December 19, 2019
The Miles Franklin Newsletter
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From The Desk Of David Schectman
Notably Dallas Fed's Kaplan hinted briefly in his speech this morning that we should not assume the dollar will be the reserve currency forever.

From the beginning of this century to last week, federal debt has multiplied four times. It was less than $6 trillion in 1999. Now, it's over $23 trillion. No nation... nowhere... no time... no how... has ever been able to spend more than it takes in forever.
But national bankruptcy is not just a matter of money. It's much worse. That $17 trillion in borrowed money (most of it miraculously conjured up out of nowhere by the Federal Reserve's ultra-low rates and its quantitative easing programs) has turned America's institutions into greasy swamp pools of degraded, disgusting, Full-Retard degenerates.
Congress, for example, now presides in solemn deceit over an "impeachment." But rather than the dignified legal proceeding that the Constitution called for, with members seriously weighing the evidence and pronouncing judgment, the whole thing has turned into just another partisan clown show. – Bill Bonner
The potential in gold is just mind-boggling. The break out should occur by March or April. A massive short squeeze is coming that can send gold to $1,800. Look to add 35% to 50% to your gold and silver portfolio by then. The stock market will experience a steep correction by then as well. 
On a technical basis the compressed range which contains a series of lower highs, and higher lows since September 3 when gold reached this year’s high of $1565 has created a bullish flag or pennant formation. – Gary Savage
According to Investopedia “Bullish flag formations are found in stocks with strong uptrends. They are called bull flags because the pattern resembles a flag on a pole. The pole is the result of a vertical rise in a stock and the flag results from a period of consolidation. The flag can be a horizontal rectangle, but is also often angled down away from the prevailing trend. Another variant is called a bullish pennant, in which the consolidation takes the form of a symmetrical triangle. The shape of the flag is not as important as the underlying psychology behind the pattern.”

The basis to this pattern is that as the range compresses energy builds until it reaches the apex of the pennant, at which time it will break strongly to the prevalent trend direction. In the case of gold this would signal a strong break to the upside. – Gary Wagner
Not only do investors face continued financial market uncertainty, but Dunn noted that because interest rates are so low, they don ’t offer the same level of protection compared to previous years.

“The fundamentals are in place for higher gold prices in 2020. All it needs is a spark to ignite the new rally,” he said. 

Although trade tensions between the U.S. and China have eased, Dunn said that this will still be an ongoing issue in 2020. He added that the phase one agreement recently proposed is “underwhelming.”

As for potential headwinds for gold, Dunn said that the lack of inflation could weigh on the precious metal next year. 

“Right now, we are seeing pockets of inflation but if you look at the economy as a whole, you will have a difficult time making an argument that inflation is out there,” he said. “For gold, if price are going to be sustainable at $1,700 or $1,800, then you are going to need to see persistent inflation.”

While Dunn is bullish on gold, there is another precious metal that he is keeping an eye on: silver. 

“When at valuations in the precious metals space, I think you need to pay attention to silver,” he said. “If we don ’t see a recession in 2020 then I think silver prices could push higher on renewed industrial demand.” 

Dunn said that he sees silver prices pushing to $18 to $18.50 an ounce by the end of 2020. – Neils Christensen

I’m not an old fool, gold will provide ultimate hedge not Bitcoin
As the Fed expands their balance sheet in the form of “unofficial” quantitative easing, inflation will rise, which will push gold prices up.

I think the price of gold is going up next year, so I want to own it, but I don’t know how much is going to go up, but I do believe that once we really start to take off, gold can go from $1,500 to $2,000 very quickly. – Peter Schiff

Corruption is warping America's institutions.
Going after Donald Trump, the FBI turned itself into a partisan, lying, Soviet-style  Cheka . The military has become fat and incompetent, pushing trillion-dollar wars only to reward its crony suppliers. The press has made itself into a craven shill for the Deep State, never even questioning its self-serving antics. The Republican Party has totally surrendered its old, conservative standards to crackpot theories, get-rich promises, and jackass leaders.
And the trade war has opened up a whole new section of low-lying Swamp... with lobbyists now making thousands of petitions to the feds to get their companies exempted from tariffs. – Bill Bonner
This game of chicken between the Managed Money and Big 8 commercial traders in gold -- and also in silver, is coming ever closer to some sort of resolution, as their respective 50-day moving average continue to creep lower. They are within a dollar or so of gold's current price -- and 23 cents in silver.
It still remains to be seen if these two precious metals will be allowed to rise above their respective 50-day moving averages, or is there still an engineered price decline in our future before that is allowed to happen? At the moment, these moving average are being well defended...particularly in gold.
Looking ahead, we've seen 'da boyz' show up in the very thinly-traded market between Christmas and New Years in prior years -- and we're only a week or so away from finding out if this sort of event will be precipitated before the 2019 calendar year draws to a close. – Ed Steer
David's Commentary (In Blue)

