Keeping The Faith - The Paradox of Silver Supply, Demand, and Sentiment – Interview with Andy Hoffman

By: Dr_Jeff_Lewis

The state of PM markets..

Technical Analysis

The Ignorance of Mainstream Financial Professionals

Keeping the Faith in a bear market

What’s new with Miles Franklin

What does silver have to do with an old horse named Doxology?

You can connect with Andy by reaching out to him at MilesFranklin.com

Dr. Lewis: Hey guys. It's Jeff here with the 47Forum and Silver-Coin-Investor.com. It is a pleasure once again to interview Andy Hoffman from Miles Franklin. He is the Director of

Marketing at Miles Franklin but as many of you know, he's been involved in the precious metals community as a commentator and a writer for many years. Before that, he was

involved. He comes from mainstream Wall Street. We sat down and talked for a little while and I wanted to share this with you.

Dr. Lewis: Do you read much fiction?

Andy: I read much fiction? That's all I read.

Dr. Lewis: Really?

Andy: Yeah. I get enough of it reading millions and millions of depressing real articles. I probably read more than anyone because I'm on the Stairmaster in the gym all the time. I read dozens and dozens of fiction books.

Dr. Lewis:  Did you ever read “East of Eden” by John Steinbeck.

Andy: Long time ago.

Dr. Lewis: Well, I think you should read it again.

Andy: That was actually ... I thought ... It was so long ago I can't even remember it but I remember I liked it more than Grapes of Wrath.

Dr. Lewis: Oh, yeah. It's way better. I think it's his best. I'm obsessed with it. I'm reading it again probably for the fourth time. I'm reading it to my eight year old and my six year old.

The six year old doesn't really get it but my eight year old who's a girl and more emotionally mature, she's following the story. It's really on so many levels it is I think a masterpiece. If you are already on the treadmill or the Stairmaster.

Andy: The stairclimber.

Dr. Lewis: The stairclimber. Then this deserves a rehash. “East of Eden” is Steinbeck's allegory retelling the story of Cain and Abel but hinging on the passage thou shalt versus thou mayest. There's a particular passage. It's a lead-in passage to a climax in the story where the main character, Samuel Hamilton, reveals a secret to another one of the main characters, Adam Trust. A fairly dramatic secret. The lead-in passage is a discussion around Samuel Hamilton's old 33-year-old horse called Doxology. The way he describes this horse and I'll quote just a little bit, "He has an iron mouth and he still fights the crupper with a saddle. He feels as though he was riding a sled over a gravel pit. He can't trot. He stumbles over his feet when he walks. I never in 33 years found one good thing about him. He even has an ugly disposition. He is selfish and quarrelsome and mean and disobedient. To this day, I don't dare walk behind him because he will surely take a kick at me. When I feed him mash, he tries to bite my hand and I love him."

This passage, you know, it's a beautifully written passage but it also makes me think of silver in the description because silver is often the ugly, red-headed stepchild that the investment community wants nothing to do with and will scorn it at any given chance or given point.

Andy: Yet there's all time high demand and inventories and production are plunging. People can hate it all they want but it's not going down anymore. Certainly not materially down.

Eventually, it's going to break out. It's just really Americans that don't look at it. On that we can talk about it anyway but I would not characterize it as a red-headed stepchild because there's all-time demand. That would imply that it is unloved and no one wants it when the US mint is constantly shutting down and we're running out of product and inventories are going to nothing. We lost 20% of the [inaudible 00:04:26] silver inventory in one day last week. There's almost nothing left. That's one way of looking at it but

Americans just, the few Americans that have money just don't care about gold because it hasn't gone up. In 2011, we had huge amounts of phone calls. In fact, we're getting phone calls like crazy in the past few weeks and it's barely gone up which is why the cartel does what it does. Even the slightest bit. My God, 1200. We'd run out of metal at 1200 if the demand would be so high.

Dr. Lewis: You just characterized this record demand, historic demand. The question is are you seeing from a silver standpoint, are you guys getting calls because many characterize this demand as, "Well, the mint is on pace for another record this year but people say there really isn't yet a retail demand. People aren't going to coin shops like they were between 2008 and 2011. There isn't a retail sense of this. You just mentioned that gold moved up a little bit and now you guys are getting calls the last couple of weeks. Is that happening with silver too?

Andy: Yeah. It's always more with silver because it's more undervalued and people see the shortages. Starting to see the premiums, certainly junk silver is starting to see the premiums go up. Again, retail demand worldwide is at an all-time high. Retail demand in the United States was at a all-time high in silver in 2013, 14 and 15. Now, whether that was Americans actually buying it, I don't know, from the US and Canadian mint. I don't believe it was Americans that bought it. I believe it was foreigners because based on our business trends which, as you mentioned, peaked.

