In May 2002, I first realized the dollar’s days as “reserve currency” were waning; and thus, went “all-in” the Precious Metals sector. I still worked on Wall Street at the time – as a sell-side analyst covering oilfield service, equipment and drilling stocks at Salomon Smith Barney; and thus, was partial to equities in general. This, as well as the fact that stock markets were still freely-traded, catalyzed the taking of huge positions in Precious Metal mining stocks, accounting for essentially my entire liquid net worth. Back then, I viewed the mining sector as a way to “offensively” invest in the trend of weakening economies and a peaking dollar; i.e., aiming to “get rich” in a generally well-functioning political environment.
However, when 2008 rolled around, it became painfully obvious that even my previous “worst-case scenario” paled in comparison to what was unfolding. That is, an inevitable crash of the entire fiat currency system; and with it, governments, social fabric, and – of course – financial market integrity. At that point, I shifted to a strategy of “financial defense,” yielding the sale of “Paper PM Investments” in lieu of physical gold and silver. It took quite some time to change my mentality – in essence, disavowing my former livelihood; but eventually, this process concluded in Spring 2011, when my last mining stocks and closed-end bullion funds were sold. Since then, I have continued to add to my physical stash; and in hindsight, the “PM Misery of 2013” will have proved to be a major blessing in disguise, in numerous ways.
For one, it enabled the purchase of gold and silver at prices I considered unimaginable when they achieved all-time highs of $1,920/oz. and $50/oz., respectively, in 2011. I mean, such declines are nearly unfathomable in light of the dramatic, expanding decline in the global political, economic and social climate since then. Not to mention, the veritable explosion in worldwide money printing.
Secondly, it allowed Miles Franklin to “high grade” its operations – which it was essentially forced to do, amidst the most difficult environment it has ever encountered. Given we are celebrating our 25th year in business; the “most difficult environment in the company’s history” is quite the powerful statement regarding the carnage the gold Cartel wrought!
When David Schectman started Miles Franklin in 1990 – followed a year later by his son Andy – his goal was to bring the “best practices” honed from a lifetime of sales to his own firm. Clearly, customer service trumps all but beyond that, numerous other factors are necessary for long-term success – and equally importantly, survival of the inevitable downturns.
At the turn of the century, Miles Franklin’s decision to focus principally on Precious Metals (after a decade of selling Swiss Annuities) proved quite fruitful. Not to mention, building a client education platform that to this day remains unique. To wit, I am not aware of a single bullion dealer employing full-time, publicly-visible spokespeople like Bill Holter and myself; aside from Miles Franklin, of course – which not only puts dozens of man-hours into its FREE blog each week, but participates in countless podcasts, radio shows, and conferences as well. Clearly, what differentiates Miles Franklin are its dedication to clients; as well as the blog and a powerful, overarching devotion to honest business practices – which is why we maintain an A+ Better Business Bureau rating, and have NEVER received an official complaint. And oh yeah, our partnership with Brink’s Montreal creating what we view as the safest, most cost-effective storage program in the Americas. To wit, not only do the firm’s principals put their money where their mouths are – in holding significant percentages of their net worth in physical gold and silver but we all store it at Brink’s!
Starting in mid-2011 – with the now infamous “Sunday Night Paper Silver Massacre”; and on to September 2011’s “Operation PM Annihilation I; December 2011’s “Operation PM Annihilation II”; February 2012’s “Leap Day Violation”; and April 2013’s “Alternative Currencies Destruction,” among others; an increasingly desperate Cartel has pulled out all stops imaginable to quell PM demand. Simultaneously, the Federal Reserve – aided by its Wall Street, Washington and MSM “partners in crime, as well as the ECB, BOJ and other Western Central banks – launched history’s most ambitious, far-reaching “can-kicking” exercise; utilizing unprecedented money printing, market manipulation and propaganda to create an artificial “eye of the hurricane.” Heck, even the Reserve Bank of India was recruited in the effort; although their comical attempts to slow PM buying have already backfired them – in essence, producing the opposite effect.
Generally speaking TPTB hoped such efforts would reverse the trend of global economic decline. However, in their heart of hearts, they knew full well they would miserably fail – just as all other such attempts have over the millennia. Well, maybe Ivory Tower acadamians like Ben Bernanke, Janet Yellen and Paul Krugman actually believed in ZIRP and QE; and likely, economically illiterate politicians like Shinzo Abe as well. However, I assure you that “Goldman Mario” Draghi, “Goldman Mark” Carney, and Wall Street’s “leaders” knew otherwise; which is why they likely have, in their personal accounts, constructed “anti-fiat portfolios” holding gold, silver, and other items of real value.
