Welcome to 'Proven and Probable' where we
deliver mining insights
and bullion sales in the form of
physical delivery offshore depositories
and private blockchain distributed
ledger technology
Joining us for a conversation is Andy
Schectman the President of Miles
Franklin precious metals investments
Mr. Schectman welcome to the show sir
thank you maurice always good to hear
your voice good to be back
and thanks for having me let's begin
today's discussion with
gold has recently surpassed its
all-time high
since we last spoke but this is no
surprise you know you forewarned us
this would come to pass in our previous
discussion back in december 2019
regarding the bank of international
settlements
and basel iii and its impact on gold for
those that missed that conversation can
you please shed some light on the
importance of basel iii yeah it's the
most significant event of my career and
really
if people were to take a broad look at
this and and
understand what it really means quite
frankly i don't think you need to know
anything else
everything else that we see is just
noise
since 1944 there's only been one tier
one asset
and that has been united states
treasuries or
fully funded dollar deposits
gold was considered a tier three asset
where
only 50 percent of its value was
allowed to be calculated on the balance
sheet therefore
there would be four reasons that central
banks would
be de-incentivized to own gold
it wouldn't pay interest costs money to
store
it was unpredictable in its movements
but the tier three status
meant that a 50 denigration on the
balance sheet would limit
a central bank's ability to sell bonds
or transact
international business so really
the the only purest form of collateral
and by the way if your listeners were to
google
tier one asset it's listed as a
riskless asset so the bank of
international settlements which is
the central banker central bank in basel
switzerland
reclassified gold april of 2019 as the
only other tier one asset in the world
next to us dollars and treasuries
so since 1944 there's only been the
dollar and the treasury bill
that would give a tier one status for
central bank and commercial bank
collateral now with gold
brought up to that table it's important
to know that
note that the central banks of the world
front ran this decision
in 2018 they bought more gold
cumulatively
as a group than they did in the 60 years
previously
and in 2019 those numbers were up 90
percent
and continue unabated higher
now and so you're seeing the most
sophisticated well-funded well-informed
traders on the globe
accumulate what they call a riskless
asset
and have been front-running that
decision of course
now for over three years so i think it's
it's only a matter of time before gold
goes
higher than anyone thinks possible and
they'll continue to let it move up at
this
methodical pace with volatility
inside of it to keep people from really
making a committed
move to it and before long they'll look
at it and say geez
we really missed the boat we waited too
long and i don't think that's the case
right now
but i think that will be began to be
conventional wisdom for most
people they will have thought that they
missed the boat
i think it's going multiples higher
where it is now you know it takes me
back to a couple months ago march and
april where
people sat on the sidelines and now
they're calling me now and saying i
missed the boat
and we hope that that narrative now
changes and they become proactive
you know speaking of central banks and
let's take the conversation now home to
the united states what are your thoughts
on the federal reserve's
unprecedented fiscal policy and what
type of impact is this going to have on
precious
metals short term and then the bigger
picture
long term well you're going to see
inflation
and you know what they're trying to do
is stave off global deflation
the deflating of all of the the assets
and the bad loans and
um deflation is bearing down on
on the globe and the fed is doing all
they can to
fight it with the printing press and um
the inflationary forces will have
ramifications you know if you look at
when we talk about inflation in 2008
with all the money thrown at the system
it went to the wall street banks and
that that money was holed up in
financial assets
uh and so stocks bonds into a to a maybe
a slightly lesser degree real estate
but financial assets were inflated and
they were able to reflate the bubble
uh of of those assets and
this time around however
you've seen trillions of dollars be
poured into the real economy
through the ppp and the cares act and uh
the twelve hundred dollar check to
people making under 400 grand and
all of this stuff that has impacted m1
and m2 the money supply you will see
beginning to see
i think um the inflationary effects of
the fed pumping money into the system
not just to the banks
continuing to inflate financial assets
all of the dow jones at all-time high
et cetera with 50 million people
unemployed
you know completely detached from
reality um
but you're also going to begin to see i
think real
price inflation uh in the end
in the real economy because you know
