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Andy Hoffman Interview – Transcript

Future Money Trends:  Greetings. Thank you for joining us at I’m here with a good friend, Andy Hoffman. He’s with Miles Franklin. He’s the marketing director. He is a precious metal expert as well as just in general in the stock market commodities. I know his degree is not in economics, but certainly, if you look at the definition of “economist,” I would refer to him as a very smart economist and someone who understands the economy.

Andy, thank you so much for joining us.

Andy Hoffman:  Sure. But for the record, my degree is in finance with a minor in economics, and I have a CSA.

Future Money Trends:  I didn’t know that.

Andy:  I worked 15 years on Wall Street on top of that, so I’ve got a handle on things.

Future Money Trends:  You really do. You’re one of the few people who has been telling the truth about the economy despite the market manipulation. You’re out there. You’re one of the good guys. I’m really glad to talk to you today and have everyone who’s listening be able to see what your input is.

I want to start off with the German gold story. For those not familiar, in or around January 2013, Germany requested some of their gold back from the New York vaults. It was going to take seven or eight years, I believe, to get this done, something China probably imports in a month. Then Bloomberg came out about two or three days ago and said that they’re no longer repatriating their gold.

I’ve seen a few stories out there now. Andy, I know you’re on the front lines. It’s your job and passion to know everything that’s going on with precious metals. What is going on? Is Germany repatriating their gold or not?

Andy:  They’re trying to. This is one of the worst propaganda schemes, to try to make it seem like they don’t want their gold. The fact is, they were only asking a year and a half ago for 300 tons of their supposed 3,000 tons that the Fed was holding. After one year, they got a one whopping five back. Five tons in one year.

Clearly, it’s not there, but they can’t say anything. They can’t say, “You guys are liars. You don’t have our gold,” because they’re all tethered together by the same lies, the same derivatives, the same lack of gold, so they basically sit quietly and take it.

This article came out by…It was Bloomberg or Reuters, one of the mainstream cheerleaders, and says they’re content. They say they’re happy with what the US is doing with their gold.

If they were, then why did they ask for their gold back? How can anyone actually believe that they’re more happy with the US’s custodianship of their gold, since they haven’t given any of it back when they were asked to do it? Then the guy who was in charge of the national movement to get the gold back said, “It was all a lie. I didn’t say that.”

It’s a non story. It’s the kind of thing that you’d see thrown into the mainstream every day to try to throw people a little more off balance about the one asset that they should be owning as opposed to the other ones that are going to ultimately destroy them.

Future Money Trends:  It certainly is confirmation for anyone who suspected that they didn’t have the gold. This is pretty obvious. Just to give people an idea, they’ve only got 5 tons out of the 300 tons. How many tons of gold, if you have any numbers, would either a major country import in a month or a year? How much is the production? I’m trying to get a scale of how big is 300 tons. Is it the impossible?

Andy:  Five tons Miles Franklin could probably get to in a week, and we’re just a little bullion dealer. Five tons is absolutely nothing. I can put in perspective how much, but it’s probably just a tiny little pile of gold. It’s the kind of thing where if you called Amazon and said, “I want 100 books,” they could say, “Sure. We’ll have it to you by next week.” That’s what should have happened, but they didn’t send it to them.

Of course, no one ever hears why. Again, the Germans are stuck with the same thing. They can’t admit to everyone that their gold doesn’t exist. Just like Feds at Fort Knox. We can’t say that ours doesn’t exist.

They asked for it. They don’t get it. It’s one thing when Chavez in Venezuela screams about it, but he doesn’t have a reserve currency to worry about. When it comes to the Europeans, the Germans can’t be seen as the emperors without clothes, as they are.

Future Money Trends:  Andy, I know probably about a tenth of what you know when it comes to the open market manipulation and the fraud and the lies out there. It bothers me that no one ever goes to jail. No one ever gets arrested. No real investigations. Nothing ever happens. Even with this German story, nothing really happens.

