“The idea that QE is primarily to help the economy recover is Keynesian guff, a cover for the true reason. Without it, the U.S. and U.K. would have to compete for global savings at far higher interest rates. What price $2 trillion in new Treasuries with no QE? What price L175 billion in new gilts? The debt trap has already sprung. And few investors yet seem aware of the irony that loading up banks with Treasuries and gilts is exactly what the eurozone banks have already done for the PIIGS. Whatever the current difficulties faced by European banks and the U.S. and U.K. governments and their banking systems, there is only one option for all of them: Buy time by printing yet more money. This is why the banking system in the eurozone and elsewhere will survive. Banks need governments as much as governments need them. The cost of this survival will be borne by the unwitting saver, who has been frightened into cash only to find it being debased more rapidly than before.” –Alasdair Macleod
We have been in business for 21 years and in all those years we have done over two million dollars in sales in a day only a dozen times. Six of those days occurred in the last 10 days. I realize that you have nothing to reference this to, but trust me, that is a LOT of business; especially for seven brokers. There are firms in our industry with 50 or more sales people who rarely ever do that much business in a day. It is a testimony to the quality of people who work for Miles Franklin AND to the insatiable demand for gold and silver. Twice, in the past six months, gold and silver have been crushed. In each case, almost immediately our phones start ringing off the hooks. The more my personal portfolio of gold and silver falls the more business at Miles Franklin increases. Our readers are among the most “with it” and highly educated investors out there! I take great pride in that fact and take some of the credit for their savvy investing. It tells me that I am not talking to the wall.
In the past, when prices fell, our business fell too. This simple “turn-about” is very significant. It signals the beginning of the end of the Gold and Silver Cartel. No matter how hard they lean on the price, it bounces right back due to massive physical off-take.
I checked the daily sales figures and we averaged less than one buy-back a day in the last two weeks. People – our people – are buying, not selling. One of these days, something will happen, a “black swan” event, and we will take orders for over three million in a day. We are not a corner coin dealer or a mom and pop operation. We are a major player in the precious metals industry, but we function as a family-owned service oriented and personal sales organization. Our business is a direct result of client referrals and newsletter endorsements. We rarely advertise. Our mailing list has doubled in the last few years. So has our business. Looking ahead, the only thing that will hold us back will be a lack of product to provide to our clients. If the top one percent of the wealthiest Americans decides to diversify their portfolios and include five percent physical gold/silver in their mix, there won’t be any metals left for the rest of us. The day is coming – after all, the wealthy used to invest in bonds, but thanks to the Fed, there is no incentive to buy bonds that pay only a percent or two in interest or to keep all of their wealth in a currency that is being blatantly debased right before our eyes with endless QE. Watch what happens to the price of gold and silver when QE3 is announced, and it will be shortly. Please, remember Jim Sinclair’s constantly repeated phrase “QE to infinity!”
We are just a very small piece of the gold and silver market, but a good “indicator” of what is happening on a larger level. Demand in India, China, the Middle East and Europe is the strongest it has been since the bull market commenced in 2001. For example, last Friday the Perth Mint, one of the largest mints in the world, informed its customers:
Demand for our coins is currently running at unprecedented levels and we have been inundated by high levels of web and telephone traffic from clients all around the world. This has put tremendous pressure on our business systems and Customer Service department which have struggled to cope with the number of enquiries and orders.
Not that long ago, a hundred thousand dollar order was a big deal. Now, a million dollar order is not unusual. People don’t casually hand over a million dollars to anyone. We have instilled a very high level of confidence with our clients. We are like one big like-minded family. Years ago I predicted that sooner-or-later wealthy investors would decide it was time to put a little money in gold and silver. And so they are! But just a little. I predict that when gold tops $2,000 and silver tops $50, most likely in the next six months, the “million dollar order” will become even more commonplace. That will make it even more expensive for most of you to buy gold and silver. The greater the demand, the higher the premiums (the charges to everyone from the wholesale market) rise on gold and silver.
Most of you are unaware of the chain of supply in our industry. All of the gold and silver that we sell comes from only two sources: Major mints like The US Mint, The Canadian Mint, The Austrian Mint, The Perth Mint, The South African Mint and a few others – and the “Secondary Market,” which is nothing more than the gold and silver that you sell back to us and is recycled. The world’s major mints are already functioning at capacity and can barely shovel enough metal out their doors to meet CURRENT demand. The secondary market is virtually non-existent. You had better get used to waiting longer and longer to take delivery of your orders. No one holds a large inventory of gold and silver. Dealers make their money by charging a few percent on the metals that pass through their doors to the client. They are not in business to “speculate.” All up and down the chain, there isn’t much of a cushion and when business spurts, like it is now, the pipeline runs dry. Then prices rise (premiums and spot prices) and delays come into play. This is just a preview of what lies ahead.
I am putting the final touches on today’s daily at 5:30 Monday morning. Gold is now UP $27.50 from Friday’s close and is at $1,666.20 and rising. Gold needs to close above $1,690 to put the recent correction behind us. If gold can pick up another $25 once the New York market opens, we are there.