on top of all the money that's been
thrown into the into
m1 and m2 which is inflationary already
remember maurice it took 300 years to
create 800 billion dollars in wealth in
this country
and in the span of ten months the feds
created what seven eight nine trillion
dollars a good portion of which has
already been
sent directly to people in the in the
form of subsidy checks
um and um
you know now you have a situation where
even
people who have ridden this bull market
back
up this illusionary recovery
created courtesy of the federal
reserve's policies i think they're
beginning to sense that jesus
this just doesn't make sense that
the market continues to roar higher defy
gravity
in an environment where so much of the
economy
is shut down may never come back a lot
of it won't
and i think people are realizing that so
here's where it gets crazy
when these people pull out
of the of the equity market of the
stocks
and of the bonds where do they go
that money is going to buy things in the
economy
anything tangibles real estate uh
precious metals our jewelry you name it
as inflation really begins to rear its
head and money comes out of the
equity markets i think you'll see
massive price inflation so you know
uh this is just the very beginning but
what the fed has done in my opinion has
sowed the seeds for
perhaps uh a hyper stagflation type of
scenario where
you have an environment of little or no
economic growth and
higher taxes coupled with much higher
prices so
any way you look at it i'm looking for
inflation with an economy that is
really really wounded may not come back
for a very long time
and that is in essence the printing
press meets the great depression and i'm
if i had to to take a guess on an
outcome a couple years from now
before things get better that's the
environment we see much higher prices
and an economy that you know really
struggles to get going again
you know speaking of higher prices the
old saying is buy low and sell high
so one may conclude that it's not a good
time to be buying gold right now
well not so fast andy what is the dow
gold ratio telling investors
well we're right at the higher end of
the dow gold ratio typically
when the ratio is five or lower meaning
five ounces of gold by the dow uh you
want to sell gold
and buy the dow uh when you
are around 15 to one
15 ounces of gold buys the dow you want
to sell the dow and buy gold and i think
we're very close to that 15 mark 14 or
whatever the number
is right now but um
not only is is the dow horrifically
overvalued in and of itself
the ratio is telling us in fact bill
bonner does a um
is fond of this metric and i remember
reading one of his articles not long ago
that there have been six times that you
should have done this in the last
hundred years and they all would have
panned out
handsomely had you made those trades so
one could argue that at this rate you
sell gold excuse me sell the dow and buy
gold
and so what what it's really telling you
is that the dow is overvalued
uh and gold isn't you know if you use
that those ratios in the in their that
the perspective of five
if you took the price of gold right now
and you multiplied it times five it's
going to get you 9700
and the dow is close to twenty nine
thousand so that really gives you the
uh you've talked about it before uh
perception and deception
and uh you see it in the numbers but you
have to know what numbers to look at and
that's what we're here to provide you is
the guidance
and not to be fooled and deceived by the
nefarious
uh tools of the the federal reserve
because that is deception and we want to
make sure that you make the right
decisions
now if we've convinced you that gold is
on sale let's move on to silver
what is the gold silver ratio telling
investors right now
uh same thing really um
in that we are not
at its upper upper end like we saw in
march
of 110 or 20 to 1 which was the
the biggest discrepancy in human history
but even still at 70 to 1
uh people should be more much more
heavily in silver
than in gold and when i talk about
people playing these ratios the gold
silver ratio
if someone were to be much more heavily
invested in silver to me it is a
temporary investment
until the ratio normalizes
and when you talk to guys like keith
neumeyer who i know you know
he'll tell you that what's coming out of
the ground is six to one
uh currently and when you
you know you take a look at silver and
the fact that it really is a depleting
asset one that has
such massive amount of
uses in industry when you see
a company like jp morgan amass a billion
ounces of it while holding down the
paper price
there are all sorts of roads signs in
the road
pointing to that you know this is really
very relevant and very important and
some pretty sophisticated people have
been holding down the price to
corner the physical market
i think that silver is still
one of if not the best investments on
the planet
but i would tell you that when that
ratio does normalize
uh you know in 2011 we saw a 35 to 1
ratio or thereabouts after it being 85
to 1 the year before
so if someone were to put 25
000 into silver today at 70 to 1.
