The bullion dealer's goal is to provide gold and silver bullion investors with market commentary when significant developments warrant updates.   At this point, that will probably be every other month starting in 2011 since the author has been writing this free ezine for over a decade now and still has not won the Pulitzer Prize.

 

November 16, 2010:  Instability Creates Another Great Buying Opportunity in the Precious Metals.


Hate to admit it, but I am growing very weary after over a decade of writing these missives; I sound like a broken record except when I come up with new predictions.  None of the idiots in power seem to be reading this excellent material since the U.S. economy and financial system continue to swirl down the vortex of the depressionary toilet bowl.  Especially not reading these erudite pages is that very dangerous idiot at the Federal Reserve, Ben Bernanke, who plows blindly ahead with more and more money printing even when the results of his previous Monetarization Schemes were dismal at best, destructive at worst, and have bloated the world with Dollar Liabilities that cannot be painlessly withdrawn.  WELCOME TO THE UNITED STATES OF BANANAS.

But we tangible asset investors are getting extremely well-rewarded for our persistent and progressive purchases of both Gold and Silver over the last 12 years, aren't we?!!!  Dollar-cost-averaging, a practice thought to only benefit ill-timed stock investors, is also a wonderful tool in smoothing out the edges of purchases in the precious metals.  None of us are clairvoyant, although the Sage does unabashedly take credit for forecasting the Housing Collapse, the Stock Market Collapse, the Banking System Collapse, the failure of both Fannie Mae and Freddie Mac, and the never-ending Dollar Collapse.  Actually, a ten-year-old could have made these calls if he had read only one economic text and one finance text and applied their historic principles to current events.

Forecasting cataclysmic events accurately is no small feat in itself, BUT ACTING TO MINIMIZE DAMAGE FROM THEM AND TO ACTUALLY BENEFIT GREATLY FROM THEM IS A VERY, VERY, VERY BIG FEAT!!!!  THERE IS STILL TIME TO ACT, AMERICA.  Sit passively on the railroad tracks of history if you must, but expect to be crushed financially if you do not take measures to avoid the speeding freight train bearing down on you.  ( How about that Municipal Bond market?!!!  Told you to avoid months ago! )

As a bullion dealer, I can never get too upset about a pullback in both Gold and Silver as we are experiencing currently.  Buying of the physical product tends to surge on these rather exciting corrections, so what degradation my still-growing Precious Portfolio may experience is more than compensated for by the incremental revenue to my bullion business.  Plus, such corrections tend to bring the brand-new bullion buyer off the fence, having suffered mightily at the hands of Wall & Broad or via the now-vacant landscapes of U.S. real estate.  Repetition is a great teaching tool, and the more American investors are hammered by traditional investment assets such as stocks, bonds, zilch-yield savings accounts, and cratering real estate, the more they get the message:  BUY GOLD AND SILVER FOR THE LONG HAUL IF YOU WANT TO HAVE ANYTHING LEFT WHEN THE DUST SETTLES.


CURRENT EVENTS:

We all know that Gold was only around $1170 per ounce back in late July / early August of this year with Silver launching from around $18 per ounce during this same period.  So there was some $240 of golden gains burning a hole in many traders' pockets when the Yellow Dog breached $1,410 last week.  On the Silver side of the ledger, traders were sitting on some $11 per ounce in silvery gains when the Poor Man's Gold came a whisker within $29 per ounce last week.  Don't get wrapped around the percentage gains here, even though they are most impressive in themselves, but look at how many dollars in each metal a 100 ounce position would be enjoying and there is every reason for some profit-taking in here.

 

There is no doubt that the 30% increase in margin requirements for SILVER on the Comex/NYMEX precipitated the correction, another example of big traders ( big fee payers! ) such as JP Morgan Chase and HSBC getting preferential treatment from the Exchange to assist in reducing their market moving short positions in Silver.  Margin requirements are likely to continue to increase as both Gold and Silver surge into the stratosphere, but reduction of leverage in a system is a good thing for investors.  Wish Bernanke had gotten that message years ago!!!  But the jig is up for these two silver manipulators, more on that unfolding event later.

IT IS ONLY A TEMPORARY PHENOMENON DUE TO AN OVERLY LIQUID SYSTEM ON LEVERAGED STEROIDS PUMPED BY ZERO COST MONEY THAT THE PRECIOUS METALS HAVE A POSITIVE CORRELATION TO THE STOCK MARKET'S ACTIVITY.  Throughout modern history, that correlation has been negative and down stock days, of many to come, will be accompanied by up bullion days of many, many more to come.  The fundamentals eventually rule, you can take that to the bank .................................... if it is still solvent!!!  I think that expression is going to go the way of the DooDoo Bird.

