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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 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. |
 Quote of the Day
It was a big sales day over at the U.S. Mint on Monday. They sold 6,000 ounces of gold eagles...a very chunky 10,500 one-ounce 24K gold buffaloes...and an eye-watering 3,937,000 silver eagles. I'm guessing it will be a record January for gold and silver bullion coins at the mint this month.
- Ed Steer, CaseyResearch.com, January 8 2013
I don't deny that the commercials look for any convenient cover story to camouflage their continued manipulation of the gold and silver price and will use political developments, Fed announcements, employment reports or dollar fluctuations as a cover story to HFT takedowns at any point of the day or night. It is important to see these cover stories for what they are - flimsy excuses to obfuscate price-fixing. The COMEX commercials would use a weather forecast for partly cloudy skies and seasonal temperatures for a price smash if they had to. The cover story is secondary; getting the price set at a predetermined low level to induce technical fund selling is all the commercials are interested in and that is exactly what occurred this week. Just remember the correct sequence - the price is set first and then the trading volume comes in on the COMEX.
- Ted Butler, ButlerResearch.com
Yet this amazing bull market in gold stands alone, sneered at and almost hated. I've been in this business for over 60 years, and I've never seen anything quite like it.
However, I do think I know something about human nature. What I've learned about human nature is that it doesn't change. For instance, if a stock creeps up year after year, sooner or later the crowd will discover it -- and then they'll pounce on it, ultimately sending that undiscovered stock far above its reasonable price.
My belief is that somewhere ahead, the crowd will "latch on to" gold. Then, as disinterested in gold as they are now, the crowd will pile into gold with the same frenzy that overtook the storied "49ers" when they packed their bags, kissed their wives and kids good bye, and headed West in search of gold.
Gold is the only item that elicits both greed and fear. The greed factor is so well known that I don't have to explain it here. But the fear factor only arises when men (and women) see the "value" of their money disappearing. Nothing concentrates the mind as dramatically as seeing the purchasing power of one's hard-earned income and savings being ruthlessly destroyed.
- Richard Russell, Dow Theory Letters,January 2 2013
Bloomberg is reporting that Jack Lew, presently Chief of Staff of the Administration, is being named Secretary of the US Treasury.
It is only right in our present financial world that one of the primary manufacturers and distributors of OTC derivatives should be made Secretary of the Treasury.
God help us all.
- Jim Sinclair, In The News Today, January 9 2013
There is some very constructive news to report on silver. Our Stalker source called and he says the silver market is really drying up ... this includes bags of silver coins and silver scrap. The words he used were "disappeared" and "all around shortage."
This fits in with what we have been hearing out of London for some time ... that the physical silver market is very tight and that silver is difficult to buy "in size."
Markets can be very hard to gauge. This has been the case with silver for months re the feedback to us that the market is that tight, which ought to bode well for much higher prices. Hasn't happened. And that is the way it can go for longer than you think. THEN, one day the price begins to take off and never looks back. We are not there yet, but that point in time, THE TIPPING POINT, should not be too far off.
- Bill Murphy, LeMetropoleCafe.com, January 9 2013
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From David's Desk
There is an Exception to the Rule
Gold isn't an investment, gold is money. If gold goes up 100% or 150% you really aren't ahead, but you can keep up with rising prices.
That's the general perception of gold. But, as in all things, there is an exception to the rule. I'm going to tell you a story now, one that will show you how to take advantage of gold's rise in a way far more beneficial than merely "treading water."
In late 2004, we finished paying off our mortgage on our home in St. Louis Park. This was the first time in our 40-year marriage that we had no debt. We bought a bottle of Champaign to celebrate. No more house payments! This was great.
However, we were also very close to building a new house. Just a few months after being debt-free, I took out a million dollar plus loan to start construction on a new house in Deephaven. From no debt to over a million dollars in debt just like that. This was a real shock for Susan. She read Richard Russell every day and had a great deal of confidence in what he had to say - and Russell was saying the thing to do was eliminate all debt. How could we justify this? We had enough assets (primarily gold and silver, but for the sake of this discussion let's just say it was all gold) that could be sold and the proceeds used to pay cash for the new house. Why not follow Russell's advice, sell the gold, pay cash for the house and have no debt? That is the question I had to wrestle with.
At the time, gold was $500 an ounce. I would have to sell 2000 ounces of my gold in order to buy the house without a mortgage. But my belief in gold and confidence that the bull market had a LONG way to go convinced me that it was foolish to sell the gold at that time and that the debt wasn't a bad thing (sorry Russell).
