Decision Of A Lifetime

November 25, 2014

It’s my last article before Sunday’s “decision of a lifetime” – in which the Swiss people not only have the ability to save their finances, reputation and currency but deliver hope to the billions suffering from Central bank monetary atrocity.  Sadly, the vast majority don’t understand how divergent the potential paths of humanity that hinge on this vote could be; kind of like in Back to the Future, when Marty McFly’s future is one of misery when he chooses to drag race – and bliss when he doesn’t.  However, we assure you the “99%” will take notice of the people taking a stand against TPTB – as they just did in Catalonia and nearly so in Scotland.

We’re certainly not prognosticating “Swiss Bliss” in the event of a yes vote – or, for that matter, Swiss Apocalypse otherwise.  After all, Switzerland is still pound for pound, the world’s most powerful financial nation.  However, what made it so was the world’s most conservative monetary system – i.e., backed by gold; as well as prudent financial management, a culture of privacy protection, and most importantly political independence and military neutrality.  These past 15 years, all of these benefits save military neutrality have been either lost or materially eroded.  However, unlike the rest of the world, Switzerland has not yet passed the “point of no return.”

Oh, they’re right on the edge as we speak – but fortunately, a “yes” vote could deliver Swiss economic salvation.  In fact, we’d venture to guess a yes vote would render 21st century Switzerland far more rich and powerful than they’ve ever been – and not just because they’d own more gold, assuming the tonnage they’d need is even available for sale.  More importantly, the Franc would become the world’s strongest currency and inflation the world’s lowest.  Capital would flock to Switzerland like never before – including, I might add, from dollar-denominated assets.  In fact, a yes vote could cause the Franc to become a de facto global “reserve currency” – until inevitably it is supplanted by the Yuan when the global fiat regime collapses, replaced by one backed by real money, either implicitly or explicitly.

As we start Switzerland’s potentially last week with a fiat currency – in which the weekend’s financial news was dominated by expectations of additional Chinese rate cuts, European “deflation” fears, the potentially catastrophic ramifications if OPEC refuses to cut production Thursday, ongoing nervousness about U.S. holiday spending (see this morning’s punk Chicago Fed National Activity Index and PMI Service readings); and oh yeah, the most negative gold forward rate in 15 years, I can’t help but recall the personal “decision of a lifetime” I unwittingly faced in 2000.

As the Bush/Gore vote approached, I was at the peak of my Wall Street career as a sell-side equity analyst at one of the most prestigious firms, Salomon Smith Barney; in one of the most successful sectors – oilfield services, equipment and drilling.  Oil prices had just recovered from their own “perfect storm” in late 1998 – when they briefly fall below $10/bbl.; and thus, I was just regaining my wits, after a year of watching my sector struggle mightily.  My career path appeared bright, and the global economy and stock markets were racing along in fifth gear.  However, every time the Presidential polls showed Al Gore gaining ground, oilfield service stocks would decline.  To wit, fears that Gore’s environmentalist leanings would hamper the oilfield service industry were heightened by political rhetoric, whilst good ol’ boy George Bush, from a long line of Texas oilmen, was perceived as the oilfield service messiah.  After all, it was rumored he’d allow the Arctic National Wildlife Preserve (ANWR) to be drilled and every imaginable drilling regulation lifted.  At the time, I didn’t know George W. Bush from a hole in the wall – other than that his father was another famous politician and fellow Texas oilman.  Conversely, after eight years as Vice President, I was well aware of Al Gore’s shortcomings; not to mention, those of his running mate, Joe Lieberman, who I had an extremely low opinion of.  And thus, in November 2000, I voted for George W. Bush and his running mate, Dick Cheney – who, incidentally, I knew well (albeit, not personally) from his role as Chairman of Halliburton, one of the companies I diligently “covered” for a decade.

As it turns out, George Bush was no better for the oil industry than Bill Clinton; or, for that matter, any prior President – “Texas oilman” or otherwise.  As it turns out, oil prices plunged as the “tech wreck” expanded; and following 9/11, a slow motion recovery didn’t enable the OSX to reach its 2000 Election Day level until Election Day 2004.  By then, the oilfield service industry had undergone a dramatic consolidation process that ultimately cost my job; as by 2005, the once powerful Salomon Energy Banking juggernaut had been dramatically weakened.

