first majestic silver

The Single Easiest Way To Understand Precious Metal’s Value

June 28, 2017

I have lots of “PiMBEEB,” or Precious-Metal-bullish, everything-else-bearish, topics to discuss – to the point that I could easily pen three or four articles.  And trust me, I could easily do so; as in my quest, and the Miles Franklin Blog’s in general, to disseminate TRUTH – and in the process, end the gold Cartel’s world-destroying reign – I have indisputably published more Precious Metal commentary than anyone on the planet.  As in, roughly 250 articles per year, atop at least 100 podcasts, for many, many years.

No matter how much ignominy I am forced endure – like yesterday’s paper gold “flash crash” – which the captive, brain-dead MSM actually called a “mistake” – it’s been worth every second of it; as the Precious Metal community, a “band of monetary rebels” with an iron constitution; and unwavering desire to end the greatest ill the planet has ever known, fiat currency; has introduced me to some of the best people I have known.  And better yet, now that I am an equally passionate Bitcoin devotee, I have found a whole new cadre of anti-establishment, anti-fiat currency “freedom fighters” to network with, making it doubly exciting to awaken each morning.

I cannot wait to get to today’s principal topic – so much so, I actually considered putting it ahead of the day’s extremely PiMBEEB events.  However, in the spirit of structure; the virtue of anticipation; and most importantly, the necessity of focusing on the political, economic, and monetary dangers facing us, I’m going to hold off until the end.  Trust me, after reading the “preliminaries,” you’ll be better mentally prepared to embrace it!  Starting with…

  1. In a “you can’t make this stuff up” moment, Mario Draghi, who just two weeks ago, “took Central bank credibility to an all-time low” when he dramatically reduced the ECB’s inflation forecasts, one day after floating a “trial balloon” that the he would raise them, doubled down on idiocy at his latest press conference. First, he “unexpectedly” signaled tapering may be closer than expected, because factors weighing on inflation were “mainly temporary.”  To the point that, he actually said – on the same day the Bank of International Settlements issued an ominous warning of the increasing likelihood of another major financial ciriss – “the threat of deflation is gone.”  I mean, what part of crude oil plunging 8% since the June 9th ECB meeting am I missing?  Or the accompanying decline in the CRB Commodity Index from 176 to 168, putting it mere basis points from of its lowest level since the 2008 crisis?  Or yesterday’s horrific earnings warning from one of Germany’s largest auto suppliers, Schaeffler, due to “price pressures in the original equipment manufacturer business?”  Or yesterday’s $17 billion bailout of two Italian banks – representing 1% of Italian GDP – just one week after the bail-in, and equity collapse, of one of Spain’s largest banks?  Better yet, Goldman Mario claimed “there are no signs of a bubble.”  No, no bubbles at all.  I mean, it’s perfectly natural for a Central bank to own a third of all sovereign bonds – many, at negative yields – including those of completely insolvent nations, amidst one of the worst periods of economic weakness of our lifetimes.
  2. Similar “deflationary” pressures are accelerating in the U.S., where the Fed is “tapering” into a Depression as well; like yesterday’s disastrous trifecta of plunging economic reports, including durable goods, the Chicago Fed National Activity Index, and the Dallas Fed Manufacturing Index. Which, in their aftermath, caused interest rates to plunge to their lowest level of the year, and the Treasury yield curve to become “flatter” than at any time since…drum roll please…November 2007, just before the biggest financial crisis of the century.  And oh yeah, yesterday’s two-year Treasury note auction featured the highest stop-out rate (read, blistering demand) since…drum roll please…October 2008!
  3. The United States of War, run by a businessman-come-“Commander in Chief” who appears to be more warmongering than even Nobel Peace Laureaute Obama himself, appears hell-bent on instigating a generational Middle East conflict – per last night’s ominous; completely unsubstantiated; and given current circumstances, patently ridiculous White House statement that the U.S. has “identified potential preparations for another chemical weapons attack by the Assad regime”…and that, if carried out, Assad would “pay a heavy price.”  This, on the same day a “Pentagon Report” concluded “ballistic and cruise missile technology is advancing in countries from North Korea and Iran to Russia and China, increasing potential threats to the U.S. even if they don’t carry nuclear warheads.”  Which brings to mind the question of why America is so obviously hell-bent on potentially suicidal – and historically PiMBEEB – military actions?  Perhaps, to distract sheeple from the collapsing U.S. economy and empire; and perhaps, per what I wrote last week, to support the price of oil – damn the potentially catastrophic consequences.
  4. “Trump-flation” – the market-manipulation-supporting-meme fabricated on Election Night, to replace the equally ridiculous “Hillary-flation” meme used to manipulate pre-Election markets – is so incredibly dead, even the “coroner” is in shock. Between plunging interest rates, oil prices, economic data, and the dollar index itself, it’s a wonder anyone listens to anything the evil Troika of Washington, Wall Street – plus their hideous love-child, the Federal Reserve; and the Mainstream Media anymore.  Particularly when it comes to pipe dreams like the “repeal and replace” of Obamacare that as I predicted two days after the election, will NEVER happen – resulting in this horrific chart, particularly in light of America’s historically ugly demographic trends, continuing to parabolically rise.  To that end, not only are the multiple circulating “Trump-Care” bill versions not in the slightest bit different, from an overall economic impact, than Obamacare; but they have not the slightest chance of being passed.  Case in point, if you want to realize just how moronic our “leaders” are…in the most current version, the Trump Administration claims that while health insurance premiums would initially increase 20% under Trumpcare, in the “long-term,” they will decline 30%.  No, I’m not making this up!
  5. Following up last week’s revelation that, care of the $45 billion General Electric has borrowed to enrich the “1%” with share buybacks and dividend increases, GE has a pension liability 50% greater than any other U.S. company; in a move eerily similar to the failed “strategy” of another once-great American icon, IBM; the “other” once-greatest U.S. company, General Motors, announced it will be borrowing $3 billion simply to fund its current pension liabilities.
  6. Brazil’s President, Michel Temer, who was appointed when former President Dilma Rousseff was impeached for corruption, was formally charged with…drum roll please…corruption; via a scandal so ugly, he too may be impeached.
  7. A “shocking” study of the net effect of Seattle’s ludicrous, mandatory minimum wage hikes – from $9.47/hr in 2014 to $15.00/hr today – revealed that already, 6,700 jobs have been lost, with the average wage in the related industries falling by roughly $1,500/person. To that end, does anyone NOT understand why McDonalds is about to replace the vast majority of its workers – you know, the part-time, minimum-wage-earning, non-benefits-receiving workers the BLS claims to be the backbone of the “strong” U.S. labor market – with computerized kiosks?

