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The Miles Franklin Quarterly Report

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Published : January 06th, 2012
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It's Wednesday night, and I'm writing from my new home away from home, the Sheraton Hotel in Minnetonka, Minnesota, a few miles from Miles Franklin's home office.  I'm here to spend time with our world-class team and explore new marketing possibilities, starting with dinner at the fabulous Redstone's restaurant with Miles Franklin's President, Andy Schectman.


I have NEVER been more motivated to spread my message, as I truly believe the end game for the global financial system is an event that could "spontaneously combust" any day.  It may take two years for the worldwide central bank Ponzi scheme to break, but don't be surprised if it occurs overnight.  At dinner tonight, I emphasized how the gold bull will resemble NOTHING in the history of financial markets, a slow but steady climb ending in a terminal, skyward spike that will NEVER return to earth.  And believe me, when that happens, the price of gold will be the LAST thing on your mind.  The PHYSICAL PM sector is vastly undervalued by any tangible definition, certainly by anything remotely dreamt of by "Wall Street", "Bay Street", or "the City", and trying to "value" it is futile given the exponential explosion of WORLDWIDE money supply growth.  Gold and silver are MONEY, and dollar, Euros, Pounds, Yen, and Yuan worthless paper - end of story!


While flying to Minneapolis, I was 100% sure PMs would be attacked, as Cartel rule #1 is "all great days must be followed by horrible days."  True, PMs were smashed into oblivion last month, but I have rarely seen the sector allowed to gain momentum, such as in August 2011 when the initial shock of the U.S. rating downgrade and commencement of Global Meltdown II took the Cartel by surprise, before they had time to implement "OPERATION PM ANNIHILATION I" in September 2011 and "OPERATION PM ANNIHILATION II' for good measure in December.


When I woke at 4:00 am MST to finish yesterday's RANT, I saw the typical Cartel smash at 3:00 AM EST, just as gold attempted a parabolic rise that would have allowed it to perform like a free market should following a rebound from unsustainably oversold levels.  Gold then spiked up at the ONLY time in the 24 hour cycle it is EVER allowed to materially rise - ironically, the COMEX opening - before yet another attack at EXACTLY the PM Fix at 10:00 AM EST.  Alas, some things never change. 


That said, gold fought the Cartel demons all day to close in the black, despite the enforcement of Cartel rule #2, that gold, silver, AND the shares shalt NEVER rise sharply in tandem.  All in all, as positive a result as one could expect following Tuesday's strong up move.


As always, the "mainstream media" continued to make my "fringe" writings look smart, as the usual suspects had no explanation whatsoever for gold's strong year-opening performance, contrary to their usually "bull market's over" commentary each time the Cartel attacks.  Moreover, Zero Hedge did their best to make last week's RANT, "ZERO HEDGE SUCKS - YEAH YOU, TYLER DURDEN" look brilliant when they published their ALL-TIME dumbest article, citing CITIBANK, my former employer and king of global corruption and stupidity, as the reason gold rose a whopping $10/oz.


I had thought their article about gold "plummeting due to increased Chinese regulations" took the cake for stupidity, EXACTLY which inspired that apparently controversial RANT.  But this one takes the cake, even stupider than their unrelenting posts about what Goldman Sachs, the world's most powerful firm, with the worst analysts, expects to happen.  Readers, I assure you Goldman's clueless "analysts" and strategists" have not the slightest clue what the political rainmakers on the upper floors of their hidden headquarters in New Jersey are doing, and anyone that thinks they are "in on" the scheme deserves to lose every dollar they invest.  That said, even the dumbest Goldman Sachs analyst is a veritable Einstein next to the smartest Citigroup has to offer, the epitome of a zombie bank employing the walking dead. 


Gold Jumps As Citi Says Gold Sell Off Over, Reiterates $2400 Target


And what a shock to see the Dow down all day long until the typical "HAIL MARY" rally in the NYSE's eleventh hour, despite a seemingly endless torrent of "horrible headlines." 


Think long and hard about what caused Global Meltdown I in late 2008 and Global Meltdown II in late 2011, as well as what, if anything,has changed aside from increased money printing, that could possibly prevent Global Meltdown III.


