The bullion dealer's goal is to provide gold and silver bullion investors with market commentary when significant developments warrant updates. 
 

November 21, 2009:  America's Condition Has Worsened In The Last Year, Not Improved.


It is will great sadness that I observe the sorry state of the American Union in the waning days of 2009.  This year has been anything but one of renewal and recovery, but one of profound incompetence, prevarication, and misrepresentation.  Our Founding Fathers are in mourning somewhere in the ether, that the foundation they labored to construct with the blood of 100's of thousands and the sweat of many a brow is crumbling before our very eyes.  The heck with the Chinese expression, "We are blessed to live in interesting times"; we are cursed to witness the accelerating demise of a once Great Nation.  Led by career politicians, many of whom have never run even a Mom & Pop Grocery Store at a profit, those in power in the United States are more intent on inflicting their version of societal governance at all levels of life and proliferate-spending policies on an almost bankrupt populace than extracting the nation from the jaws of bankruptcy and subsequent social ruin.  Our nation will be great again someday in this New Millennium, I hope I live that long, but it will not be with the Ship of Fools, the utter self-serving, arrogant Political Hacks we have in Washington today getting all excited about a healthcare package that will impair the economy even more with additional taxes, inevitably higher premiums and healthcare costs to the public (not Congress and government employees of course!), and eventual rationing of services to individual American patients.  What idiots under God's blue skies come up with such irresponsible, campaign-payback policies at a time when the economy is the single most important issue for American constituents, BAR NONE.  Wealth preservation comes before wealth redistribution.

Heed you well on Capitol Hill and the White House.  Enjoy the time you have left for the American Mob known as the Citizens of the Land are coming to take back their country.  They are not Republicans, they are not Democrats, they are the Seed of the Founding Fathers. 

Politicians can only stay out of touch with those they purportedly represent for so long before they are replaced.  I feel a Sage Prediction swelling up:  Congress will be set on its ear in 2010.  Not by a Republican landslide, but by a Founders' Party landslide of Americans of all political thought united in their utter disgust of what passes for Governance in 2009 America.  The Country is headed in the wrong direction; the American people always have and always will put the country back on the correct course to freedom and prosperity given time and adequate resources.

All of the political contributions from Broad and Wall which seems to own the U.S. Government at this point will not be able to buy the votes of millions and millions of Americans who are struggling to keep a roof over their heads and food on their tables.  Look at what food shoppers have in their grocery carts these days.  It is more and more the basics with the treats of yore being left idly on the shelves.  More and more shoppers are paying with Food Stamps.  Look at the increasingly empty restaurants.  Look at the empty houses down the street, with not even a For Sale Sign in front of them, the foreclosing entity not wanting to compete with other empty houses this lender is currently saddled with, trying to unload or even rent.

This past week saw once again the utter falsehood of claimed employment gains from the Failed Stimulus & Recovery Act of 2009 on Recovery.Org, another signpost that it is not only business as usual in Washington with the truth-challenged Obama Administration, but their level of falsification of information and outright dishonesty takes Executive Branch ethics to newly plumbed lows.  They can no longer blame the Bush Administration for every failing they themselves elicit.  And all of the errors to date in even the correct Congressional Districts have been to the Plus Column, not the Minus Column, naturally, of Imaginary Stimulus 2009 Jobs.  It is not Government's role to even attempt to create jobs, they bungle the vast majority of projects they ever attempt and cost the American Taxpayer greatly and generations to come with bloated budgets and cost over-runs as far as the eye can see.  Few governments in the history of the world have been the epitomes of efficiency, and this one is certainly, certainly, no exception.

It is not only the fact that the Green Shoots so frequently bandied about via the airwaves are mostly illusionary as was the 3.5% one-shot GDP Growth of the Third Quarter, but that they are based on unsustainable spending that puts the Country on a path to fiscal bankruptcy.  And to hear King Obama talk about eventually reducing the Federal Deficit ......... it is so disingenuous that you want to puke!!!  The Fourth Quarter is going to be a Shoot Killer.  Stay tuned.

Now that many Cash-for-Clunkers participants realize that the $4,500 maximum tax credit was not a true credit at all with it being taxable as ordinary income, but also that they drove off the lots with vehicles that lost manufacturers' discounts of some $3,500 the minute the Government Subsidy Program began.  Nice to be saddled with another $25,000 to $35,000 of back-breaking debt during an unfolding Depression when the serviceable "Clunker" was destroyed like Hoover or Coolidge did to hogs and crops under another ill-conceived Economic Stimulus Gesture in 1930.  When you push the real numbers in this American Auto Industry Bail-Out, Phase II or III, I have lost count, the unwary consumer was behind some $1,500 to $2,000.  THIS IS THE GOVERNMENT THAT CAN'T SHOOT STRAIGHT, but it will never be made into a movie because people don't pay $15 ticket prices to see something that makes them cry or throw up throughout.