Is there anyone out there that you are aware of that, “Hey, you know what, Dan? This guy right here or this group or somebody, they are doing their best, and this thing could come apart because of these efforts.”

Andy:  No, and there won’t be. Your silence if anything happens…I’m not talking about tilled silence. You’re ignored completely. We’ve gotten to a place where there’s so much corruption going on, particularly when you’re talking about financial markets, that it’s ubiquitous. No one could care less.

People have been dumbed down. Heck, even the few hedge funds that are still left in the market because they’re lucky enough to be in the business of being supported by the government. They have no clue. That’s why they’re all under performing the indices, because they don’t get it that it’s the index that is being bought. It’s not a stock picker’s market.

Their job is to make money, and if the market’s going up they’ll just keep buying it. The only thing you can’t do as a hedge fund manager is have the market go up, and you be out of it. Like in 2009, they’d rather be all in and just watch everything crash, because they’ll say, “Hey, it happened to everyone else.”

If my job was to invest other people’s money in the stock market, I would just believe the propaganda, too.

Future Money Trends:  That’s a funny point that you just made, about if they’re in and it goes up, then they want to pat themselves on the back. If they lose money, they just point fingers and say, “Hey, everybody lost money. Nobody saw this coming.”

Andy:  Yes, that’s the whole point. But the funny thing is that hedge funds in general have been doing horrible. Because one, you have to pay 20 percent of the profits to start with, plus a two percent management fee. Also because these guys just don’t understand. They want to tell their investors, “Yeah, we’re great stock pickers,” but the fact is there’s no such thing as stock picking anymore. It’s all about being where the government is.

Yes, there are a couple of names that get the 1999 Internet treatment; the Netflix’s and the Priceline’s. But for the most part, stock picking doesn’t work because it’s really just the indices that are being driven up by the government.

Future Money Trends:  Certainly if you bet against the Fed with precious metals it’s been rough for the past few years. If you said, “You know what? I’m going to align my money with the Fed.” You just can’t lose money in the stock market right now.

This morning, as you know, GDP came in at negative, 2.9 percent, most in the five years. I’m looking at the Dow right now. Actually, it’s closed. The Dow closes up today. It looks like it didn’t have any issues today. I’m assuming this is because people know that this means more government help’s on the way. More liquidity.

Andy:  It’s more because it’s the actual government in the market. We just learned this week, a study came out that said governments own $29 trillion of stock. That’s half of the entire market capitalization in the world.

There was a story today that said the Norwegian Sovereign Wealth Fund now wants to own five percent of every European stock. Japan’s government pension fund is now selling treasury bonds, because they know they can, because Abenomics is going to buy everything, and pouring them into stocks.

The point is, it’s the governments themselves that are buying them, because they’ve created the zero interest rate policy and they’ve created their PPTs that support the market, so they’ve created the greatest bubble of all time, whether it’s bonds or stocks or selective high end real estate.

You’re talking about bubbles that blow away, in terms of valuation, in terms of leverage, blow away 1999, blow away 2007. Again, I wrote a piece called “The Giant Sucking Sound” last week saying when the government owns half the stocks and half the treasury bonds, and half of the mortgage bonds, at some point there’s no one else left to sell them to.

One way or the other, these markets are going to cause catastrophic, real losses.

Yeah, perhaps they’ll hyper inflate like Zimbabwe did, or Weimar Germany or Venezuela last year. In which case, you’ll still have huge real losses compared to inflation. Or maybe it’ll just be a 2008 style crash. It really depends on a lot of factors. This is the absolute worst time on the planet, in history, to be buying financial assets that are being propped up by QE and the governments themselves.

Future Money Trends:  What is the sentiment of gold investors these days? We talked a little bit about it before the call, that it seems like, when I talk to people, they’re pretty down. However, then I read the numbers and we’re breaking records when it comes to physical demand.