Yes, readers, European stocks were clocked, but yet again the Dow pulled off a miracle rally, as it has done nearly EVERY DAY since the simultaneous commencement of "OPERATION PM ANNIHILATION II" on December 8th.  Apparently, American "market participants" were not impacted by the unrelenting torrent of negative news, starting the second European markets opened.  I mean, how could one NOT be bullish on the prospects of World War III, as America's European lackeys, particularly its "b**ch the United Kingdom, appear to be on board with bombing the most dangerous, flammable, cancerous nation on earth?


Crude Surges On News Europe Agrees To Ban Iran Oil Imports


And how can they not be excited by the prospect of a complete and utter freeze of Europe's interbank lending market?


ECB Deposit Facility Usage Hits New Record


Or the utter implosion of the Spanish economy, which pound for pound may be experiencing the world's largest real estate implosion, as its one hard-working people siesta the afternoon away and its stupid, arrogant government pretends all's well?


The Pain In Spain In Charts


Or tanking European bond markets, particularly in THE world's most underwhelming, self-righteous, self-aggrandizing, BANKRUPT nation, France? 


European Credit Markets Tanking Ahead Of Key Issuance Day 


Or the fact that China, the so-called "engine of the world," can't manage to maintain positive stock gains despite the world's largest PRINTED MONEY dose of early year "OPERATION INSTILL CONFIDENCE" ever?


Santa Rally Is Over: French Spreads Blow Out To Late November Levels; Shanghai Composite Already Down On The year


Oh, I see why.  Perhaps it's due to the 19th consecutive week of U.S. equity mutual fund outflows, totaling a whopping $140 billion...


Retail Investors Pull $140 Billion From Equity Funds In 2011 Which Close The Year With 19 Consecutive Outflows


Or the massive reduction in REAL, non-HFT volume resulting from such a mass exodus from the once free U.S. equity markets.  And don't worry, the volume will return, in spades, when Global Meltdown III commences.


One Word...Volume


Or the fact that even America's best companies are shedding jobs like they are going out of style...


Pepsi mulls 4,000 job cuts: report


Or complete and utter political gridlock, to the point that ALL U.S. politicians are dead in the water, not only incapable of passing legislation but no longer caring now that "election season" has become.  What happened to the maverick John Boehner, so staunchly against raising the debt ceiling from $14.3 trillion to $14.7 trillion, now that it will be raised just four months later from $15.2 trillion to $16.4 trillion? 


Let's face it, aside from back-burner social issues such as gay marriage and abortion, there is ABSOLUTELY ZERO difference between Democrats and Republicans, including the "greatest President of all time," Ronald Reagan (facetious) and the "greatest communicator ever," Bill Clinton (doubly facetious).  Sorry, my partisan friends, but you are taking a knife to a gunfight if you try to prove Republicans are fiscally "conservative," or Democrats inordinately "liberal."  All these bought-and-paid for CRIMINALS are good for is serving their Wall Street masters, and as noted a few weeks ago, the Wall Street money is heavily in Mitt Romney's camp, so unless the financial system COMPLETELY COLLAPSES by this Fall (which could very well happen), say hello to President Romney.


Guest Post: President Obama, Demopublican


Perhaps the market is "irrationally exuberant" by the fact that a whopping 14% of projected 2012 S&P 500 earnings growth emanates from brain-dead expectations for Bank of America, the epitome of  the living dead, not to impugn the integrity of actual zombies.  We may never know which of the TBTF banks is the most insolvent, the most hopelessly broke racketeering organization on earth.  However, my money is with either "derivatives king" JP Morgan or "mortgage Frankenstein" Bank of America, with the John Gotti of global finance, Goldman Sachs, not far behind.


Stunner: Bank Of America Responsible For 14% Of Projected 2012 S&P500 Earnings Growth 


Oh well, when half the world's richest people live in its most insolvent nation, how can it's stock market NOT significantly outperform?  And how can the situation NOT turn out badly?


