Future Money Trends: Greetings. Thank you
for joining us at FutureMoneyTrends.com. I'm
here with a good friend, Andy Hoffman. He's
with Miles Franklin. He's the marketing director.
He is a precious metal expert as well as just
in general in the stock market commodities.
I know his degree is not in economics, but
certainly, if you look at the definition of
"economist," I would refer to him as a very
smart economist and someone who understands
the economy.
Andy, thank you so much for joining us.
Andy Hoffman: Sure. But for the record, my
degree is in finance with a minor in economics,
and I have a CSA.
Future Money Trends: I didn't know that.
Andy: I worked 15 years on Wall Street on
top of that, so I've got a handle on things.
Future Money Trends: You really do. You're
one of the few people who has been telling
the truth about the economy despite the market
manipulation. You're out there. You're one
of the good guys. I'm really glad to talk
to you today and have everyone who's listening
be able to see what your input is.
I want to start off with the German gold story.
For those not familiar, in or around January
2013, Germany requested some of their gold
back from the New York vaults. It was going
to take seven or eight years, I believe, to
get this done, something China probably imports
in a month. Then Bloomberg came out about
two or three days ago and said that they're
no longer repatriating their gold.
I've seen a few stories out there now. Andy,
I know you're on the front lines. It's your
job and passion to know everything that's
going on with precious metals. What is going
on? Is Germany repatriating their gold or
not?
Andy: They're trying to. This is one of the
worst propaganda schemes, to try to make it
seem like they don't want their gold. The
fact is, they were only asking a year and
a half ago for 300 tons of their supposed
3,000 tons that the Fed was holding. After
one year, they got a one whopping five back.
Five tons in one year.
Clearly, it's not there, but they can't say
anything. They can't say, "You guys are liars.
You don't have our gold," because they're
all tethered together by the same lies, the
same derivatives, the same lack of gold, so
they basically sit quietly and take it.
This article came out by...It was Bloomberg
or Reuters, one of the mainstream cheerleaders,
and says they're content. They say they're
happy with what the US is doing with their
gold.
If they were, then why did they ask for their
gold back? How can anyone actually believe
that they're more happy with the US's custodianship
of their gold, since they haven't given any
of it back when they were asked to do it?
Then the guy who was in charge of the national
movement to get the gold back said, "It was
all a lie. I didn't say that."
It's a non-story. It's the kind of thing that
you'd see thrown into the mainstream every
day to try to throw people a little more off
balance about the one asset that they should
be owning as opposed to the other ones that
are going to ultimately destroy them.
Future Money Trends: It certainly is confirmation
for anyone who suspected that they didn't
have the gold. This is pretty obvious. Just
to give people an idea, they've only got 5
tons out of the 300 tons. How many tons of
gold, if you have any numbers, would either
a major country import in a month or a year?
How much is the production? I'm trying to
get a scale of how big is 300 tons. Is it
the impossible?
Andy: Five tons Miles Franklin could probably
get to in a week, and we're just a little
bullion dealer. Five tons is absolutely nothing.
I can put in perspective how much, but it's
probably just a tiny little pile of gold.
It's the kind of thing where if you called
Amazon and said, "I want 100 books," they
could say, "Sure. We'll have it to you by
next week." That's what should have happened,
but they didn't send it to them.
Of course, no one ever hears why. Again, the
Germans are stuck with the same thing. They
can't admit to everyone that their gold doesn't
exist. Just like Feds at Fort Knox. We can't
say that ours doesn't exist.
They asked for it. They don't get it. It's
one thing when Chavez in Venezuela screams
about it, but he doesn't have a reserve currency
to worry about. When it comes to the Europeans,
the Germans can't be seen as the emperors
without clothes, as they are.
Future Money Trends: Andy, I know probably
about a tenth of what you know when it comes
to the open market manipulation and the fraud
and the lies out there. It bothers me that
no one ever goes to jail. No one ever gets
arrested. No real investigations. Nothing
ever happens. Even with this German story,
nothing really happens.