OK, now that the ugly stuff is out of the way, let’s get to the “fun” stuff; i.e., the “single easiest way to understand Precious Metals’ value”; which, per my introductory remarks, you are hopefully eagerly waiting to hear about.

Let’s go back to last week’s article, “valuation anomalies suggest historic Precious Metal lows”; in which, I described how, care of the historically weak Precious Metal sentiment the PPT, Fed, ESF, and gold Cartel have created here in the States; which is decidedly NOT shared overseas, where Precious Metal demand is stronger than ever; the historically low silver/gold and platinum/gold ratios and numismatic premiums present some of the most attractive investment opportunities since the PM bull commenced nearly two decades ago.

Regarding the latter, when I realized numismatic premiums for coins like the below 1904 U.S. Liberty, “Mint State 62” coin were close to zero, I rushed to purchase some myself; knowing full well that it was less than a decade ago when premiums – over the underlying bullion value – were 50%-100%.  A time, I might add, that Miles Franklin’s brokers vehemently recommended swapping them for additional bullion coins, given the “arbitrage opportunity” that existed.  Today, that opportunity is 100% “reversed” – as you can now purchase these very same coins – government-issued American Gold Eagles, from the time of a true gold standard, before the Fed even existed – for essentially the same price as one minted today.

When I received it in the mail, the first thing I noticed was the date, 1904.  After which, I pondered the fact that the U.S. dollar as we know it wasn’t even created yet.  Moreover, that since today’s dollar was created in 1913, when the Federal Reserve was surreptitiously ushered into existence, it has lost 99% of its purchasing power.  And yet, this coin is worth far more today, than the $35/oz it demanded 113 years ago.

Next, I considered how difficult it likely was to mine – with pickaxes; in horribly dangerous conditions; as claim-jumpers sought to steal whatever they could get their hands on.  And yet, those were the “good old days” of gold and silver mining, when “visible gold” still existed – via placer formations that enabled miners to see glistening gold in streams; and thick, unmined veins NO ONE could mistake for anything but the real thing.  This, compared to today, when such “low hanging fruit” is so far in the rear-view mirror, you’d be lucky to mine one ounce from a ton of rock – using extremely expensive extraction methods; following extremely expensive, high-risk exploration methods that rarely produce any mineable ore in the first place.  Not to mention, with claim-jumpers still around; as well as thieving governments; hell-bent environmentalists, and Mother Nature herself – now that most of the ore in fair weather locales has been found.

You see, the beauty of “hard assets” are that they are not government or corporate fabrications, written on a piece of paper or typed into a computer – nearly all of which, lose most, if not all of their value over time (particularly fiat currencies, care of the Ponzi schemes underlying them).  In the case of physical gold and silver, you are holding real, tangible wealth that has endured the test of thousands of years of time; and very likely, will endure thousands more, no matter what “money” the world uses.  To that end, if “money” happens to still be fiat currency, gold and silver coins will undoubtedly gain value as a monetary alternative and inflationary hedge; and if Bitcoin and/or other decentralized crypto-currencies usurp fiat currency, as I strongly believe they will, gold and silver coins will also gain value – simply, as the world’s oldest, most trusted means of wealth storage.


If you have any questions regarding how you can capitalize on the “historic valuation anomalies” cited above, please give Miles Franklin – whose brokers, on average, have three decades of industry experience – a call at 800-822-8080.  Or, as always, you can email me at [email protected]

Andrew ("Andy") Hoffman, CFA joined Miles Franklin, one of America's oldest, largest bullion dealers, as Media Director in October 2011. For a decade, he was a US-based buy-side and sell-side analyst, most notably as an II-ranked oil service analyst at Salomon Smith Barney from 1999 through 2005. Since 2002, his focus has been entirely on precious metals, and since 2006 has written free missives regarding gold, silver and macroeconomics. Prior to joining the company he spent five years working as an investor relations officer or consultant to numerous junior mining companies.

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