Half the world's richest 1% live in the United States


Now it's Thursday morning, with some "bonus coverage" before I move to today's very special RANT topic.  Frankly, I'd rather not make this piece longer, but the "horrible headlines" NEVER STOP!  I was asked yesterday why I provide so many links, I answered that each reader does due diligence in his or her own way.  My goal is make sure you see ALL of what is going on behind the scenes - as well as in front - as the global economy has so many moving parts, essentially all collapsing in tandem.


Last night a friend pointed out gold was closing in on $1,620/oz, so I told him that years ago, I learned to turn off the screen until the morning.  Gold has been flat or higher in Asia essentially 90% of the time for more than a decade, explaining the ridiculous anomaly of how gold has traded LOWER, on a net basis, in the New York PAPER market over a 12-year bull market.  Furthermore, I told him that nothing matters until 3:00 AM EST - which coincides with the LBMA, or London Bullion Metals Exchange pre-market, EXACTLY when the Cartel shows up for work each day.


As highlighted earlier, gold was on the verge of a parabolic up move yesterday until EXACTLY 3:00 AM, when it suddenly PLUMMETED, and the same was the case today.  In the below chart, the red line represents Tuesday's action, and the green line today's.   Notice how on BOTH days gold was capped and attacked at EXACTLY 3:00 AM EST, as noted.  Furthermore, gold surged at yesterday's COMEX open, the ONLY time the Cartel allows gold to do so over the 24-hour trading day, but was immediately capped at EXACTLY the PM Fix at 10:00 AM EST, while today gold was simply attacked at EXACTLY the COMEX open at 8:20 AM EST.



Laughably, the media tried to blame today's COMEX-opening WATERFALL DECLINE on "better than expected" jobless claims numbers, which came in a whopping 3,000 below expectations.  Of course, for perhaps the 30th week in a row, last week's number was revised upward by 6,000, and the only reason such numbers are "falling" in the first place are "seasonal adjustment factors," which magically transformed a 37,000 increase in REAL jobless claims to a statistical 12,000 job decrease in IMAGINARY claims!


Seasonal Adjustment Pushes Initial Claims Below Expectations At Least Until Next Week's Revision


Fudging the monthly NFP employment report is ALWAYS a top consideration of sitting administrations, and during an election year that necessity grows exponentially.  Between "seasonal adjustments", the "birth/death model", "benchmark revisions," and other fictional alterations, the NFP figures have become the biggest joke in worldwide economic data reporting.  In the last four years alone, the BLS has revised downward the number of jobs reported the previous year by 293,000, 89,000, 902,000, and 378,000, respectively!


Technical information: Revisions to CES data for late sample reports, annual benchmarking, and other factors


It's hard to believe this much bad news can come out in a few hours time, as I thought for sure I was in the clear after typing past 11:00 PM last night.  Unfortunately, the "unadjusted" global economy is in freefall, and I see essentially ZERO chance that my top prediction for 2012, an acceleration of the European financial COLLAPSE, will come to fruition, likely yielding a new form of financial governance, connoting one or more defaults, by year-end.


Frankly, my only question relates to WHICH European nation will go bankrupt first.  The odds on favorite is Hungary, which is a member of the Euro Zone but not the Euro currency...


Hungarian Yields Soar, CDS Hits Record As Bill Auction Fails


...unless, of course, one still considers Greece to be solvent.  Boy, I remember sitting here in Miles Franklin's home office on my first day of work ten weeks ago, when the Dow soared 400 points due to the "Greek Haircut/Bailout package."  As it turns out, the haircut idea was scrapped, and apparently the bailout as well.  But just as the U.S. debt ceiling debacle morphed from all-important to ignored, no one seems to care about the imminent financial daisy chain of death coming from Athens.


European Deathwish Exposed: Greek Bailout Package Delayed By Three Months


...remember, when the PPT's on the job to prevent the Dow from falling, NO PROBLEM!



As for Europe's REAL countries, at least compared to piddling Hungary and Greece, the situation appears to be WORSE, starting with France, the continent's second largest economy.  This morning, French yields and CDS's surged following a FAILED BOND AUCTION, but France is a veritable Sunday morning church service compared to the Saturday night bar brawl going on in Italy.


