The Miles Franklin Newsletter
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From The Desk Of David Schectman
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A Commercial Signal Failure may be set up right here and now! I’ve been involved with a few of these events in the commodities sector over the past few decades with vivid memories when Corn, Soybeans, Wheat, and Cattle, which all blew out the shorts when they discovered they were on wrong side of the trade. Over the past few years, the controllers of paper have had their day, it may be the time when the paper game loses to rock (in paper, rock, scissors fashion). We will know for sure when physicals, needed to supply the game of paper, cannot be found at the Comex. All that can be said now is stay tooned, we’re still waiting in a game where the waiting is the hardest part!
– J Johnson
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David's Commentary (In Blue):
You don’t buy insurance after you need it.
You buy it in advance
Imagine that you just had your annual physical examination and your doctor looked at your chest X-ray and said, “We found a spot on your lung and we don’t like the looks of it. We need to do a biopsy and keep a close eye on this.” And you are thinking, “Do I have enough life insurance now? Is my long-term healthcare insurance sufficient?” These are the kind of questions people often wait to address until it is too late.
Well, the current events that could have a direct effect on my wealth, and the socio-economic landscape that we will have to deal with in the near future, are flashing warning signs. I can’t help but think this will not end well and I better have my financial insurance, my gold and silver positions, solidly in place now, before it’s too late. This is somewhat akin to the “spot on the lung” example.
The targeted assassination of Qassem Suleimani
Here is the way I see things as a new decade unfolds. President Trump’s decision to take out General Suleimani will have dire consequences and it will affect the markets. This is a big deal. Suleimani is a national hero in Iran and has a strong following in Lebanon, Syria, Iraq and the Gaza Strip. The “Death to America” chants are echoing across the Middle East. There will be reprisals. Iran has positioned itself to be perceived as the strongest power in the Middle East. Their credibility will be based on how they respond to Trump’s actions. So accept it as a given that hostilities will ratchet up between the US and much of the Muslim world.
Everyone has an opinion on why President Trump ordered the assignation at this time. He could have taken action many times over the last three years and his excuse that this was in response to rocket attacks on a US compound that killed ONE CONTRACTOR rings hollow. There are claims ranging from he was planning major attacks on US interests in the Middle East – to he was in Baghdad on a peace mission with Saudi Arabia.
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The Trump administration has justified its action, citing unspecified intelligence that indicated Suleimani was in the process of finalizing plans for attacks on U.S. personnel and interests in the region, claiming that Suleiman’s death "saved American lives." This narrative has been challenged by Lebanese officials familiar with Suleiman’s itinerary, noting that the Iranian general had been in Beirut on diplomatic business, and had travelled to Baghdad via a commercial air flight, where he had been diplomatically cleared to enter. These officials claim Suleimani was killed while riding in a convoy on his way from Baghdad International Airport into the city of Baghdad. – Scott Ritter
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So what do I think is behind the timing of the killing? Starting with the premise that in politics nothing happens by chance and every major event is planned (including false flags), this looks to me like this was timed to deflect the media attention focused on the upcoming impeachment trial in the Senate. It is very unlikely that we will replace a President in the midst of rising tensions or a war with Iran. Trump will never convert his haters but this will rally his supporters prior to the election.
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Ed Steer had this to say….
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"The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists." --
Ernest Hemingway
Hemingway got it slightly wrong, as the first panacea for the U.S. is war -- and about to be followed by inflation of the currency. If they're smart, this war is one that no other western country should stick its nose into...but currency debasement is coming for all.
It certainly appears that the gold card is being played, but it’s happening in ultra-slow motion at the moment -- and the circumstances under which it's happening are rather ominous.
But as I've stated for many, many years now...when the precious metal prices are allowed to rise...and at some point far faster than they're rising now...it would happen concurrently with some economic, financial, monetary or military event as cover. I was always cheering for one of the first three, or a combination of them -- and always feared the last one.
It's the worst case scenario as far as I'm concerned, because it leaves the door wide open for some sort of major false flag event along the lines of 9/11...which came to us courtesy of the U.S. deep state and its Middle East 'allies'. They won't make the same obvious mistakes this time around, as the official story has been totally shot down in flames. Even Trump, before he became president, mentioned that a new investigation into the events surrounding 9/11 would be something he would welcome.
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Along with 9/11 came the Patriot Act that had been sitting on a shelf somewhere waiting for that moment -- and the next false flag event will bring even more draconian measures with it...which I'm sure have already been finalized.
And as far as the U.S. financial/banking system is concerned, it's done for. As the
Zero Hedge
stories over the last few days have shown, the Fed is now monetizing the debt, albeit rather surreptitiously at the moment. But it's going to get far worse. That phrase "print or die" is now happening out in the open in real time for all to see.
