There is some outstanding commentary from LeMetropole Café from Friday. I hope you are checking them out. They are one of the best sources of original information in our areas of interest.
Sinclair is on a roll. You can’t miss his take on what is happening now.
Gold closed the day and the week at the high on Friday: $1,582.30. Silver was up $0.45. The dollar and the Dow were down. This should be an interesting week for gold and silver!
On Sunday, Frank Suess, Jr. stopped by to visit us. His company is hosting a financial seminar on offshore investing, here in the Miami area.
Frank is an important person from our past. When I started Miles Franklin, in 1990, I went to work with Lou Parente and Frank Suess, and their start up firm BFI. Our little group pioneered the Swiss Annuity business in the U.S. Contrary to what you may have assumed, Miles Franklin didn’t start off as a precious metals company. In the early 90s, there was very little interest in gold and silver but it wasn’t too difficult to get people interested in investing in a Swiss annuity. Swiss annuities were denominated in the gold-backed (at the time) Swiss franc and offered privacy, safety and a way to keep part of your money safely offshore. We, along with the Swiss-based Jurg Lattman group, were the first people to present this concept in the US. We had a unique new product that many Americans wanted.
We stayed in the business with BFI, for over a decade and built the Miles Franklin name, and reputation.
Our focus in gold and silver didn’t heat up until around 2001. At that time, right after gold broke the $300 barrier, Andy and I decided it made more sense for our client base to move from the Swiss franc into gold. It was a prudent decision and the timing was absolutely perfect. That was the very beginning of the now 13-year bull market in gold and silver. Our clients made a lot of money in the Swiss franc in the 90s and multiplied the gains in gold and silver in the 2000s. Yes, we really did see the bull market coming as early as 2001 and we were one of the few firms that actually got our clients involved from the beginning. Early on, we helped our clients move hundreds of millions of dollars from Swiss francs into physical gold and silver. Jim Sinclair wasn’t the only one who saw this coming!
Getting back to Frank Suess, Jr. Frankie, as we call him, is the same age as my son Andy Schectman, and I am a contemporary of his father Frank Sr. Frankie grew up in Switzerland, went to college in the San Francisco Bay area and he joined his father in the business (BFI) in the mid to late 90s. He and my son Andy were looked upon as “the future” of Miles Franklin and BFI. Frank and I were the owners of the businesses, but the next generation was already on board.
Both Miles Franklin and BFI evolved together and worked closely together. We were their biggest sales agency and they were our primary source of income – though we did sell some gold and silver too. We were like family. The Suess’s are great people, totally ethical and well respected. We made a terrific team.
Although we have not worked closely with them for over a decade, we have remained friends and stay in touch.
So on Sunday, Frankie and I had a cup of coffee and talked about the past and the future too. We agreed that there will come a day, in the future, when the price of gold is “fixed” and it reclaims its role as a major backing for a new reserve currency. We both do believe that day is coming. That will necessitate a major change in our business and our industry. And when it does, we will be there once again with BFI, offering our clients an array of state of the art, managed accounts with cutting-edge investment alternatives from Europe and Asia. You will need someplace to invest all the profits you will have made in gold and silver. But that’s in the future.
During the course of our conversation, Frankie made a statement that was not directed AT ME, but in general, and it really resonated with me. Being Swiss and living in Zurich (though he travels extensively in Europe, Asia and the Caribbean), he said, “You Americans are too hard on yourself. You have a great country. Yes, it has its problems, but where else would you rather live? Where do you think that your life would be better?” I thought about that statement for quite a while and I realized that he was absolutely right. Right on all counts.
I have a handful of friends and clients who are actually considering leaving America for New Zealand, Israel or some destination in Latin America. They are very worried about the direction our country is headed. When you are heavily involved in our industry it is easy to lose sight of the forest for the trees. We write about and talk about the PROBLEMS on a daily basis. But do we put them in perspective?
Wasn’t it easy to lose hope and worry during the Great Depression? I wasn’t a part of it, but my parents, grandparents, aunts and uncles all were. I heard the stories of our parents having to use pages from the Sears Catalogue for toilet paper. I heard about their struggles and having to live on very little money.
I was very young, but I remember the hard times in the early 40s. My father bought me an ALUMINUM bike with solid wheels (no spokes) because there was no steel available due to shortages caused by the war. No TVs, no vacations, one old car for the entire family. We got by. After the war, my mother always said, “Eat all of your food, they’re starving in Europe.” Her younger sister and her husband moved in with her parents. Everyone was kind of poor, but we didn’t know it. Even though we had just come through a dark period (The Great Depression and WW2), we knew that we had it better than the rest of the world.
In the 1950s, I was taught to duck beneath my wooden desk at Willard Grade School, during bomb drills. It was The Dr. Strangelove era – we were always afraid of the Atom bomb. We lived with the threat of nuclear war every day. It was real – the Cuban missile crisis brought us to the edge of the abyss. Our mortality was right there, staring us in the face.
In the 60s we suffered through the Vietnam war and in the 70s inflation threatened to send all of us to the poor house. Like most Americans, I had no idea what gold and silver was all about but I sort of remember they were going up in price, along with oil, and the stock market wasn’t doing very well.