From a Miles Franklin perspective in what you’re reading and seeing, but more so what you guys are actually experiencing, what is the sentiment? Are investors buying the dip, or are they tired? Are they tapped out?

Andy:  It’s a tale of two worlds. I would say our best month in history, by 50 percent more than the second best month, was last year in April when they had the gigantic smash out of nowhere, after Obama had his closed door meeting with the 15 too big to fail CEOs. That day Goldman Sachs put out a recommendation to short sell, and then miraculously gold fell $250, and silver like six bucks in two days.

That was when they said, “OK, enough. We’re doing Abenomics. We’re doing QE. We need to just smash Gold into oblivion.”

After that big smash where people were buying in or Fed, it’s gotten worse and worse. I would say it’s easily the slowest since I’ve been here. In the Western world, if you include US and Canada, I would say it’s probably the worst sentiment for gold since before the bull market, like in 1999.

Business is very slow here. That said, you’re 100 percent right. The physical demand is setting records on a global basis. China, we just learned today that 2,000 tons were taken off the Shanghai Exchange last year. That compares to 2,700 tons or so of global production. Then there was another 1,400 tons or so that were imported into China.

Basically, more than the entire production of the world was bought by Chinese last year, which is why those Swiss refineries were running 24/7, taking the GLD inventory, which is probably no longer there, taking it from private vaults, et cetera. You’ve seen massive and massive amounts of buying.

Of course, in India, they had a big year even with the tariffs. Of course, silver, they had a record year. Russia, they tell you every month how much they’re buying. There have been huge premium differences in India and China, in the Eastern hemisphere, as big as it’s ever been.

The most ironic thing is the Silver Eagle sales here by the US Mint set a record last year, as we had our weak business and the price was down 30 percent or so because it was clearly the Chinese and Middle Easterners, the Russians, that were buying from our own Mint.

Future Money Trends:  Andy, I don’t know if you…

Andy:  By the way, 2014 year to date is blowing away 2013’s numbers. Our year at Miles Franklin is much slower than it was last year.

Future Money Trends:  That’s amazing. With the silver, you mentioned the Eagles. I just want to talk about it real quick. I was looking at some of the numbers a few weeks ago. These are old numbers now because they were the end of 2013. Roughly 1.1 billion ounces in demand for silver. It was like 85 or 100 million ounces of shortfall.

I noticed the recycled silver was down 25 percent. Government stockpiles, 10 years ago it was 10 percent. Last year it was three percent, and then 2013 it was one percent. There’s definitely now a deficit running again in silver.

I just want to ask you. On the recycled silver, I would have thought if prices are higher than they were 10 years ago, there would be more recycled silver. My question is, on the recycled silver, when it went down 25 percent, is that something that you guys picked up on or that you guys had some analysis on? Why was the recycled silver down so much? Why wasn’t there more of it?

Andy:  I would say this. If you’re talking about the CPM Group or The Silver Institute, every number they’ve put out is pure garbage. You can throw it in the trash. One of the two major groups that puts out the silver demand and supply is Jeffrey Christian.

First of all, how anyone could believe that they could measure silver scrap is beyond me. Second of all, over the years it’s been proven easily that the investment side for gold and silver has been vastly higher than what those groups, World Council and Gold Field Institute, or whatever that’s called, put out.

The numbers are immaterial. First of all, in the bull market in general, going from 2000 until now or 2011, pick your time, it’s all about investment demand. Scrap, immaterial. In silver’s case, it is a fact that there is probably three quarters of all the production is taken up by industrial demand. Most of it is for stuff that is indispensable. That’s not going away even in a recession.

That said, what makes the price go from $4 to $50, and what’s going to make it go in the future, has nothing to do with scrap, with industrial demand, with any of that garbage, with how much stuff goes to Cash For Gold. It’s all about investment demand.

What’s going on right now is simply the most insane naked shorting of paper that has ever been seen in history, and then, of course, the dishoarding of physical gold, which explains how the Chinese could have bought 3,500 tons when gold production was only 2,700 tons last year.