Let's fast-forward to this summer and "assume" gold is $2,000 an ounce. That number makes the math easier. This summer I sell 500 ounces of gold and pay up the mortgage - not 2000 ounces that was required in the fall of 2005. Since I have a 10-year, fixed-rate, interest-only loan, I will have to pay it up or re-finance it in the fall of 2015. Sinclair's target for gold by then is at least $3,500. If I hold off until the note comes due, I should be able to pay up the loan with less than 300 ounces of gold, leaving me with a PROFIT of 1,700 ounces.
Yes, there was a monthly mortgage payment (all interest) that cost me $840,000 over the 10-years, but I was also able to write most of it off on my taxes. And of course there will be a 28% tax on the gain when I sell the gold, but all in all, I was far better off holding onto the gold for a decade, paying the interest on the loan and the taxes on gold's gain. If it takes 300 ounces to pay off the loan, factoring in the 28% tax, I have to sell around 400 ounces to also cover the taxes. The 1600 free ounces times $3,500 is worth $5,600,000. Now that's a pretty hefty profit that was generated by using the bank's money to finance our home.
I would say that I did just a bit better with the gold than treading water. But didn't I start this discussion saying that gold was just supposed to keep me even with rising prices? Yes I did, or more accurately that's what Richard Russell said. The exception to the statement is using low interest debt to lock in a price (in this case, of my home) and then pay it up with cheap dollars that you accumulate as gold rises. Now's a good time to take another look at Russell's chart, that I showed you in Monday's newsletter.
1974 to --
2001 -- 50.8%
2002 -- 24.8%
2003 -- 19.5%
2004 -- 5.35%
2005 -- 17.77%
2006 -- 18.36%
2007 -- 32.34%
2008 -- 5.14%
2009 -- 24.3%
2010 -- 29.8%
2011 -- 14.2%
2012 -- 9.6%
Do you see those percentages up there in that column? Do you know what they mean? They represent the year after year loss of purchasing power in Federal Reserve notes ("dollars") in terms of gold. You may not have noticed the loss of purchasing power in the dollars that you earn and own, because the annual loss has been subtle and gradual. The above are official figures. Actually, I remember buying one-ounce gold coins in 1974 for $70 a piece. Based on that price, that's a multiple for gold of 23.9 from 1974 to the present.
- Richard Russell, The Dow Theory Letters, January 7 2013
According to Russell's figures, since 2005 the dollar has lost over 150% in purchasing power. Put another way, the million-dollar home was purchased for $400,000. But how do you buy a million dollar home for $400,000? You do it like I did it. You use the bank's money instead of selling your gold, and then, down the road, you sell the gold and pay up the house with "cheap devalued dollars."
That's how I did better than merely staying even. The cost of the house, the bank loan, stays constant. Gold rises (because we are in a bull market, the rise is far greater than usual). The "profit," pays for the house. This "profit" is represented by Russell's chart. Actually, my gold rose from $500 to the current price of $1,650, which is a rise of 330%, not the 150% Russell's chart implies. I guess that's the "compounding" effect - the extra double is a result of compounding each years gain on top of the previous gains, for nearly a decade.
The moral of this story is that if you use the bank's money now, and hold onto your gold, you will come out way ahead. You still have to make the monthly mortgage payment, but each year, as inflation eats away at the dollar, that monthly payment is easier to make than the year before. The payment is fixed, it stays the same. I earn more every year, and the gold goes up more every year, but the pay-off number stays the same. I'm sure glad I didn't listen to Russell and pay cash for our Deephaven home. I'll deal with that in the fall of 2015.
Oh yeah, Russell also pointed out that he bought one-ounce gold coins in 1974 for $70 a piece. That's a multiple of 23.9 from 1974 to the present. In 1974 I sold a mint 1902 Luger Carbine with matching stock for $1,500. Six weeks ago one just like it sold for $51,750 at the Rock Island Auction. That's a multiple of 34.5 from 1974 to the present. This is a fair example that shows over a longer timeframe, gold does indeed hold onto its purchasing power.
Pictured below is a cased 1902 Luger Carbine with stock and accessories that will be in the next Rock Island Auction this May. Note the "American Eagle Crest" on the chamber. This one was meant specifically for sale in the U.S. It will take more than $51,750 to buy it. But doesn't it "look nicer" than a pile of 30 Gold Eagles?
