AOL Mail _200_.pdf by yan198555

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									AOL Mail (200)                                                                                       6/30/09 10:17 PM

 Zhanna Schectman
 Sent from my iPhone

 Begin forwarded message:

          From: David Schectman <>
          Date: June 30, 2009 9:35:17 PM CDT
          Subject: News from Miles Franklin

                                                                                           May 15, 2009
                 Established 1990
                                                                                             Issue #102
                        QUICK LINKS

                     Miles Franklin                 Welcome to Miles Franklin
                                                    WEEKLY GOLD AND SILVER UPDATE
                  Delaware Depository

                  Dow Theory Letters                Greetings!

                            Gata                    Now, The global economy is balanced
                                                    on a razor's edge and could quickly
                        Gold Seek                   topple over into deflation or hyper-
                                                    inflation. Things are far, far worse
                    Gold Star Trust                 than the media is reporting. Here is
                                                    our weekly update featuring a
                   Le Metropole Cafe                                                         Page 1 of 26
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                   Le Metropole Cafe                discussion on precious metals and the
                                                    economy. We will not pull any punches in analyzing
                     Silver Investor                what is occurring or where the
                                                    blame lies.
                   The World Money
                                                    David Schectman
                                                    CEO, Editor in Chief
                                                    Miles Franklin

                      "Of all the contrivances devised for cheating the
                     laboring classes of mankind, none has been more
                     effective than that which deludes him with paper
                                  money"... Daniel Webster

                 US AT 1-800-822-8080 AND MAKE SURE THAT WE HAVE YOUR EMAIL
                 AND/OR MAILING ADDRESS.

                 OWNERS OF GOLD AND SILVER
                 Jim Sinclair has sided with Martin Armstrong's view that the gold market will
                 react to a major event around the third week in June and launch from there.
                 Adrian Douglas is very bullish on gold and is certain that there are some serious
                 big players (funds and perhaps even countries or central banks) who are
                 prepared to take on the commercials and the cartel. Howard Katz is also
                 bullish. Richard Russell is a big picture guy and is calmly sitting around waiting
                 for the market to speak. Deepcaster expects a cartel-led raid on gold and silver
                 led by dollar intervention, reversing its recent fall up and sending it up to the
                 USDX of 84 or 86.                                                             Page 2 of 26
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                 This chart shows a perfect head and shoulders pattern which made a text book
                 breakout. The USD is at support and we could see a rally higher to the 84 - 88
                 levels which would complete a larger head and shoulders pattern on the monthly
                 chart. A breakdown from the monthly head and shoulders would start the next
                 major leg lower. If the USD rises now, it will drag the price of gold and silver
                 down temporarily.

                 It's confusing all right, but sometimes that's all we have to go by. Don't worry,
                 this will play itself out quickly, and remember, this is just short-term "noise".
                 Relax and view all of this back and forth action through the "big-picture" prism.
                 There is NO question how this will play out by next winter. Gold will be the
                 asset of choice and the dollar will be tumbling into lower and lower levels of

                 Gold And Silver

                 We reiterate last week's Forecast, correct thus far, that The Cartel is and will
                 continue to facilitate a move up toward $1000/oz. Silver has been topping
                 recently at about $14. We expect Gold to continue to chop up, for several days,
                 and perhaps well into June.

                 But, both gold and silver are at risk for a major takedown within the next very
                 few weeks.                                                         Page 3 of 26
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                 In our view, The Question is not whether there will be a Takedown, but only

                 We would thus NOT be long paper Gold and Silver at this time.

                 Of course, we do recommend continuing to hold physical Gold and Silver in
                 one's personal possession, as the basis of one's Core Position.

                 We reiterate also that we think it likely there will be a jump up in Gold as a
                 Lure just prior to The Next Takedown. Creating such a "lure" has been The
                 Cartel's habit.

                 Deepcaster has a pretty good track record and my advice, based on their warning
                 is to sit back for a week or so and let this play out. I have no doubt that
                 Deepcaster is correct about the Cartel's "intentions." The question is - will the
                 "motivated buyers" the new big money that has recently entered the game,
                 identified by Adrian Douglas, will be willing to take them on and buy all the
                 cheap gold and silver that is being dumped on the market. The large funds and
                 sovereign wealth funds certainly have the muscle to reverse last week's fall. It
                 will be fascinating to see how this short-term battle ends.

                 Who will be right - Sinclair (and Armstrong) or Deepcaster? Russell (and
                 Sinclair) did not want gold to rise too fast and stated that this is NOT the time
                 for gold to attack the $1,000 level. Better it should meander in a trading range
                 or correct before it mounts its next assault. Sinclair says the "Commercials" are
                 not ready to let gold rise yet - they are way too "short" the market at this time.
                 But all of that can change overnight. Will gold muscle its way up NOW or will
                 we have another summer of disappointment? I can't say today, but what I can
                 tell you is that this fall and winter will make all the gold bulls smile.

                 THE 5 GOLDEN PILLARS
                 Jim Sinclair has identified the conditions in the markets that must occur before
                 gold can launch to his predicted price of at least $1650 an ounce.

                 A recognized Top in the U.S. Dollar. Is it happening? Yes

                 Trust in U.S. paper assets will be declining. Is it happening? Yes

                 General Bullishness in the Commodity Markets. Is it happening? Yes

                 Triple Deficits firmly in place (Trade, budget and Current Account Deficits). Is
                 it happening? Yes                                                          Page 4 of 26
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                 A recognized Top in the U.S. Treasury Long Bond. Is it happening yet? Not yet,
                 but it is coming.

                 All we are getting now is "spin" and manipulated data from the BLS. Use
                 Technical Analysis to figure out the basic direction of the trend. The key to
                 success is if that direction is fundamentally sustained.

                 This manipulation on the dollar and gold market cannot be sustained.

                 Here is what Sinclair says about "manipulation." Many of my readers fear that
                 gold and the dollar will always be manipulated to and not allow true pricing.

