November 11, 2019
The Miles Franklin Newsletter
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From The Desk Of David Schectman
What’s wrong in the financial world with the longest expansion in history and the Fed starting QE (money printing) again? Griffin says, “We are living in a system of the banks, by the banks and for the banks, and that is the reality. . . . They see that the wheels are coming off. . . . The system of inflation in which we live cannot go on forever. . . . All systems of exponential growth always collapse. They come to an end at some point, and it’s hard to tell exactly at what point, but you do know there is a breaking point where it just moves beyond reality. The banks know this better than anybody. So, I am assuming that they feel they are at the end. You can smell it. You can see it. You can touch it almost. So, what do you do? . . . I think their thinking is, hey, we are at the end and let’s just grab all we can so when the system collapses, we will be okay. That is kind of a crude way of putting it, but I think they are going for broke because they know it is broke, and there is not much they can do about it.” - Edward Griffin
David's Commentary (In Blue):

Recently, I asked myself, “What have I done in my lifetime that had a positive affect on other people? I believe the most meaningful thing I have done is to have influenced thousands of people to take a position in gold and silver. Many of them made a profit and some did not, but the important thing is that all of them own gold and silver. Whether they realized it at the time or not, it was never about price or profit. It was about establishing a “financial insurance” position. Just because we haven’t needed it (yet) doesn’t mean that we won’t need it in the future. 
We have sold billions of dollars worth of gold, silver and platinum. I am certain that the time will come when everyone will come face to face with the daunting reality of why it was so necessary. Some will have taken the necessary steps to soften the hardships and many will not. History will prove that we were right. You should thank your lucky stars that the day of reckoning hasn’t yet arrived. But it will. 1929, 1971, and 2008 were the precursor of where we are headed. The only questions are: will it be deflationary or inflationary in nature, and when will it arrive?
The coming Great Reset will test all of us. And although it is impossible to pinpoint exactly when that day will arrive or exactly how it will play out, one thing is certain - there must be a financial reset. There is no doubt in my mind that gold will be at its center. 
Our credit-based system is failing and the world needs a new stable currency. Historically currencies have around a 100-year life span. The dollar, as a Federal Reserve Note, has been around for 106 years and it has lost 98% of its 1913 value. Judged by that metric, the dollar is already a failed and virtually worthless currency. When the dollar is compared to gold, the results are clear-cut. Gold was $20/oz in 1913 and today, 106 years later, it takes nearly 74 times as many Federal Reserve Dollars to buy the same ounce of gold. That number was nearly 78 times as much just two months ago. Gold has always been a “stable” currency. Fiat currencies have always been failures.
Gold was at the center of the reset between 1929-1933 and in1971. The former was deflationary and the later was inflationary. The 2008 crisis was never resolved, it was just delayed and papered over with trillions of dollars of paper and debt that the Federal Reserve pumped into the banks and the economy. 
The Fed’s solution isn’t working – or why else would the Fed usher in another round of QE, to the tune of over $100 billion a month? They are afraid to call it QE but that is exactly what it is. This era will come to an end without significant new global growth but where will it come from? Not from China, Japan, the EU, or the US. It’s nowhere in sight. We are just treading water and not able to grow out of the enormous (unpayable) debt problem foisted on us by the central banks. Without the economic growth, there is no way to service the ballooning debt and that is why the Fed has reverted to its failed policy of more QE. That’s all they can do, even if it doesn’t work, long-term. At least it buys a little more time – until it doesn’t. A reset is coming, and I believe gold will once again be at the center of it.
Can You Spare An Hour?
Can you set aside an hour. I know, we live in a sound-bite world and it is difficult for most people to hold their attention span for that long, but there are some things that are worth it. I mean many of you will spend three and a half hours watching a football game or two and a half hours at a baseball game or spend an hour and a half watching a movie, so yes, we can do it – but will a discussion of our economy, our future, our well being motivate you to just sit down and allocate an hour to get the answers to all the topics and questions we touch on in this newsletter? I hope so. 
