The Phaserl


PiMBEEBA-A-LOOZA, Part II, And An Important Personal Message

by Andy Hoffman, Miles Franklin:

I’ve been working hard, very hard. As in, not an hour of the day goes by, 24/7, that I’m not scouring the internet for incremental information; downloading articles; reading and analyzing them; preparing my next article, podcast, or presentation. This, while performing my other duties, as the Marketing Director of one of America’s oldest, most trusted bullion dealers. To that end, I wrote every day during my vacation – and wake each morning before 4:00 AM, nearly never at the prompt of my alarm clock.

The reason being, that not only do I want to succeed at my job – and thus, overcome a lifelong fear of failure; but educate you of the fraud and deception emanating from the “evil Troika” of Washington, Wall Street, and the (fake news) Mainstream Media. Which cumulatively, will do anything – legal or illegal, ethical or unethical; toward the end of maintaining power over a dying status quo, and helping the “1%” separate the “99%” from their money. Or at the least, create such a dramatic wealth disparity; whilst inadvertently hyper-inflating the cost of living; that even those that appear to be “winning,” are in the big picture losing significant chunks of economic ground.

Politically and economically speaking, the list of “negative superlatives” regarding the state of America – and much of the Western world – has never been longer; and unfortunately, due to the toxic combination of unprecedented, parabolically growing debt; rampant overpopulation, coupled with historically ominous demographic trends; and the ongoing implosion of history’s largest, most destructive fiat Ponzi scheme; will only get worse before one day, when the economic disease is inevitably, but painfully purged, all that has been trending down since the turn of the century, turns up.

When I consider my investment career – going back to my first internship at Paine Webber in 1989, selling 8% Certificates of Deposit to a cold-call list of people with no interest in such “low” yields, it’s amazing to consider not only how the world has changed, but the equally dramatic shift in my personal investment preferences. To that end, my first serious “investments” didn’t occur until 1999; when for the first time – in my first year as a sell-side oilfield service analyst at Southcoast Capital in New Orleans, at age 29 – I had enough savings to even attempt investing. At the time, said investments were typically a few hundred shares of the latest dotcom or telecom high-flier; most of which worked out, until the bubble popped shortly thereafter.

My natural risk aversion – i.e, fear of failure – caused me to sell my last dotcom stock in April of 2000. After which, I remained in cash for the next two years, avoiding entirely the bursting of what, to that point, was the worst economic crash since the Depression. For that matter, aside from mining stocks – which I’ll get to in a second – I haven’t owned a stock of any other kind since.
My early years at Salomon Smith Barney, where I worked as a sell-side oilfield service analyst from 1999-2005, were the best earning years of my career. And thus, for the first time, I had enough saved to make investments large enough to matter. Which is why, when I found the Precious Metal sector in May 2002 – exactly 15 years ago, when I purchased a few hundred shares of Newmont Mining – I was prepared to take significant speculative risks. At the time, I was working 80-hour weeks; making good money; and had no “attachments” except my work, given that I didn’t get married until late 2002. The oil business was good; the worst of the post-Dotcom crash was behind us; and, as noted above, I had been wise – and lucky – enough to have avoided the brunt of the financial carnage.

Given my newfound love of mining stocks, my speculative juices were boiling over. Consequently, I quickly invested my entire net worth in the sector, under the overly simplistic, and decidedly un-alarmist premise that the dollar was “overvalued”; and thus, ripe to “decline.” It took mere days for me to realize an omnipresent Cartel was suppressing prices – and by 2003, I was already a regular contributor to the GATA website. However, the Cartel was exponentially less “advanced” than today, as the existential “threat” gold and silver posed to fiat hegemony was not yet sensed by the powers that be. Thus, while I experienced plenty of frustrating Cartel smashes, the Precious Metal markets were dramatically more freely traded than today; and consequently, the vast majority of my personal wealth – to this day – was earned in the mining share markets, principally juniors, of 2002-06. Given what has conspired since – i.e, a decade of Cartel-induced stress and financial losses, despite everything I had worried about being far worse than imagined – it’s a miracle I’ve retained as much as I have. And yet, care of my subsequent decision to invest solely in physical metal, it’s just a third less than the peak net worth I achieved a decade ago.

When I left Salomon in 2005 – after the fourth round of post-Dotcom layoffs finally, mercifully ensnared me – I sought to parlay my 16 years of (largely successful) Wall Street experience into the sector that now dominated not only my intellectual interest, but my net worth as well; i.e., Precious Metals mining. Starting in 2006, when I received my first (inevitably worthless) warrants to consult with a junior miner, I spent five years working as either an Investor Relations officer or consultant to literally dozens of mining companies. One of them was a full-time gig, from early 2008 (when the stock, and my options’ value, peaked) until it burned through the $100 million of equity capital it raised at the time of my hiring, a mere three years later. Good people, but a highly-flawed business plan, exposing why mining is one of the difficult businesses on the planet; particularly, when a Cartel is working 24/7 to destroy the value of your end-product.

During that time, the 2008 financial crisis occurred – and despite having been dead-on right in predicting it; and being fully invested in Precious Metal mining shares, which I expected to benefit greatly from it; I lost two-thirds of my net worth to the Cartel’s post-crisis paper PM raids – which consequently, hit mining shares far harder. Too bad I hadn’t yet discovered physical metal; as despite the initial, Cartel-induced plunges in paper prices, physical prices never materially declined. As once the paper prices started falling, physical demand grew so strong, the global bullion industry sold out within weeks – yielding massive delivery delays, and physical premiums (versus the fraudulent paper prices) of up to 30% for gold, and 100% for silver. I.e., the exact amounts the paper markets had been taken down.

As the crisis progressed through 2008, I started selling my miners in lieu of physical metal – which initially, I purchased in small amounts from eBay. Fortunately, I held on to the majority of my mining stock investment for dear life – which for the most part, I “high-graded” into what I thought to be, at the time, the best mining stock imaginable. Yes, I “bet the house” on one stock, a Canadian silver royalty company called Silverstone Resources – which, from a high of roughly $4.00/share, had fallen to about $0.50/share. Given that this “poor man’s Silver Wheaton” was cash-flowing even at the bottom, I thought it was worth the risk. Which it turned out to be, as Silver Wheaton eventually bought it in early 2009 for stock – making Silver Wheaton, valued near its post crisis low of $8/share, the vast majority of my net worth.

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