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What do THEY know that YOU don’t?  Do you think that gold buyers in China and India that purchased gold last year are NOT losing the same amount of money that you are losing?  Yet Americans sit back and stop buying while the Chinese keep on buying.

Ah, but some of you are thinking David must be wrong.  I read that a record number of American Eagle gold coins are being sold.  What does he mean that Americans aren’t buying gold?  Perhaps you need a different perspective.  In 2011 the U.S. Mint sold a total of 30 tonnes of gold in all denominations from the one ounce to the 1/10th ounce varieties.  (94,700 ounces)  China imported 104 tonnes of gold through Hong Kong in June alone!  They have imported 1,160 tonnes for all of 2013, year to date.  That’s approximately one-half of all the gold that will be mined in 2013.  The Chinese are buying it all up!  That’s why the central banks are back to leasing their gold.  The difference in the supply/demand is huge, yet the price keeps falling.  This is manipulation being orchestrated from the only sources with enough gold to be able to feed a deficit of this magnitude.  Central banks.  You can buy gold for or below the cost of production (the current price) and the Chinese understand this.  Wake up everybody!

Monthly Chinese Gold Imports from Hong Kong

China is THE economic might of the 21st Century.  The Chinese are the shrewdest buyers in the world.  If you doubt it, you obviously have never done any business with a Chinese person.

So ask yourself, why is the demand for gold coming from China, India and Russia so strong? It’s causing shortages and delays.  Of course I’m only talking about physical gold; they have no interest in ETFs or Comex contracts.  The answer is, they understand gold and most Americans do not.  People in the U.S. are brainwashed into trying to pick a bottom.  They stop buying and wait.  Their attitude is that gold might go lower, so why buy now? That is why I believe the Larry Edelsons of the world actually do a disservice to people who read him and are interested in buying gold.  I don’t care if his calls are right or wrong.  He sends the wrong message!  He is turning his readers into “short-term traders” and “investors.”  If he were recommending only mining shares or futures and options, where timing is important, that’s o.k.  But that is the wrong message to send for people who want physical gold and silver.  In American, gold has become just another “investment.”  In the Far East gold is money.  They understand gold, but here most of you still do not.  I say it often; gold is not an investment; gold is money.

The buyers in the Far East are down as much as the buyers are in America, but the difference is they keep buying.  They increase their buying as the price falls.  Here, most people shy away.  One of the main reasons so many Americans are on the sidelines now is because so many of the newsletter advisories (subscription required, of course) selling timing information.  You pay them for trading advice.  They cater to the investor and create an investor mindset instead of sending the message that gold (and to a lesser extent silver) is money and in physical form are far preferable to paper assets.

Tell me, would you be happier to pay $1,900 an ounce for gold today or $1,350?  Why then are you so upset with the price under $1,300?  Do you plan to trade your gold coins or sell them when they go up a few hundred dollars?  I sure hope not.  In fact, I suspect that most of you will never sell a single ounce; you will leave it for your kids.  That’s what I plan on doing.

I’ll stop buying when the demand from China and India dries up.  Until then, it seems to me that they are the smart ones and we are the fools.  Either they are right or we are right!  It is as simple as that.  They buy on the way down, they buy on the way up; they trade paper currency for a monetary asset that has proved its worth for centuries.  They have lived through tyrannical governments and through currencies that have been inflated away to zero.  They have gold in their veins, in their DNA. They understand that our dollar is headed for the same fate and that trying to save in dollars, or any fiat currency is a fool’s game.  I promise you, the dollar will lose most of, if not all its value.  It has before and is well on the way to being worthless now, right before your eyes.  It’s impossible to see it happen because the move is up and down and in slow motion, but the trend is unmistakable.

Why does it cost $120,000 to buy a Mercedes SL Roadster now when I was able to buy the same car for under $10,000 in the early 70s?  Why does the two story colonial house that I built for under $30,000 in 1970 now costs over $450,000?  How come I could buy a gallon of gas for $.25 in the late 60s and today it cost around $4.00?  It’s right there to see, but most Americans are not paying attention.  One of these days, as Bill Holter loves to say, you will wake up on a Monday and the game will be over and you will not be able to get out of the dollar and into precious metals for any price.  No one will be willing to sell it to you.

There is a new TV show that Susan and I watch called The Dome.  Two episodes ago, when the townspeople realized that they were running out of food and water, a mob lined up in front of the local grocery store with money in hand – waiting to buy food and water.  But the storeowner didn’t want their money!  He was willing to trade his food and bottled water for batteries.  He probably would have traded it for silver or gold too, but the point I’m trying to make is your wealth in dollars will not always be able to transfer into “things.”

All it takes is a crisis.  A bottle of scotch, a pack of batteries, a flashlight and some silver coins will be worth more than a fist full of hundred dollar bills in a crisis.  Should a terrorist attack bring down the power grid, and that is certainly a possibility, your dollars will be worthless.  Your credit cards will be worthless.  Even gold and silver may not be accepted, but at least they will hold value during the crisis.  But we don’t need a terrorist attack; we have already experienced on, of sorts, over the last 40-years and it slashed nearly 80% off the purchasing power of our cherished dollar.  But an ounce of gold in 1971, before Nixon closed the “gold window” was worth a lot, even at the fixed price $35/ounce.  Then, a 1972 280 SL (I owned red one) Mercedes Roadster could be had for the equivalent of 285 ounces of gold.  Today it would set you back 92 ounces.  You could buy three of them now for the same amount of gold it took in 1972. And don’t try and tell me that I am picking a date to make it look favorable for gold.  That is when gold was set free, for the first time since 1933, to trade at what people were willing to pay for it.