And as Gregory Mannarino has been pointing out -- and which is equally obvious to all, the moment that the Fed stops its repo/QE4/debt monetization thingy...call it what you will...the U.S. financial system, along with its currency, is done for -- and will take the rest of the world with it.
And as Hemingway stated in his 1926 novel, The Sun Also Rises..."How did you go bankrupt? Two ways. Gradually, then suddenly."
The U.S. nation state has arrived at that point now -- and it isn't alone. As I mentioned two paragraphs ago, when one goes, they'll all go.
It has suddenly become a very dangerous world out there, so be careful.
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After the attack, Iran said it would no longer abide by a 2015 agreement to suspend uranium production. President Trump and Israeli Prime Minister Netanyahu have both stated that they will never allow Iran to acquire a nuclear bomb. The odds have increased greatly that there will be a pre-emptive attack on Iran’s nuclear facilities before that happens, most likely sometime in the next 24 months. If it appears that the Democrats are getting close to unseating the President, move the timeline up to prior to the election this fall. If that happens, I would expect Iran to retaliate by sinking an oil tanker in the Gulf of Hormuz, which would send the price of oil up, into the hundreds of dollars a barrel. That would send the global economies and stock markets into freefall.
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Iran is meeting rhetoric with rhetoric and just pledged to abandon the terms of the nuclear deal the US has already walked away from and to enrich uranium on its terms.
If Tehran is going for a mad dash for a nuke to try to prevent US military pressure *rather than just pretending to* then we are in for a very wild ride
. Yet is Iran really that suicidal? And if so, why did anyone think it was a regime that could be trusted to stick to the terms of a nuclear deal? (I point this out to see if commentators are internally consistent with their World War Three logic.)
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Bill Holter’s 60
th
Birthday Party
Last Saturday Susan and I attended Bill Holter’s 60
th
birthday party in Austin, TX. Susan got to meet Jim Sinclair for the first time. He can be very charming. So can Susan. They hit it off very well. I had a nice chat with J. Johnson, who briefly wrote for Miles Franklin a couple of years ago and now writes for Bill Holter and Jim Sinclair on the JSMineset website. I also met Gary Christenson for the first time. Gary writes for us and I admire his writing but I had never met him in person before.
Before the cocktail party started, Jim Sinclair made a spirited presentation to a couple of dozen large investors, including myself, in TRX, his Buckreef gold mine in Tanzania. After updating the investors on the latest developments in TRX he turned the conversation toward where he believes the price of gold is headed. He started the conversation with the statement that Russia and China are accumulating all the physical gold they can, and have been for quite a while. This is in advance of establishing a physical platform to settle all of the trade between the two countries in physical gold. One side of the trade will set the bid and the other side will set the ask. They will establish the true price of gold, based on actual supply and demand and that will be the end of Comex setting (rigging) the price based on leveraged contracts (estimated to be several hundred to one) with very little actual physical gold to back the contracts.
Jim is certain that there will be a currency “reset.” There is so much debt (and growing rapidly) that it can never be repaid. All of the currencies are inflating without any concern for the consequences. Gold will be brought back into the mix at a fixed value and it will be a major part of the new currency that replaces the dollar, the euro and the rest. Lots of luck trying to trade dollars for gold when that happens. Accept that as a given. No one in their right mind will exchange gold for dollars at any price when that happens.
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My regular readers know why I believe the gold price is poised to move from its current level of around $1,525 per ounce to $2,000... $3,000, and beyond.
Right now, we are exiting the eye of the giant financial hurricane that we entered in 2007, and we're going into its trailing edge. It's going to be much more severe, different, and longer lasting than what we saw in 2008 and 2009.
In a desperate attempt to stave off a day of financial reckoning during the 2008 financial crisis, global central banks began printing trillions of new currency units. The printing continues to this day. And it's not just the Federal Reserve that's doing it: it's just the leader of the pack. The U.S., Japan, Europe, China... all major central banks are participating in the biggest increase in global monetary units in history.
These reckless policies have produced not just billions, but trillions, in malinvestment that will inevitably be liquidated. This will lead us to an economic disaster that will in many ways dwarf the Great Depression of 1929-1946. Paper currencies will fall apart, as they have many times throughout history.
This isn't some vague prediction about the future. It's happening right now. The Canadian dollar has lost 24% of its value since 2013. The Australian dollar has lost 34% of its value during the same time. The Japanese yen and the euro have crashed in value. And the U.S. dollar is currently just the healthiest horse on its way to the glue factory.
Money manager Michael Pento says forget about the sky high stock market because everything is being propped up with massive global money printing. Pento explains, “Let’s look at the facts. Global debt has now risen above $250 trillion. Let that sink in for a second, and it is a record percentage, 330% of GDP. So, we have never seen debt like this before in nominal terms. Even as a percentage of the phony GDP that is engendered by free money, it is at a record. So, the central bankers have realized that they are trapped. There is no escape from global massive debt monetization. . . . We have China, Japan, Europe . . . and even our Federal Reserve is back in QE. We have a standing repo facility. We could only raise rates to 1.5%, and we are headed back to 0%. So, the only way this massive pile of debt is able to be serviced, even on the margins, is when money is free and central banks continually debase currency.”