French Auction Fails To Sell Max Projected As Bid-To-Cover Plunges


The Euro is literally in FREEFALL this morning as Italian stocks and bonds collapse.  Above, I was going to lash out at the arrogance and stupidity of French leaders, but it's hard to do so when those of Italy are front and center.  My apologies to all good Italians, including my wife, but it is hard to believe ANY country outside the United States could have been this poorly managed over such a long period of time.  To think that Italy, whose most important contribution to the world is pasta, could have been allowed to amass the world's third largest debt load is incredible, a testament to callous disregard by its leaders and equally destructive enabling by the European Central Bank.


Euro Slumps To 15 Month Lows As BTPs Crack 7% Yield


Not only are the sovereign bonds of these nations collapsing, but even the "Fed swap facility" and "ECB LTRO"-supported BANKS are on their way to zero. 


EURUSD Dips Below 1.28 As All Hell Breaks Loose In Italian Financials


Honestly, I feel like I'm watching an episode of the Keystone Kops.  I mean, geez, Unicredit is Italy's largest bank, and despite falling below € 1.00/share earlier this year, is STILL thought to be salvageable.  Then these idiots came up with the brilliant idea of a 1:10 reverse split last week, which further fueled bankruptcy fears.  Today, the stock is down 17% after being halted FOUR TIMES, to a split adjusted level of € 0.48/share, on its way to a MASSIVE, PRINTED MONEY BAILOUT in the next few weeks...


...and here's the chart of the world's biggest financial joke, "National Bank of Greece," which reverse split 1:5 a few weeks back.  It, too, is at an all-time low, on its way to zero in the coming weeks and same, said bailout. 



Why do I bring up these two "national disasters," aside from the reverse splits?  As it turns out, BOTH were caught this week in government-sanctioned PONZI SCHEME financing, starting with NBG, which underwrote its own bonds AND gained backing by the government of Greece - you know, the same bankrupt entity begging for a bailout itself!


Would A Ponzi By Any Other Name Smell As Bad?


As for Unicredit, they are trying to one-up NBG, although the race for biggest scam is currently too close to call.  In the spirit of the failed Japanese keiretsu, Unicredit has tried to find a "captive" buyer for its securities by cross-holding its ownership with Mediobanca, another of Italy's largest, and most likely to fail banks.



Readers, as the END GAME of the GLOBAL FINANCIAL SYSTEM approaches, you will see fraud reach levels never seen in the history of mankind, EXACTLY why you should pull essentially ALL your assets out of PAPER securities and into PHYSICAL Precious Metals and other REAL ITEMS OF VALUE!


I'll Hold Yours If You Hold Mine: The Italian Ponzi Comes Home


In the final analysis, printing money ALWAYS fails, i.e. EVERY SINGLE TIME it has been attempted in all of human history...



30-Year Mortgage Rate Matches Record Low, but With Little Effect


...which is probably why GLOBAL demand for PHYSICAL gold and silver rises day after day, week after week, year after year.  And what's this, the U.S. mint sold 11% of last year's RECORD SETTING VOLUME on just the first day of 2012?


US Mint Sells 3.2 Million Silver Eagles First Business Day of 2012!!!


Finally, a prediction from my good friend John Embry of Sprott Securities, one of the best guys I know and smartest Precious Metal analysts on earth.  Last year, he called the PM market bottom at the end of January, and this year, makes an even BOLDER prediction!


John Embry - Gold Will Not Trade Below $1,500 Ever Again



Today's RANT topic is the Miles Franklin Report, a quarterly newsletter written by our firm's Founder, namesake, and devoted blogger David Miles Schectman.  An extension of his detailed daily commentaries, the Miles Franklin Report has been written for more than a decade to expand on key topics affecting global financial markets and, of course, Precious Metal prices. 