if we were to see it do what it did in
2011 and
get to 35 to 1 the idea would then be to
sell gold or silver
rather and buy gold and that money that
would have gone into
gold today but instead went into silver
would be worth twice as much
then when that ratio normalizes and so
playing the ratio
is really really really good but when we
look at
the dao and saying at 15 you you know
you you want to
uh be in in in gold and at five you want
to be in the dow well here
um in at 70 or above you want to be
in silver and 35 or
or below maybe even 40 you want to be in
gold so
we're closer to the b and silver side of
the equation
all always mindful of that ratio
and giving us an opportunity to double
up the amount of gold we otherwise would
be able to get
or if someone were to trade 20 ounces of
gold for silver at 70 to 1
when the ratio normalizes you go back
and that 20 ounces turns into 40.
it's a it's it's simple and it's
brilliant
and i i know that a number of your
clients as well as my clients that are
more heavily weighted towards gold
they've been taking advantage of the
opportunity before us
let's get into my favorite metal
platinum i'm maurice jackson
of miles franklin precious metals
investments where we have a number of
options to expand your precious metals
portfolio
from physical delivery of gold silver
platinum palladium and rhodium to
offshore depositories
and precious metal iras today i'd like
to take an opportunity to share with you
the value proposition that i see
in platinum but before we move forward
let's take a step back to three years
ago
when i was interviewed by small cap
power about the value proposition of
rhodium
at the sprott natural resource symposium
where is the best position for investors
to be in
at the current time if you're looking at
precious metals you have no allocation
at all i would look at silver and
platinum
all the precious metals are on sale but
relative to one another
it is silver it is platinum and rhodium
if you don't have an rhodium that is
that is that is an unsung hero there
rhodium
ladies and gentlemen at the time of that
interview the price of rhodium was below
one thousand
by march of this year the price of
rhodium reached thirteen thousand
that's correct thirteen thousand today
i see the value proposition of platinum
equal if not greater than i saw in the
value proposition of rhodium
three years ago why platinum is
industrial
strategic and precious how precious
well it's 30 times more rare than gold
but i want to focus a little bit more on
the industrial component being rare
doesn't cut it
you must provide utility to have value
the utility that platinum provides
is in clean air through catalytic
converters and combustible engines
diesel engines and believe it or not
even more so
in fuel cells in electrical cars to add
to the value proposition
78 of all the world's platinum comes
from a very
very unstable region of the world south
africa
and their cost to extract platinum out
of the ground is equal to
if not higher than the current spot
price of platinum
which is currently trading at half the
price of gold right now what are your
thoughts on platinum sir stupid
inexpensive
i wish it was easier to get it's really
not
very easy to get the price is misleading
maurice because
you know i mean we can get it and we
have had it and we are
lately having a hard time keeping it in
stock
um but you know the high premiums and
the difficulty getting the product
with any regularity speaks to me
that the physical side is is
continuing to stay tight maybe even get
tighter
but if you are a rational guy
the ratio between gold to platinum is
every bit is
out of whack in fact more so probably
than the gold to silver ratio so
the one thing against platinum is that
it doesn't have the history
as a monetary metal the way that gold
and silver does it's
it's more used or viewed as a industrial
metal and mostly in catalytics for
diesel automobiles but you know
when something is so far away from
historical price averages
the magneticism is is pulling us back to
the mean
every day so it's got to
come back into line most of the last
hundred years platinum has been more
expensive than gold so
you know i think that i think it's as
good of an investment
as anything out there right next to
silver
and the only reason i slightly have
favored silver this whole way up even
though the ratio is every bit as good or
better
is that i think silver always does
first in these types of situations
where it's industrial hat but before
it's all said and done
is wearing its monetary hat as well and
people view
silver as a substitute for gold as a
monetary metal not just an industrial
metal
whereas platinum is more of a industrial
metal
it and and an investment but not so much
monetary metals so um but i do think