HOWEVER, since I have watched the metals more than most over the last 30 years, I will venture to say that we are more at the interim bottom in each metal at this point than only half way through the correction as some expound.  If I am wrong, then you get a full refund on this newsletter in Chinese Yuan.  Commodities correct very fast and then often go into a consolidation period that allows new entrants to feel more comfortable in taking a new position.  So if a 50% retrenchment is naturally expected after say a 20% advance in Gold, then the $1,280 area is that target.  Similarly simplistic reasoning provides that a 50% retrenchment of a 60% advance in silver takes us to the $23.50 area as we lop $5.50 per ounce off of the interim high of $29 per ounce.

HOWEVER, AS TO SILVER, I DO NOT THINK WE WILL EVEN COME CLOSE TO THAT ARBITRARY NUMBER.  While Gold is within $55 or 4% of the $1,280 number at $1335 currently, a gap it can close in a matter of one or two days, IF IT IS TO GET THERE AT ALL, silver has some behind-the-scenes support that it did not have several weeks ago.  And these people are surprisingly not Chinese!

The long-awaited RICO Class-Action Lawsuits against JP Morgan and HSBC have introduced a new dynamic to the silver market:  It will become a more level playing field for small investors with time AND WE WILL SEE MUCH HIGHER PRICES SOONER RATHER THAN LATER.  Meaning that the humongous short positions nurtured by these well-connected market manipulators will be increasingly under regulatory and judicial scrutiny AND THEY WILL HAVE TO BE REDUCED GREATLY TO AVOID FURTHER DETECTION, PROSECUTION, AND EVENTUAL RESTITUTION.  Now we know that Wall Street partisans don't play fair unless chained to a post with a shotgun taped to their heads, so one would expect them to hire shills to do their bidding that attempt to mask their true identities in silver trading.   But I also expect that the now-awakened and chastised governmental authorities know how this shell-company game is played and will be finally ever-watchful of it; electronic or not, there is always a paper trail to catch the bad guys.  Just ask Al Capone.  Unless they physically carry dump trucks full of rotting cash to their shills ( and the Sage will pick that up via satellite just before the Predator missile is launched ), there will be a prosecutable trail of moola.   Bad guys like Madoff always think they are smarter than the opposition JUST BEFORE THEY ARE FITTED FOR THE ORANGE JUMPSUIT.

This means that these two parasitic organizations will have to be huge buyers of Silver at some point to get their humongous short positions down to a more market and legal-settlement friendly level.  The Sage feels that we are very close to that point today with Silver at $25.50 per ounce.  What about the other $2 that would take us to the "bottom" target that everyone and his uncle would be looking for??  Likely to be negated by incremental buying by these two vampires to take instant advantage of the less painful, lower prices right in front of their warted noses.  The unrealized losses on the books of JP Morgan and HSBC must be capable of singularly making them insolvent, so all efforts will be made to reduce these positions in the immediate days and weeks and months ahead.  Me thinks that the days of hiding losses under the Persian rugs on Wall Street are coming to an end ( on that note, I expect Wells Fargo to cough up a giant hairball any day now!!! ). 

A NEW SHERIFF IS IN TOWN, AND IT IS AN ANGRY AMERICAN PUBLIC THAT IS GOING TO INSTITUTE "CHANGE" THAT IT ALONE CAN COUNT ON.  You can pick our pockets only so long before we cut off your hand.

There are many "good-guy" buyers of Gold and Silver out there that will rise to the occasion as well, not at all motivated solely to stay out of jail.  I think we have turned a corner in this country with the November 2nd elections.  We are going to throw most of the bums out over the next 4 to 6 years, and if any newly elected official decides to attempt to resurrect the old ways in Washington, he or she will unceremoniously be thrown out the next time around.  WE CANNOT AFFORD TO DO OTHERWISE IN THIS COUNTRY, WE ARE BROKE.  I can hear some of the chuckles out there that this is just another ranting of the imbalanced Sage, but mark this down as another one of my laser-guided forecasts.  We are going to see "change" in this country that does not make us throw up.

So if you need to sell some estate jewelry or second homes or stocks or bonds or cash to have liquidity to buy Gold and Silver, BY ALL MEANS, DO SO.  These parabolic moves are going to be more the norm than the exception.  And remember that the interim low can be hit while you are going to the restroom at the office or brushing your teeth at home.  Start buying at these levels, because the Sage's forecasts of $3,500 Gold and $130 Silver are more possible today than even six months ago.  I will possibly be dedicating the hearthstone in my upcoming house in Norway to Ben Bernanke, he and Greenspan will have done more than anyone else to make my financial dreams come true. 