In writing two newsletters each day - David's "Dailies" and my "RANTS" - we aim to entrench readers into the ongoing, rapidly changing global news flow, calling it to the attention of the financial experts among us, and interpreting it for those not as familiar with these issues.  Our financial expertise, aided by the fabulous feedback we receive from around the world, makes for a great open forum to discuss the complex, and increasingly deceptive, issues of our day.  Moreover, given the wonders of internet communication, our pieces are instantaneously broadcast around the world.  I am always astonished - and flattered - when receiving international messages, and in less than three months at Miles Franklin, am proud to say I've received email from six of the seven continents!


David Schectman is a master communicator, and one of the most likable fellows one can meet.  The two of us share an equal passion for the merits of Precious Metals ownership, particularly their ability to PROTECT your net worth from inflation, the eternal vise of politicians.  Once the bankers take over a government - an event repeated countless times throughout history - it's inevitable they will attempt to install a destructive, fiat-based monetary system. 


You see, the beauty of the gold standard is that it just doesn't just work well, but TOO WELL.  In other words, people become so accustomed to the prosperity and low inflation inherent in such systems, they get lured into believing the cause is "strong government," as opposed to the discipline imposed on it by the shiny, inert rocks languishing in its vaults.  The bankers know this well, and thus pounce on the public's misconceptions, usually in the dark of night, in "military coups" that ultimately lead to systemic insolvency, poverty, and WAR.  This is exactly what happened to the U.S in 1913, when the Federal Reserve was created via a secretly held, sparsely attended Christmas Eve vote, and to Europe in 1992, when a thriving continent was convinced by a group of well-heeled bankers of the benefits of unity via the newly proposed Euro currency.


Sorry, I went off on a tangent, something I rarely do in my RANTS.  But I'm not deleting what I wrote, as my job, like David's, is to explain the sinister underpinnings of the financial system that have destroyed so many currencies over time, including the current world, with evil tentacles sure to stretch over all political, economic, and social aspects of society.  Perhaps I'm excited as I'm on a plane flying to Minneapolis to visit the home office, and perhaps I just feel that passionately about the evil perpetrated on humanity by bankers over the centuries.  To wit, per the words of Thomas Jefferson:


If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered...I believe that banking institutions are more dangerous to our liberties than standing armies... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.


Miles Franklin has been built on David's communication skills and philosophy, the latter of which has been amply passed to its team of brokers, particularly our President, David's son Andy Schectman.  I've said before that David and I are "twin brothers from different mothers," but that statement holds doubly true for myself and Andy.  We both are named "Andrew," have NEVER been called anything but "Andy," and were born within three weeks of each other.  Moreover, we're both avid golfers, ballplayers, skiers, and lefties, and both have fathers named David!


The reason I digress is to drive the point home that Miles Franklin is a tightly knit group that enthusiastically comes to work each day, knowing we are doing something we love and knowing we are making a difference.  David and I write our daily commentaries to educate readers, but ultimately our goal is to empower people to PROTECT THEMSELVES, and our team of brokers, which on average has 17 years of Precious Metals experience, understands well its duty to assist in that process.


The Miles Franklin Report is a compilation of the key aspects of our roughly 120 daily commentaries each quarter, breaking them down to the simplest, most articulately stated conclusions about where the world is going, and how you should view it.  Like David's "Dailies" and my "RANTS," all prior editions are neatly archived on our website, including the latest edition, to be posted shortly.


For our inaugural 2012 report, David gave me the honor of being its author, which I executed proudly.  My goal was to give readers a bit more commentary about my background, i.e. how I became "RANTING ANDY," and how my trials and tribulations brought me to Miles Franklin.  Additionally, some history of how the current financial system was ruined by bankers and politicians, and my view of its likely impact on PHYSICAL gold and silver prices.


Attached below is an advanced version of the "Winter 2012" edition of the Miles Franklin Report, which I humbly, and proudly, submit for your reading pleasure.


Miles Franklin Report Winter 2012 





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Andrew Hoffman was a buy-side and sell-side analyst in the United States (including six years as an II-ranked oilfield service analyst at Salomon Smith Barney), but since 2002 his focus has been entirely in the metals markets, principally gold and silver. He recently worked as a consultant to junior mining companies, head of Corporate Development, and VP of Investor Relations for different mining ventures, and is now the Director of Marketing for Miles Franklin, a U.S.-based bullion dealer.
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