$1.5 Trillion Deficits for the next decade is the Death Knell for the A+ Credit Rating of the United States.  We currently do not deserve this highest investment grade rating anyway ( okay, who paid off Moody's and Standard & Poor's on this one??? I guess Uncle Sam just told them they would not be arrested for the over-rating of the Trillions of Collateralized Mortgage and Debt Garbage they were involved in!!! ) due to some $106 Trillion of future obligations that the Country will never be able to meet with only a $14 Trillion economy.  Even at a 100% tax rate that Globe Trotter Obama would like to see some day since He is certain middle-class people stole everything they have, there is no way you can pay it off prior to outright default.  And those presently-identified LIABILITIES will not be stagnant in this Dollar Amount as the decade unfolds, but will balloon with each 100 basis point increase in U.S. interest rates that our FOREIGN OWNERS WILL INSIST UPON BEGINNING SOME TIME IN 2010.  I am amazed that rates are still only around 4% on the long-end of the Treasury curve since inflation is decidedly north of 7% as we speak, but the Federal Reserve in cahoots with Goldman Sachs and JP Morgan has been buying unwanted Treasury Notes to the tune of some $300 to $400 Billion so far this year.  SO WHO THE HELL IS ON FIRST BASE?????????  This ploy cannot go on much longer even as the official Federal Reserve Program of Buy-Your-Own-Debt known affectionately in the vernacular as Quantitative Easing is set to expire in March, 2010.  THE CHINESE WILL BREAK BERNANKE'S LITTLE PRINCETON ARM IF HE DOES NOT DISCONTINUE THIS BANANA REPUBLIC SHENANIGANS BY THEN.  Spoken any Mandarin lately?!!

I have not changed my mind whatsoever about the upcoming WATERFALL DECLINE DESTINED TO COME TO A STOCK MARKET NEAR YOU.  I am not that good a top caller, as to the exact day, week, or month, but I do know a developing top when I see one.  THIS ONE IS GOING TO BE A DUSEY!!!  There is little of fundamental support for Dow 6500 or S&P 600 at this point in time, much less for where we are now on the indices as this is written.  We are heading back to the old, March, 2009 lows sportsfans, because corporate insiders and the really smart money has been selling with both hands and both feet all the way up!!!  And we go back to negative GDP growth with the First Quarter of 2010 government report, no matter how much they try to fudge the figures into positive territory.  Geeze Louise!  Why not just understate the inflation rate for the millionth time!!!

Such slights-of-hand keep those pesky Social Security Annual Adjustments at bay, don't they???  What these intelligence-challenged prevaricators of economic data don't remember is that SENIORS PACK ONE HELL OF A PUNCH AT THE VOTING BOOTHS.  And they generally have the time and money to stay very, very active politically until their voices are heard through real legislative change.  Can you spell T-E-A  P-A-R-T-Y.  Of course, in 2010, the Tea Party will morph from that politically acceptable phrase of over-liquified colonists to the stark reality of "ANGRY LYNCH MOB".  Figuratively of course, not literally.

The Sage is holding with his 2009 price target of $1,250 Gold, but has reduced his Silver projection to a mere $21.65 for the yearly high price.  Who really cares because THIS Congress and THIS Administration and  THISFederal Reserve and  THISTreasury Secretary and THIS Wall Street have all guaranteed that the Dollar is a doomed vehicle of domestic and international exchange that could go into its own Waterfall Decline at any moment.  It is the boulder resting on the edge of the global cliff that the slightest gust of wind is going to send careening down into the valley below with devastating consequences to the Global Villagers nesting there.  Most non-American villagers below the cliff are already scrambling to get out of the Dollar's way.  It is the majority of Americans who have not gotten the message yet, and will pay dearly when that loaf of bread takes a Wheelbarrow of Dollars in exchange.  Maybe we should teach German History in our schools.

Bullion product backlogs are now out to 10 days to 2-weeks.  THIS IS A SIGN, SPORTSFANS, OF LONGER BACKLOGS TO COME AS A SPIKE IN DEMAND IS RIGHT AROUND THE CORNER FROM THE EQUITY (OR BOND!) WATERFALL DECLINE.  This time may indeed be different from the Everything-Gets-Sold-To-Get-Liquid phenomenon of October, 2008 that saw highly-leveraged speculators whack the fundamentally strong assets as well as the fundamentally sick assets such as stocks.  I think the Precious Metals laggards or non-believers will have finally gotten the message this time around concerning the Store of Value merits of owning PHYSICAL GOLD & SILVER.  While the precious metals will dip when the bottom falls out of the Stock Market and/or Dollar (not a big Dollar Rally proponent at this time), they will be bought up so quickly that the pullbacks will be brief .... if scary at all .... and dollars escaping the slippery fate of no-retirement for holders will plow by the Billions into our shiny friends.  Gosh, they have been a friend to my retirement accounts.  I started buying gold for an IRA back in 1997 when it was around $275 and silver in 2003 when it was around $7.  THERE IS NO BETTER WAY TO GET EVEN WITH ANYONE WHO ANGERS OR HARMS YOU THAN TO BE SUCCESSFUL IN YOUR INVESTING, BUSINESS, OR LIFE PURSUITS. 
 

HAPPY THANKSGIVING, we can still give thanks for the plenty we generally have as a Nation, even though our Leaders have failed to lead.  GIVE CHARITABLY TO THOSE WHO YOU KNOW ARE SUFFERING THIS HOLIDAY SEASON.