ONE FINAL NOTE TO THE TROOPS:  WE NEED TO REIN IN THE ROLE OF THE U.S. FEDERAL RESERVE, PERIOD.  Ben Bernanke's zero-interest rate policies are pushing America's Senior Citizens into risky assets much to the detriment of their financial well-being.  And the buying of Treasuries to bail out Washington to put on the books of the secretive, despotic Fed has got to end and now.  Please put that item on your legislative dockets, oh fellow citizens of the Land.



Wearily, The Sage of Wexford, locked and loaded with Gold in one hand and Silver in the other.



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December 18, 2010:  OUT WITH THE OLD, IN WITH MORE OF THE SAME.


I am putting the writing of this ezine on a time clock, 1.5 hours is all I will expend this morning, since I have little new to expound upon this merry, merry season.  I want to take this opportunity to thank Congress for working on a Saturday today since they have done little all year to set the nation on the right track.  The Reed Dream Act and Don't-Ask-Don't-Tell are oh so important to the fiscal solvency of the nation that they absolutely must be passed before the House turns Republican in January.  Where do these guys come up with this stuff???!!!  Having been the only non-minority student in the Financial Aid line every term at Michigan to obtain my engineering scholarship payment, I must admit that I was the most poorly dressed in the queue.  Army field jacket and worn corduroys in a spectacle of leather hats, leather coats, and yes, even leather pants.  I always pondered how these "disadvantaged" students could afford such splendid threads and still need 100% support from the University and its donors.  Now, I am jumping with glee that the children of alien adults who have entered and stayed in our country ILLEGALLY will be rewarded with taxpayer subsidized State Tuition when many LEGAL residents' children across the land with go without the same benefit. 

The message is all too clear:  DO THE RIGHT THING IN AMERICA, AND YOU WILL PAY FOR THE BENEFITS OF THOSE THAT DO NOT DO THE RIGHT THING.  Is this a great country or what???  I will not even give the open gays in the military question the time of day since my late father served both proudly and valiantly in the U.S. Army for 30 years and I know where he stood on this issue.  I wonder as a Navy man when was the last time that the Chairman of the Joint Chiefs of Staff was actually in mortal combat??  This is where the issue will blow up in Congress' face, they are all so attuned to life in the field in the U.S. military today.

We only have to turn to the renewed turmoil in Euroland debt markets to realize that the Sovereign Debt Crisis is here to stay and will become an even bigger funding problem for the many insolvent countries within the European Union.  Greece, Ireland, Portugal, Spain, Italy, and even France are likely to have a very rough time of selling their seemingly endless debt going into 2011.  The Euro is effectively a failed currency of a failed state, and the individual insolvent members are akin to the growing cadre of insolvent States in the once United States.  The debt rating agencies, as compromised as they are via conflicts of interest, have steadily been downgrading some of these Euro-Losers and Moody's has now once again threatened to downgrade U.S. Debt from the investment grade status it so improperly holds.  The Debt Collapse is now entering a Second More-Deadly Phase where nations, states, counties, and municipalities are coming under the scope of the resurrected bond vigilantes for their inabilities to meet payment obligations. 

Poor Bennie Boy Bernanke!!!  That $600 to $900 Billion of freshly printed money under QE Lite and QE2 is burning a hole in his autocratic pocket, but the mortgage pricing end of the bond market is slicing and dicing bond prices as global investors attempt to obtain reflective yields THAT EVEN BEGIN TO COMPENSATE FOR THE DEFAULT RISK IN MUNICIPAL, STATE, AND NATIONAL DEBT TODAY.  Some very big sovereign defaults are just over the horizon in the New Year. 

 

As the Treasury Yield Curve steepens further and further as you go out the maturity curve, IT IS A FRICKING VOTE OF NO CONFIDENCE FOR THE POLICIES OF THE BERNANKE FEDERAL RESERVE.  Holding short-term rates to Zero to INFINITY AND BEYOND does little for intermediate and long-term borrowers in an environment of heightened INFLATION EXPECTATIONS.  ECON 101, BENNIE BOY.