Oilfield Service Index

Not that I could have known how world events would transpire; or, for that matter, if a Gore/Lieberman White House would have acted any differently – financially, legislatively or militarily.  However, it’s clear they couldn’t have acted worse – as unquestionably, America’s finances and global reputation were more damaged by Bush/Cheney than any other “reign of terror” in its history.  Until Obama/Biden, of course; but then again, I find it difficult to discern even a modicum of material difference in their policies, certainly not the volume or scope of their lies.  Moreover, in Obama’s “defense,” the further the dollar Ponzi scheme expands the more money printing, market manipulation and propaganda each succeeding Administration must engage in if it wishes to “kick the can” four more years.

To that end, even the most determined Wall Street or Washington propagandist would have difficulty disputing that market manipulation has gone mainstream – regarding not just precious metals but all financial markets.  And if the myriad admissions, convictions, and investigations of impropriety wasn’t enough to convince you, perhaps this poignant article will – by a veteran equity trader claiming to be “100% sure Central banks are buying stock futures,” who aptly asks…

Why would the Fed prop up our stock market?  To that end, in utilizing the ‘Plunge Protection’ mandate, why not just bypass the ‘plunge’ altogether?  Can’t the definition of Plunge Protection be just that?  Protection against a plunge, instead of during a plunge?  Doesn’t propping the market equate to “Plunge Protection,” since propping alleviates plunge and “protects” us?

-Zero Hedge, November 22, 2014

Back to the issue at hand, the inspiration of today’s piece was this article describing the current “pro” and “con” issues of the Swiss referendum – which eerily parallels my own short-sighted thought process in Bush/Gore 2000.  To wit, the author surmises…

A win for the initiative would most probably imply a breakdown of the Euro/CHF floor. 

According to the polls, low income groups are in favor. Effectively their purchasing power would increase when the Franc appreciates. 

High income earners and stock owners are rather against it – If the CHF improves Swiss stocks could collapse, and this explains their voting intentions.

-George Dorgan, November 2, 2014

In other words, the “1%” that have benefitted from Central bank money printing are dead set against an event that “on paper” will cause their investments to shrink – just as the “common knowledge” that George W. Bush would be a boon for oilfield service stocks.  Worse yet, 2014 Switzerland’s “common knowledge” has far less basis than my flawed Bush 2000 thinking – as unlike oil prices, which were essentially immune to Bush and Gore’s foolishness, the Swiss economy – and nation itself – will be badly damaged by a “no” vote, and dramatically improved by a “yes.”  And yes, I know Switzerland’s “1%” is larger than the global average.  However, the fact remains that holders of fiat currency denominated wealth want the status quo to continue, no matter how destructive it may be; whilst those in favor of political, economic and price stability vehemently support the initiative – although perhaps a bit less vehemently, as the tangible benefits of a “yes” vote are more difficult to envision than the perceived losses if the SNB can no longer print money at will.

At the end of the day, we have not a clue which way the vote will swing.  However, as noted in yesterday’s “ECB (and many others) vs. the SNB,” we are quite sure the true polls will enter Sunday’s vote in essentially a dead heat.  And one more thing to ponder, to empower gold bulls and alleviate their Thanksgiving weekend fears.  Which is that the gold price’s fate decidedly does NOT depend on this vote, irrespective of the relentless Wall Street/Washington rhetoric – and likely, “technical analysis oriented” newsletter community – a “no” vote would undoubtedly yield.  For one, the reasons to own PMs have never been more powerful, with prices well below the cost of production as global demand achieves new record highs, and mining output appears on the precipice of an historic plunge.  In fact, we’d argue that very powerful financial forces have worked overtime pushing prices down ahead of this vote – accentuated, no less, by the one-time sale of Ukrainian gold that likely, as we speak, sits in Chinese deep storage.

And thus, whilst Swiss citizens face the “decision of a lifetime” regarding the fate of their nation, the rest of the world sits in economic purgatory waiting for the inevitable spark that blows history’s largest fiat Ponzi scheme sky-high.  Hopefully, you realize the uniqueness of the opportunity presented, enabling you to protect your assets at historically subsidized prices – amidst an unstable monetary system that could implode any day.  And if you do decide to capitalize on this situation, we humbly ask you to call Miles Franklin at 800-822-8080 and give us a chance to earn your business.


Courtesy of

Andrew ("Andy") Hoffman, CFA joined Miles Franklin, one of America's oldest, largest bullion dealers, as Media Director in October 2011. For a decade, he was a US-based buy-side and sell-side analyst, most notably as an II-ranked oil service analyst at Salomon Smith Barney from 1999 through 2005. Since 2002, his focus has been entirely on precious metals, and since 2006 has written free missives regarding gold, silver and macroeconomics. Prior to joining the company he spent five years working as an investor relations officer or consultant to numerous junior mining companies.

Spanish Conquistadores invaded the Inca Empire in 1528 to steal their silver and gold.