                 My answer is manipulation only works in the direction anything wants to go in
                 the first place, which gold and the dollar have so far proven correct. Step back
                 and from the day to day ticks and look at the big picture.

                 The problems out there are so big that no central bank, treasury or group of
                 Banksters anywhere on the planet can afford to handle them. Right now if it
                 were not for the charisma of the new Administration things would have
                 unwound completely.

                 In time the problems of today's financial world, to which there is no practical
                 solution, will overwhelm the manipulation by the amount of money directed
                 into the gold market and the number of newly created dollars for sale.

                 The size of the dollar pool is infinite, and the amount of gold is finite. That is
                 the equation which will make Alf Field's prediction of $3000 to $6000 gold
                 right. All it takes is a failure of confidence to activate the equation. This is why
                 I have been trying to give you clear direction free of the fog of emotion and
                 spin in order to protect you.

                 At every turn the media, government and Banksters have been trying to get
                 you to dump your protection.

                 Stay the course. Gold is going to save more than your financial position.


                 How do you prevent being robbed? You place your assets out of the currency                                                        Page 5 of 26
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                 being depreciated. There are many goods you can buy. But most of them have
                 certain peculiarities which make them unsuitable as a store of value. Some
                 (like the grains) are bulky and expensive to store. Some (such as art and rare
                 coins) require expertise. Many are not traded on any organized markets. Of
                 all these economic goods, two (gold and silver) have proven over the years to
                 be safe and reliable stores of value. If your government depreciates your
                 currency, then everything you own that is denominated in the currency (such
                 as T-bills, certificates of deposit, corporate bonds, etc.) also gets depreciated.

                 Furthermore, we can refine this idea of protecting ourselves. This is the theory
                 of the commodity pendulum. Since 1963, the U.S. (and world) economy has
                 been fluctuating wildly. First (1963-1971) commodities went down in real
                 value. Then (1971-1980) they went up in real (and nominal) value. Then
                 (1980-1999 they went down again. And now (1999-?) they have started the
                 second upswing. In principle, stocks and bonds move opposite to commodities
                 (although there is a bit of an overlap, which is tricky).

                 The strategy is to be long commodities when they are making their upswing.
                 Then when commodities top out, switch over to stocks and play stocks or real
                 estate for their upswing. For example, I called the top in gold in 1980. Then in
                 1982, I switched over and became a bull on the stock market. In this way you
                 can have the best of both worlds. A person who bought gold in 1970 and has
                 held it to the present has done nicely and has protected himself from the decline
                 in the value of the U.S. dollar. But a person who could switch from
                 commodities (meaning gold) to stocks at the right time has come out way
                 ahead of the game.

                 Today we are in a massive upswing of the commodity pendulum (which I
                 guestimate at about 20 years). Gold has multiplied by a factor of 4. But we
                 are still early in the pendulum. The (grand cycle) top in the stock market may
                 have occurred in October 2007. If this is the case, then we will see commodity
                 prices rise explosively and something like a 20%-30% annual rise in the
                 Consumer Price Index (U.S.). This will force the Federal Reserve to tighten,
                 and that will lead to a serious decline in stock prices. For example, in 1974 U.S.
                 prices rose by 12.3%. The yield on the 20 year bond rose from below 6% to
                 almost 9% and the S&P 500 fell from 120 to65.

                 DOLLAR TECHNICALS

                 This long term situation is about to explode. For years, gold bugs have warned
                 that the irresponsible fiscal and monetary policies being followed by the U.S.
                 Government would result in a decline in American wealth and in American
                 power in the world and a rise in the price of gold. They are going to be proven
                 right in spades - HERE, NOW.                                                      Page 6 of 26
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                 I expect you were disappointed in gold over the past fortnight. The decline of
                 the first week of June was due to the dollar rally. But during this past week
                 gold was dull. There was little volume in the gold stocks, and they sat all day
                 with little movement. What must be happening in the gold market is that the
                 gold traders are in a daze. The dollar was down sharply on Tuesday and
                 Thursday, but gold did not respond. The gold traders are saying, "This isn't
                 happening. The dollar didn't really go down today." It is this kind of disbelief
                 that I want to see as a prelude to the big rally. It is characteristic of all
                 markets which are ready to make a major move. Low volume and small price
                 movements (small real bodies in candlestick parlance) are often a prelude to an
                 explosive situation.

                 IMPORTANT BULLETIN

                 I have just received the following e-mail from the St. Louis Fed. Concerning the
                 U.S. money supply (M1):

                 Half of all transaction deposits at banks do not appear in M1 due to retail
                 deposit sweeping. Adding these back into M1 causes M1 to be larger than the
                 monetary base. (In retail deposit sweeping banks reclassify checkable deposits
                 as savings deposits so as to reduce statutory reserve requirements. Within
                 certain legal bounds, such behavior is acceptable to the Fed. Bank customers
                 are unaware that such reclassification is occurring.)

                 In short, the Fed is lying about the money supply. They are counting demand
                 deposits (which are money) as time deposits (which are not money). This is the
                 reason that, although the monetary base more than doubled last autumn, the
                 money supply made a much smaller gain (16%) and in fact the reported money
                 supply fell below the monetary base. This is impossible because the base is a
                 part of the money supply, and a part cannot be greater than the whole.
                 Transaction deposits are demand deposits plus other checkable deposits. Thus
                 the reported number (June 1, Fed Release H-6) is $740 billion. If an equal
                 amount is being counted as time deposits (savings deposits), then the true
                 figure for transaction deposits is $1.48 trillion, and the true U.S. money supply
                 is $2.34 trillion, not the reported$1.6 trillion. This is an increase in the money
                 supply of 70% over the past year, which beats the previous record of 16.9% in
                 This is a staggering piece of information. Much of the gold bug community has
                 been warning of rising prices (except for a few crackpots who have bought the
                 establishment line and are shouting "depression"). Bernanke is making us 10
                 times as right as we ever thought we would be. The concept that the U.S. has
                 just increased its money supply by 70% in one year is simply not the America
                 we have all known. It can't be happening. But it is happening.                                                      Page 7 of 26
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                 Below is a daily chart of GLD, a proxy for gold. We see that GLD has fallen
                 below it rising channel. RSI has also been overbought. At the bottom of the
                 chart, MACD has given a sell signal. As subscribers know, I have been bothered
                 by all the recent hype and bullish advertising about gold.