Is there anyone out there that you are aware
of that, "Hey, you know what, Dan? This guy
right here or this group or somebody, they
are doing their best, and this thing could
come apart because of these efforts."
Andy: No, and there won't be. Your silence
if anything happens...I'm not talking about
tilled silence. You're ignored completely.
We've gotten to a place where there's so much
corruption going on, particularly when you're
talking about financial markets, that it's
ubiquitous. No one could care less.
People have been dumbed down. Heck, even the
few hedge funds that are still left in the
market because they're lucky enough to be
in the business of being supported by the
government. They have no clue. That's why
they're all under-performing the indices,
because they don't get it that it's the index
that is being bought. It's not a stock-picker's
market.
Their job is to make money, and if the market's
going up they'll just keep buying it. The
only thing you can't do as a hedge fund manager
is have the market go up, and you be out of
it. Like in 2009, they'd rather be all in
and just watch everything crash, because they'll
say, "Hey, it happened to everyone else."
If my job was to invest other people's money
in the stock market, I would just believe
the propaganda, too.
Future Money Trends: That's a funny point
that you just made, about if they're in and
it goes up, then they want to pat themselves
on the back. If they lose money, they just
point fingers and say, "Hey, everybody lost
money. Nobody saw this coming."
Andy: Yes, that's the whole point. But the
funny thing is that hedge funds in general
have been doing horrible. Because one, you
have to pay 20 percent of the profits to start
with, plus a two percent management fee. Also
because these guys just don't understand.
They want to tell their investors, "Yeah,
we're great stock pickers," but the fact is
there's no such thing as stock picking anymore.
It's all about being where the government
is.
Yes, there are a couple of names that get
the 1999 Internet treatment; the Netflix's
and the Priceline's. But for the most part,
stock picking doesn't work because it's really
just the indices that are being driven up
by the government.
Future Money Trends: Certainly if you bet
against the Fed with precious metals it's
been rough for the past few years. If you
said, "You know what? I'm going to align my
money with the Fed." You just can't lose money
in the stock market right now.
This morning, as you know, GDP came in at
negative, 2.9 percent, most in the five years.
I'm looking at the Dow right now. Actually,
it's closed. The Dow closes up today. It looks
like it didn't have any issues today. I'm
assuming this is because people know that
this means more government help's on the way.
More liquidity.
Andy: It's more because it's the actual government
in the market. We just learned this week,
a study came out that said governments own
$29 trillion of stock. That's half of the
entire market capitalization in the world.
There was a story today that said the Norwegian
Sovereign Wealth Fund now wants to own five
percent of every European stock. Japan's government
pension fund is now selling treasury bonds,
because they know they can, because Abenomics
is going to buy everything, and pouring them
into stocks.
The point is, it's the governments themselves
that are buying them, because they've created
the zero-interest-rate policy and they've
created their PPTs that support the market,
so they've created the greatest bubble of
all time, whether it's bonds or stocks or
selective high-end real estate.
You're talking about bubbles that blow away,
in terms of valuation, in terms of leverage,
blow away 1999, blow away 2007. Again, I wrote
a piece called "The Giant Sucking Sound" last
week saying when the government owns half
the stocks and half the treasury bonds, and
half of the mortgage bonds, at some point
there's no-one else left to sell them to.
One way or the other, these markets are going
to cause catastrophic, real losses.
Yeah, perhaps they'll hyper-inflate like Zimbabwe
did, or Weimar Germany or Venezuela last year.
In which case, you'll still have huge real
losses compared to inflation. Or maybe it'll
just be a 2008-style crash. It really depends
on a lot of factors. This is the absolute
worst time on the planet, in history, to be
buying financial assets that are being propped
up by QE and the governments themselves.
Future Money Trends: What is the sentiment
of gold investors these days? We talked a
little bit about it before the call, that
it seems like, when I talk to people, they're
pretty down. However, then I read the numbers
and we're breaking records when it comes to
physical demand.
From a Miles Franklin perspective in what
you're reading and seeing, but more so what
you guys are actually experiencing, what is
the sentiment? Are investors buying the dip,
or are they tired? Are they tapped out?