Pento goes on to say, “Now I hear from the central bankers that inflation is not rising fast enough. They are
panicked
that inflation is not rising fast enough. You have to wonder why the faith in fiat currencies isn’t eroding even more rapidly. It is going to because all the ingredients are there. I think the pace of that erosion is going to become a deluge. . . . The zeitgeist of the day should be central bankers are trapped and they can never raise interest rates. Real interest rates will be falling, and if you want a chance of staying in the middle class, you have to preserve your purchasing power, and that means owning gold.
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The Boyz Are Back
Right on cue, as the price of silver – and especially gold opened on Sunday at much higher prices after the assassination, the boyz at Comex (JPMorgan and friends) went to work shorting the snot out of both metals to blunt the rally.
Ed Steer had this to say about it…
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There's no escaping the fact that JPMorgan et al. were at battle stations from the 6:00 p.m. open in New York on Sunday evening, right up until the market closed at 5:00 p.m. EST on Monday afternoon. They threw everything they had at the prices of gold, silver and platinum -- and it proved to be enough. Without their massive intervention, the prices of these precious metals would have closed at heaven-only-knows what amounts.
The
Commitment of Traders Report
, for positions held at the close of COMEX trading on Tuesday, December 31 did not make for happy reading because the short positions in both gold and silver increased a bunch more...even more than I was expecting...particularly in gold.
In
silver
, the Commercial net short position increased by a further 11,325 COMEX contracts, or 56.6 million troy ounces.
The Commercial net short position in silver is now up to 483.2 million troy ounces
, which is not a record amount to be sure, but closing in on it fast.
In
gold
, the commercial net short position blew out by another 26,095 troy ounces, or 2.61 million troy ounces of paper gold.
They arrived at that number by reducing their long position by 279 contracts, but increased their short position by an eye-watering 25,816 contracts -- and its the sum of those two numbers that represents their change for the reporting week.
The commercial net short position in gold is at another new all-time high...the largest in history...36.65 million troy ounces.
And as in silver, we're most likely going to see another new record high commercial net short position in gold in this Friday's COT Report.
And as
silver analyst Ted Butler
said in his COT commentary on his website yesterday afternoon..."There should be little question that if we move lower in price, it will be due to the massive record concentrated short positions in both silver and gold -- and those few traders succeeding in driving prices lower. The few triumphing over the many - as has been the case for decades. But since the big shorts have not succeeded for months in driving prices lower and they have sustained record open losses in the interim, there is still the question of whether they can succeed in driving prices lower ahead.
I can see the big crooked shorts perhaps succeeding in inducing selling by those traders which have most recently bought on the upward penetration of the 50-day moving average over the past couple of weeks. But I have trouble seeing how the big commercial shorts could succeed in inducing selling from those traders, which didn't sell over the past couple of months where they always had sold before.
In any event, the current extreme positioning must be resolved and it's hard for me to see how the coming resolution won't be a humdinger. I'm still of a mind that if we do get a price smash, it will be the last such smash, [as] the big shorts are so deep in the hole that it could end up with some of them covering to the upside for the first time ever."
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When gold (and silver) are traded at their true value, the price will explode. The previous highs in both will be in the rearview mirror. And the bullion banks that have shorted the metals markets by billions of dollars will experience their “religious moment” as they panic to unwind their short positions into a rapidly rising prices, adding further fuel to the move up.
I am not talking about gold as a fantastic investment opportunity here. Sure, I expect the price to rise dramatically, but physical gold is not about capital gains, it is the ultimate insurance policy to protect your net worth when this happens. And once it becomes clear that gold is poised to replace (or partially replace) the dollar as the world’s reserve currency – a failed experiment since 1971 – the demand will explode so fast that there will be little left for the “retail” buyer.
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But then a funny thing happened by mid-December, namely, the managed money traders didn’t sell as they always had sold before (for some still-unknown reason) and instead of gold and silver prices selling off, they embarked on a fairly spirited rally into quarter and year end which culminated in the year end $3.8 billion mark-to-market loss by the big 7, the largest in history. Please remember, the year ended last Tuesday and there have only been two work days since then, so I’m talking in about as up to date terms as is possible. – Ted Butler
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Goldmoney
In 2019, priced in dollars gold rose 18.3% and silver by 15.1%. Or rather, and this is the more relevant way of putting it,
priced in gold the dollar fell 15.5% and in silver 13%.
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Private Safe Deposit Boxes
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Unencumbered / Segregated Storage
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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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