The model 1902 Luger Carbine was a variation of the 4 �" Model 1900 Luger. It has an 11 �" barrel, adjustable sight up to 300 meters, a European walnut wooden forend and attachable matching shoulder stock. This turned the Luger into a rifle/carbine. The story goes that Georg Luger made it especially for Kaiser Wilhelm who loved to hunt deer on his estate, but had a crippled arm and a regular rifle was difficult for him to hunt with. The factory made 2,500 of this model and they were sold all over the world. It is usually the "center piece" in any high quality Luger collection.
Very high quality and rare collectables, like the Luger pictured above, do hold their value over time - like gold does. But you have to own "the best." The same can be said for ocean front real estate in desirable locations. If you store a chunk of your wealth in things, instead of dollars, you will avoid much of the stress of future inflation. Gold is more liquid than the Luger Carbine or real estate. That is one of its greatest benefits. Gold is money (really it is - the BIS recently gave gold the same Cass 1 status as dollars and will now be a favored bank reserve).
This lovely gun is a reminder to me just how much buying power the dollar loses over time. As the saying goes, it's easier to make money than to keep it. True - unless you "keep it" in gold or silver coins, high quality real estate or top-notch collectables. All of them will hold value over time.
Sincerely, David Schectman Miles Franklin Back to Table of Contents |
The Holter Report
 Technical Analysis
Published: January 9th, 2013 Technical analysis. Everyone knows what this is today. 20-30 years ago it was considered some sort of magic or even "black magic." It was revered as "the secret tool" and a way to gain an edge and make money. In some respects this was very true, technical analysis could be used to size up whatever market you were trading and get a picture as to oversold or overbought. Regular patterns would occur over and over again which gave you better "odds" while trading. This still holds true today but... to a much lesser extent and now nowhere near as good a predictive tool. So what happened? First, technical analysis became "popular" and once everyone knows something... it becomes no longer valid or less so. Secondly and more important in my mind, fiat or fake currency as it is causes bad decision making because the values themselves become skewed or altered. Investors make bad decisions because they cannot correctly judge risk. This is illustrated today by interest rates being forced lower by the Fed when market forces would have them much higher to compensate for "risk." A couple of examples are housing prices being as high as they still are (even after crashing) because the prices are made "affordable" by unjustifiably low interest rates. Another example is that PE ratios in the equity markets are higher than they should be because they are calculated against Treasury (supposedly risk free) interest rates. These are both "fundamental' investment decisions made by investors that technical analysis cannot take into account. Thirdly, when a government can create any amount of "money" that it wishes, it can use this money to "push" markets around. They cannot turn it completely upside down but they can surely "paint" and create false pictures. These false pictures are seen every single day as markets react 100% opposite to what common sense would tell you should occur. This can (and is every day) be done in the short term but cannot change the basic direction that Mother Nature would deem to be correct. These manipulations however can alter time frames by either postponing or speeding up moves in markets depending on what the manipulators deem to be for the "greater good." When I hear for example "Elliot wave this or Gann that" I just cringe. I cringe because two separate "experts" can read the same charts and come up with two diametrically opposed conclusions. They will talk all sorts of mumbo jumbo with long and detailed explanations to support their case. Both cases can sound logical at the same time which brings us back to "flipping a coin." I ask you, what's the difference between flipping a coin as to market direction or flipping a coin as to which "expert" is correct? There is no difference. You can of course follow the track records of analysts which can be helpful because some are more right than others or "recently" more right and have a hot hand. The problem with this is that their hand may all of a sudden go cold... for years to come. A couple of examples would be Elaine Garzarelli and Robert Prechter making great calls before the 1987 crash only to never be correct again. Prechter for example would have not only had you out of Gold since 1999, he would have suggested that you be short which would have caused your financial death long ago. I thought about coupling this piece with one on "fundamentals" tomorrow but I see no need as the topic would be quite short. Yes, I believe that you absolutely MUST use the fundamentals to create your big picture and then position yourself. BUT it is very important as to how you create your big picture. You can watch the cheerleaders on CNBC and Bloomberg, take the government economic reports at face value and listen to your stockbroker who is compensated to blow smoke up your butt, make you feel good and move your money "often." OR, you can use some common sense and believe "your own eyes!" For example, when you hear "numbers" released by the government that don't "sound" right... they almost surely are not. Just use the common sense that you were born with and be skeptical of what you hear and read. Investigate for yourself. Dig for the truth... and THEN formulate the big picture. If you want to use technical analysis using trend lines or go contrary to an overly bullish or bearish public, great, but don't go against the trend of your big picture. ...Which is why for the last 13 years I have NEVER tried to call a "top" in Gold. My "big picture" tells me that Gold should be now and will be multiples higher than where it is today so why would I worry or try to profit from a 10% or even 20% drop. THAT is a mugs game and one that technical analysts will assure you they have mastered!
