX Empire.

“Bullish traders are trying to build a case for a rally due to geopolitical tensions surrounding U.S.-China trade relations and potential military activity in the Middle East, but these factors haven't been much of an influence on gold prices this week,” FX Empire senior market analyst James Hyerzyk told Kitco News on Thursday.

It is all about how gold is perceived by the market, noted Hyerzyk.

“Investors haven’t been treating gold as hedge, but rather an investment. During times of geopolitical turmoil, investors have flocked to U.S. Treasurys, the U.S. Dollar and the Japanese Yen for protection,” he said.

If this trend continues for much longer, gold will have trouble sustaining any short-term gains it makes, FX Empire’s Hyerzyk pointed out.

“It’s not the headlines that will drive prices higher, but rather a combination of a weaker U.S. Dollar, lower Treasury yields and a drop in demand for risky assets. Unless all of these factors weaken at the same time, gold is going to have a hard time attracting strong buyers,” he explained. – Kitco News
Are we in for a repeat?  Will history rhyme again, 90 years later?
" Everything was not fine that spring with the American economy. It was showing ominous signs of trouble. Steel production was declining. The construction industry was sluggish. Car sales dropped. Customers were getting harder to find. And because of easy credit, many people were deeply in debt. Large sections of the population were poor and getting poorer...

It was this nature of mass illusion. Prices were going up, people bought. That forced prices up further, that brought in more people. And eventually, the process becomes self-perpetuating. Every increase brings in more people convinced of their God-given right to get rich.

At the end of 1929, as they celebrated New Year's Eve, all that lay in the future. Nobody knew that the Great Depression was coming -- unemployment, bread lines, bank failures -- this was unimaginable. But the bubble had burst. Gone was that innocent optimism, the confidence, the illusion of wealth without work. One era had ended. They toasted the coming of the 30s, but somewhere, deep down, they knew the party was over. " --  PBS  American Experience:   The Great Crash of 1929
Will justice be served?  Traitor or hero?  Take your pick.

Jim Cook was my first mentor in this business. We are best friends to this day. He discovered Ted Butler 20 years ago and Jim and Ted have been worked tirelessly trying to expose JPMorgan and their involvement in the silver industry.
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Jim Cook Interviews Ted Butler: JPM, Silver Investors & More

Cook : A lot of silver investors are frustrated these days. Can you give them any hope?
Butler : I'd be lying if I said I wasn't frustrated as well. But I have no doubt that silver will eventually prove its great worth.
 
Cook : Does everything still depend on what JPMorgan does? 
Butler : If you don't know by now that silver is manipulated by COMEX paper trading, largely at the hands of JPMorgan, you’re missing the whole story.
 
Cook : Ok, we get all that. We want to know when will it change? 
Butler : When JPMorgan decides it will change. Look, you know I can’t tell you the precise time in advance.
 
Cook : Is that the best you can do? People are getting tired of hearing that. 
Butler : Tired of what – the only explanation that makes any sense?
 
Cook : Calm down, you can’t blame people for being impatient. 
Butler : OK, I understand that.
 
Cook : Do you understand why some people doubt you? 
Butler : I know that some people doubt what I say. However, just before he died, the former CFTC commissioner, Brad Chilton, confirmed that JPMorgan was under investigation for manipulating the price of silver. That should end any doubt.
 
Cook : You’ve made some astonishing predictions on how high the price of silver could go. What’s your reasoning on this? 
Butler : I’ve tracked JPM’s every move. They have accumulated 850 million ounces of physical silver. They anticipate making billions on this hoard. That’s a big, overpowering reason to own silver.
 
Cook : Anything else?
Butler : Yes of course.by holding the price of silver down, they interrupted normal supply and demand factors. Low prices discourage mining and reduce supply. Alternatives to silver for industrial use hardly exist because nobody looks for them when prices are low.
 
Cook : What else?
Butler : Silver is truly a miraculous metal. Most of all it’s the greatest low cost conductor of electricity. That’s why 100 million ounces are used for solar power each year. It’s an electric world and silver is used in everything electric. If it wasn’t for JPM holding down the price while they hoarded it, I think we’d be close to $100 an ounce right now.
 