We have spurts like when we had a massive shortage last summer and spring of 2013. With the exceptions of spurts like that which are always after big cartel smashes. Like last summer, remember we had gold went down $52 in 5 minutes on a Sunday night and right after that, we had a surge of buying. Besides those spurts, we've only had declining demand since 2011. That was the peak of our demand. That said, we've had record sales of the US mint, of the Canadian mint, of Indian imports. I'm sure the Chinese numbers if we ever knew what hey were would be very high. You have a record retail demand around the world. Institutional demand hasn't gone anywhere. Institutions like you're talking about the redheaded stepchild. They won't even look at gold and silver until it's going up and going up a lot. Once they do, the intensity of the buying every time prices go down and the intensity of when they go up even the slightest bit as we've seen in the past couple of weeks just gets more and more each time.

That's why we were just saying, it's gotten to the point we're $1124 right. Gold was $1200 in a couple of weeks, I bet you the phones would be so off the hook, we'd have another shortage of silver just like we had last summer. Last summer was the biggest shortage that we've had since 2008 and we had ... In 2008, we ran out of product for 3 months and premiums went to 100%. We also had a huge shortage in April and May of 2013, which was our biggest month ever. Our biggest quarter ever was this third quarter of 2015 after a cartel smashing. That's with the price all the way down here. If we had a $1200 gold and pick a number. 17, some tiny little number, or 18 for silver would be crazy. We would have no product.

We'd have a huge shortage of silver. Gold eventually follows and if we have crisis which we're in the early stages of one. I fully believe with all of my heart I believe that this is the year that the powers that be lose control of markets, of control, all that stuff. When that happens, I believe that we're going to have a major crisis of shortage in the physical precious metals unlike even 2008. I believe that with all my heart and I do believe that we are near the end because I just can't see them getting through another year with everything falling apart like this.

Dr. Lewis: I guess you basically answered one of the main questions and one of the reasons I wanted to talk to you because we have this group of investors. I hear, I get questions like this all the time where people who know, they have been around for a while, they understand the story. It's not like we're educating someone who is just waking up to the idea of precious metals as an investment. These are people who have been involved for a long time and they will say that they're number one issue is keeping the faith.

That despite all of what they know, it is continues to be this ... Right now we're at $14.20 in silver. We're above 20 day in a 50-day average. We sat about it for a couple of days but the 200-day moving average is at $15.13. Maybe that's the inflection point you're referring to. Maybe that's where that little tiny bump it changes everything.

Andy: Put it this way. I've watched everything forever. I've been a Wall Street analyst for 25 years. I've been in precious metals for 14. I watch all that stuff. I don't even look at 200-day moving averages anymore. I don't look at any technicals. They are worthless. We'll get to the issue of what retail people are worried about and looking at in a second but I mean absolutely, utterly worthless. It does not matter what the 200-day moving average of the DOW, of the gold. Maybe more so of something like the DOW because they're so desperately, obviously trying to protect it. The PPT. Whereas the price of gold, they use numbers right now. They have a hard number at 1125 or whatever and they sit on it forever. If it breaks, they'll move up to 1130. If they can, they'll try to knock it down and try to break some moving average. It won't matter because the demand will just keep coming. The more they hit it, the more the demand will come.

There's no doubt in my mind that we've hit our floors on gold and silver, somewhere around here. The price is not going to go much lower. The minors are going out of business.

The inventories are vanishing. The record demand, the world's falling apart, negative interest rates. There's nothing they're going to be able to do to stop that demand. Everything that they try to do will make things worse including trying to hold gold down under 1125 or 1120. Pick whatever number. All that does is create pent up energy, pent up demand.

We see it in the store. We see that the premiums go up. We see inventories go away.

As for the retail people needing to keep the faith. No you don't. If you have physical precious metals, and we've been in business 27 years, we don't have any clients. Not one on the whole planet that holds their gold and silver worried that it's going to go down. Once you have the physical, you're fine. You know you're not going anywhere. The beauty of it, it's not $50 anymore. Now it's $15 below the cost of production and demand is soaring and the supply is falling. No one is worried about it. If you own paper assets, if you own GLD and SLV and mining shares and all kinds of other paper stuff, I would be terrified because on any given day you could be up and you could be down 10%. It's completely different.

The people that are in and the people that are in the retail people are in gold and silver already, they are not the people who are going to move it. They're people like me and you.