Regards,
Bill Holter
Associate Writer for Miles Franklin
Read more Bill Holter Articles on the Miles Franklin Blog
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Gold Highlights
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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.
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GOLD/SILVER
Mark Lundeen...
Hi Bill
Here a BIG PICTURE charts that may brighten the Caf� members' day. The chart displays the 10 Wk M/A plots of the indexed values for US Treasury long-term yield and the price of gold; August 1971 =1.00.
Remember; bond prices and yields trends have an inverse relationship, when one goes up, the other goes down. Also, rising gold prices indicates a lack of faith in the monetary and economic system, while declining bond yields (rising bond prices) indicates rising faith in the finances of a nation's financial future. Look at the fiscal follies coming from Washington; does the US government deserve its current low yields? I don't see how it does. So, seeing gold's price rise above as bond yields decline (rising bond prices) means that someone is terribly wrong here, and it's not the people buying gold and silver.
Seldom mentioned is the countercyclical nature in the price trends for gold and bonds. For 30 years (1971-2001) rising gold prices were bad news for bond holders, and falling gold prices went hand and hand with rising bond prices. This was true until 2001 when gold's price trend reversed strongly upward, as bond prices totally ignored the change in gold's primary trend. Seeing gold's twelve year bull market rise far above its high of 1980 as bonds prices continues their bull market suggest that the bond market is unstable and in danger of a sudden, and violent reversal downwards.
Currently, the global bond bull market can best be described as a future killing field for private wealth. When the bond market begins its long awaited bear market (rising yields in my chart), it will signal the loss of control by the global political system to fight the forces of deflation in financial assets. Flight capital of more trillions of dollars, euros and yen than anyone of us can count will flood into the gold and silver markets, as well as the mining shares.
So be patient with the day-to-day tribulations we now endure in the precious metals' market; a day is coming in the precious metals and bond markets that will be studied for hundreds of years to come.
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Financial Manipulation? Hedge Fund Operations Are Affecting the Gold Market
The price of gold has been kept down by hedge fund redemptions. These redemptions will end in a week and after that a nasty hand that has been holding the price of gold down will be lifted. As we begin this New Year news is starting to trickle out demonstrating that hedge funds as a whole have had a horrid performance last year.
According to incoming data nine out of ten hedge funds failed to beat the S&P 500 last year. According to a recent report by Goldman Sachs their average return was 8% while the S&P 500 posted a 13% gain for 2012.
What is worse is that the third worst fund tracked by HSBC was the Paulson Advantage Fund. This fund of 19 billion dollars lost 19% last year due to bets that the European euro crisis would continue and that gold would rise. It is one of the largest holders of the SPDR Gold Trust ETF (NYSE: GLD) and has been forced to meet investor redemptions.
These redemptions have undoubtedly caused selling in GLD in the past few weeks and will probably continue to hold gold prices down for another week. John Paulson also runs a gold fund that gave its investors a negative 25% return last year too. Paulson is not the only hedge fund manager facing big losses being forced to sell to meet investor redemption requests.
Most funds though didn't generate huge losses; their program trading algorithms simply failed to beat the market. Ironically a few funds did beat the market last year by investing in places others wouldn't. Dan Loeb's Third Point hedge fund posted a 21% gain in 2012 by betting big on Yahoo and by buying Greek bonds. Pine River Capital Management also made 30% by holding depressed mortgage securities.
If you are a gold investor I do not think you should worry. Gold prices peaked out in the Fall of 2011 and since then have been consolidating in what I believe is a mere pause in a long-term secular bull market. The price of gold now has resistance at 1800 and support in the 1550-1600 zone. I think it will likely break out above its 1800 resistance level later this year, probably in the summer, and then begin a new bull run.
I know it's easy to get anxious and worried when you see gold just slug around. I want you to know that much of the recent selling from hedge funds will soon be over. That will take one force of selling in gold out of the market. For disclosure purposes I have a position in GLD. We have seen several similar periods of consolidation in this secular gold bull market that have lasted well over a year. This one will come to an end the same way they did - with gold prices reigniting and leaving those that doubt the power of gold behind.
http://www.globalresearch.ca/financial-
manipulation-hedge-fund-operations-are-affecting-the-
gold-market/5318241
***
Dave from Denver...