                 It looks as though gold is going to "cool off" for a while, prior to its next
                 advance. The current correction will serve to quiet down all the hoopla about

                 I've been warning about this for years. Take away the dollar's reserve status,
                 and we can't print ourselves out of our disastrous debt situation. Why?
                 Because without its reserve status, no other nation will accept billions of

                 On top of this China is leading the parade of those who want to live without the
                 dollar. The Chinese are cleverly engineering the move away from the dollar.
                 They have arranged currency swaps with seven nations (the latest Argentina) -                                                      Page 8 of 26
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                 - which would allow these counter-parties to settle some trading bills in yuan.
                 Thus China is effectively cutting the dollar out of its commerce. Interestingly,
                 China's biggest trading party is no longer the US, it is Brazil.
                 The Obama crowd is spending huge amounts of money in a desperate effort to
                 (1) halt deflation, particularly in housing, and halt unemployment. (2) The Fed
                 is printing money in huge quantities to cover the cost of the Obama's
                 administration's massive spending. (3) The world is producing far too much
                 merchandise, thanks to the entrance of Asia into the system. The over-
                 production is creating deflation in goods and assets.

                 It's come to the point where China, our biggest creditor, has warned, "Stop!
                 You're killing our trillion dollars of reserves in US Treasuries. At the same
                 time, to the astonishment of most economists, Angelina Merkel of Germany has
                 denounced central banks the world over for creating too much fiat money --
                 remember, Germany was almost wiped out by inflation once during the 1920s
                 and the Germans are mortally afraid of inflation.

                 The dilemma -- If the US cuts back on spending and money creation, rising
                 deflation will throw the country into a deeper recession. OR -- if the US ignores
                 the Chinese-German warnings and continues pumping out money as the dollar
                 and bonds decline, then the rest of the world will move away from buying
                 dollar-denominated securities. The US will lose its reserve currency status, and
                 the US economy will go into collapse.

                 The problem reduced to three words, "Inflate or Die."

                 Gold -- Gold is selling off as it looks at the implication of an administration cut
                 back in spending and a cut back in the Fed's production of fiat money -- all of
                 which would be deflationary. In the end, gold will rise on an impending
                 collapse of the dollar.

                 LeMetropole's Rob Kirby points out that Bernanke says one thing and the Fed
                 does the opposite. The Fed tries to control the market by controlling
                 "expectations." The following are quotes from a recent Bernanke interview: "I
                 think I would note that you look around for evidence of inflation and inflation
                 expectations you're not going to find very much."

                 "If you look, for example, at surveys of consumers, if you look at the forecasts of
                 professional forecasters, if you look at the spreads between indexed and non-
                 indexed bonds, all of those things are quite consistent with inflation remaining
                 stable and well within the bounds that the Federal Reserve believes is consistent                                                           Page 9 of 26
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                 with price stability."

                 "What we're seeing in the markets is that prices, manufacturing goods, for
                 example, and wages in nominal terms are not showing any signs of a wage-price

                 Kirby writes, What makes Mr. Bernanke's Fed speak so disingenuous is his
                 alluding to inflation being an outcome of wage pressures, which have been
                 engineered to be benign through outsourcing of jobs and sieve-like porous
                 border with a low wage country [Mexico] on the southern flank. Take note
                 how the 'higher wage' northern border [Canada] has always been empirically,
                 relatively, "well guarded". Prattle about these "engineered outcomes" is
                 misdirection anyway - owing to the fact that INFLATION IS AND ALWAYS
                 HAS BEEN A MONETARY EVENT - and here's what the Fed has been doing to
                 the money supply:

                                                    Source: St. Louis Fed

                 Historically on the inflation front, the Fed has only had to concern itself with
                 Dollars held domestically. This meant that the Fed - at any given time in a
                 Domestic sense - could counter-act any Domestically created money-glut by
                 tightening domestic credit, thereby, reducing the domestic velocity [turn-over]
                 of fiat money - hence - inflationary pressures at home.

                 What has now occurred - IN THE GLOBALIZED ECONOMY - the Federal
                 Reserve has acted in their customary way in the wake of their own reckless
                 monetary excess, by restricting the creation of "new" fiat credit [the CREDIT
                 CRUNCH WE ARE NOW EXPERIENCING]. The problem for the Fed is that the                                                       Page 10 of 26
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                 Chinese have "OVERTURNED" or "trumped" Fed policy [by virtue of the
                 staggering amount of Dollars they hold arising from their Balance of Trade
                 Surplus] by extending Dollar Reserve Derived credit to spur demand
                 [increasing foreign velocity of U.S. Dollars] - which has, in turn, led to GLOBAL

                 Effectively, the U.S. Federal Reserve has lost a significant amount of control of
                 their own financial house and puts their current policies of money printing [aka
                 inflation] at odds with their biggest creditor - CHINA.

                 Dear Friends,
                 You know that information that comes to me has been reliable. You also know
                 that the entire purpose of all of working here at JSMineset has been to get you
                 through this safely. You also know that if we had not been here hundreds of
                 thousands of people now holding gold would not be.

                 So please pay attention to the following.

                 I have heard rumors for some time, but today it was confirmed to me, that the
                 Canadian mint's present problems are not unique and that other depositories
                 (vaults) have had an army of auditors descend on them in the last two weeks.
                 Some of these depositories have names so famous that it would scare the hell
                 out of you. The repercussions would be drastic if they turn out to be troubled.