We now find ourselves boxed into a corner and there is simply no way out. The Fed can’t allow the big NY banks and hedge funds to fail - yes, they are too big to fail - yet the Fed’s policies that support them - ultra-low and falling interest rates, QE and REPO - all but guarantee it goes nuclear down the road. I can’t imagine any scenarios whereby the stock market, the economy and the dollar emerge intact once these wreck less policies lose effectiveness. 

Put another way, the Fed is fighting to keep the economy from sinking into a massive debt-based deflation by adopting policies that lead to an even more destructive inflationary outcome. How can you solve a debt problem by adding trillions of dollars more debt to keep it afloat? How can the dollar survive such a policy? That’s a logical question that I keep asking myself and so far, the only answer I come up with is - it has so far. Yogi Berra says, “It ain’t over until it’s over” (he said that about the 1973 pennant race but it applies here too).

I’ve had a front row seat in all of this madness for the last 37 years and I have learned several things, all of which surprised me. I learned that things take longer (much longer) to happen that I thought possible. I learned that the people behind the scenes, who really run the country and the markets, always find a way to keep kicking the can down the road. There are no limits to which they won’t go to hold onto their power and wealth. No matter whom we vote into office, nothing really changes. The rich get richer and our precious freedoms keep slipping away. Half the country feels that Obama was a disaster. The other half feels that Trump is a disaster. I think that it’s all an illusion, they all are a disaster. 

It’s easy to accept the madness - as long as we are making enough money to live a comfortable life style. But fewer and fewer people are able to do it now. 

The middle class continues to shrink and the potential for the young people who are just entering into the work place, including college graduates who enter the work force with $100,000+ in debt, and a BA, will be doomed to the service economy where owning their own house and having financial freedom will be completely out of reach. Yup, all the economic promises that used to go with a college degree for a majority of the recent college graduates are just a pipe dream. The troubling thing about this, for people of my generation (baby boomers), is that a majority of the young people, faced with the reality that they are never going to get their “fair” share of the pie will join the Progressive movement and demand that the government give it to them as if it is a birth right. Well, nothing from the government is free. They want free tuition (and repudiation of their college debt), they want free health care, they want a guaranteed income. Just listen to the rhetoric from the Progressive branch of the Democratic Party. Who will pay for all of this? We will, the people who have worked for the last 50 or more years to become somewhat successful. Sounds to me like higher taxes and reduced buying power of the dollar. Sounds to me like they want to pull themselves up by pulling my generation down. I mean they are blaming our generation for the mess they find themselves in. Yes, it was my generation, but just a small part of it, the people who make the policies that created the mess in the first place. People like the ones who run the Fed and who passed the laws that favor the One Percent. 

When I was just getting started in the mid 60s, you could retire and live like a king with a million dollars. Now days, if you are retired and want to live a moderately comfortable life style, a million dollar might last you a decade, if you were frugal. A wealthy friend of mine told me some years ago that the most important thing is INCOME. Even if you have set aside a lot of money, you need income. It used to be, before the Fed crushed interest rates, that you could live off of the interest income on CDs and money market funds and bonds. Not any more, which means you must “speculate” in the stock market where for every winner there is a loser. Yes, I know, many of you have made a lot of money in the last decade, but how many of you will give it all back in the next decade? From what I read, the “insiders,” those in the know, are already selling their stocks. It’s the “retail buyer” who is the last to know.

Being rational, and a history major, it seemed like owning a lot of gold and silver would not only pay off handsomely, but was necessary to side step the inevitable inflationary consequence that would result from decades of reckless deficits. I still believe that I got it right, but apparently I was very early. Not that I am complaining, because who really wants or needs another depression or hyperinflation? 

Susan and I watched The Joker last night. If Joaquin Phoenix doesn’t take home an Oscar for Best Actor then the award is farce. It is a dark film and it focuses on many of the problems we are facing right now. Corruption, hatred of the rich, mobs in the street. It fits perfectly with Gerald Celente’s views of what’s heading our way in 2020.