Wednesday, January 9, 2013
The Gold Bull Stage 2: Here Come The Pensions
Pension money invested in bullion is 'peanuts' at the moment...If 1 percent of their total assets shift to the metal, the gold market would explode. - Itsuo Toshima, advisor to Japanese pension funds (Bloomberg, link provided below)
I have maintained since 2002 that the precious metals and mining stock market would eventually erupt into bull market frenzy that would at least rival, and likely succeed, the bull market frenzy we saw in tech stocks. Part of what will fuel this frenzy is the enormous flow of institutional investor money, globally, that will eventually find its way into the precious metals and mining stock sector. Because the amount of potential capital from institutions from just a small increase in sector allocation - relative to the total size of the precious metals/mining stock sector - the price effect is potentially enormous.
There are a lot of solid fundamental reasons for this. But from a technical perspective, the total size by market capitalization of the gold, silver and publicly traded mining stocks combined is absolutely minuscule in relation to the total size of global investible institutional assets. To put this in perspective, the market cap of each of the top 15 stocks in the S&P 500 is individually larger than the total market of the entire publicly traded mining stock sector (1). Think about that for a minute. Apple has a bigger market cap than every single mining stock globally combined.
(1.) I get this number by taking the total market cap of all mining stocks globally as of March 2009, calculated by Ibbotson & Assoc of $150 million LINK, and grossing this number up by 25%, which is a blended rate of appreciation between the XAU and the Canadian Venture Exchange, which is the commonly accepted benchmark for junior mining stocks. The market cap of the 15th largest stock in the SPX is $204 million: LINK.
(2.) Interestingly, if you think about it, to what extent can Apple possibly achieve even more market penetration and customer-base growth over the next 5 years? It is likely that Apple's market saturation and ability to innovate and create demand has plateaued. At very best, its growth curve has largely flattened. The ole law of diminishing marginal returns - yes, it's a bona fide law of economics/nature - had to get its claws into Apple eventually. Apple stock happens to be the largest holding across all hedge funds.
Now compare that to gold, silver and mining stocks. This visual should help:
Compared to Apple on a relative basis, the "market penetration" into the precious metals sector by institutional investors is quite tiny and there is significant room for institutions to move into and saturate the precious metals sector.
Now, compare this global asset allocation to the last bull market peak for precious metals back in 1980. Back then precious metals represented 6% of total global assets invests. In other words, the amount of global cash invested in precious metals was 600% greater than it is today. By this measure alone, not only is the precious metals sector unequivocally not in an investment bubble, but it is absurdly undervalued.
I bring this up because it now appears as if the precious metals sector is starting to get the attention of the big institutions. Certainly everyone is now aware that Pimco's Bill Gross was quite vocal in advocating gold during 2012, including his latest comments: LINK
Pimco manages about $2 trillion. The total market value of ALL of the gold held at the Comex, including the customer gold that is not available for delivery, is $18 billion. If Pimco were to allocate 5% of its asset base to buying physical gold, that amount ($100 billion) is 5 times greater than all of the gold held at the Comex. That's just one U.S. institutional investor.
Interestingly, I saw a story posted on Bloomberg late last night about the movement of Japanese pension funds into gold:
Japanese pension funds, the world's second-largest pool of retirement assets after the U.S., will more than double their gold holdings in the next two years as the new government pushes for a higher inflation target, according to an adviser to the funds.
Here's a link to the article: Gold Lures Japan's Pension Funds
Japan's new Prime Minister has explicitly stated that he will implement whatever monetary policy is required to stimulate a 3% inflation rate. The pension funds are responding in kind by moving into gold.
This is just getting started on a global institutional investor basis and it's in its nascence in the United States. Japanese pensions have $3.36 trillion (U.S. dollars) under management. This number in the U.S. is over $20 trillion (Rockefeller Foundation).
So Pimco alone can wipe out the Comex 5 times over with just a 5% allocation to gold. Consider that the total market capitalization of all publicly traded mining stocks is around $200 billion, with the top 5 stocks comprising a large portion of this. Now run the scenario if just U.S. and Japanese institutional investment managers allocate 5% of their portfolios to gold and mining stocks.