Of course, they’re not telling you about that. They’re not telling you that the GLD has less gold than it’s supposed to have. The fact is, if China in fact did buy everything they say they did, which I believe they did, it had to come from somewhere. It probably came from the German’s gold at the Fed, and whatever gold we might have had left at Fort Knox, and people’s gold in GLD that they didn’t even know about, and their vaults that were re-hypothecated, and all kinds of things.

Nothing about statistics should be in the slightest bit looked at with the slightest bit of truth.

Future Money Trends:  That information…

Andy:  Look at the economics statistics. We’ll talk about them if you want, but go on.

Future Money Trends:  No, it’s funny. The Silver Institute, that is like the gold standard when it comes like these TSX companies that we work with. If you can’t back up whatever you’re writing or doing for them, or if we’re doing a PDF or something for them, they all want The Silver Institute. What you’re saying is those numbers are just garbage.

Andy:  Yeah. First of all, these trade groups, what have they done to help their own trade? They have done nothing but harm their own trade. Why would you believe their numbers? Again, they’re being proven wrong constantly.

Eric Sprott’s done simple work that proved it. Frank Veneroso started the movement 15 years ago. It’s literally like asking the fox to count the hens in the henhouse and ask him how many are there.

Future Money Trends:  Andy, I want to close this interview out by asking you a question that I get asked all the time. My answer is usually, “I don’t know.” People always ask me why silver went up 50 cents or down 50 cents, or gold went up 10 bucks.

Here, we have a situation where silver went from $18 to $21, and gold had a pretty large run here, too, I think about $75. People still ask me, and I’m like, “Of all the runs, there’s not anything major, other than I could tell that maybe something happened behind the scenes.”

If you could tell us, what exactly happened here? Why did we go from $18 to $21?

Andy:  Nothing major is going on? You mean like a potential world war in the Ukraine? A potential world war in Iraq with $107 oil? Like GDP being next to nothing? Like negative interest rates in Europe? Abenomics in Japan? The Chinese having an absolute collapse of the biggest bubble in history and devaluing the yuan? Nothing major is going on?

Let alone the Germans asked for their gold back and they can’t get any of it back. There are literally 200 reasons why gold should be going up huge on every single day.

The only reason it goes up, it goes up because the powers that be are not able to hold it down. Again, I can’t scream this enough. We’re talking about prices that are way below the cost of production of the industry, way below.

Silver should be 30 bucks in any sustainable industry. I’m talking about making money in the big mines, the small mines, replenishing reserves and having a chance to survive as an industry. You need 30 bucks. That’s why they’re not getting the price below the 18 or 19, even if they are suicidal enough to try, and clearly they’ve tried multiple times. The same goes for gold at 1,200.

Future Money Trends:  Everything you said is…You’re 100 percent right. I couldn’t agree with you more as far as Russia and Ukraine, but then on some days, nothing. Then all of the sudden, out of the blue, this stuff matters again. I think that’s…

Andy:  It’s not that much, though. For silver to go from 50 down to 19 and then go to 21 is not a giant move to me. For the Dow to go up, literally, every single day for five years amidst the worst global economy and political situation in the history of mankind is a big deal. It’s obvious what’s happening.

They just told us they own 29 trillion in stock. They told us they own all the Treasury bonds, which push the rates down. They even have given out all the money to Wall Street, to private equity so they could buy real estate up. There’s nothing real going on.

When gold goes up, it doesn’t go up for a reason on a given day. The Dow didn’t go up today because the GDP means that there’s going to be more QE. They print money and they buy the stock market every day. They print money and naked short gold and silver.

While they can push up the stocks all they want and create hyperinflation, they can’t create physical gold. When I tell you that the Chinese alone bought more physical gold last year than there was produced, something is going to give soon. It’s probably going to give in silver before gold because there’s far less of it.