They're already there. If it goes down, we buy a little more. If it goes up, we buy a little more. We're not the people that are going to move the price. It's the new people that will move the price. The new people will only come in as they did in 2008 because they saw a shortage, as they did last summer when they saw a shortage. In 2011 when they saw prices breaking out. That's when they come in. When prices either plunge which from this level, I don't think is even possible in this environment, and when they soar which of course is coming down the road.

It's all a matter of when the new people come in. Again, in paper assets, paper gold or silver and mining, all that kind of stuff. Completely different story. I'd be terrified on a daily basis. I lived that life for seven, eight years. Nine years waking up and knowing I could have a massive loss in any given day. Whereas if gold fell today, let's say gold fell $30 today, it wouldn't bother me at all. I know it's going to come back. It's all about the established buyers who are generally older and the new buyers who will come.

Of course, the bigger picture is about the United States where people have been brainwashed by their reserved currency status for so long to think that gold and silver are just barbaric relics. Of course, that's also where the biggest manipulation goes. To the rest of the world who are buying it hand over fist who are desperate for it right now. You know, if you live in the Bricks, if you live in Brazil, if you live in all these places where the currencies are collapsing. Russia. You can't buy gold if you wanted to and you desperately need it.

Here in the United States, this insurance, which is desperately going to be needed soon, is on fire sale. It's amazing. No one wants it. It's the perfect storm. People want to buy high and sell low. This is when you need to buy the insurance and you can whereas overseas, the prices are soaring in other currencies and people can't even get a hold of it.

Dr. Lewis: You would think that in a place, in a country where people are so obsessed with finding a return on their money or being so investment savvy, they would recognize the cheap option when they see one.

Andy: You know what I found? This again, this is a different kind of cheap option because it's universally reviled by Washington, Wall Street and the Main Street medium. You are taught from the day you are born that gold is a barbaric relic and it's attacked in the markets every day. When you have a crisis, they make it go down so you can't even say, "Well, I need to buy it because I'm worried about crisis, et cetera, et cetera." It's just a mindset in this particular country.

The other thing that I found is that while Americans on average are very educated and generally speaking intelligent, when it comes to finance, I would say the average American, I'm talking about the average intelligent, successful American is completely and utterly clueless. Not just about finance, about economics. About politics. They've been dumbed-down. They're not interested. Most people are just trying to get by and the few people that can get by just don't care.

We just had this meeting. We had a our Denver, Boulder meeting with myself and Andy Schectman and by the way, we're about announce several new dates. We're going to go around the country with this. I sent an email to, I kid you not, every financial professional in the state of Colorado. I think it was eight or nine-hundred financial professionals in the state of Colorado. Simple, nice email. "We're having this email. It's Andy Schectman and myself. We're experts in precious metals. It's a crisis around the world and there's no strings attached. No cost. Just come, get a free dinner, and ask questions." That's it. You know how many people answered? Zero. Not one out of the eight or nine-hundred. Do you know how many people came to the meeting? One-hundred and thirty because they found out because of sites like yours and the other alternative media. They're everywhere people but they're in small pockets. The average person in this country, the average successful person in this country, has not the slightest understanding or interest in anything that matters to the long-term of their own finances and this country.

Dr. Lewis: Including people who are in the professional financial world.

Andy: Absolutely. More than any the people who are the professionals. The wealthiest people. Absolutely. We were trying to get into a country club, a very wealthy country club in a wealthy city where everyone is smart and even monetarily smart. They're in an area where people are very, very understanding of this stuff and they just won't do it. They just say, "No. We want to be in the stock market." The stock market! They can't see that we're in a major global crisis, that we're in a bear market, that the world is falling apart. They don't even want to listen, just listen. Just have someone come in, not a sales pitch, just come in and just let them ask questions about our view of the economy and how [inaudible 00:16:32]. They won't even listen to it and these are the wealthy people who can actually afford to protect themselves.

Dr. Lewis: Unbelievable. Unbelievable. Andy, thank you so much. I appreciate your time. Can you ... If someone wanted to find out or follow you guys in terms of where you're going to be, when those meetings will occur, what's the best way for them to engage?

Andy: Miles Franklin, we've been around for 27 years now. We're one of the largest bullying dealers in the nation. We have my free blog where I write everyday for free. I do all these podcasts. As you said, we're doing meetings around the country which will be free as well. You just go to milesfranklin.com. You can email me at ahoffman@milesfraknlin.com.

Dr. Lewis:  Great. Great. Thank you so much, Andy. I really appreciate it and have a great day.

Andy:  You too, Jeff.

By Dr. Jeff Lewis

Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com

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