THE SAGE OF WEXFORD, pitchfork, garden hoe, axe, railroad rail, tar & feathers, Tea Party sign, steamer ticket, diaper bucket, funeral marker, repelling rope, and shovel ready.




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December 21, 2009:  American's Need To Shift Gears or PREPARE TO WALK.


Most human beings are creatures of habit, some habits being very self-destructive ones.  Although the purveyors of FINANCIAL GARBAGE masquerading as stocks, bonds, muni's, money markets, and Treasuries (no National "Treasure" there, just mountains of eventually non-payable debt!) have continued to suck in the no-return-on-cash crowd since March of this year, the stock market in particular and the bond market secondarily show all of the classic technical signs of a topping action which will be prelude to another severe reduction in Personal American Wealth.  WHEN WILL THEY EVER LEARN was a song I used to play on my guitar.  Why Americans keep going back to Wall & Broad, the true casino of the East, is beyond me as I started virtually eliminating my exposure to financial assets back as early as 1999.  I may have left some money on the table as to never-to-be-realizable capital gains, but have basically stayed out of the financial markets since then.  Was short the market in August of 2008, thank you very much, and have been adding to targeted short positions since September of this year.  This is strictly "play money" which would not buy the average SUV, since I know that the Fed and Treasury are printing money at virtually no cost to borrowers.  BUT ALL ARTIFICIAL MONETARIZATION EFFORTS EVENTUALLY HIT A BRICK WALL, and the bill comes due with absolute resistance to future U.S. debt purchases by investors.  No gains in my strategic short positions as of yet, but expect some juicy ones once reality sinks into the pricing of stocks.  This is not investment advice, kids don't try this at home, just letting you know that I put my money where my mouth is in my business affairs ( sorry, Tiger, not that kind of "affair" ) and personal investing.  I am not bad-mouthing the financial markets to sell bullion.  I truly believe that the financial markets will soon enter Panic Sell-Off Phase TWO.

http://www.thedailybell.com/678/Stocks-Suffer-Worst-Decade-Ever.html

( Please come back to my ezine after reading this eye-opening article or you will get coal in your stocking!!!)

Americans are moths to the flame.  Not sure where the money is going that is currently leaving the niggardly yields of money market funds, some decidedly is going into precious metals bullion from my firsthand experience.  But even if it is going into bonds instead of stocks this is a big mistake being repeated by American investors:  Investing in Debt is only as good as the issuers' abilities to service and repay that debt and during a developing Depression, those abilities are well in question going forward.  ESPECIALLY SINCE MOST DEBT ISSUERS IN THIS COUNTRY ARE CURRENTLY SADDLED WITH RECORD LEVELS OF DEBT TO BEGIN WITH.  NOW SAY AFTER ME:  "THE FUNDAMENTALS STILL COUNT WHEN IT COMES TO INVESTING."  And American and Global fundamentals stink right now, thank you Bennie Boy, Timmy Boy, B.O., and all of the other agenda-driven clowns on Capitol Hill that have dug the economic and financial hole deeper in this developing DEPRESSION.  THROW MONEY AT EACH AND EVERY PROBLEM THAT WE HAVE AND DON'T ALLOW THE ONCE- ENVIED AMERICAN SYSTEM TO CORRECT ITSELF IN A MANNER THAT GUARANTEES THE SOLVENCY AND SURVIVAL OF THE SYSTEM AND ITS PARTICIPANTS.  The American I.O.U. is about to get a very cold shoulder from global investors.  If it were not for the Federal Reserve being the key buyer at some 5X Treasury Auctions this year, U.S. Treasury yields would be well north of 8%.  Not the end of the world at that level, but just a harbinger of much higher yields to come.  I have heard the expression many times this year and it is still totally fitting for all to hear:  "If you are in a deep hole, at least put the shovel down and stop digging!"  But appointed and elected officials always have to look like they are doing something to help even when they don't have a clue as to strategy, and this bunch of guys and gals need to be shipped to Siberia for a year or two so we citizens can straighten this mushrooming mess out.

Since this is my bully pulpit as the English would say, I will continue to rail against those that put the current and future fiscal solvency and standard of living of our once great country in harm's way.  Multiple Trillion Dollar Deficits as far as the eye can see will guarantee that our offspring and grandchildren will have no choice but to default on the payments of same, either outright or technically indirectly.  But expect the change for the better we did not get in 2009 to begin to come to a polling and voting place near you in 2010.  Even the seasoned professional political analysts out there are going to be shocked as to the degree of displeasure of the American voting public.  When the ruled suffer to the extent of struggling to hold a job and keep food on the table while elected officials vote themselves raises and increased spending budgets, THE POPULACE IS GOING TO REVOLT.  Hope Harry next year and Nancy the following year have their resumes updated in time.  Even the once-exalted Barrack Hussein Obama  with a disapproval rating of some 46 percent now, will have to go back to community service by the beginning of 2013, the only job he has ever held where his performance could even be remotely measured as "AS PROMISED".  This guy has really proven to be a charlatan in the worst of performances of political theater; it is all smoke and mirrors coming out of the White House today.  Bold face lies are spewed forth daily, but the body language under the camera's telling eye reveals the faint, momentary twinges of a conscience long dead to all who know the signs.  To call Copenhagen a success is right from the Theater of the Absurd.