Andy: It's a tale of two worlds. I would say
our best month in history, by 50 percent more
than the second-best month, was last year
in April when they had the gigantic smash
out of nowhere, after Obama had his closed-door
meeting with the 15 too-big-to-fail CEOs.
That day Goldman Sachs put out a recommendation
to short sell, and then miraculously gold
fell $250, and silver six bucks in two days.
That was when they said, "OK, enough. We're
doing Abenomics. We're doing 2E. We need to
just smash Goldman to oblivion."
After that big smash where people were buying
in or Fed, it's gotten worse and worse. I
would say it's easily the slowest since I've
been here. In the Western world, if you include
US and Canada, I would say it's probably the
worst sentiment for gold since before the
bull market, like in 1999.
Business is very slow here. That said, you're
100 percent right. The physical demand is
setting records on a global basis. China,
we just learned today that 2,000 tons were
taken off the Shanghai Exchange last year.
That compares to 2,700 tons or so of global
production. Then there was another 1,400 tons
or so that were imported into China.
Basically, more than the entire production
of the world was bought by Chinese last year,
which is why those Swiss refineries were running
24/7, taking the GLD inventory, which is probably
no longer there, taking it from private vaults,
et cetera. You've seen massive and massive
amounts of buying.
Of course, in India, they had a big year even
with the tariffs. Of course, silver, they
had a record year. Russia, they tell you every
month how much they're buying. There have
been huge premium differences in India and
China, in the Eastern hemisphere, as big as
it's ever been.
The most ironic thing is the Silver Eagle
sales here by the US Mint set a record last
year, as we had our weak business and the
price was down 30 percent or so because it
was clearly the Chinese and Middle Easterners,
the Russians, that were buying from our own
Mint.
Future Money Trends: Andy, I don't know if
you...
Andy: By the way, 2014 year-to-date is blowing
away 2013's numbers. Our year at Miles Franklin
is much slower than it was last year.
Future Money Trends: That's amazing. With
the silver, you mentioned the Eagles. I just
want to talk about it real quick. I was looking
at some of the numbers a few weeks ago. These
are old numbers now because they were the
end of 2013. Roughly 1.1 billion ounces in
demand for silver. It was like 85 or 100 million
ounces of shortfall.
I noticed the recycled silver was down 25
percent. Government stockpiles, 10 years ago
it was 10 percent. Last year it was three
percent, and then 2013 it was one percent.
There's definitely now a deficit running again
in silver.
I just want to ask you. On the recycled silver,
I would have thought if prices are higher
than they were 10 years ago, there would be
more recycled silver. My question is, on the
recycled silver, when it went down 25 percent,
is that something that you guys picked up
on or that you guys had some analysis on?
Why was the recycled silver down so much?
Why wasn't there more of it?
Andy: I would say this. If you're talking
about the CPM Group or The Silver Institute,
every number they've put out is pure garbage.
You can throw it in the trash. One of the
two major groups that puts out the silver
demand and supply is Jeffrey Christian.
First of all, how anyone could believe that
they could measure silver scrap is beyond
me. Second of all, over the years it's been
proven easily that the investment side for
gold and silver has been vastly higher than
what those groups, World Council and Gold
Field Institute, or whatever that's called,
put out.
The numbers are immaterial. First of all,
in the bull market in general, going from
2000 until now or 2011, pick your time, it's
all about investment demand. Scrap, immaterial.
In silver's case, it is a fact that there
is probably three-quarters of all the production
is taken up by industrial demand. Most of
it is for stuff that is indispensable. That's
not going away even in a recession.
That said, what makes the price go from $4
to $50, and what's going to make it go in
the future, has nothing to do with scrap,
with industrial demand, with any of that garbage,
with how much stuff goes to Cash For Gold.
It's all about investment demand.
What's going on right now is simply the most
insane naked shorting of paper that has ever
been seen in history, and then, of course,
the dishoarding of physical gold, which explains
how the Chinese could have bought 3,500 tons
when gold production was only 2,700 tons last
year.