Gerald Celente was interviewed on Kitco by Daniela Cambone. This is a terrific interview. Celente is a street smart tough Italian who never pulls any punches and tells it like it is. Here are the three major trends for 2020 ---
2020 will be the year of New World Disorder; anger from income inequality; President Trump winning by default. The theme is disorder and chaos. How about Bolivia, how about Peru, how about Columbia, and Venezuela and Argentina. How about Lebanon, how about France. Then you take a trip over to Hong Kong, it’s lovely over there. Go to Zimbabwe, go to Cameron, go around the world. People are up in arms, the world’s on fire. And what’s it all about mostly? Income inequality, corruption and violence. I’ve never seen anything like this before and I’ve been doing this for 40 years. It’s the New World Disorder. No one knows how to deal with this and it’s only going to get worse as economic conditions worsen. The violence, the corruption and the crime rates are going to increase.
The facts are there. People are taking to the streets like we’ve never seen before. 

How about just last Thursday the Fed announced they’re going to shovel another three trillion bucks into the repro market between December 16 th and the middle of January. And it’s not going to the banks, it’s going to the trading houses. These people are addicts and they need their money to gamble and the Federal Reserve are the dealers that are giving the money junkies what they want.

They’re going to lower interest rates. This time next year we will see negative interest rates here in America. Trump is going to do everything he can to get elected.

Globally, real estate is overvalued and as the economies slow down real estate is going to tumble. It’s happening now in Vancouver and Australia. Cities around America are overbuilt. In New York real estate is flat. The global real estate collapse, now taking place, will hit America in 2021 because they are going to prop up the markets until after the election. Trump is in charge and if you don’t think he influences the Fed you should read history. They are going to do everything in their power to boost the economy prior to the election. 

Trump is going to win the election by default. The default is the default of the Democrats. They haven’t put up a candidate that can beat him. It’s about the swing states. Bernie Sanders and Elizabeth Warren aren’t going to win the swing states. The impeachment process will hurt Biden because people will see that he did a dirty deal to get his boy hooked up in the Ukraine. Also you’re going to see a peace deal with Afghanistan, and a peace deal with North Korea and we did another trade deal with China.
If there is any kind of conflict in the Middle East oil prices will go back up and that’s the end of the global economy. 

Gerald, You said you’ve never seen anything like this. So how are you protecting yourself with your assets? What are you doing? Speaking for myself, it’s gold. Gold is a safe haven asset. You saw what happened earlier this year. Gold was rising until the Federal Reserve started pumping money into Wall Street. That is where money is going. It’s going to the traders. When that artificial propping stops, gold is going to go back up. Gold to me is the ultimate safe haven asset.
Here are a few more articles that I think you should read.
The days trickle down. To a precious few.
But the dots explode into a whole galaxy of known unknowns... along with a universe of unknown unknowns... one of which is sure to blow up.
We saw on Monday that corruption is warping America's institutions.
Going after Donald Trump, the FBI turned itself into a partisan, lying, Soviet-style  Cheka . The military has become fat and incompetent, pushing trillion-dollar wars only to reward its crony suppliers. The press has made itself into a craven shill for the Deep State, never even questioning its self-serving antics. The Republican Party has totally surrendered its old, conservative standards to crackpot theories, get-rich promises, and jackass leaders.
And the trade war has opened up a whole new section of low-lying Swamp... with lobbyists now making thousands of petitions to the feds to get their companies exempted from tariffs.
When the Money Goes
When the money goes, everything goes. The feds sent the dollar on its way in 1971. It was then that they took off the golden handcuffs. Since then, the dollar has been picking everyone's pockets. Compared to the pre-1971 dollar, it's lost 98% of its value.
And the Federal Reserve soon degenerated, too. From the stern and sober guardian of America's money - which it was in former chair Paul Volcker's day - it has become a reckless enabler of Deep State debt, funding extravagant deficits and dangerous delusions. The link to it is  here .
Kitco News
Silver is looking to play catch-up to gold and potentially outperform the yellow metal next year, according to analysts, who are eying the U.S.-China trade progress and silver's improving demand as key drivers.

Both silver and gold had a stellar year despite dropping off its 2019 highs reached this fall. During the last 12 months, spot gold rose around 19% and silver advanced 16.9%, according to Kitco's aggregated charts.
Spot silver prices reached their 2019 peak at the beginning of September, trading above $19.60. At the time of writing, spot silver was at $16.99 and March Comex silver was at $17.07 an ounce.
Strategists at TD Securities see silver's potential peaking at around $20 an ounce next year. "Silver [could] jump to $20/oz by the end of 2020 in response to its firming fundamentals and spillover investment demand from the yellow metal."
Bubba Horwitz
It seems like just a week ago that we were writing about  gold  and  silver  trying to reverse directions. Here we are once again -- the metals are attempting to change trend direction and go higher. Is the selling pressure over?