Gold and silver and palladium and platinum suppliers and refiners around the world are once again into backlog situations mainly due to the tremendous demand for these Anti-Financial / Anti-RealEstate Assets.  Secondarily is the time of year effect where much-deserved vacations are taken, refineries and Mints are partially shut down for maintenance and change-over to 2010 products, and weather-related delivery delays occur even from sovereign Mints.  But expect higher premiums on most products going into 2010 as the wheels fall off the Wall Street Bus once again, the Dollar continues its search for true value ( hint: much, much lower ), and our politicians add fuel to the fire to accelerate the double dip of the economy and the financial markets through outmoded progressive policies that re-distribute wealth, BUT DO NOT CREATE IT.  Probably 40% of WCM's much cherished business is new buyers these days, so be patient with the Sage if he is not patient with you after answering the same, "How do I buy precious metals bullion from your company?" question for the 100th time in a day.  In fact, since I am soooooooo in the Christmas Spirit right now after shoveling and snow-blowing 20 inches of snow this weekend, here is a clue to the answer::::::

 

I do not mean to be unkind when I take a very deep breath and bark back a curt answer, but I is gray-haired, my back hurts, I am crankier by the year, and Americans were taught to read around age 6!  So please, please, if you want the Sage to be around for another 21 years in business ( I will never make it cause the wheels are already coming off of this old battered bus! ), PLEASE PERUSE MY VERY INFORMATIVE WEBSITE THAT TOOK MANY MAN-YEARS TO PUT TOGETHER BEFORE GETTING ME ON THE PHONE ( and I did not expend all of this limited Sage Energy for the fun of it ).  Okay, I will take my meds, get happy again, down a spiked eggnog, and try not to beat that dead horse again.  I will get you the best prices possible on the most-liquid, highest quality bullion in the world, but don't make me do my job multiples times on the same easily-sourced answers.

Back to the bullion market.  Higher bullion premiums over spot are definitely inevitable because regardless of what your lying Government is telling you about inflation, insurance premiums for bullion shipments are escalating, fuel premiums for shipping are persistently higher even with reduced volumes for carriers, and the outright scarcity of bullion products without 2 to 3 week delay times to first shipment dates are FACTS OF LIFE TODAY IN THE BULLION BUSINESS.  I will continue to make my whooping 1.1% over wholesale cost for Gold and 1.7% for Silver and may even reduce them as Gold gets to $1500 and Silver to $30 in 2010.  No guarantees, but things are worse today than in October of 2008 with the purported economic recovery a statistical blip on the radar screen and little else.  Third Quarter GDP just revised DOWNWARD to 2.2%, mostly artificially stimulated / tax-credit / one-time growth that will never provide the tax revenues necessary to either SERVICE or PAY-OFF THE BALLOONING NATION DEBT under Obama and his lackeys on Capitol Hill.  FINAL DEMAND is the key ingredient missing on all of the economic assumptions bandied about from Above.  An economic concept that Washington bureaucrats have no grasp or experience with.  How can final demand be increasing in a consumer-driven economy when basic expenditures for subsistence are shrinking and are difficult if not impossible to meet at the wage-earner level that does not have a Bernanke or Obama Printing Press???

On the major capital expenditure front, Ford Motor Company may well end up being the only American automobile company to survive by 2015.  Just a well-educated guess on the part of the Sage.  Much of the American Taxpayer Money put into General Motors and Chrysler will go down the toilet, especially when the stock market tanks early next year.  My Subaru Forester is now over 7 years old, and I have no plans for a new vehicle for the next 5 to 7 years along with our equity investments in these Dinosaurs.  And the Scrooge Sage is not alone in this perspective, because New Millennium vehicles last well into the 150,000 to 200,000 mile range without engine or transmission replacement AND MANY AMERICAN WILL NOT BE ABLE TO AFFORD A NEW VEHICLE IN THE NEXT 5 TO 7 YEARS I AM REGRETFUL TO INFORM THE BAIL-OUT KINGS IN WASHINGTON.  Cash For Clunkers was a glaring economic stimulus failure, taking sales from yet-to-come periods, and putting already debt-laden Americans on the hook for vehicles they truly cannot afford.  Now we have the Anointed One promoting Cash for Caulkers which once again fails to see the necessity for Americans to come up with extra loot, regardless of the Al Gore Green-ness of the effort  to make the net, after-tax expenditure in the first place.  Al needs to lose weight, his bulk is adding to Global Warming AND THAT TENET IS REAL SCIENCE!! ),  Let's see:  Uncle Sam pays 30% of the non-basic, can't-eat-it expenditure and Joe/Josey Citizen still pays the other 70% that his or her Green Heart may not have.  Wow!  Let's stimulate some more entrants to Debtors' Prison to keep the Cash-For-Clunkers Debtors company!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Got a little side-tracked there, but I am sure you enjoyed it.  My Axelrod Spy Camera can see you rolling in the aisles!  Gold is at $1092 and Silver at $17 as I type, so put down that wrapping paper, STUDY MY WEBSITE, and give me a call.  Although I had my second best year ever in 2009, the 2008 Panic Year being the best, I still have to make more money to send to Washington to pay for ObamaCare, ReidCare, and PelosiCare, not to mention Nancy's airplane rides to an fro her husband's vineyard in California.  So help me out here in the interest of the nation.  Just saw the President-elect of the AMA, American Medical Association, support the Senate version of Healthcare Armageddon, so I am sure we will see this shill greeting shoppers at a WalMart near you when the majority of American Doctors who strain to take Medicare and Medicaid patients currently under 80% reimbursement rates throw the guy out of office.  Anyway ........................................ it is tough to go to bed at night after watching the news and settle down enough to fall asleep right away.