And here it is. Here is a 56-minute interview that I hope you will sit down and watch. I assure you, when you are finished you will have a much clearer view of what is happening now and where we are headed. We are headed for a “reset.” What will it be? What will cause it? Jim Sinclair talks about the coming Great Reset. So does Grant Williams. You really should understand what this means for you. It is your glimpse into the future.
Adam Taggart
While at the New Orleans Investment Conference this past weekend, Chris and I had the great pleasure of sitting down with Grant Williams, publisher of the economic blog  Things That Make You Go Hmmm  and principal of  Real Vision TV . There will be no smooth transition back to sustained economic growth, he warns Instead, the distortion of today's excessive asset prices will require a systemic reset to fix. Either by a deflationary event that destroys the malinvestment, or by an inflationary event that destroys the currency.
No one knows where gold is headed and when, but there are a lot of “opinions.” Read them for entertainment but trying to time your purchase is a crapshoot. The entire system is a game of musical chairs and the game can end at any time.
Today’s Kitco headlines:
Gold to stabilize at $1,400 in 2020 then peak above $1,600 in 2021.
Gold prices sell off but anything above $1,450 is still a bull market.
$1,447.50 will be the back up the truck and buy bottom, according to Rick Ackerman. 
Craig Hemke has written a very important article of the fraudulent relationship between the COMEX price discovery mechanism versus the amount of actual gold that is available to settle the enormous amount of contracts that they use to set the price. This is another must-read, if you are still unsure of why gold and silver are priced as low as they are, and how this must end.
Sprott Money
The Continuing COMEX Fraud
Last week, we wrote about the pending price correction in COMEX gold and silver due to the extreme level of futures contracts issued by the market-making Banks. With price getting smashed thus far this week, it's time to explain again the dynamics of this tried-and-tested price manipulation technique.
First of all, understand that the alchemy of " gold price exposure" was created in 1974 for the express purpose of managing price in lieu of physical metal supply. The London Gold Pool had collapsed in 1968, and Nixon had suspended the dollar's convertibility into gold in 1971. Absent new physical sources to control price, investment products were soon created as vehicles for the purpose of siphoning off physical investment demand. See this link:
Of course, it's not just futures/derivatives contracts that serve as gold price exposure. The decades that followed led to even more synthetic gold creation through "investments" such as unallocated accounts and ETFs. However, it is the trading of the derivative (futures) contracts that are still utilized to determine price. The Bullion Banks use their monopolistic dominance of these "markets" to control price and selfishly profit at the same time.
So it's imperative that you, as a precious metals investor and enthusiast, understand the dynamics of this fraudulent and illegitimate pricing scheme. The price you pay for physical gold and silver is  NOT  determined by an exchange of cash for metal. Instead, it's determined by the trading of futures contracts— the supply of which is controlled by the market-making Banks —with these contracts somehow accepted as a proxy for the physical price.
Why do we always use the term "FRAUDULENT" when discussing this price discovery scheme? Let's look at both sides of the trade:
• The futures contracts are issued by Banks, which have little to zero access and ability to deliver physical metal if forced to do so. COMEX contract settlement is just an implied ability to physically settle contracts in delivery...this even though the market-making Banks own very little actual gold.
• The futures contracts are demanded and purchased by Speculators, who acquire the contracts via loaned funds (margin) and then never seek to actually take delivery of physical metal.
So, if Banks sell contracts with no metal backing, and these contracts are purchased by speculators with no end demand for physical, then what does the trading of these contracts have to do with the actual value of real, physical metal? The answer: NOTHING.
And here's the rub...
Since The Bullion Banks have infinitely deep pockets and the full protection of the central banks (due to their "Too Big To Fail" stature), there are no limits to the amount of derivative contracts that they can create during a period of Speculator demand for gold exposure. Therefore:

• As price rises, the total supply of COMEX gold futures contracts expands. The Banks issue new contracts in order to meet Spec demand. Price rises, but not as much as it would if the supply of contracts had been regulated to remain constant and tethered to some sort of physical backing.