Actually, looking back, the price of gold was always fixed.  An ounce of gold was a $20 gold piece since before the Civil War and its value was increased (the paper dollar was devalued) to $35 paper dollars in 1933.  Before the manipulated takedown, a year and a half ago, when gold was worth $1,900, the Mercedes could be had for just 63 ounces of gold.  That will happen again.  In fact, I say to you with complete confidence, that you will be able to buy the same car a few years from now for 30-some ounces.  So much for the history lesson…

Andy Hoffman just returned from a 10-day vacation in China. While he was there, he saw first hand the lines of people, rich people, average people, young people, old people, people from all walks of life, waiting to buy gold.

Andy wrote about his experience in his article titled, The Irrefutable Physical Gold Reality – Live From China! He said:

Anyhow, All I can say is this.  We’ve seen pictures of PHYSICAL Chinese gold demand – like the 10,000 people lined up to buy during this spring’s Dragon Boat holiday – and heard stories of such as well.  However, now that I’m actually in China, I can tell you first-hand that all we have heard is TRUE – and then some.  Just selecting a random marketplace near my hotel, I walked into a half dozen-coin/jewelry stores here in Guangzhou (a/k/a Canton) – the nation’s largest city.  And lo and behold, they were FULL of aggressive buyers purchasing everything from one-ounce coins to bullion bars to stunning 22-karat jewelry…

TRUST ME, the “IRREFUTABLE PHYSICAL GOLD REALITY” is that retail buying in the world’s most populous country has likely NEVER been stronger; and the more PAPER perception games TPTB utilize to “kick the can” a wee bit longer, the more voracious said demand will become.  Eventually, they WILL be overwhelmed by said demand, just as they ALWAYS have been throughout history.

In India, the demand for gold is so strong that the Indian government decided to limit the amount of gold that can legally enter the country.  The demand was so great that it was distorting the national balance of trade and punishing the Rupee.  Like the Chinese (and Americans), the Indians are “losing” as much money in the last year as we are, but instead of curling up in a cocoon, they’ve increased their purchases.  What do they know that you don’t?  I’d say a lot!  (My comments here are only directed to a majority of our readers who are afraid to buy until the bottom is in and are on the sidelines.  A minority of you are still buying and do understand gold’s role in your portfolio).

Our national culture is anti-gold and has been since FDR in 1933.  In the Far East, the culture is pro gold; they have seen paper currency after paper currency come and go.  To them, gold is money.  It is the only way to save.

Our readers freak out on a day like today, when for no apparent reason gold drops by $20.  Yet many of our clients will yell and scream to save $5 an ounce on their next purchase.  Where is the logic in this?

The truth is, I am fighting a difficult battle.  MSM is anti-gold.  Worse yet, most of the advisory services in our little niche industry try and time the market or present precious metals as an investment.  From all sides, you are told to wait, not to buy now.  From every side, you are being brain washed.  How, many of you ask, can you guys (Miles Franklin) be right?  Listening to you for the last year cost me money!  I say, what about the vast majority of our readers and clients that have been on board for years and years on the way up?  Most of you made huge gains for 11-years and enjoyed the ride up, but now you are upset by the orchestrated correction on the way back down.  This is only a problem if you believe that the bull market in precious metals is over.  Some of you actually do, but that would be a big mistake.  The final stage, when gold and silver make their biggest gains is yet to come.  It is not far off either.

I’ve told you many times before; the current lower price is a “subsidized” purchase.  The truth is, gold and silver shouldn’t be this cheap.  And the Chinese and Indians and Russians know it.  And further, they will continue to buy if the price goes lower and will continue to buy when prices go higher, because at any price, let along these unrealistically low prices, they prefer gold and silver to fiat currency.

I was discussing this topic with Bill Holter and he said, “In China the government encourages the purchase of gold and here the government doesn’t.”  Americans have been told that gold is nothing but a barbarous relic (Keynes).  But in India now, with their government discouraging it, and even greatly limiting the amount that can be imported into the country, their business thrives.  It has moved underground to a black market that smuggles gold into the country to meet the demand.  India is still the second largest gold consumer, second only to China.

In China and India the people understand gold. Here in America, there is no one alive who has witnessed the end of our country’s currency.  We’re getting close.  I’d say a loss of 98% since 1913 almost qualifies, but how many 100-year olds do you know?  And it’s happening in slow motion, over years and decades.  We do not have the hands-on experience.  There is no one alive who remembers or experienced the Civil War or the Revolutionary War and those were the two earlier periods when our national currency did become worthless.  Yes, the last real experience of the danger of holding wealth in a paper currency occurred 150 years ago in the South.  The good old Confederate currency.

100 hundred dollar bill

Two Third of a Dollar

Yesterday was one of those days…

Everything was down.  Gold, silver, platinum, palladium, the Dow, the dollar, and oil.  Everything was down.  But as usual, gold more than the rest.  That is paper manipulation, plain and simple.  It is the commercials waging war against the hedge funds and vice versa.  Let them pick each other’s pockets.  Thank them for making your next purchase $20/oz. cheaper.  The only price that counts is the price you sell it for.  The lower it goes the better it is for you.  And that is a fact that most Americans overlook and the wise savvy buyers in the Far East are totally aware of.  Believe me, if they felt otherwise, they would not be buying now.  Only some of you are cutting back.  So once again I ask you, who is right?  Them or you?

Check out the following YouTube video below:

Gold, the Titanic & Lifeboats – Why it’s Important to Own Physical Gold
It offers a simple analogy of the difference between physical gold and paper gold.  This is a must see for all of you.  Simple and elegant.