BUT US SERFS OF THE UNITED STATES WILL EVENTUALLY RISE UP AND THROW THE SELF-INDULGING ROYALTY OFF OUR WEARY BACKS.

I know that I over-shot in my forecast the annual high price of Silver for 2009, and no you cannot have your money back for this free ezine.  However, there is more and more data available today that educates investors to the true scarcity of this precious metal, THE POOR MAN'S GOLD, and I will stand, for now before I get a spanking-new position on the White House teleprompter, by my $30 target for 2010, a stock-market-like rise of 76% from today's measly $17 price per ounce.  Sounds far-fetched, right?  How about a stock market that had a March, 2009 low of Satan's 666 on the S&P 500 and now trades at 1114 for a 67% 1930's rally.  And the latter done with flat to deteriorating Fundamentals, not improving ones like the Precious Metals; just wait until First Quarter, 2010 results come in, they will not be pretty regardless of the tweaking down by the Statistical Serfs at BLS.

NOTHING IS IMPOSSIBLE IN A WORLD OF SEEMINGLY ENDLESS LIQUIDITY FROM GLOBAL GOVERNMENTS AND IN A WORLD OF SHRINKING SUPPLY FOR BOTH SILVER AND GOLD.  Especially when virtually all other asset markets will head South with abandon some time in (early?) 2010; expect more economic and financial turmoil in 2010, not less.  Forecast:  Real Estate problems will actually accelerate again next year as more mortgage resets occur on underwater homes, commercial real estate implodes, and home prices continue to decline with a record 14 months of supply sitting on the market.

SPEAKING OF SILVER AND GOLD: 

MERRY CHRISTMAS, HAPPY HOLIDAYS, AND A HAPPY NEW YEAR TO ALL, EVEN THE UNFUNDED LIBERALS OUT THERE.

GOD BLESS THE MEN AND WOMEN OF THIS COUNTRY THAT ARE WILLING TO PROTECT US COUCH-POTATO, ARMCHAIR DIPLOMATS AGAINST ANY AND ALL THREATS.  They are part of the stuffing that will make this country great again within the next 50 years.

Now we just have to protect ourselves from the threat within.


( THANKS ALSO TO EVERY PAST AND PRESENT CLIENT OF WEXFORD CAPITAL MANAGEMENT FOR MAKING MY EVENTUAL EXODUS TO NORWAY A REAL POSSIBILITY WITHOUT HAVING TO TRAVEL VIA STEERAGE. )


THE SAGE OF WEXFORD, holly branch in hand to put on Nancy's Senate seat.


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January 17, 2010:  Most Landmines from 2008 Still Threaten The U.S. Investing Landscape.


Hate to be the party-pooper this early in the new year, but the celebratory language coming out of Washington and the increasingly skeptical News Media about financial system and economic system recovery in progress are misguided to put it politely and incorrect to put it succinctly.  Government stimulus efforts in 2009 merely created temporary bursts of spending by cash-strapped American consumers, forcing them to take on additional debt at a time they could ill afford to do so, and basically robbed final sales from the Fourth Quarter, 2009 and the First Quarter of 2010.  The number of jobs, permanent, wealth-building jobs, created by the 2009 $787 Billion Economic Stimulus Bill are so insignificant in number and economic impact that one can only conclude that The Government has failed to date to pull the U.S. economy out of the Economic Morass it is still firmly stuck within.  This is no surprise to any student of Economic History.  The private section of the American economy has always been the Job Engine for sustainable growth and will continue to be under a Democratic Capitalist System ( DCS ).  Within a DCS, and in order for that system to survive intact over hundreds of years, success need be rewarded with the fruits of labor while failure need be rewarded with the disappearance of mismanaged, imprudent, fraudulent, or greed-driven enterprises and its captains.