You can see where this analysis is headed. This is not my original thinking, as I vividly recall James Dines (The Dines Letter) laying out the case for this sector back in mid-2001, and stating that the eventual bull run in the precious metals/mining stock sector would dwarf the bull run we saw in internet/tech stocks.
The bottom line is that, typically, with big institutional money managers, an investment trend starts slowly and then happens all at once. It is a herd of cattle that you want to be positioned aggressively in front of before the stampede starts. Based on the murmurs being made by the money managers like Bill Gross and by the Japanese pension investors, I would say that the cattle are looking at the open and getting ready to make a run for it.
Subscribe to LeMetropole Cafe for the full article.
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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 nshermeta@northlandsecurities.com.
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.
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The Reasoning Behind Basel Three Liquidity Requirement Delays
January 9, 2013, at 11:26 am
by Jim Sinclair
My Dear Extended Family,
The entire reason for the agreed delay of the Basel Three liquidity requirements is the Western financial system's balance sheets. They are cartoons because of FASB blessing of debatable values for paper assets such as OTC derivatives with absolutely no market relationship.
Put succinctly, the Western world financial system simply does not have the ability in terms of real liquidity to meet Basel Three requirements. That is the entire story. The tomes written on this should be but one line - bankrupts cannot meet liquidity requirement now or in two years from now.
Add this to the news that a derivative dealer out of Citi has been proposed as Secretary of the US Treasury and my conclusion is that in truth, "Father forgive them because they (our esteemed leaders) really do not know what they have gone and done."
Respectfully,
Jim
_______________________________________________
In The News Today
January 8, 2013, at 10:12 am
by Jim Sinclair
Jim Sinclair's Commentary
You know there really is no hope for a return from these exercises of financial Sodom and Gomorrah. Actually Sodom and Gomorrah was child's play in comparison.
It is traditionally said that when the world is at its worst, God, the Force, whatever you believe in, sends a representative to protect the oppressed.
It is so bad it cannot actually get worse. What we need is a second coming to throw these money changers out of the temple. Clearly nothing else is going to do it.
Secret Goldman Team Sidesteps Volcker After Blankfein Vow
By Max Abelson - Jan 8, 2013 12:00 AM E
Sitting onstage in Washington's Ronald Reagan Building in July, Lloyd C. Blankfein said Goldman Sachs Group Inc. had stopped using its own money to make bets on the bank's behalf.
"We shut off that activity," the chief executive officer told more than 400 people at a lunch organized by the Economic Club of Washington, D.C., slicing the air with his hand. The bank no longer had proprietary traders who "just put on risks that they wanted" and didn't interact with clients, he said.
Lloyd Blankfein, chairman and chief executive officer of Goldman Sachs Group Inc., speaks to the Economic Club in Washington, on July 18, 2012. Photographer: Joshua Roberts/Bloomberg
The Princeton crew team throws their coxswain Geoff Adamson into Lake Quinsigamond after winning the Grand Final at the Eastern Sprints in Worcester, Massachusetts. Photographer: Tom Herde/The Boston Globe via Getty Images
That may come as a surprise to people working in a secretive Goldman Sachs group called Multi-Strategy Investing, or MSI. It wagers about $1 billion of the New York-based firm's own funds on the stocks and bonds of companies, including a mortgage servicer and a cement producer, according to interviews with more than 20 people who worked for and with the group, some as recently as last year. The unit, headed by two 1999 Princeton University classmates, has no clients, the people said.
More...
***
Jim Sinclair's Commentary
Not exactly a traditional sign of a silver bear market!
Highest Ever One-Day Sales for American Silver Eagles?
January 7, 2013 By Michael Zielinski
Today, January 7, 2013, the United States Mint began accepting orders from authorized purchasers for 2013-dated American Silver Eagle bullion coins. The opening day sales tally of 3,937,000 coins seems to represent the highest one-day sales total in the history of the program.
In recent years it has been typical for the Mint to experience the strongest sales for Silver Eagle bullion coins on the first day of availability for newly dated coins. Last year, orders had been placed for 3,197,000 Silver Eagles on the first day of availability for the 2012-dated coins. In 2011, opening day sales had measured 2,085,000 coins, and in 2010 opening day sales had measured 2,440,000 coins.
For the years 2009 and prior back to the start of the program in 1986, none of the monthly sales totals have exceeded today's one-day sales total of 3,937,000 coins.