                 Why take the risk?

                 I suggest to you now that you take delivery of all gold held in vaults and
                 depositories on your behalf, but this time even from the most prestigious.

                 You can get delivery via armored car service to your bank and utilize safe
                 depository, spread over a few banks. You can insure your safe depository if you
                 do not mind making your holdings public.

                 I believe that this recommendation is warranted, but also it will be the
                 financial savior of many.

                 Respectfully yours,
                 Jim                                                      Page 11 of 26
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                 IN THE 1970's HOWARD RUFF WROTE A NUMBER ONE
                 Here are a few of Howard's recent comments:

                 Silver Soaring

                 I have recommended gold and silver for a few years. In September/October,
                 2008, we went through a difficult period for all when gold managed to hold its
                 own, and stocks crashed up to 60 percent. Now the stock market is still down,
                 even after a 30 percent rally. Silver took a beating.

                 Now silver is nearing a new high. It went as low as a little over $9, and is now
                 almost $16. It's a long ways from being too late to buy in.

                 Some of you are asking me about storing metals with the seller or buying
                 ETFs. No! No! No! That's paper metal, and there is no way to ensure they are
                 actually putting aside the metal.

                 The best way to own gold and silver is in the form of coins. Silver coins will be
                 the most useful for the quantities in which most people buy things. Bags of
                 junk silver are preferred.

                 I also prefer silver because it is less likely to be seized by Government.
                 Government will probably not even want to seize gold as Roosevelt did. At that
                 time, gold represented government wealth and Roosevelt wanted to repair the
                 government's balance sheet. Right now, the government is treating gold as just
                 another commodity, and they are making gold coins and selling them. So it is
                 possible, but not likely.

                 There is very little likelihood that they will ever want your silver because the
                 silver market is so tiny it will not make one bit of difference to them. So seizure
                 is less likely.

                 For years I have claimed the way the Commercials manipulate the Gold market
                 is by shorting Gold above the moving averages as technically driven                                                      Page 12 of 26
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                 commodity funds get long the market. They then use whatever market that is
                 falling at the time to correlate Gold to and overwhelm the market with more
                 sell orders than the market can handle. As Gold is driven through the moving
                 averages the technically driven funds sell and the commercials cover.
                 As you have pointed out we are at another crucial point. As Ted Butler has also
                 pointed out the Commercials once again have established one of the largest
                 speculative short positions in history. This most recent sell off started by the
                 BLS reporting another fraudulent employment report which the commercials
                 used to force a short covering rally in the $ and drive Gold down on Friday
                 afternoon (after the physical markets had closed for the week). Monday Gold
                 was manipulated below the 20 day moving average as the Euro continued its
                 Friday correction; interestingly Gold ended up closing above the 20 day
                 moving average. My guess is the physical market was stronger than the forced
                 liquidation in the futures market.

                 Today Gold has once again been driven below the 20 day moving average as
                 an early morning sell off in S&P futures were used to drive the HUI lower and
                 GLD was hit with what appeared to be large naked short sales on downticks.
                 For Gold to explode to the levels which we believe are fair market values, one of
                 these manipulative washouts will need to fail. Sooner or later serious buyers of
                 physical Gold will bid on all the available Gold below the moving averages and
                 the commercials will not have time to cover. At that point your long awaited
                 Commercial failure will be imminent. Whether this one will be the failure is
                 anyone's guess. What I do know is the amount of intelligent people who
                 understand how reckless our Treasury and Federal Reserve has become is
                 growing every day.

                 This afternoon we will report a truly scary Budget Deficit for the month of May
                 only 1 hour after another large 10 year note sale and a day before another
                 large 30 Year Bond sale. I personally think it is a matter of time before the Fed
                 is forced to double down on their monetization of the debt to fight rising
                 mortgage rates. When that happens I expect Gold will blow through its head
                 and shoulder neckline. The way I see it Larry "expectations are more important
                 than reality" Summers has a choice to make here. If they stop supporting the
                 S&P and let the bear market in stocks resume then the deflationary scare will
                 resume and his hedged fund crony's will be wiped out for good. I am betting
                 this is just another rear guard maneuver and this will prove to be the last trip
                 below the 20 day moving average before the next leg in the Gold bull begins.

                 I have been very vocal in recent months about the impending collapse of U.S.
                 Treasury Bonds, going as far as to say I am as bearish on T-Bonds as I am
                 bullish on gold.

                 Despite execution of the U.S.'s new "Quantitative Easing" program, which
                 simply means printing money to buy such bonds, U.S. Treasury Bonds have                                                    Page 13 of 26
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                 been collapsing rapidly all month, with the yield on the 10-year note spiking up
                 to 4% today (from 2.5% two months ago) following another hopelessly pathetic

                 The last stool to go before hyperinflation sets in is a collapse in demand for
                 government paper (dollars and T-Bonds), suggesting that capital is rapidly
                 leaving the U.S. and its overvalued financial assets. And if you think 4% sounds
                 low, it is, nearly as low as it ever has been thanks to the Federal Reserve's
                 maniacally loose monetary policy this past decade.

                 When hyperinflation starts, it moves very quickly. That is why you must
                 PROTECT YOURSELF by owning objects of real value, such as gold, silver,
                 food, and other life necessities.

                 The steep decline in T-Bonds may be the watershed event that gets the issues I
                 have been talking about in motion, so time could be short to PROTECT

                 The week ended on Friday with the dollar is sharply higher, the yield on the 10
                 year T-note is sharply lower, and gold and silver get bombed. What happened
                 to effect such market price changes? Nothing, the way I see it, except
                 enormous intervention.

                 Over the past 5 weeks the Federal Reserve has purchased as much as $233B in
                 securities; yet, they want us to believe they are winding down their
                 monetization of the debt. Lies, manipulation and the printing press appear to
                 be functioning smoothly at the Federal Reserve.