On the contrary, the Government sector of the economy has ballooned over Obama's first year in office, a sign of his misguided preference for Big and Over-Reaching Government to attempt to cure any and all of what ails American Society, even those areas such as Healthcare where the majority of Americans are reasonably content with their existing coverage such as MediCare, OR AREAS WHERE AMERICANS TOTALLY OBJECT TO GOVERNMENT MANDATES AND INTERFERENCE.  Most damaging outside of the economically punitive legislation continually coming out of Washington such as ObamaCare, the Financial Bail-Outs starting in late 2008 under Bush and put on steroids under Obama have only put on life-support, with temporary reprieves, such failed institutions as Fannie Mae, Freddie Mac, AIG, General Motors, GMAC, and Chrysler; these entities in a true democratic capitalist system would have been allowed to fail, the chips falling where they DESERVE to, but not on the backs of American Taxpayers.  To even begin to think that Americans will make money on any of these so-called "investments" is to be gullible at best and uninformed at worst.  Chrysler is almost a sure bet to fail along with GMAC, as auto loan defaults set new records almost monthly.  So there is some $30 Billion to $40 Billion down the taxpayers' drain.  The pre-bankruptcy money put into General Motors of some $13 Billion is already down the drain, with the stock that we lucky citizens own quite likely to go close to zero in the next several years as GM shrinks to maybe one or two car lines from the vastly reduced four of today.  I think the number for AIG is some $80 Billion and counting, with most of the toxic assets originated by this Titanic of the Insurance World still smoldering on their books and still awaiting extinguishment.  Add Ginnie Mae, the new guarantor for Government Mortgage Relief and the FDIC, the under-capitalized Government Bank Insurer, to the list of failing institutions since they are already insolvent, the FDIC carrying a Negative Net Worth of over $8 Billion this moment.  A total of 140 private bank failures in 2009, 3 banks as of this past Friday in 2010, and many more to come as one loan category starting with Subprime Mortgage to Prime Mortgage to Commercial Real Estate to Credit Card to Auto Loan to Student Loan go bad one after the other.  This reality is virtually guaranteed in a budding Economic Depression after a Colossal Debt Collapse precipitated by Excessive Monetary Looseness at the Fed and Excessive Risk-taking in hand with Excessive Leverage in the private sector:  corporate, banking, and homeowner.

SIDEBAR:  Now the Federal Government is hell-bent on Excessive Leverage.

All of this deterioration is destined to occur just as the Net Tax Burden on Americans will be legislated to increase at the County, State, and Federal levels.  Desperate Bureaucrats do desperate things, and God forbid that civil service payrolls be cut in the Nation's time of need.  There are now more $100,000 plus salaries being paid out in Washington than in any time in history.  While the Nation's people suffer, those feeding at the Public Trough squeal with glee.  For the Citizens of the Land, it will be a cut in services across the board even as your net payouts to Government go up quarter after quarter whether it be from new fees for formerly free services, higher income tax rates at both State and Federal levels, a 1/2 percent increase in Sales Tax, more limiting or outright elimination of current tax deductions, or tax penalties & added premium costs under a New PelosiReidObamaCare Healthcare System.  The allowed-to-expire Bush Tax Credits are a Middle Class Tax Increase that will be like a thief in the night that most Americans won't realize have picked their pockets until it is time to do their taxes in 2011.  State Sales Tax and Income Tax increases are virtually inevitable in the most destitute States such as California, New Jersey, Nevada, Michigan, Rhode Island, Florida, and maybe even Your State.  These increases will get many politicians thrown out of office in 2010 and beyond, but many current politicians gauge their own political power by the number of government employees under them, their annual budgets, and the number of new programs they can add to the till each year to attempt to stay in power.  Property related taxes such as the Real Estate Tax and Personal Property Tax will see Appraised Values that will be persistently overstated in relation to the realities in the respective property markets within a Depressionary America.

THE FACT THAT PRESENT AND FUTURE AMERICAN TAXPAYERS ARE GOING TO BE ASKED TO PAY FOR THE MISMANAGEMENT, IMPLICIT FRAUD, AND EXCESSIVE COMPENSATION OF THESE FAILED INSTITUTIONS IS ABSOLUTELY APPALLING TO THE VAST MAJORITY OF AMERICANS. Not only is it appalling, it seals the fate of the country's economic future, which is no longer a bright one, but one of a subpar performer burdened with unpayable debt at all levels.  This shifting of private sector imprudence and $Trillion Losses onto the backs of present and future Americans is a watershed event that in conjunction with $1.5 to $2.0 Annual Federal Deficits as far a the eye can seem ARE GUARANTEED TO FURTHER BANKRUPT AN ALREADY BANKRUPT COUNTRY, THE UNITED STATES OF AMERICA.  The efforts to date of our elected and nominated officials have merely been to dig our financial and economic system further into a much deeper hole that will take decades to exit from.  Welcome to the Greater DEPRESSION of 2008 my fellow Americans.

To think that 7 of the 8 major Money Center Banks of this country have paid back the American Taxpayer with interest on the TARP funds borrowed ( Citi is the exception )and that this whole Government Intervening Subsidy Plus Bail-Out was a success, THINK AGAIN.  These very same banks sold $Billions of newly-issued stocks and bonds in 2009 ( IN ORDER TO PAY THE GOVERNMENT BACK AND GET THEIR COMPENSATION LARGESS GOING AGAIN ) that were gleefully and blindly purchased by ............ drum roll, please ......... AMERICAN TAXPAYERS.  Robbing Peter to pay Paul?  Now to point out that American Investors do some very stupid things these days is not my intention here.  My intention is to show that you, Joe and Josephine Citizen, will still be left holding the rotting asset bag when the music stops.  Can you get a 5% interest rate on an unsecured loan at the same bank that Uncle Sam lent YOUR MONEY to?  Nope.  What toxic, defaulted mortgage assets did the Federal Reserve take in from both Fannie and Freddie last year, to hold until the stench grows so strong that the insolvency of the U.S. Central Bank causes either a U.S. Debt Default or Dollar Devaluaton?  I get a little confused in here as to who is on first base, per Laurel and Hardy, but I think the number is $400 Billion with a new "faux ceiling" of some $600 Billion, please correct me if I am wrong.  In any case, a BIG NUMBER, and this ceiling had just been increased by Congress at the request of the Fed.  Hey, we are Americans!  Nothing is too big for us to handle!!!  We have money coming out of our ears, or so says Obama and Congress!

