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The “Gold, One Year Ago Today” price is now back over $300 for the first time in quite a while.  After slipping from the $320 area last fall, to the $200 area, gold is once again back over a plus $300 and holding even with its movement of one year ago.  Whatever is happening to the price of gold, up or down, at this juncture, it is approximately the same movement that occurred last year at this time.  I use this number to give you a feel for how gold is doing, relative to last year at this time.  Gold finished 2010 up $315.90 from 2009.  It fell from there, during most of January, to just above the $200 level.  Gold was falling faster this year than it did last year.  Gold is back on track again.  If it just maintains the same level of performance it logged in 2010, gold will finish 2011 at $1750.  I expect it to do better than that, but what do I know?  After all, I expected gold to finish 2010 at $1500 and missed by $80. But as you will see in Alastair Macleod’s article, “Why technical analysis fails with gold” in today’s daily, gold is a manipulated market under the foot of JPMorgan and several other bullion banks and they can bully it around for short period of time to their liking.

One of our readers, AD from Florida, emailed me and wanted to know what motivates me to write my daily letter.  What is my motivation?  That’s a fair question, and I shall attempt to answer it.

From the time I was in high school, in the late 1950s, I had an interest in “teaching” or coaching as a profession.  The only reason I chose not to pursue either of those professions was because I was interested in making more money than teaching or coaching had to offer.  But I always longed to teach.  At the University of Minnesota, in the early 60s I majored in history and had a minor in philosophy leaning heavily toward existentialism.  I loved to dig into things and figure out what made them tick.  I was, even then, a “big picture” guy.  I saw the forest for the trees and I loved being in school.  I thought about being a “professional student” and hanging around the campus for years.  But the Vietnam war was starting to heat up and the year I graduated, 1964, was the last year when marriage was a draft exemption – and I had a low lottery number, so my girlfriend at the time, Susan and I got married at the age of 22 and 18.  I have an 18 year old granddaughter now, in college at the University of Missouri and she is such a “baby.”  How could Susan and I ever have made it through 47 years when we were so unprepared for life?

When I started writing The Miles Franklin Quarterly, in the 1990, it was with but one goal in mind – to educate and inform Miles Franklin readers. Over the next 15 years, the Quarterly became a monthly and then a weekly. One year ago my son Andy pleaded with me to write a daily.  I was 68 and trying to lighten the load, but I was willing to give it a try.  The computer and the internet has changed my life, and yours too.  It still amazes me that the first time I ever used one (an early version of a cartridge loaded word processor, given to me by my mentor Dr. John King, author of Future Economic Times) was in 1989.  I used it to write his newsletter for a year, after his death and before I founded Miles Franklin.  Dr. King’s readership, some 10,000 strong, was the foundation for my new business which was primarily helping US citizens acquire Swiss annuities.  I was one of three people, working with BFI (they are still around and flourishing) in the US who offered the product and we specialized in “education” and built up a fine reputation with well over 1000 people who we set up with an annuity with the Swiss.  By the late 90s my firm started to get serious with gold and silver and our bulging BFI client base supported the move.  By 2002 I urged all of our Swiss annuity clients to bring back their funds from Switzerland and invest them in gold and silver.  I reasoned, correctly, that gold and silver would dramatically outperform the Swiss franc, going forward.  Since my recommendation, the Swiss franc has risen around 40% but gold rose by 350%.

Being a “big picture” guy, it was very clear to me, early on, that gold was the asset class to embrace in the new century.  In fact, Miles Franklin sold more 1/10th ounce gold eagles, prior to Y2K than just about any dealer in the US.  We also sold as many pre-1933 gold double eagles as any dealer in the country in the early and mid 2000s.

Today, we do a low-key $100 million plus worth of business every year with a small, highly trained, courteous and service oriented sales force of eight.  Four of the eight have been in the industry since 1991 (two since 1983) and I am privileged to have them as a part of Miles Franklin.

My motivation is still the same – to teach and to inform.  I love doing that.  The “teacher” in me still remains.  The work load of putting out a daily is harder but there is so much going on every day now, as the bull market in precious metals starts to accelerate, that writing every day is what my readers have come to expect.

When I was on vacation for the last 10 days, many of my readers went into withdrawal shock.  They have come to rely on the daily and really missed it. Honestly, I went into shock myself and missed writing it.  But I am back again, and will continue to pound it out until next August, when I will take some time off again.

I can promise you one thing – my daily is not an infomercial.  Those of you who have followed this daily know that I rarely promote product, and if I do, it is only because we have stumbled onto a good deal and I don’t mind sharing that with my readers.  I have been so low key that often our readers ask us “do you guys sell gold and silver?”  Honestly, many of them don’t know, but yes we do, that is how we pay the bills. We are thrilled when you give us an opportunity to provide you with gold, silver, platinum and palladium.  My newsletter is a mirror image of my precious metals company.  Read the daily and you will know what we are all about – and it is not about putting US FIRST.  I put YOU FIRST, in every way, price, quality, service, education.  You get the picture.