Of course, they're not telling you about that.
They're not telling you that the GLD has less
gold than it's supposed to have. The fact
is, if China in fact did buy everything they
say they did, which I believe they did, it
had to come from somewhere. It probably came
from the German's gold at the Fed, and whatever
gold we might have had left at Fort Knox,
and people's gold in GLD that they didn't
even know about, and their vaults that were
re-hypothecated, and all kinds of things.
Nothing about statistics should be in the
slightest bit looked at with the slightest
bit of truth.
Future Money Trends: That information...
Andy: Look at the economics statistics. We'll
talk about them if you want, but go on.
Future Money Trends: No, it's funny. The Silver
Institute, that is like the gold standard
when it comes like these TSX companies that
we work with. If you can't back up whatever
you're writing or doing for them, or if we're
doing a PDF or something for them, they all
want The Silver Institute. What you're saying
is those numbers are just garbage.
Andy: Yeah. First of all, these trade groups,
what have they done to help their own trade?
They have done nothing but harm their own
trade. Why would you believe their numbers?
Again, they're being proven wrong constantly.
Eric Sprott's done simple work that proved
it. Frank Veneroso started the movement 15
years ago. It's literally like asking the
fox to count the hens in the henhouse and
ask him how many are there.
Future Money Trends: Andy, I want to close
this interview out by asking you a question
that I get asked all the time. My answer is
usually, "I don't know." People always ask
me why silver went up 50 cents or down 50
cents, or gold went up 10 bucks.
Here, we have a situation where silver went
from $18 to $21, and gold had a pretty large
run here, too, I think about $75. People still
ask me, and I'm like, "Of all the runs, there's
not anything major, other than I could tell
that maybe something happened behind the scenes."
If you could tell us, what exactly happened
here? Why did we go from $18 to $21?
Andy: Nothing major is going on? You mean
like a potential world war in the Ukraine?
A potential world war in Iraq with $107 oil?
Like GDP being next to nothing? Like negative
interest rates in Europe? Abenomics in Japan?
The Chinese having an absolute collapse of
the biggest bubble in history and devaluing
the yuan? Nothing major is going on?
Let alone the Germans asked for their gold
back and they can't get any of it back. There
are literally 200 reasons why gold should
be going up huge on every single day.
The only reason it goes up, it goes up because
the powers that be are not able to hold it
down. Again, I can't scream this enough. We're
talking about prices that are way below the
cost of production of the industry, way below.
Silver should be 30 bucks in any sustainable
industry. I'm talking about making money in
the big mines, the small mines, replenishing
reserves and having a chance to survive as
an industry. You need 30 bucks. That's why
they're not getting the price below the 18
or 19, even if they are suicidal enough to
try, and clearly they've tried multiple times.
The same goes for gold at 1,200.
Future Money Trends: Everything you said is...You're
100 percent right. I couldn't agree with you
more as far as Russia and Ukraine, but then
on some days, nothing. Then all of the sudden,
out of the blue, this stuff matters again.
I think that's...
Andy: It's not that much, though. For silver
to go from 50 down to 19 and then go to 21
is not a giant move to me. For the Dow to
go up, literally, every single day for five
years amidst the worst global economy and
political situation in the history of mankind
is a big deal. It's obvious what's happening.
They just told us they own 29 trillion in
stock. They told us they own all the Treasury
bonds, which push the rates down. They even
have given out all the money to Wall Street,
to private equity so they could buy real estate
up. There's nothing real going on.
When gold goes up, it doesn't go up for a
reason on a given day. The Dow didn't go up
today because the GDP means that there's going
to be more QE. They print money and they buy
the stock market every day. They print money
and naked short gold and silver.
While they can push up the stocks all they
want and create hyperinflation, they can't
create physical gold. When I tell you that
the Chinese alone bought more physical gold
last year than there was produced, something
is going to give soon. It's probably going
to give in silver before gold because there's
far less of it.
Future Money Trends: That is a great point.