Now what is the amount of VIRTUALLY WORTHLESS SECURITIZED ASSETS that the Central Bank, God bless Bernanke because this academic will eventually need His Help, has taken onto Public Books via the Fed in order to help the banks not to lend money ........ I mean LEND MONEY?  Audience participation is encouraged here, but I am going to say $500 Billion to $1 Trillion of toxic assets that you the proud American Taxpayer now owns because the banks will lobby and contribute to never have to take them back; or at least they will not have to take them back at Original Cost, some 90% to 80% more than Current Market Value.  Plus, the banks still have $Trillions of rotting Securitized "Assets"/Derivatives still parked on their books AT ORIGINAL COST, NOT MARKET VALUE, that have not been written down to what a sober person would pay for them TODAY!  There is data on the internet to confirm this number, but you get the picture, another BIG NUMBER.  Then we have the Quantitative Easing campaign by the Fed that has a ceiling of $300 Billion for U.S. Treasury BUY-BACKS that is set to expire on March 31, 2010.  FAT CHANCE OF THAT AMERICAN SUCKERS!!!  Now it has been documented that the Fed's Quantitative Easing program stepped up to the funding plate no less than 4 to 5 times in 2009 to assist the U.S. Treasury sell its endless stream of Government Debt that Barack helped make.  The Fed is tagged to have purchased from Goldman-Sachs and JP Morgan-Chase some $400 Billion in 2009, the very next day after technically failed Treasury auctions, so Bernanke and Crew must have hired Bernie Madoff's accountant to create balance sheet categories that don't show over-stepping of the Fed's self-stated limit on BUY-YOUR-OWN-DEBT, YOU-BANANA-REPUBLIC-YOU.  No this is not the name of the new Federal Reserve Balance Sheet Category, or Shell Game Shell, but it should be.  Madoff's bean-counter will definitely be called upon for Creative Fed Accounting ( CFA ) in 2010, because there will be fewer buyers of U.S. Treasuries who want Banana Republic Debt or low interest rates on this Gar-Baaage ( pronounced with a French accent to give it some panache or class or credibility! ).  Interest Rates are in the process of heading higher, a death knell for the bond market, the stock market, AND THE ECONOMY, green shoots be damned.

Wall Street is starting to see disappointing earnings reports already from Fourth Quarter, 2009, and they will likely get progressively worse as 2010 unfolds due to THE LOSS OF CONFIDENCE BY AMERICAN CONSUMERS.  The recent Consumer Confidence readings about current and near-term conditions were at record lows, and this is a fact that all the spin-meisters in Washington and the Financial Press cannot airbrush over.  A frightened Consumer is not one to open his or her purse in any significant amount in the Quarters ahead.  THE LOSS OF CONFIDENCE PHASE, Washington you have not helped one iota, IS FIRMLY IN PLACE FOR THE GREATER DEPRESSION.  Once the Sheeple, a.k.a., Sheared People, get frightened that stock prices as well as home prices do not just grow to the moon each and every year, the rolling over action that we have seen in the Stock Market since September, 2009 will turn into what it inevitably must:  AN OUTRIGHT ROUT.  Stock investments via the S&P 500 over the last ten years returned a NEGATIVE 9%, so if you think you are going to retire partially on your stock portfolios, think again.  We are at the edge of another cliff circa late 2008, stock investors.  SELL NOW OR THINK ABOUT SELLING YOUR FUTURE DOWN THE RIVER.

NOW SAY AFTER ME:

THERE CAN BE NO SUSTAINED ECONOMIC RECOVERY UNTIL BANK CREDIT GROWTH TURNS POSITIVE AGAIN.  Not a single economic recovery has ever occurred in the United States without an increase in overall borrowing at the private level, period.  This is an outright DEFLATION IN DEBT, but it is an essential ingredient that must occur before any FUTURE SUSTAINABLE ECONOMIC RECOVERY CAN TAKE HOLD.   Just like over-eating at the dinner table, the American diner is pushing the Debt Plate away and striving to pay down as much debt as possible as quickly as possible.  As debt collapses or deflates, partially through default of distressed borrowers, real prices continue to increase for the average consumer as Monetary and Fiscal policies take highly inflationary paths that devalue the currency and, resultantly, inflate real goods needed for basic subsistence.  Add pending Tax Increases to the mix, and last year's Tea Party events will be very mild compared to what is to come.