We don’t sell rare earths.  We don’t sell mining shares.  Yet I write about them all the time and urge my readers to diversify into many things that we do not sell.  I wouldn’t ask you to do anything that I don’t do myself!  I know for a fact that most of the brokers who work for other firms that sell gold and silver do not own any themselves.  All of my brokers own what they sell.  They understand how important it is for THEM.  Reading my daily, and my monthly before that for years, how could they NOT understand the importance of owning metals and avoiding dollar-based investments?

The daily is my view of what is happening through my eyes, after absorbing as much information as I can, from as many sources as I can read.  And they are the finest sources in our industry.  Most of you don’t have the time or the interest to do the digging.  I not only do all “the digging,” I condense it to 20 pages a day of the best of the best information that I have come across, and I present it to you, usually focusing on a particular topic or theme .  The point may be – beware, the dollar, or it may be “now is the time to own gold,” or “silver is a better alternative than gold,” or “we can never repay our debt,” or “you should buy rare earths or mining shares.”  I try not to confuse my readers by presenting all sides of an issue.  I give you my side, my take, and it is based on nearly 30 years of observation and research in my industry and on the economy.

I can’t promise you that my views are the best or even that they are correct, but I can promise you that I believe them, totally and invest with my own funds accordingly.  My views and my timing have been very accurate for a decade now, but I don’t rest on my laurels.  I think I will be right in my views of the future, even though I really do not like what I see coming.  It will be challenging to navigate through the next few years, and at minimum, we should be aware of the danger we face due to our government and Fed’s policies.  We should do WHAT WE CAN and that is an individual responsibility.

If I am right, then if you move your available dollars into gold, silver, platinum, palladium, mining shares of gold, silver, uranium and rare earth, then you will probably make a lot of money and better yet, avoid a major loss in the dollar’s buying power.  I am your cheerleader, and we all need a good cheerleader.  I use Russell and Sinclair when I need pumping up.  They are SO GOOD (I have followed them since the early 80s) that I start off almost every daily with their most important insights and comments.  If I put them on top of the list, you should consider doing the same.  That is not to slight any of the other writers I present to you, or those I have failed to mention – if I am putting them in the daily, they have something very important and timely to say.  You can’t go wrong following Bob Chapman, Jim Willey, Bill Murphy, Eric Sprott, John Embry, Julian Phillips, Howard Katz, Dave Kranzler, Martin Armstrong, NIA, Doug Casey or Ed Steer. These, and many, many more, get my full attention and you will read about them in this daily.

Casey Research is offering the Lowest Price Ever on their FlagshipNewsletter.

They have a TCR 72 hour – $98.00 Sale, available for the Miles Franklin Daily readers. That’s a 72% savings.

Today’s Editorial- Politics of Hate

ED Link: http://www.caseyresearch.com/editorial/4054?ppref=MFL226ED0211A

In our strongly held view, the government will continue to opt for the path of more spending – until it simply can’t, at which point the first path will lead back to the second. And so, no matter what it does at this point, the government will soon find itself faced with serious and widespread discontent.

Throw a heavily militarized constabulary into the mix, and the potential arises for the situation to get very ugly, very fast.

That the government remains firmly committed to its spending becomes obvious in a recent Reuters article about plans by the new Republican House to reduce Obama’s already diluted $100 million in planned federal budget cuts, to just $50 million.

And this while the government continues deficit spending to the tune of more than $100 billion a month. What a joke. What a bad, bad joke.

Delores (Dody) Day

A few comments courtesy Five Min. Forecast:  If Goldman is bullish on gold, so should you be.  They are, after all, the shrewdest investment bank out there. Also, note that inflation is caused by an expanding money supply (QE) and that is what we have now.
But this morning an unlikely source may have raised its “crash alert” flag.

According to the Financial Times, Goldman Sachs is sitting on a $170 billion mountain of cash. They’re reluctant to invest in anything right now. Evidently, GS sees no bargains in the market. At least none as juicy as the $50 billion Face book they’re offering overseas clients.

Indeed, “if asset prices remain at current levels,” reports the FT, “Goldman has said it could change gear and begin to sell portfolios.”

“Seldom has a larger red flag been raised for investors,” writes Peter Cooper, watching events from his perch in Dubai. “If Goldman cannot find anything worth buying, what chance for the rest of us?

“If the bank was really confident about the future, it would be out there buying so as not to miss the next rise in prices. You surely hoard cash only in the expectation of future bargains.

“Could it be that Goldman is secretly anticipating a big correction in asset values, a Phase 2 of the global financial crisis? If so, the bank is ready and waiting with money to invest when things look worse for the rest.”

If you suspected the Fed’s easy money (“quantitative easing”) has a lot to do with the rise in stocks, here’s a chart that confirms those suspicions. While many charts of economic statistics have gray bars representing recessions, this chart from Northern Trust has gray bars representing when QE is in effect.


David Schectman

Miles Franklin