As I promised yesterday, I will write more of my own thoughts and offer up less of other people’s material. Let Misha, our Newsletter Editor, know if that is what you want at email@example.com.
There is scientific evidence that people tend to think that bad things happen to other people but not to them. An example of that mindset is that people still smoke even though they know that over 400,000 people will die this year from smoking, and there are warnings on the cigarette packs and from the media.
But they rationalize, “It happens to others, but it won’t happen to me.” The same phenomenon happens in the market place too. “Other people will lose money by choosing the wrong investments or stocks but it won’t happen to me.” This is a commonplace mindset.
I certainly fall into that camp, and so do many of our readers. Not about the smoking part – I had my last cigarette nearly 30 years ago, but it does pertain to the investing part. I am steadfast in my belief that my views are right about gold and silver, the fall of the dollar and the risk of owning common stocks and bonds. I write daily about doing what I do is safe and the other guys are at risk. Of course the “other guys” take the other side and are certain they are not at risk and us precious metal “nuts” are the ones whose investments are at risk.
This does not explain which side is right or wrong, but it does explain why the two sides hold firmly onto differing views. We humans are hard wired to think in this manner. “The danger does NOT apply to ME!”
Another part of the research suggests that it is normal for people to see the “worst” possibility for others, but it doesn’t apply to them. This is another theme we encounter in our daily life. Others will die of cancer and heart attacks. Others will be raped or mugged. Others will be involved in a car accident. Others will lose their money in stocks, bonds, or even gold and silver. It always happens to others, but not to us. I know it’s crazy, but that’s the way we all are wired. Well, not everyone; my wife, bless her huge loving heart, is always worried “it’s going to happen to us, and especially the children and grandchildren.” I really don’t know what this “It” is (don’t I sound like Bill Clinton), but she does and it’s always a different “it.” When I point out to her that there is nothing to worry about, we are fine financially, the kid’s marriages are going well, the kids are happy and healthy… she says, “But there’s always cancer.” What can ya do? I never worry, she always worries. I can never win the battle, but for short periods of time.
What does all of this have to do with investing in gold and silver? A lot! We all have our beliefs that we are doing it right and are out of harms way. I “know” that owning gold and silver is the right thing to do and the safest place to have my money. Backwoods Jack (and most of the MSM) thinks us Goldbugs are “Wingnuts,” and the real safety (and profitability) is in common stocks. Backwoods and I fight like cats and dogs over this issue and the pendulum swings back and forth. For a period, I’m right and lately he’s been right. But who is really “right?” It doesn’t matter, in a sense, because whatever we embrace, our subconscious will tell us that harm will only come to the OTHER view. Even when we are wrong, we think we are right.
It’s difficult, because being right or wrong is not a constant; it changes over time. That is why it is so difficult for those of us who own gold and silver or those who don’t want to figure out what the best course of action is. Our hardwiring works against us, and the back and forth price swings make it even more confusing.
That is why I spend so much time researching and writing about the importance of understanding The Primary Trend and The Big Picture. The day to day noise only adds confusion and either (1) reinforces our views, if we are making money, and (2) strengthens our resolve, in spite of evidence to the contrary, we are still right. Back to my favorite Richard Prior statement, to his wife who came home and found him in bed with another women – “Do you believe me or your lying eyes?”
Our capacity to delude ourselves is endless. The question is, and this IS THE QUESTION, “Is the bull market in gold over?” The short-term price movements will not give us the answer. If there is an answer to be found, it will be The Primary Trend and The Big Picture, and the fundamentals.
I have concluded that I AM RIGHT! Well, that’s to be expected. I’ve just written why we all think that way. But really, I AM RIGHT. I don’t believe my “lying eyes.” I don’t care that gold is down some 30% in the last two years. I don’t care if gold is down 26% in the last 20 months. Well, actually I do care and it really pisses me off, but it does not dent my belief in gold one bit. Not as long as –
(1) Congress keeps borrowing hundreds of billions of dollars every year, with absolutely no end in sight.
(2) The Fed keeps printing money to buy the debt and hold interest rates to near zero, below the inflation rate.
(3) The BRIC countries move toward trading between each other outside of the dollar.
(4) Gold and silver are selling for less than the cost of production.
(5) China and Russia are buying up as much physical gold as they can find on the market, and the lower the price the more frantic their buying becomes.
(6) Central banks (led by the Fed) keep leasing hundreds of tonnes of gold into the market, through the bullion banks, to hold the price down, artificially. That can only last for a while, it will come to an end, and then…
(7) Because Backwoods Jack thinks I’m an idiot and that comforts me because what the Heck does he know anyway (outside his profession that is)? I would be much more concerned if he agreed with me!
(8) Many of the brightest people I know agree with my view of the economy and the precious metals markets, including Jim Sinclair, Richard Russell, Eric Sprott, Bill Holter, Andy Hoffman, Ted Butler, Bill Murphy and Chris Powell, Doug Casey, James Turk, Jim Willie, Jim Cook and many others..
(9) Germany asked for 300 tonnes back, their gold stored at the Federal Reserve. We said, “O.k. we will return it over the next seven years. Seven years?” If they had it, why take seven years? You should think about that and perhaps draw the conclusion that gold really is in short supply, physical gold that is.
We can’t all be wrong. Most of us have spent at least three or four decades involved in this industry and we all see pretty much the same thing here. Oh, there are differences in opinion. Some say manipulation is the only reason gold isn’t already priced in the thousands and silver isn’t well above $100 an ounce. Others say it’s just normal market swings, corrections and cycles. But all agree we are headed toward those lofty prices and all of us use most of or all of the reasons I have listed above.