                 At the moment The Gold Cartel and other commercial shorts have had their
                 way. They have MANAGED to turn the technicals bearish which will attract the
                 usual obligatory selling of a number of trend following, technical trading
                 systems. Do we have to go through many weeks of a tedious liquidation
                 process? The answer to that question will depend on the amount of competitive
                 demand for physical gold, now at cheaper prices. Should there be enough
                 buyers who want in, then what we got today could just be a one day wonder
                 and back up we go.

                 $930 is a key support point. If that level holds next week, and the cabal forces
                 can't gain any traction on the downside, we ought to make a quick U-turn and
                 go right back up. Otherwise ... drudgery for the early part of the summer.

                 Here is the one ounce price of gold in German Markets from early 1919 to the
                 fall of 1923:

                       German Markets                                                     Page 14 of 26
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                       January 1919 $170
                       September 1919 $499
                       January 1920 $1,340
                       September 1920 $1,201
                       January 1921 $ 1,349
                       September 1921 $ 2,175
                       January 1922 $3,976
                       September 1922 $30,381
                       January 1923 $372,477
                       September 1923 $269,439,000
                       Oct 2, 1923 $6,631,749,000
                       Oct 9, 1923 $24 ,868,950,000
                       Oct 16, 1923 $84,969,072,000
                       Oct 23, 1923 $1,160,552,882,000
                       Oct 30, 1923 $1,347,070,000,000
                       Nov 5, 1923 $8,700,000,000,000
                       Nov 30, 1923 $ 87,000,000,000,000
                       Source: CIBC World Markets

                 To all; the above "Gold prices" were the result of German monetary policy from
                 1919 to 1923. It is very important to understand that I put "Gold prices" in
                 quotes because this is how we Americans think. This is completely wrongheaded
                 thinking. The truth of the matter is that German Reichmarks were valued in
                 Gold ounces and the German currency collapsed in value, thus the amount of
                 currency necessary to purchase 1 ounce of Gold exploded exponentially. Gold
                 did not "go up", the Reichmark imploded.

                 We think in terms of Gold went up or down today when we should be thinking
                 the Dollar went up or down. An ounce of Gold 200 years ago is still that same
                 ounce of Gold today. 200 years ago Dollars did not exist, they may not exist in
                 the near future. The point is that Gold or Silver is a constant or a measuring
                 stick for other goods and for paper currencies, not vice versa.

                 Looking at the above numbers is certainly startling. I read about the Weimar
                 Republic years ago (not in college because this is not something Americans
                 "need" to know) and I knew the currency went to zero. What I did not know
                 was how fast it really happened! In 3 years the Reichmark dropped 95% vs.
                 Gold, it only took another 21 months to become worthless. Think about the
                 numbers above. 87 trillion RM's for one ounce, 87 trillion?! You may be
                 wondering why I am posting this. I am not trying to show you that you will
                 become "rich" or that you will retain your purchasing power by owning Gold,
                 by now I think we all understand the many reasons to own Gold and that
                 hyperinflation and destruction of the Dollar is virtually a given.

                 I show you this because many people have asked me "what is our exit                                                      Page 15 of 26
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                 strategy"? This is always a logical question to ask and one that is always
                 necessary when you first enter into an investment. I believe that what lies
                 ahead of us will in no way resemble 1980 when Gold spiked and then plunged,
                 only to barely tread water for the next 20 years. My thoughts are; that since
                 the global currency markets are Dollar based, once the fiat Ponzi scheme
                 collapses we will have plenty of time to survey the lay of the land and make
                 intelligent investments from that point without time pressure to get out before
                 Gold crashes again. Why do I believe it will be different this time? Simple,
                 people will not trust another fiat currency again during our lifetimes because of
                 the wealth destruction that has and will occur due to "funny money". Gold will
                 be seen again for what it always has been, MONEY and a the ultimate store of

                 Because we live in a world with computers that provide instant information
                 and communication, I believe the potential for a virtual 2 week tsunami of
                 value destruction has a very good possibility of occurring. I see only one
                 possible alternative. Once the "powers that be" see that Dollar destruction is
                 imminent, I believe a new currency will be unveiled. Gold will be the new
                 foundation and will be marked up accordingly, 10 to 1, 100 to one, 1000, etc. I
                 have no idea what the number is, but it will be eye popping. I also believe the
                 longer this is postponed the greater the mark up will be.

                 There have been many very well respected people throwing out Dollar/Gold
                 numbers such as $1,650, $3,000, $6,500 and even higher than $10,000. I pay
                 no attention to these numbers and think that anyone offering up a number is
                 fooling themselves. There are just too many variables to arrive at a $/Gold
                 number. Do we really know how many Dollars exist now that money supply is
                 no longer reported? No. Do we have any idea how many synthetic Dollars exist
                 in the derivatives markets? No. We do know that the government says they
                 have over 8,000 tonnes of Gold, should we believe them? (I'll leave this one up
                 to you). But what if there is only 4,000 tonnes, or 1,000? Or God forbid, what if
                 it is all gone!? As I said, too many what if's. The only thing we do know for sure
                 is that even if we believe every ounce of Gold is still in Ft. Knox, there is
                 nowhere near enough to support the "admitted" money supply with each Dollar
                 priced at 1/1,000 th per ounce.

                 I wanted to show you the Weimar experience because it is visually shocking. It
                 is certainly a scary thought if Gold were to require $87 trillion to purchase one
                 ounce. It is also important to screw our heads on straight as to thinking about
                 Gold in Dollar terms since we know (were taught) no other way. When all is
                 said and done, we will have to "relearn" how to value assets in terms of ounces
                 rather than in how many pieces of paper with how many zeros.