The Sage is available to the White House and Congress on a $100,000 per week consulting rate or whatever Failed Central Banker Greenspan is getting these days.  ECON 101, NOT ROCKET SCIENCE.

 

For a CEO of a major Money Center bank to state that he did not know that home prices do not always go straight up, and, hence, he kept lending with both hands and feet using Other People's Money well past the August, 2005 peak in prices:  "ME BAD" is his excuse for bankrupting the Bank!  GIVE ME A FRICKING BREAK!!!  Either fire him, hang him in the public square, or give him a placard in the Banking Idiots' Hall of Shame.  Or, all of the above.  But since this unenlightened, VERY highly-paid U.S. banking executive owns the loyalty of many occupants in the White House through prior contributions, I will leave his name out of this for fear of the Black Boots.  WOULD YOU KEEP YOUR MONEY IN HIS BANK AT A LESS THAN 1% ANNUAL INTEREST RATE???  It is no wonder Americans have lost faith in their Government, their Government institutions, and the U.S. banking & financial system.  Oh, oh, oh, I just remembered:  How about the Goldman Sachs executive who said such $Billion-Dollar-Bonus-Pools such as his were really just rewards for doing "God's work" in helping the American public obtain financing to run the economy???  Whoa Nellie.  Pay them a vote of "NO CONFIDENCE", America.  TAKE YOU MONEY OUT OF THEIR BANKS.  Dig a hole in the ground, put 3- to 6-month's worth of living expenses into it in Cash form only.  At some point in the next year or two, we will have a Bank Holiday in the United States.  It could be days or weeks before you have access to your money again, so be prepared.  Based on the cover-up of asset values on the majority of U.S. bank balance sheets and the continuing failure rate of U.S. banks, The Sage is going to glibly forecast 200 U.S. bank failure in 2010?  Based on Japanese LOST DECADE ACCOUNTING being adopted here and the real state of the U.S. economy from the MAN-ON-THE-STREET view, I think this devastating event is almost inevitable.  AND OF COURSE, BUY GOLD AND SILVER WITH THOSE WASTING, IN-HARM'S-WAY, BANK DEPOSITS AND STOCK SALE PROCEEDS.  You knew that was coming, but I put my own money where my petite mouth is.

Speaking of the Precious Metals:  It is impossible to know in advance whether or not both Gold and Silver will pull back when the financial markets hit the impending Brick Wall of Price Rationalization ( Hint: much lower prices ) that we are fast approaching, if not upon.  In my humble opinion, there may be a temporary fainting spell for the Precious Metals at that juncture, but I think it will be both shallow and short-lived.  I know I have said the same thing for prior corrections, but have the odds and conditions on the ground behind me on this one!  Investors have literally few-to-none other places to put cash created from asset sales these days other than the safety of Tangible Assets.  In another tentacle of the Obama Administration's reach into every aspect of American life, talk of the CFTC actually limiting the size of commodity positions on the exchanges is a positive, not a negative for precious metals investors.  While this may constrain price actions ignited by otherwise larger long positions, it has been the history of the exchanges to allow much larger short positions in relation to long positions in the precious metals.  Not to mention short positions as much as 10 times the ability of short-sellers to deliver physical metal to meet their obligations if forced to do so.  This situation is particularly true in the much smaller Silver market.  So if the likes of Goldman-Sachs and JP Morgan cannot pile on the shorts in humongous positions in a heartbeat, the longs have a much better chance of winning the day and not getting washed out at every drubbing handed them by a mega-financed Cartel of Precious Metals Shorts ( CPMS's ).  It will be a more level playing field than one potentially having received virtually zero-rate financing from the New York Fed and the Plunge Protection Team.  Governments out of control always outside hire hacks to carry out their most dirty deeds.  Remember, this potential limitation on position size is only to limit U.S. trading, but I submit that is where the majority of transgressions occur, partially due to implicit Government intervention.

In the real world of physical Gold and Silver there are very few sellers in relation to the number and dollar volume of buyers; I know this from first-hand experience running a very successful bullion business.  This applies to the global precious metals market as well, and even if the longs in the U.S. cannot carry the day, the longs in Hong Kong and London and Dubai can more readily do so with a reduction in the ability of U.S. shorts to overload the U.S. exchanges AND SET THE PRICE FOR THE DAY.  The jig is up for the U.S. Dollar, it is not a matter of "if", but a matter of "when".  The forecast that overseas central banks would become net buyers of Gold in particular was made within these electronic pages back as early as 2003 by The Sage.  That forecast is coming true in spades.  The short sellers in Gold and Silver had better keep their resumes updated.  Of course, they can always go work for a Ballooning Government.  Expect a spike in the metals as we enter "Financial Panic, Part II" in 2010.  Also expect real shortages to re-appear with 4- to 6-week backlogs as we enter the Fall ( or sooner, this is a very tough call ).  Buy now or expect to pay higher prices for refined/minted products not only because of higher spot gold and silver prices, but higher delivered premiums on bullion products as shortages re-develop.  Exploding demand with limited production capacities around the world invariably leads to much higher prices. 

Now back to the playoff games.  However, the SuperBowl of Investing has already begun.

Are you on the winning team?



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