I went a full year in 1983 without a job. The inflation of the 70s lead to ultra-high interest rates which stifled the economy and the recession was nasty (like it is now).
Things brightened up for a while; in the 1990s the stock market made a lot of people wealthy, on paper. But what the Gods give the Gods take away and as the new century rolled in, the stock market crashed. Then we sat in front of our color TVs and watched in horror as 9-11 unfolded. Life would never be the same again.
The perpetual War on Terror was launched and we are still stuck in Afghanistan. The war drums are beating once again; this time with Iran and/or North Korea.
We are still digging out of the rubble of the near-global financial crash in 2008. We are worried about the very survival of our US dollar and our economy (CIA Adviser Warns: US Is in Throes of ‘A War We Are Going to Lose’).
Looking back, there were huge problems and threats in every decade of my life, from 1942 up to today. They were all very real. And yet here I am (and here you are) and we still live in the best country in the world (a fact that Frankie reminded me of, from the perspective of a well to do, dual-citizenship, American-Swiss entrepreneur).
Do you know that of the 1.3 million Brazilians who travel each year, over 70% come to the US. Miami Beach is a great example of how desirable people from other countries think we are (especially in Miami where the weather is awfully nice). There are so many wealthy people here, from Russia, Venezuela, Brazil, Mexico, Columbia, Canada, and Israel, to name but a few, and they all want to be HERE. They could go anywhere, but they WANT TO BE HERE. At the other end of the spectrum, there are less fortunate people from Cuba, Mexico, Jamaica, the Dominican Republic and Haiti – but they share one thing in common; they consider themselves fortunate to be here. They don’t see American through the eyes of our newsletter writers. They don’t worry about the problems. This is THE place they want to be.
The biggest problem I face, every time I discuss the topics I write about in this newsletter with new people, is they always ask the same question. They say, “O.K., now that you’ve told me how bad things are, how do we fix the problems?”
We, the people in our industry, are full of information, information that tells you how messed up things are. We are facing another depression; we are facing hyperinflation; the stock market could crash; the housing market is about to tumble again; our currency will become worthless; we are losing our freedoms (Patriot Act); the government is arming against us; the Fed and the banking industry have gained control and our government is unable and unwilling to fix any of the problems.
We have become experts in focusing on all that is not right in America. And then someone like Frankie stops by and says, “You Americans don’t realize how good you have it.” He’s right! We still are the best choice out there. And yes, things are not as good as they could be or should be, but where would you go for a higher standard of living? I would never leave. Oh, I may move some of my assets to another country, and that makes sense on a financial level, but my family, my business, my friends and my culture are all based in the US. God forbid I should have to give up my beloved Vikings, Twins and Timberwolves! I just couldn’t do it.
We hear about all of the freedoms we are losing, but I am still able to write about our Federal Reserve, our government and our problems without interference. I am able to travel anywhere in the country I wish. I can live in any neighborhood I choose and can afford. I have access to the finest medical care that money can buy. Even after paying a majority of my earnings to the government, I still have enough left over to live a life I never thought possible when I was in my 20s.
Yes, I have noticed that I live in the midst of many wealthy people from all over the world here in South Florida. I noticed the wealth and the different languages, but I didn’t stop to ask myself “Why are they living HERE?” I’ll tell you why – because in spite of all the things I discuss that are wrong with America, there is a whole lot more that are right.
I’m still not exactly sure how to answer that simple question – “How do we fix it?” But we all better start working together to find an answer. What we have is too good, too special to let it all collapse.
Perish the thought, but maybe Backwoods Jack is right – maybe we Americans are a tough, ingenious lot and we will figure it out before it’s too late. Jack is a pillar of HOPE. We’ve made it so far, for the last few hundred years. If we made it through the Revolutionary War, the Civil War, WW1, WW2, a few depressions, pandemics, (Spanish Flu, Polio, etc.) an oil embargo, the cold war, Y2K and the war on terror, we should be able to make it through our current problems too. They always seem so daunting when we are in the middle of them, but we move on.
There will be some serious bumps in the road and I try and help you avoid those related to our currency and try and offer you ways to hold onto most of your hard-earned wealth. But we will all get by – some will have an easier time of it than others, but we will get by and our great grandchildren will look back on these times and wonder why so many of our generation focused so heavily on “doom and gloom.” There is hope. Americans have always found a way – have led the way. We still have the right to protest, to vote and there are enough concerned Americans to make a difference – if only we band together and address the issues.
We could start with the elimination of all lobbyists; one six year term for the president and members of congress; a movement toward a real balanced budget; bring back our troops from the Middle East and use the trillions we would save to re-build our infrastructure and modernize our industries. Cut the red tape that makes it so difficult for new businesses to start up and succeed. Cut taxes so people can end up with more money to save and invest – in America. There are so many things that CAN be done.
At some point, maybe after a stiff kick in the ass, I believe we will find a way to change things. We better, because they sure need changing. And even though this is still the best place in the world to live, it could be BETTER. It must get better.
Thanks, Frankie, for reminding me how well we really do have it here. You should know; you have spent half your life here and half in Switzerland. You have a perspective most of us do not.