                 The funny thing is that you don't even have to believe me or what I have said,
                 just listen to Ben Bernanke, Tim Geithner, and our new President. They have                                                      Page 16 of 26
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                 told you exactly what they plan to do. They will borrow more (until there is no
                 more) and they will use the electronic printing presses. When these begin to
                 fail, then the real Weimar will emerge, the Fed will simply print more Dollars
                 to purchase Treasury bonds that were left unsold because the world did not
                 want them. In tandem the Dollar and Treasuries will go down the Weimar rat
                 hole together unless and until we get a new currency that has Gold backing and
                 the government completely restructures itself (read, bankruptcy) going
                 forward with manageable and balanced budgets.

                 I will leave you with a couple of questions. Do you know of anyone (country,
                 corporation, or individual) that went through bankruptcy with assets entirely
                 of Gold bullion and no liabilities? During Weimar, Argentina, USSR, US 1930's,
                 Zimbabwe, Iceland, US present (Zimbabwe II)? Were these not the absolute
                 worst economic times in the last 100 years? Has anyone EVER gone broke
                 owning nothing but paid for and in possession Gold? No, no, no, and double no!

                 The big question is how long can the dollar last as the world's reserve
                 currency? Needless to say, that is not an easy question to answer. We recently
                 called the top on the dollar at 89.50 on the USDX. The USDX is six currencies
                 versus the dollar on a weighted basis. More than a year ago the dollar hit a
                 low on the USDX at 71.18. A phenomenal rally ensued from that level
                 expedited by de-leveraging and the closing out positions within the carry trade.

                  A good example of the carry trade was when a bank in NYC borrowed yen at
                 ½% interest, sold the yen for dollars and bought dollar denominated
                 securities. All of that is now history as the dollar comes under increasing
                 pressure. We believe the dollar could test 71.18 this year. We also believe the
                 dollar could break down to 40 to 55 over the next few years. The collapse of the
                 dollar is certain. The Treasury and the Fed have committed the American
                 taxpayer to $13.8 trillion of debt and before the dollar goes where it is
                 ultimately going that figure could reach $30

                 In modern times such fiscal and monetary irresponsibility is unparalleled. This
                 abdication of moral responsibility has already begun the process of dollar
                 deterioration and rising interest rates. The result will soon be hyperinflation.

                 There is no question where China is headed in this currency war to dump the
                 dollar. They continue to accumulate gold with the intention of having a gold                                                   Page 17 of 26
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                 backed currency - something America is, we believe, incapable of doing. Such
                 an ongoing pressing event has to put continual downward pressure on the
                 dollar. China is already bypassing the dollar reserve system by settling in
                 other currencies, using barter and through swap arrangements. Major.
                 changes are in the process of taking place. We do not believe the yuan will be
                 the reserve currency of the future. A better idea is to have a weighted basket of
                 10 major currencies as a world benchmark.

                 Wednesday's 10-year Treasury auction wasn't all it was cracked up to be. The
                 yield was 3.99% with 46.8% allotted at the high bid. The only reason the sale
                 went well was that the note had to be lifted 13 bps to 3.99% in order to attract
                 buyers. In addition the Fed had to buy $3.5 billion in longer term maturity
                 bonds and prop up the auction.

                 They cannot fool us. The system sinks into deeper trouble every day. All we
                 can say is you had better own gold and silver.

                 What the Fed did was buy 18.4% of the auction with money they created out of
                 thin air - more monetization.

                 At the beginning of the year the yield on the 10-year T-note was 2.35%. We
                 figured it would go to 3.50%. Thus far it has gained to 4.00%. That is 1.65% in
                 less than six months. The yield has risen 135 points since the Fed announced in
                 March that it was going to buy Treasuries, some $300 billion worth for

                 Rates are up due to $2.2 trillion in monetization, that they are already
                 committed to, and that is just the beginning.

                 Commodity prices in many instances have doubled, inflation expectations are
                 high, equity prices are up 30% plus and gold and silver have remained strong
                 so it is no wonder rates in the real market have moved
                 substantially higher.

                 Here are a few comments from the latest issue of Chris Laird's The Prudent
                 Squirrel ( With the USD battling to hold 80 on the
                 USDX currency basket index I observe the following:

                 Oil is acting like it's near a peak, we thought $65 was near a peak. The USD
                 has held 80 rather firmly. We said two weeks ago the USD was poised to drop
                 into the 70's eventually to test 70 again on the USDX, but that was not yet                                                    Page 18 of 26
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                 confirmed - and the USD is still holding 80.

                 The US Treasury market is holding water, but buyers are moving to shorter
                 terms like the 2 yr. There was flagging demand for the longer term Ts but some
                 of that is returning. The Chinese are still buying USTs. In spite of their many
                 significant actions to prepare for a USD alternative, the USD holds its own

                 Gold appears to have had some profit taking after threatening $1000 again. It
                 remains to be seen how soon the bond market does a thumbs down on the new
                 US Treasury borrowing. As long as the bond markets can swallow several
                 $trillion this year of extra US T issuance, the USD can hold steady.

                 We expect some problems around August/Sept to manifest in the US T markets.
                 We are also still on watch for the USD to turn back down into the 70s, but as
                 yet that has not occurred, the USD is holding 80.

                 The USD never fails to amaze everyone. One guy I respect is former US Fed
                 Chief Volker. He just stated that, in spite of the efforts to create an alternative
                 to the USD by the Chinese and others, that the USD is here to stay for years
                 out. I think that is possible. That would mean the USD would gradually devalue
                 - and that is the preferred way for it to fall, in a controlled manner.

                 What that would mean is the US will continue to accumulate massive new debt
                 until the USD breaks down. I still am n my comfort zone mix of 25% gold
                 stocks, 25% bullion coins, and 50% cash (then the farm, boat and other real
                 things too).

                 In spite of the massive money priming worldwide, there is deflation out there,
                 particularly if you look at things like Chinese or Japanese industrial
                 production/exports dropping 30 something pct over the year.