Cook : Do you think we’re still going to go there?
Butler : Yes, and maybe a lot more.
 
Cook : Why do you say that?
Butler : The supply is thin and we could have an industrial shortage. The users have to have silver at any price or shut down their factories.
 
Cook : What about investment demand?
Butler : That will kick in with rising prices. When that happens I don’t see enough silver existing to meet the demand. That’s when it will get interesting. The silver price will have to burn itself out at much higher levels. It’s going to be one for the ages.


Who benefited from low interest rates?  Banks did.  Large businesses did. The bond market did.  Stockowners did.  The workers and the man on the street; not so much.  And this led to an environment that was favorable to stocks and dismissed precious metals.  But from a broader perspective, they fostered huge bubbles in the stock market, the bond market and set the stage for Donald Trump.  Whether that is a good thing or a disaster remains to be seen.  He is turning typical international diplomacy and our time-tested relationships with our allies on their head.  We don’t know how this will work out – yet, but there have never been more potholes to navigate and more reasons why gold and silver make sense than now.  Unfortunately, gold and silver do best when everything else is a mess.  That’s why I am in no hurry for new all time high prices in both, but we will get it.  Too many potential disruptions to avoid a gold-friendly economy.

In the last 20 years, there were probably only a couple of opportunities to stop this Debtball Express.

One of them came in June 2000, says our colleague David Stockman. Then, it was obvious - to Alan Greenspan, as well as others - that the monetary system inspired by Milton Friedman and put in service by Richard Nixon wouldn't work. Friedman's system - monetarism - called for controlling the growth of money, keeping it at around 3% per year.

But after 1971, when the final thread between gold and the dollar was severed, America's real purchasing power came from a new source - credit.

And by the end of the 20th century, Greenspan noticed that the Fed no longer knew what "money" was... and could neither measure it nor control it.

Greenspan, the former gold bug, might have stood up straight before his fellow Fed governors and explained the situation:

" Uh... guys... this isn't working. We've got to go back to a gold-based system ."

Instead, he let the credit money system erupt, reducing the cost of money/credit from a federal funds rate of 6% to a rate of 1% - the lowest at that point in history.

This  worthwhile  commentary from Bill put in an appearance on the  bonnerandpartners.com Internet site early on Thursday morning EDT -- and another link to it is  here .

Here is one of the Black Swans that Trump must resolve.  I get the feeling that the tactics he used to bully his way to get what he wanted in the business world will fail miserable in the political landscape.

When I owned a condo in Florida, we became friends with a man who owned a successful business in New York.  They manufacture concrete pipes, used in new building construction to carry fluids in and out of the buildings.

He is also VERY liberal (typical for New York residents) and loved Hillary and hated Donald Trump.  Before the election he told me that New Yorkers knew all about Trump and he would be a disaster.  He said he did business with Trumps companies, providing concrete pipes for his hotels.  He said that after the contract was signed and they started work, Trump’s people came back and refused to honor the contract and demanded that he cut his price or they wouldn’t pay.  He said, fine, and stopped work, mid-stream.  It didn’t take long before they came back and did honor the contract.  He said Trump is known for that kind of business tactic. It may have served him well in the private life, but it remains to be seen if he can bully his way around in the world of international politics.  So, we hope for the best, and own gold – just in case he falls flat on his behind in the mid-east and with North Korea, Mexico, NATO and China.

Casey Daily Dispatch

Justin’s note:   Tensions are flaring in the Middle East.

If you read   yesterday’s  Dispatch , you know what I mean. In short, the U.S. and Iran have been exchanging words lately, even threatening one another with force. And neither side’s backing down.
But this is more than just tough talk. The U.S. recently sent a carrier strike group to the region, along with bombers.

It’s quite serious. In fact, Doug Casey thinks the situation could easily spiral out of control… and even lead to something resembling World War III. He explains why in today’s interview… Click Here

Let’s finish off with half a dozen of the most interesting articles on Zero Hedge.  
The rare earth export ban was always a disaster waiting to happen.  Don’t mess with China.  Without their rare earths, our hi-tech military will shut down.  We need it for bombs and missiles and aircraft and just about anything that is battlefield necessary in the 21 st Century.

Click on each Headline to read

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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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