Today's apparently record breaking one-day sales are driven by the typically high demand for newly dated coins as well as pent up demand following the unexpected sell out of 2012-dated Silver Eagle bullion coins on December 17, 2012. This sell out created a three week period during which no Silver Eagle bullion coins were available for authorized purchasers to order from the Mint.
During 2012, the Mint had sold 6,107,000 Silver Eagle bullion coins during the full month of January. Annual sales had reached 33,742,500 coins.
More...
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Yesterday in Gold and Silver
January 8 2013
You may remember a story from very late last week where Dennis Gartman was trashing gold...as he just loves to do, every time the opportunity presents itself. Well, reader Denis Roch sent me the following e-mail yesterday...and I thought it worth sharing..."If you want to see what Dennis Gartman has returned to those who invested in his Horizons Gartman ETF [HAG] have a look at HAG.TO. It's down 20% since its inception in the 1st quarter of 2009." [Good work, Dennis. Just think how much your investors would be ahead if you had invested in physical gold and silver instead... ;-) - Ed]
Here's a chart courtesy of Washington state reader S.A. that he 'borrowed' from somewhere...and it requires no further words of explanation, as the title says it all.
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The Wrap
January 9 2013
Here are the six-month charts of both gold and silver...and the obvious engineered price declines on Thursday and Friday have both these precious metals back below their respective 200-day moving averages once again. It will be interesting to see how long they are kept there.
Prices didn't do much in Far East trading during their Wednesday, but have moved up a bit now that London has been open for a couple of hours...and volumes are about average for this time of day in both metals. The dollar index is chopping sideways.
But, as always, the price action that really matters happens in New York...and I expect that will be the case again today.
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The Top 7 Money Trends for 2013
FutureMoneyTrends.com believes that these 7 trends will have the biggest impact on your money opportunities for investment.
7. Hyper-gridlock in D.C. If you think the last few years have been ugly, wait until you live through 2013. Congress is in a non-election year and the President is in his final term, so both sides will be bolder than ever when it comes to drawing a line in the sand. Post-Fiscal Cliff deal the IMF and Moody's have come out with statements, Moody's saying, "Medium term actions may be needed to support Aaa" and the IMF says, "More remains to be done on U.S. public finances." The odds of anything being done about our fiscal mess is probably pretty low, since the entire revenues of the U.S. pay for just our entitlements and interest on our debt. Borrowed money goes towards everything else in the Federal Government including the entire defense budget. Fixing the U.S. spending problem with the very people who advocate for more government and cherish their pet projects is probably impossible. Expect significant volatility during the debt ceiling increase and the new fiscal cliff deadline in 60 days, both these political talks will create excellent opportunities to trade as well as buy in on any big dips of companies you may be watching.
6. Recession in the U.S. to be official. We know that for many of you reading this, you are probably asking when did the 2007 recession end. Well officially according to National Bureau of Economic Research, the recession ended around June of 2009, even though for those of us living in reality, the recession never ended. Food stamp use continues to make new all time highs, with 1 million people added in the past 2 months, coincidentally the same amount of people who have dropped out of the workforce during the same time frame. Gallup's polling information continues to give us a real unemployment number in the teens with it being steady at 20% when you include everyone who wants a full time job that doesn't have one. With that said, even the mainstream media and economists will admit this year that the U.S. is in a new recession, perhaps even stating that it started in late 2012.
FutureMoneyTrends.com sees too many economic indicators slowing and several strong catalysts to send a shock wave throughout the economy like the debt ceiling debate. A recession being official simply means more headwinds to the propaganda machine trying to get us to all buy mutual funds, max out 401k's, and steer clear of gold. This new recession could slip into a currency crisis, so be careful because things may not play out like they have in past recessions. If the dollar begins to fall, we may see stocks continue to rally during hard times on Main Street.
5. A new downgrade in U.S. credit rating by S&P and perhaps Moody's. This week Moody's fired a warning shot to the U.S. Treasury, we believe if Moody's plans to remain credible, they will need to downgrade the U.S. this year. Probably in the next 90 days during the debt ceiling crisis, if this happens, expect a massive shift to the precious metals as the world begins to acknowledge that the U.S. will have to print to keep interest rates artificially low.