                 So we have the US issuing debt at massive rates, and other CBs running big
                 stimulus programs, but the loss of demand by drastically falling exports is not
                 being overcome by the money going out.
                 Why are stimulus and bailouts having little affect on inflation? With the USD
                 battling to hold 80 on the USDX currency basket index I observe the following:

                 Oil is acting like it's near a peak, we thought $65 was near a peak. The USD
                 has held 80 rather firmly. We said two weeks ago the USD was poised to drop
                 into the 70's eventually to test 70 again on the USDX, but that was not yet
                 confirmed - and the USD is still holding 80.

                 The US Treasury market is holding water, but buyers are moving to shorter
                 terms like the 2 yr. There was flagging demand for the longer term Ts but some                                                      Page 19 of 26
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                 of that is returning. The Chinese are still buying USTs. In spite of their many
                 significant actions to prepare for a USD alternative, the USD holds its own

                 Gold appears to have had some profit taking after threatening $1000 again. It
                 remains to be seen how soon the bond market does a thumbs down on the new
                 US Treasury borrowing. As long as the bond markets can swallow several
                 $trillion this year of extra US T issuance, the USD can hold steady.

                 We expect some problems around August/Sept to manifest in the US T markets.
                 We are also still on watch for the USD to turn back down into the 70s, but as
                 yet that has not occurred, the USD is holding 80.

                 The USD never fails to amaze everyone. One guy I respect is former US Fed
                 Chief Volker. He just stated that, in spite of the efforts to create an alternative
                 to the USD by the Chinese and others, that the USD is here to stay for years
                 out. I think that is possible. That would mean the USD would gradually devalue
                 - and that is the preferred way for it to fall, in a controlled manner.

                 What that would mean is the US will continue to accumulate massive new debt
                 until the USD breaks down. I still am in my comfort zone mix of 25% gold
                 stocks, 25% bullion coins, and 50% cash (then the farm, boat and other real
                 things too).

                 In spite of the massive money priming worldwide, there is deflation out there,
                 particularly if you look at things like Chinese or Japanese industrial
                 production/exports dropping 30 something pct over the year.

                 So we have the US issuing debt at massive rates, and other CBs running big
                 stimulus programs, but the loss of demand by drastically falling exports is not
                 being overcome by the money going out.
                 I have to point out that when the USD does actually let go, it will likely be a
                 surprise event that accelerates quickly, meaning you have to be already
                 positioned before it happens, or you will get caught by surprise.

                 DEANS REPORT
                 Dean's Report is written by our long-time friend Dean Danielsen. He has offered
                 his opinions on a select few stocks in The Miles Franklin Report in years gone by,
                 including Avalon Ventures. Occasionally, we get a request for an update on
                 Avalon Ventures. Dean's current view of Avalon Ventures, and the entire Rare
                 Earth sector are published below.                                                      Page 20 of 26
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                 The views expressed by Dean are not necessarily those of Miles Franklin or David
                 Schectman. I personally own a large position in Avalon Ventures. You should do
                 your own due diligence. Exploration stocks are speculative and many of them
                 will never be successful. When you do find a winner, it is usually a grand slam
                 home run.

                 Deans Report
                 Avalon Rare Metals
                 AVARF (Pink Sheets) AVL (Toronto Exchange)
                 Web Site:

                 On May 22,2009 Jim Dines of The Dines Letter made his"super major " call for a
                 "Super Major Bull Market" in Rare Earth Elements(REEs) his first such call in
                 nine years.

                 He recommended four REE (rare earth metals) companies. Two Australian
                 companies - Lynas and Arafura 51.6% and 25% Chinese owned and two Canadian
                 companies - Avalon Rare Metals and Rare Earth Elements (RES.V). The trading
                 volumes are up about 1500% and the stock prices up about 300% and this is
                 only the beginning. I believe you should have 10% of your stock portfolio in AVL.

                 It is therefore incubent upon you to know and understand REEs. First go to
                 AVL's website and view the PPT Power Point presentation then:



                 After viewing the above, you will understand why I feel so strongly about REEs
                 in general and AVL in particular.

                 If investing in REEs were a baseball game this would be the top of the first


                 USDOLLAR BOUNCE WILL BE BRIEF (Jim Willie's Hat Trick Newsletter)

                 The US Dollar will suffer the brunt of US Treasury rescues, either by brute force
                 futures contracts, or coordinated central bank interventions. Numerous factors                                                        Page 21 of 26
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                 read bearish on the billboard for the beleaguered USD ollar: huge US
                 Government debt issuance, weak US economy, rising specter of price inflation,
                 questionable bank leadership, foreign revolt in the form of reserves
                 diversification, and calls for a new & improved global reserve currency to de-
                 throne the USDollar. The chart for the DX index could not be more vulnerable.
                 The next targets are 77 and then 72. Watch for a 20-wk moving average
                 crossover below the more stable 50-wk moving average, a powerful technical
                 signal to sell the US$ down hard! It is coming like night follows day. The current
                 bounce is dead on arrival, obstructed by the 81 level resistance from December,
                 and the falling moving averages overhead. As the credit derivative issue,
                 complete with fresh publicized losses, raises its ugly head, the USDollar will be
                 the bigger loser. The US banks are extremely vulnerable to additional credit
                 derivative losses. Insolvency could quickly turn into a skein of bank failures. The
                 mysterious rise in the crude oil price confirms great risk and weakness built into
                 the USDollar. The Powerz can blame the speculators, but the true risk is with the
                 US Dollar. Crude oil confirms the US$ weakness.