it's a heck of a value maurice and i'm
continuing to buy it myself so
uh but to me truthfully
it comes in third in level in in my
portfolio in terms of volume
to gold and silver you know i always
share with my clients that i own a
little bit of gold
a lot of silver and a lot of platinum
but to me the ultimate metal is gold and
the reason i'm buying silver and
platinum is because i want to use those
ratios as you've expanded upon
we've addressed gold as a great value
proposition but silver and platinum has
even better value propositions right now
let's switch topics here and let's
address some questions
that we receive from prospective clients
and that is uh you know often hear
what is the minimum requirement to
purchase from miles franklin
no there isn't a minimum order um
you know it's it's we'd like to help
anyone we can
so we don't have a minimum order but i
think you would at least
have to spend a few hundred dollars to
make it worthwhile when you factor in a
fifteen dollar shipping charge uh on
small orders so
um no minimum we work with everyone
and so whether it be a million dollars
or 150 we'll work with the client
absolutely every client is important to
us we do not look at you from a
numerical standpoint we understand that
you're entrusting us
with a big responsibility and we wear
that as a badge of owner
here's the big one why aren't your
prices listed
i could list prices i've chosen not to
maurice because
the minute we took it off the minute we
said call for a price
all the fraud that we had fought for
years stopped
and i know it frustrates a lot of people
that
our prices aren't listed but we'll beat
any price
find a price we'll match it we'll beat
it we won't be
undersold and i know it takes another
step
but we are old school and analog in a
digital world and i think when you talk
about privacy
uh in in
precious metals to me deserves to be
offline
and it's not a cop-out i have the
ability to turn our online store
on again but when i had it on we fought
with fraud
every single day so much so that
they found ways to try to hack our
emails
uh try to uh
do identity theft try to do mortgage
fraud
um the list goes on and on and on and on
and every day we were dealing with
in many cases state sponsored
eastern european professional hackers
trying to um you know find a way to
disrupt our business and steal money
from us or our clients so i
i think it is every bit as important to
the safety of our clients
as it is to us and uh for now
i guess i just choose to do things old
school marie's and
i know we'll lose some people who don't
want to pick up the phone and call but
for those that do
i can assure you we'll make it worth
your while and if you find a nationally
listed price better let us know we'll do
our very best to beat it
most cases we can you know very
responsible words there
i get that question asked to me a number
of times and and also one last thing
here we talked about fraud
somebody who's looking to set up an
account with us what's the best way for
them to do that
uh just give us a call um
get your questions answered um and
literally that's it i mean when it comes
to placing an order
after we've had a discussion got all the
questions answered we
need name address phone number email
address
and how they want to pay regular check
ach or wire
once all those boxes are checked the
order is placed
and if the funds need to clear
after upon clearing the
client receives ups insured tracking
numbers to follow it all the way in
it's literally that simple it's as easy
the transaction as there
is any longer in the world of decreasing
privacy
and increasing complexity this is one of
the few
simple straightforward things that still
is
yeah so just just as a reminder if
you're looking to set up an account with
miles franklin all you have to do is
give me a call i'll get your information
find out what you're looking to purchase
and we'll find the best deal for you
but you would not set up your account
online we do that to protect
your privacy last question regarding the
questions that we receive from
prospective clients what about credit
card payments why don't you
accept those uh same reason
just a tremendous amount of
identity theft and fraud and um
to me it's just not worth being on the
other the wrong side of that maurice and
um you know with
with a credit card as an example someone
steals a credit card does identity theft
they place an order for five thousand
dollars
we ship them the product and then the
the charge is disputed due to identity
theft on a five thousand dollar order we
may make a hundred bucks
but the 90-day investigation pulls the 5
000
out of our account while the charge is
investigated so
have that happen five six seven times a
month
ten times a month whatever you end up