4. China Bubble begins to deflate, China currently has 65 million vacant units of real estate, these cities have been rightly dubbed, ghost cities. China has also been stockpiling commodities; this growth is now on edge due to China's wage dilemma. If China allows wages to rise so that their citizens can begin to purchase a lifestyle of a middle class family, China may as a result lose jobs to lower wage countries like India and other parts of Asia. However, if China continues to keep wages low, they will basically be stuck building an empire that no one can afford to live in. To top it off, China has a long-term demographics problem, probably the worst the world has ever seen due to China's 1 child policy. China over the last generation has created a population of 4 grandparents, 2 parents, and 1 child. China in the next 20 years will have more old people than the entire U.S. population. As t he world slows down, China will potentially see the worst of the downturn as jobs move out of China and demand for Chinese goods collapse in the West as those nations experience depressions and dramatically lower incomes from austerity.
3. Iran to announce enriched uranium to produce a nuclear bomb. The U.S. and Israeli window of prevention is likely closing in the next few months, in our opinion the world is going to learn how to live with a nuclear middle east. We won't see the arms race as many have predicted since Saudi Arabia knows they have the U.S. military on stand by. We would expect an initial bump up in oil prices but nothing sustainable. However, we can expect the media to go into a panic for the first 72 hours, maybe even some verbal threats from the west.
2. A Silver Rush in 2013: As attention turns to gold with the debt ceiling debate, the average person who wants to protect themself will buy silver. Already we are seeing the same dollar amount of silver purchases as gold, Eric Sprott recently pointed this out in his latest article (which everyone needs to read), it is important that we all profit together off of this great trend of the decade!
FutureMoneyTrends.com likes silver anywhere near the $30 level, if it drops below $30 we'll buy call options to maximize short term profit, if it remains around $30 we plan to continue a regular accumulation of the physical metal as well as mining shares.
1. The #1 Money Trend is likely to be the rise of Uranium. In fact a supply shortage may begin in late 2013 that will put uranium in a bull market for the next several years. The big catalyst for 2013 is the end of an old Cold War treaty between Russia and the U.S., this treaty is currently providing about 24 million pounds (16% of the entire market) of uranium per year to the market from decommissioned nuclear weapons, this treaty expires at the end of 2013. The price for uranium is down 30% since Fukushima and nearly 60% since hitting an all time high in 2007. These low prices have caused BHP Billiton, Paladin Energy, and Cameco to all announce a reduction in investment or production in the uranium sector.
Buying at these levels where many companies aren't even profitable due to the depressed uranium price reminds us of early last decade when silver miners were mining silver for $5 and selling it for $4.50. Obviously this type of distortion in the market can't remain for too long, silver saw a rally of 1,000% since $4.50. Especially when demand is set to rise consistently over the coming decades; India plans to increase its nuclear power by 200% over the next 25 years, China currently has 26 nuclear reactors under construction, in Russia 10 are beginning to be built with 14 in the planning phase. This is a big trend, we don't expect prices to skyrocket tomorrow, but we do feel this is a safe level to begin an accumulation of Uranium producers.
Don't forget to pick up our 2013 Silver Report; this is the last week we will be offering it. It includes 9 Silver Stock Suggestions as well as Technical Analysis.
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David's Mail Box
Hi Andy,
Tell your dad when he has a battery power issue, to just simply remove the batteries, rub the ends with your thumb to "clean" the surface, and replace. It's that simple. I've done this on my TV remote about 4 times now; they are the original batteries from manufacturer with TV, approximately 7 years old.
Long time reader of both David and Andy blogs.
Thanks for the knowledge you all share,
John S
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Andy,
I just read through portions of today's newsletter. Please let David know that he should be able to return that mouse to the Apple store, explain the story to them and they should take it back no questions or only charge him a restocking fee.
Thanks,
Brant B
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Mr. Schectman,
We were all waiting for QE3 so the metals fly. I rebooted my pc but nothing. Then QE4EVER came and I rebooted my pc again. Then I bought a new laptop but the metals are still down.
Why everyone was so excited about QE3 and why it did not work? Sinclair said it takes 2-3 months to see the effect of it.
Thanks
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David,
That was quite a war story with neat coincidences. My brother was a P-38 pilot in the Pacific. I made it as far as Norfolk, VA in the Navy. Korean Conflict. Afraid I didn't contribute much. I do like to hear these stories, even though they are a bit far afield from your teachings.
Thanks for your website.
Richard M.
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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 are approaching $200 million a year in precious metals sales. We are rated A+ by the BBB. We are recommended by many prominent newsletter writers including Doug Casey, David Morgan, Ron Hera and LeMetropole Caf�. Our reputation for service, education, quality product and pricing is outstanding. 
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