                 Congressman Ron Paul's Federal Reserve Transparency Act, HR 1207, has
                 reached and surpassed the level of 218 cosponsors in the House of
                 Representatives, which means it is now cosponsored by a majority of the

                 The 218th cosponsor was Dennis Kucinich (OH-10), and the bill has since
                 received its 222nd cosponsor. "The tremendous grass-roots and bipartisan
                 support in Congress for HR 1207 is an indicator of how mainstream America is
                 fed up with Fed secrecy," said Congressman Paul. "I look forward to this issue
                 receiving greater public


                 Ron Paul's Federal Reserve Transparency Bill has achieved a very significant
                 milestone: it has 222 co-sponsors now, which means it can easily pass a House
                 vote. Apparently it needs to get thru some kind of committee process and then
                 introduced to the House floor for a vote. Sounds like it should sail thru. If Bernie
                 Sander's sister Bill in the Senate passes, all eyes will be on Obama to see what he
                 does with this. A bona fide audit of the Fed could cause our country to
                 completely unravel is what we suspect about the Fed is true.


                 Russian ruble to go palladium. Boris Gryzlov, the speaker of the Russian
                 Parliament, the State Duma, said that the participants of the Economic Forum in                                                       Page 22 of 26
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                 St. Petersburg would discuss a possibility of making ruble coins from precious


                 We now hear commentary regarding the Fed raising interest rates. Some don't
                 see that until next year. We don't see it happening at all. The Fed has to keep
                 interest rates at current levels and continue to increase money and credit. If they
                 do this interest rates will rise, bond will fall, as will the dollar as gold and silver
                 rise. If they raise interest rates, stocks will fall, bonds will rise as will the dollar,
                 but inflation will not decline because it's already in the systems, thus, gold and
                 silver will rise. There will also continue to be more shocks to the market that
                 will push gold and silver higher.


                 Universa Investments LP, which has links to "Black Swan" author and New York
                 University professor Nassim Nicholas Taleb, is starting a hedge fund to bet that
                 efforts by governments and central banks to end the global recession will lead to
                 hyperinflation, the Wall Street Journal reported, citing Taleb. The fund will
                 invest in
                 commodities and options on oil and gold stocks.

                 Universa reaped huge rewards betting against the market last year and is about
                 to open a fund premised on another wager: that the massive stimulus efforts of
                 global governments will lead to hyperinflation.

                 Universa Investments LP is known for its ties to investor Nassim Nicholas Taleb,
                 author of the 2007 bestseller, "the Black Swan," which describes the impact of
                 extreme events on the world and financial markets.

                 Unlike last year's sudden market implosion, inflation isn't an unimaginable
                 event that few currently anticipate. In fact, many fear inflation right now amid
                 government efforts to goose the economy. Universa's bet, however, is that
                 inflation will reach levels few expect.

                 By opening the inflation fund, Universa is trying to capitalize on a wave of
                 investor demand for its products, which when they're right can protect investors
                 from extreme market moves.

                 The new strategy, designed by Mr. Spitznagel, aims to post big gains if inflation
                 and interest rates take off as they did in the 1970s. Universa will invest in
                 options tied to commodities such as corn, crude oil and copper, as well as options
                 on stocks such as oil drillers and gold miners.                                                            Page 23 of 26
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                 "We think these things are going to see massive volatility," Mr. Taleb said in an
                 interview. The fund will also bet against Treasury bonds, which tend to weaken
                 in inflationary environments. Last week, Treasury yields shot to their highest
                 level since November as prices fell on inflation concerns. Oil topped $66 a
                 barrel. Gold is creeping
                 nearing $1,000 an ounce. The minimum investment in the firm's other funds
                 has been $25 million,


                 George Soros calls CDS `Instruments of Destruction' and adds they need to be


                 The brute force of the recession earlier this year turned back the clock on
                 Americans' personal wealth to 2004 and wiped out a staggering $1.3 trillion as
                 home values shrank and investments withered.


                 Retail gasoline prices have moved up more than 40 days in a row as gas rose
                 $1.00 from its lows. That displaces $130 billion in discressionary spending.


                 Subprime problems may generally be over but we have another year of ALT-A
                 loans and three more years of Option-ARM, pick-and-pay loans to get through.
                 In the first quarter due to rising unemployment 50% of foreclosures were
                 concentrated in prime mortgages where the default rate is now 2.40%, more
                 than double 1.10% yoy. Over the next few years this problem will worsen.


                 Bank nationalizations are "absolutely necessary" to stop them damaging the
                 financial system further with more losses, said Nassim Nicholas Taleb, author of
                 the best-selling finance book "The Black Swan."

                 "You cannot trust the banks in taking risks," Taleb said in an interview with
                 Bloomberg Television in Davos. "We have a very strange situation in which it's
                 the worst of capitalism and socialism, a situation in which profits were privatized
                 and losses were socialized. We taxpayers have the worst."                                                        Page 24 of 26
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                 Miles Franklin, Ltd.
                 801 Twelve Oaks Center Drive, Suite #834
                 Wayzata, MN 55391

                 (800) 822-8080 Toll Free
                 (952) 476-7971 Fax

                 Andrew Schectman
                 Direct: (800) 255-1129

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                 Direct: (800) 814-3224

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                 Direct: (800) 963-3177

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                 Direct: (866) 476-0013

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                 Direct: (877) 242-2788

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                 Direct: (877) 867-7293

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                 Direct: (866) 805-9115 Clients of Jim

                 Steve Berlin
                 Direct: (866) 485-4345 Clients of Steve               Page 25 of 26
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                 If you would like to send an email or view our website, all you have to do is click
                 on the link or email link for an broker.

                    The information presented by the author is not intended to be used for investment purposes
                    and it may contain errors. It is intended to inform the reader of the state of the economy, the
                    stock market and precious metals markets- as perceived by the author. There may be errors
                    in the data presented here, but to the best of the author's knowledge, the data is accurate.
                    As with all forms of investing, do your own research and due diligence, and remember that
                    there are risks involved when investing in stocks, precious metals, and especially when
                    investing in junior and exploration mining companies and foreign currencies. The opinions
                    presented here are the author's unless otherwise noted. The author is not a financial advisor
                    and he and his family may own a position in the stocks mentioned in this report.

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