• Then, as price inevitably falls due to buying/momentum exhaustion, Speculators sell their gold exposure. The Banks use this Spec selling to buy back and cover their fraudulently issued short/delivery obligations, and total contract open interest declines.
In 2017, we wrote a detailed, yet simplified, report on HOW and WHY The Banks engage in this process. If you've never read it, you should do so now:
Turning back to the present, why is this so important again today? As we wrote last week, total contract open interest for COMEX gold has surged again to new ALL-TIME highs. And, what do you know, price is now falling!
As of Monday this week, The Banks have driven total COMEX interest to 688,722 contracts. Again, consider the scam and fraud of this scheme. At an alleged 100 ounces per contract, the total open interest on the COMEX represents 68,872,200 ounces of gold. This while the entire COMEX vaulting structure only holds 8,378,798 ounces.
System Apologists will attempt to claim that the derivative pricing scheme is legitimate because it serves as a vehicle for gold and silver producer hedging, and that all of the contracts created are only for those forward-selling purposes. However, just this week, the World Gold Council revealed that the current global hedge book for gold was  contracting  in Q3 —not expanding— and that it currently stands at 265.8 metric tonnes:
But even if all of that hedging were done through COMEX—  WHICH IT'S NOT —it would only require about 85,500 contracts of short-selling and future delivery promises. The math on that? Well, 265.8 metric tonnes is about 8,550,000 troy ounces, and again, at 100 ounces per COMEX contract, you can therefore hedge the entire amount with just 85,500 contracts.
So why the heck is total COMEX contract open interest at an all-time high of 688,000 contracts? What's the need for the 600,000 contracts above and beyond the producer hedging? Oh sure, of course there are other holders of gold that might like some hedging...but 600,000 contracts worth? That's 60,000,000 ounces, or about 1,900 metric tonnes!
Thus we end where we began. The Bullion Banks maintain monopolistic control of an obviously fraudulent pricing scheme, and they are currently attempting to blunt and reverse the 2019 price rally by issuing endless amounts of futures contracts. They'll no doubt continue to have some success, and price will likely fall to the levels we forecast last week:
But in the end, this is all just frustration and noise for those of us who are forced to track the digital derivative price on a daily basis. What are the implications for you, the long-term precious metals investor?
Understand that the current digital derivative and fractional reserve pricing scheme is rooted in fraud. It's also defined by the illusion that gold and silver are plentiful, when they are not. What IS plentiful is all of the "exposure" that The Banks have alchemized over the past four decades. What is NOT plentiful is the actual physical metal that underpins this system. Therefore, WHEN the system implodes upon itself, physical metal will be scarce and the price of it will be many multiples higher in all currencies. If you don't currently own physical precious metal, be sure to do so before this fraudulent pricing scheme finally collapses.
All markets are driven my one of two different emotions: fear and greed. Today it’s greed but it won’t be long before fear takes the lead. Fear always propels the price of gold to new highs.

Greed Driving Broader Markets Today, Fear To Spark Precious Metals Fireworks In The Future

With the Fed propping up the entire market and extreme greed driving the stock indexes to new highs, investors have lost interest in the precious metals, for the moment. However, I am not surprised. What is taking place in the overall markets is precisely what I forecasted back in September.

After gold and silver broke out of key resistance levels in the summer and then moved to new highs for 2019, a consolidation period would likely follow before the precious metals began the next leg up. I mentioned this in my last Youtube precious metals update,  Silver Price Update & End Of Mining Era ,published on September 21st.

Andy and Zhanna in London

Last week Andy was in London meeting clients.
Andy is going to have knee replacement surgery on November 20. He put it off for as long as he could, but he loves to ski and golf and the time has finally arrived to have the surgery so he can remain active.  
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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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