Future Money Trends:  That is a great point. As far as what you guys are recommending right now, if somebody wants to own precious metals…We’ve probably talked about this before but for anybody who is listening to this for the first time, I want to talk about gold, silver, platinum, palladium, and numismatic coins.

What does Miles Franklin suggest as a good, diversified precious metal portfolio?

Andy:  We don’t recommend anything. We’re not investment advisors. We are gold bullion dealers. We’re fortunate enough to have some of the best minds in the economic world writing for us, because what we’re doing is simply educating people about what’s going on in the world.

Our recommendation is to own precious metals instead of fiat currency. That’s our recommendation. In my case, I own gold and silver, half and half. Yes, some people like platinum and palladium. They’re very rare metals. I’m not a huge fan of them. Platinum will probably go up directionally with gold over time. It usually has. Palladium, it’s less certain because it’s industrial.

We say, “Buy precious metals.” We say it because that’s what we own. That’s what the principals of the firm own. What we’re talking about is what we do ourselves. That’s our recommendation.

Future Money Trends:  If someone wants to store it with you guys, either in the US or in Canada, how do they get the metals there safely? Do they meet Brinks at a bank, or how does it work?

Andy:  We have options around the world, but frankly, the only one we really use, and I will say recommend, is the Canada one in Montreal with Brinks. We do so because it’s our program that we, personally, go to audit. I’ve been there several times already to see my metal. We charge by the ounce instead of by the percent value.

To me, it’s the best of all situations in the Western hemisphere because I know the gold and silver are there, unlike a lot of other storage things where you get a piece of paper and you hope and pray it’s there.

How does it work? Either you can buy it from us. It’s very simple. We just send it right up there. Or, you can send it to us. As far as sending your own stuff, which I’ve done myself, you send it through the mail. There are ways of insuring it so that the people in the post office don’t realize how much it’s worth. It’s a very simple process. We’ve never lost a package or a wire or coins, ever, on either side in 25 years of being in business.

Future Money Trends:  People at the post office do steal. I can verify that. We actually went…

Andy:  They don’t know. You can insure a package. It’s for $20,000 or $25,000, but then you can get private insurance for another million and they will never know.

Future Money Trends:  Obviously, you’re going to do it correctly if you’re sending a significant amount of value.

For our paid membership area, we send one free silver ounce just as a gift. We do occasionally, I would say it’s rare but it does happen when a subscriber will call us up and say, “Hey, this package has a slit at the bottom of it and no silver.” Somebody at the post office was taking that silver.

Andy:  Yeah, I wouldn’t worry about the process. The thing people need to worry about is to actually consider doing something.

I’m not sure it could be screaming more at you, where you have no GDP growth around the world, where you have historic money printing, negative interest rates, war, surging food and energy prices, and record money being poured into overvalued financial assets unleveraged by the government, and precious metals, which are constantly having shortages, trading below the cost of production, with the entire Eastern world buying hand over fist and talking about de dollarizing.

How much more do people need to be smacked over the head? It’s not like we’re telling you, “You need to own every penny you have in precious metals.” Do something about it. Consider what’s going on in your own life and think about what might be the best thing to do.

Future Money Trends:  Yeah, for sure. With the metals being at below the cost…We get this beautiful Silver Eagle for less than it costs one of these silver companies to make it. Then with sentiment down so much, it truly is. This is one of the best deals right now out there, if you want to own precious metals.

If you want to own some precious metals or learn and get educated at the Miles Franklin blog, you can also get an email update daily. It’s one of the best blogs out there if you’re interested in learning about precious metals and the macro economy.

Like Andy said, these are some of the greatest minds out there. They’re analyzing everything. It’s not just gold and silver. You’re getting everything. I’m sure tomorrow you’ll get a full analysis of the GDP.

Andy, if someone would like to reach out, it’s just, correct?

Andy:  Right, or you can call 800 822 8080 or email me personally at

Future Money Trends:  Andy, thank you so much for your time.

Andy:  Always a pleasure, Daniel.