Obviously, there are no guarantees that the direction in gold and silver will change here; however, the patterns are trying to change. Both are building ascending patterns into the key resistance levels -- gold at $1,490 based on February futures and silver $17.20 based on March futures.

For now, we remain short and have added to our positions knowing that the metals could break out to the upside. However, we need to see proof that the pattern has changed. The clues are there but price needs to prove it. Until further notice, we are short and will remain there until the price tells us to change.
Zero Hedge
In my previous post, from March 2018, on the audits of U.S. official gold reserves, I have exposed that during the audit procedures of the U.S. official gold reserves from 1974 through 2008, repeatedly audit staff deviated from the auditing protocol, while internal control meant to prevent this was failing. Many audits and assay reports have been destroyed. For decades a significant share of the metal was excluded from verifications for no apparent reason. And, the U.S. government went to great lengths in withholding information and spreading false information about the audits, among other findings in documents obtained through Freedom of Information Act (FOIA) requests. All in all, these findings made me question the integrity of the auditor.
After my last publication, I have obtained more documents from the U.S. Treasury through FOIA requests, which expose another falsehood that puts the auditor in an even more peculiar position. In conflict with the audit protocol, the permanent seals of the vault compartments have been broken, time and again. In addition, the auditor has lied about these events, and when confronted, it's unable to explain its actions. By now, I have lost faith in the auditor fully.
It's been a very long investigative journey that has led me to make bold statements, such as the ones above, about the auditor of the world's largest gold holding. I wouldn't claim anything of this magnitude if I didn't thoroughly do my homework and research every single possibility that could have caused the auditor to have accidentally spread inaccurate material, including asking the auditor for an explanation. 
Simply put, Powell and Company are playing with fire . When you do that, you eventually get burned ...

" Own risk assets...everywhere... everywhere " says Embark Group's CIO Peter Toogood, exclaiming that " this is nothing to do with fundamentals anymore, fill your boots, why not ?"
After The Fed entirely flip-flopped from last year, the clearly frustrated manager notes the facts behind the so-called market, " flooding the repo market with $400, $500 billion from The Fed to stop it collapsing after it reversed course massively from last year... "
" ...we'll just keep pumping... and we'll just keep pumping... and it's not QE they tell us, definitely not QE... and its worked for the last 8 years so we'll just keep pumping more... "
It's quit simple, Toogood notes, " all CTAs have gone long, most macro funds are long, the biggest engines in London are as long as they can be... and volatility is on the floor... "
" Just keep going... " he chides sarcastically:
" ...until you don't, until the music stops... I'm being incredibly flippant but for a very good reason... there is no logic to [buying risk assets like equities] other than to chase the gilded lily... it's nuts! "
The anchor attempted to get the conversation back on track, by mentioning earnings, to which Toogood scoffed - " Earnings! Earnings? Are they relevant? "
Toogood then took aim at the farcical " phase one " trade deal with China that " doesn't actually mean anything " and warned that the next year will be full of " phase two talks are going well " jawboning.
This is not reality, " the world was slowing down long before this trade deal became the biggest issue ."
It's bonds that make more sense, he concludes, reflecting the massive total debt in the world and the consumer being loaded with personal debt as a tamper on overall economic growth.
" It's Insane... but it's gonna carry on because The Fed is absolutely in hock to what they created... which is a monstrous beast of over-inflated valuation ." The link is  here .
Ed Steer
Here are  silver analyst Ted Butler 's thoughts on this from his mid-week commentary on Wednesday..."As far as what to expect in Friday's COT report as of yesterday's cutoff for the reporting week, trading volumes have not been heavy (due the holiday season I believe), but there has been an upside price tilt over the reporting week, with silver ending the week higher by more than 35 cents and gold up by $12 or so. Gold did penetrate its 50 day moving average on a number of occasions during the reporting week, but has yet to close above it. Gold has upwardly penetrated its 20, 30 and 40 day moving averages on a closing basis and silver likewise for its 20 and 30 day moving averages.
Total open interest for gold increased by a hefty 27,000 contracts over the reporting week (4,000 in silver), but I can't tell how much may have been spread related. There would appear to have been managed money buying and commercial selling in each."
I'm still wondering about the poor performance of the precious metal shares on Thursday. In the past, this has sometimes been a precursor to an engineered price decline, as the in-the-know traders would be selling their earlier-purchased shares for a decent profit and/or shorting them in anticipation of repurchasing them at a far cheaper price once the deed had been done. Whether this proves to be the case or not, it's what's top-of-mine right now -- and I certainly hope to be proven wrong.
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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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