Anyhow, TPTB did in fact manufacture two years of relative “market calm”; but in the process, exported massive inflation imported worldwide – fomenting further economic weakness; surging debt, consumer prices and unemployment, plunging emerging market currencies and a global dependency on zero interest rates that can never be reversed. Why have I given this background, you ask, in an article about Miles Franklin’s 25th anniversary? A good question, but trust me there’s a reason and that is, the unintended consequences of the Cartel’s blitzkrieg paper raids of 2011-13.
Such desperate, U.S.-led tactics have caused massive physical gold buying the world round; and in the process, alienated America – permanently – from many former allies. China’s gold demand alone is at least as much as global production; and now that India’s draconian import tariffs are on the verge of repeal, it’s becoming more and more obvious that the gold and silver markets are destined for Cartel-killing shortages in the not-too-distant future.
However, here in the States – with the exception of April 2013, in the wake of the “Alternative Currency Destruction,” physical demand has been extremely muted. Yes, the U.S. Mint sold a record amount of silver eagles but in my view, the buyers were mostly foreign – likely, Chinese. Thus, for the North American bullion industry at large, 2013 was a very, very difficult year; easily, the most difficult of the 21st century. Based on both official and anecdotal data, I have no doubt Miles Franklin’s market share increased markedly but irrespective, business was very tough – and as mentioned above, we were forced to reconsider all aspects of operations, to make them as “lean and mean” as possible. Consequently, the firm is stronger than ever and not to mention, the Miles Franklin Blog is more efficient, streamlined, and (inter)actively utilized than at any point in its existence.
However, for many of our competitors, the downturn caused significant damage – in some cases, fatal. Due to a variety of factors – from poor marketing, to high overhead, a lack of experience, or suboptimal operations – the bullion dealer herd has been materially thinned. And of those still remaining, many former “leaders” have been severely damaged and/or crippled. And I must emphasize, the reason I bring this up is not to gloat or belittle, but remind readers that the bullion industry is essentially unregulated; and thus, when it comes to buying, selling, and storing Precious Metals, the universal adage of caveat emptor could not be more relevant.
Generally speaking, bullion dealership is a commodity business; in that all dealers, coin shops, and online marketplaces offer the same products and services. Pricing is extremely competitive and over the years, dealers that have attempted to sell at elevated premiums have either gone bankrupt or been severely discredited particularly those attempting to recoup thin margins on bullion coins with reckless recommendations of higher-margin numismatics. At Miles Franklin, we have always warned of the risks of numismatics and thus, the only time you’ll hear us discussing them is when premiums fall to or slightly above melt value, or when a truly unique situation arises – such as the recent release of a limited amount of coins from the “Bank of Canada Hoard.”
During the good times of 2008-11, many bullion dealers expanded their overhead; aggressively marketed numismatics – in some cases, drawing criminal accusations; and in some cases, built business models based on selling tremendous amounts of volume at razor thin margins. Certainly, Miles Franklin changed with the times as well; which is why, among other things, I was hired in October 2011. However, generally speaking, we stuck to our historical formula of remaining relatively small providing competitive pricing and focusing on client education.
When the Cartel all but destroyed Western sentiment toward Precious Metals in 2013, Miles Franklin’s business certainly suffered. However, we remained solidly profitable and as noted above, gained significant market share against competitors with lesser “buffers” against downturn. In fact, perhaps the most infamous “volume seller” of all – Tulving, Inc., has been under fire in recent months for extremely extended delivery times, per this article. Ours is not to judge the validity of such claims; or ultimately, what will come of Tulving. However, in the spirit of caveat emptor, one must be extremely careful who they buy from – particularly in an unregulated business like Precious Metals. At Miles Franklin, we ALWAYS tell you where we stand regarding inventory; and thus, customers are well aware before they purchase metal as to how long they will likely wait to receive it. In fact, it is a Minnesota law to write estimated delivery times on all invoices and thus, our customers always know where they stand.
We suspect the recent PM upturn marks the start of the “Big One” we have long awaited; and we certainly hope so – albeit fearfully, given the potential perils of a “post-fiat future.” Irrespective, we are working hard to improve our products and services, including the Miles Franklin Blog; our soon-to-be-unveiled, brand new website; and additional conference appearances, podcasts, webinars and promotions.
Hopefully, those that have either read the blog or utilized our services realize Miles Franklin strives to be the best at what it does; while simultaneously, demonstrating a sincere care for your well-being. If that is the case, we simply ask you to give us a chance to earn your business and if you are satisfied, to recommend us to others. The better we do, the more appearances and promotions we can make and the more far-reaching and interactive the Miles Franklin Blog will become. We don’t need to state how appreciative we are of your patronage; but promise to continue improving ourselves for as long as there are still coins left to sell!