As far as what you guys are recommending right
now, if somebody wants to own precious metals...We've
probably talked about this before but for
anybody who is listening to this for the first
time, I want to talk about gold, silver, platinum,
palladium, and numismatic coins.
What does Miles Franklin suggest as a good,
diversified precious metal portfolio?
Andy: We don't recommend anything. We're not
investment advisors. We are gold bullion dealers.
We're fortunate enough to have some of the
best minds in the economic world writing for
us, because what we're doing is simply educating
people about what's going on in the world.
Our recommendation is to own precious metals
instead of fiat currency. That's our recommendation.
In my case, I own gold and silver, half and
half. Yes, some people like platinum and palladium.
They're very rare metals. I'm not a huge fan
of them. Platinum will probably go up directionally
with gold over time. It usually has. Palladium,
it's less certain because it's industrial.
We say, "Buy precious metals." We say it because
that's what we own. That's what the principals
of the firm own. What we're talking about
is what we do ourselves. That's our recommendation.
Future Money Trends: If someone wants to store
it with you guys, either in the US or in Canada,
how do they get the metals there safely? Do
they meet Brinks at a bank, or how does it
work?
Andy: We have options around the world, but
frankly, the only one we really use, and I
will say recommend, is the Canada one in Montreal
with Brinks. We do so because it's our program
that we, personally, go to audit. I've been
there several times already to see my metal.
We charge by the ounce instead of by the percent
value.
To me, it's the best of all situations in
the Western hemisphere because I know the
gold and silver are there, unlike a lot of
other storage things where you get a piece
of paper and you hope and pray it's there.
How does it work? Either you can buy it from
us. It's very simple. We just send it right
up there. Or, you can send it to us. As far
as sending your own stuff, which I've done
myself, you send it through the mail. There
are ways of insuring it so that the people
in the post office don't realize how much
it's worth. It's a very simple process. We've
never lost a package or a wire or coins, ever,
on either side in 25 years of being in business.
Future Money Trends: People at the post office
do steal. I can verify that. We actually went...
Andy: They don't know. You can insure a package.
It's for $20,000 or $25,000, but then you
can get private insurance for another million
and they will never know.
Future Money Trends: Obviously, you're going
to do it correctly if you're sending a significant
amount of value.
For our paid membership area, we send one
free silver ounce just as a gift. We do occasionally,
I would say it's rare but it does happen when
a subscriber will call us up and say, "Hey,
this package has a slit at the bottom of it
and no silver." Somebody at the post office
was taking that silver.
Andy: Yeah, I wouldn't worry about the process.
The thing people need to worry about is to
actually consider doing something.
I'm not sure it could be screaming more at
you, where you have no GDP growth around the
world, where you have historic money printing,
negative interest rates, war, surging food
and energy prices, and record money being
poured into overvalued financial assets unleveraged
by the government, and precious metals, which
are constantly having shortages, trading below
the cost of production, with the entire Eastern
world buying hand over fist and talking about
de-dollarizing.
How much more do people need to be smacked
over the head? It's not like we're telling
you, "You need to own every penny you have
in precious metals." Do something about it.
Consider what's going on in your own life
and think about what might be the best thing
to do.
Future Money Trends: Yeah, for sure. With
the metals being at below the cost...We get
this beautiful Silver Eagle for less than
it costs one of these silver companies to
make it. Then with sentiment down so much,
it truly is. This is one of the best deals
right now out there, if you want to own precious
metals.
If you want to own some precious metals or
learn and get educated at the Miles Franklin
blog, you can also get an email update daily.
It's one of the best blogs out there if you're
interested in learning about precious metals
and the macro economy.
Like Andy said, these are some of the greatest
minds out there. They're analyzing everything.
It's not just gold and silver. You're getting
everything. I'm sure tomorrow you'll get a
full analysis of the GDP.
Andy, if someone would like to reach out,
it's just milesfranklin.com, correct?
Andy: Right, or you can call 800-822-8080
or email me personally at ahoffman@milesfranklin.com.
Future Money Trends: Andy, thank you so much
for your time.
Andy: Always a pleasure, Daniel.