really making it not worth
the while i know there are a lot of
companies out there that do it
i don't know what their level of fraud
is to me it's just not worth it you just
open yourself up to
to identity theft hacking fraud
and experience tells me that the minute
i shut that off
that side of of things just disappeared
so to make my purchase i can do it with
a check
a wire and ach is that correct yes sir
all right sir last question for you here
actually too let me ask you know my
favorite one here is
what keeps you up at night that we don't
know about
i don't know i don't like the way things
are going in this country
and you know with with the success that
we've had as a company
um we have
had great successes here working 15
hours a day
seven days a week but you know there's
nowhere to go and nothing to do and
um kids going back to school but doing
so online
um and
the destruction of the economy right in
front of us
and i just don't like the path we're
heading down i think this winter
as we head towards the election is going
to be incredibly
bumpy and i think it's going to come
with some
very scary things i live in the
epicenter of stupidity
insanity in minneapolis and
it's been one thing to
make it through what has been a really
beautiful summer weather-wise
but i can't imagine what it's going to
be like here in the
northern states come winter time when
the restaurants that are working 20 or
30 percent capacity hanging out by a
thread
are forced to shut down and uh and all
of the other establishments that
you know uh are just hanging on
in a in the winter i think most of them
will just
go by the wayside and i'm very concerned
about
what things look like uh
over the next few months and so i guess
preparation is very important uh people
forget
you know it's just a few months ago in
march and april
uh when you know
people couldn't find bottled water and
toilet paper anywhere
i think that that was the front edge of
the storm
and i've been saying recently that i
think we're in the eye of the hurricane
right now
people have been blowed into a sense of
complacency
but i think the trailing edge of the
storm is coming
and uh don't forget that we had the repo
market crisis
last september before any of this
happened the banks
have been hanging on by a thread for the
past
10 months many of these banks have loans
made to companies that are
either bankrupt or close to being
bankrupt
and don't forget about real estate and
commercial real estate and all of the
things that
uh are are dependent upon
loans and um credit
these banks are in big trouble i think
we're in trouble as an economy maurice
and
if anything keeps me up at night it is
that
my success will come at the expense of
everything around me that i love
sitting at a bar watching a twins game
eating a hamburger and a beer
i can't tell you what i'd pay for that
right now but
it's just uh it's it's just
those are the kind of things that mostly
looking through my kids eyes that
keep me up at night above all else and
i'd like to to be optimistic and hope
things
you know turn around for some time soon
but i guess i just can't logically get
to that
point yet i think we're too far away
from seeing anything like what was
last year and we're a long ways away
from that and that keeps me up at night
more than anything you know i'm a
vegetarian you're referencing the
hamburger but i just find it disgusting
that you would want to watch a twins
game
last question sir and that is what did i
forget to ask
you didn't really forget to ask anything
maurice you asked the right questions
there's opportunities in
in ratios and there's opportunity in
platinum there's opportunity in silver
there's opportunity to sell dow and to
get on the sidelines before things
get really crazy you asked the right
questions you made the right statement
well thank you sir and it's a pleasure
as always but uh before we close
for someone listening that wants to
contact you please share the contact
details
i can be reached directly at andy
atmilesfranklin.com
that goes right to my cell phone andy
milesfranklin.com
and sign up for our newsletter free
seven days a week at miles franklin.com
on the home page
sign up for our newsletter and it's a
good way to stay in touch
and in contact with uh with what's going
on
in the meantime i wish you and all your
listeners uh
uh you know prosperity and health and
safety
and good fortune moving forward
and if you visit proven improbable in
the right hand column you will see a
link for the miles franklin newsletter
as well
mr shekman it's been a real pleasure
speaking with you today wishing you
the absolute best sir always mauricio
take care buddy hope to talk soon
yes sir take care the information
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