There can be NO doubt that for now, JPMorgan is the elephant in the room that controls the price of paper gold and silver. It used to be Goldman Sachs. I like to group them together. They are the Evil Wall Street Twins. But luck is on our side now because JPM is very LONG in gold and silver and JPM never seems to be wrong. They are investing with expectations that gold and silver will RISE, not fall and they MAKE the market. They will continue to make the market until (1) the CFTC says they can’t, which doesn’t seem likely, or (2) the physical market takes over due to supply/demand shortages in the physicals. That can happen and in fact is in the process of actually happening right now. China (and India and Russia and some of the Arab states) are behind this change and it is really powerful and it is growing.
So now you know everything that counts. You know what you believe and you are right (which ever way you believe) and you know how to justify believing in gold and silver. Will you be right? I say absolutely, as long as you believe the way I do.
Telling it like it is
A lot of people really like what I have to say. Why is that? If you want brilliant insight, amazing research or unfailing investment advice there are many other sources of information. I hired Andy Hoffman and Bill Holter to offer you some of the finest information in our market place and they do. So why bother to read what I write?
Well, here is what I believe I bring to the table. I have worked in the precious metals industry for 30 years. For the last 30 years, I have spent hours a day searching out the finest information I could find, and 20 of those years were before the Internet. I had to pay for the information and it was weekly or monthly, not daily, like it is now.
I learned about the economy and precious metals the hard way, with serious effort and devotion.
I also started and head up a highly respected precious metals firm that does, in a good year, some $200 million in business – starting from nothing in 1990. As a broker and the owner of a fine successful firm, with 30 years of hands on experience, I’ve developed a feel for our industry, our clients and readers needs. I was one of the first in the precious metals industry to offer an educational newsletter (much copied since) and focus it on educating our clients. We wrote about why they needed gold, beyond the all too common promise of profit. Actually, profit is low on the list, but the “why” is more important than the “what,” as in what to buy.
But even more important, if you have followed my newsletter for even a short period of time, you know that I write from the heart! I don’t B.S! To my conservative readers, please forgive the reference to BS, but I am telling it like it is and exactly the way I feel about it. I may not know everything or every twist and turn in the road, but I do have one seldom-found ability that I offer to my readers; I am moral and honest, to a fault.
Sure, I run a business, and we need to make a profit to exist, but I make sure that our pricing favors our clients, not our bottom line. The bottom line is what is left. Profit is not a goal; it’s what’s left over after doing things the RIGHT way. Many in our industry have a totally different business model. I once asked the very successful owner of a precious metals firm, “Why do you charge so much?” He replied, “Why do you charge so little?” Simple, because making money was never my main goal when I founded Miles Franklin. Sure, I wanted to earn enough to have a great life style, but beyond that, money was not a motivator. Actually I wanted a lot of free time, minimal stress and the ability to do what I like, which is why I read, research and write. I had enough of the “sales” end of it for the first 20 years.
I would never ever suggest that anyone, especially our readers and clients, do anything that I do not do (and my son Andy feels exactly the same way). Our financial “chips” are all in, gold, silver and platinum.
I believe in what I write and am certain that what I say is the way it is. Sometimes the prices don’t agree with the story, but the last few chapters of the book have not yet been written. However, if you are smart enough, you know how a book or a movie will end before the end – if you pay attention.
I try not to speak down to my readers. I talk to you like I would talk to my best friend, my family or my next-door neighbor. Straight, no-B.S. conversation, from the heart with your best interest foremost in mind, and no ulterior motives beyond that. Is this the best way to write a newsletter? Some of you think so and many probably don’t. Hey, that’s o.k. Read Andy Hoffman, Bill Holter, and I would say Jim Sinclair and Richard Russell, but they could well say the same things I just said, and all of us would mean the same. Some of us tell it like it is and hope we are right, actually assume we are right, and that’s what we do; that’s all that counts.
I say, good honest advice that puts YOU first is uncommon. I don’t sell subscriptions. Most of the people that read our reports probably buy from other gold dealers. I’m o.k. with that, but I would really appreciate it if you gave us a chance to earn your business.
In my company, the people who work for me are honest, knowledgeable and will really treat you well – or I won’t keep them around. My name is on the masthead. I am the Miles of Miles Franklin. The Franklin hasn’t been around since 1994 and was never involved in the business other than as an investor. I bought him out nearly 20 years ago. My self-respect is, to a large degree, based on how my firm treats YOU. I set it up that way and it will never change, not as long as I am involved. That’s a promise!
If you follow my advice, this much I can assure you – we will both sink or swim together. I know firsthand that there are other firms in our industry where the owners and the brokers own no gold and silver, or very little. How can anyone sell something that they don’t believe in enough to own it themself? I couldn’t do it, but perhaps I am somewhat unique in that regard.
What more do you want? We give you great information. We price our products as low as we possibly can. We keep our overhead low so we can do this and management does NOT take ridiculous salaries. Actually we take very small salaries, and what is left at the end of the year is our “profit.” We are honest and we care about what we say and how it affects you. We believe completely in what we sell and invest probably way too much of our own money in the products that we sell. We believe our own story!
In a world that no one can promise you how the future will play out, at least we ourselves believe in our interpretation of the facts and we do invest our own money accordingly.
Now I think that is a lot to offer, and it’s actually, rather rare. But what counts is what YOU think. So, what do you think? Are we worth a conversation so you can judge for yourself? If you think so, our toll free number is (800) 822-8080.
Your ever-humble servant,