Just another sad example of Big Brother Knows Best blowing up in the bureaucrats faces!!  And did you hear that the Bond King, Bill Gross of PIMCO fame is now exiting some bonds to buy ...................... death march tune, please ....................... STOCKS??!!  Yikes, the "World Turned Upside Down" at Britain's Yorktown, VA surrender to the tattered and soiled gaggles of American colonists should be played before the opening bell of the NY Stock Exchange.  If this is not a death knell for bonds, I don't know what is!!!  And after stocks have appreciated some 86% since the March, 2009 interim lows, I KNOW THAT I WANT SOME OF THAT ACTION IN A DEPRESSIONARY ECONOMY WITH RISING INTEREST RATES AND COMPRESSING PROFIT MARGINS!!!  If the S&P has not been putting in a rounding top since April of this year, I will run down to Capitol Hill and cast my Yes Vote for all of the garbage legislation on the docket in the Senate today!!!  By all means stay in stocks up to your eyeballs going into 2011.  And buy more bonds with the left hand.  Just don't ask me to support you in retirement with higher and higher taxes because I will be speaking Norwegian by then.

Premiums at wholesale for most precious metals products are steadily increasing right now.  This sometimes occurs at year-end as refineries and mints switch over production to the upcoming year's mintages, but a noticeable shortage is beginning to develop in both Gold and Silver bullion products.  For example, South African Krugerrand gold coins are almost impossible to obtain Stateside these days.  Days-to-Shipment have not increased much, by one day to a few days, not weeks, but the rising costs of shipping, insurance, and production are seeping into more wholesale premium increases.  If you think there is no inflation in the U.S. right now, operate a bullion refinery or mint or a bullion distribution center!!  Energy prices alone with spot crude over the $80 per barrel mark have an effect on bullion production & distribution costs and, hence, final product pricing.  I told all of my clients and readers some 8 years ago that this was going to happen, and .......... pass the Yuletide contribution cup, please ............ another Sage Prediction comes true.  And don't forget that ObamaCare affects bullion employees' healthcare insurance costs also, and they are going through the roof! 

BOTTOM LINE:  DON'T GET TOO FANCY WITH YOUR MARKET TIMING OF ENTRY POINTS FOR NEW OR ADDITIONAL BULLION PURCHASES IN HERE.  Clients ask me almost hourly where the metals are going in the next 10 minutes and I have the same answer:  "If I knew with any certainty, I would not have to answer the phone anymore".  The real answer:  "BOTH GOLD AND SILVER ARE GOING MUCH, MUCH HIGHER WITHIN THE NEXT DECADE (how is that for a laser-guided time horizon?) AS THE WHEELS FALL OFF THE GLOBAL ECONOMIC AND FINANCIAL SYSTEM CART".

That I do know with certainty.  The Sage is still on target for $3,500 Gold and $130 Silver so buy today before we see 7% delivered premiums in Gold products across the board and 9% delivered premiums in Silver products outside of sovereign mint coins which are already pushing 10%.  It has been my personal philosophy since 1997 to follow the Sage Axiom (SA):  WHEN YOU GOT THE DOUGH, GO!  And money sitting in stocks and bonds, I don't care where they hail from, China included, is money waiting for an accident to happen.  I read about empty cities in China this week, and if that is not a real estate bubble, show me what is!  If Japan can have two decades of depression after a real estate, stock, and debt collapse, so can the United States of Bananas.

ONE HOUR EXPENDED PRO BONO, AM HEADING TO THE FINISH LINE.

Watch Silver burst through $30 and head toward $35 per ounce before the First Quarter of 2011 is over next year.  Can you feel the earth starting to tremble beneath your feet??  Something a'big is a'coming.  The Prez, Repubs, and Demos just passed another defacto Fiscal Stimulus Bill to the tune of some $857 Billion this week to get the Bush Tax Cuts extended and a break on the Estate Tax.  WHERE THE HELL IS THE FISCAL DISCIPLINE THAT THE VOTERS CLAMORED FOR IN NOVEMBER?????  Oh, and Scott Brown from Massachusetts:  You is going to be thrown out in the next election, oh Liberal in conservative clothing!  These guys ever hear of spending cuts to pay for more spending???  The U.S. fiscal situation is totally out of control.  We are bankrupt, fiscal & economic toast, and there is no avoiding a depression at this point.  So even as Bernanke puts on his ink-smeared printer's hat one more time, the humongous, non-stop spending by most levels of U.S. Government is making it impossible for him to keep up.  Like the Disney Sorcerer's Apprentice who lost control of the animated brooms and buckets until the chamber floated away in a sea of newly created water.  To think that another $Trillion of government spending in 2011 and 2012 will get the nation back on course economically is to ignore the lessons of the last 3 years.  More, more, more Government Debt is not the answer.  But that is where we are once again headed with wild abandon.  Higher interest rates, higher inflation, lower stock and bond prices, and higher bullion prices will be the result.  The Sage has spoken.

Try to keep from nodding off out there, I myself just got some coffee: 

Sage prediction for Gold's high in 2010 (made in December, 2009) of $1,495 and for Silver's 2010 high of $29.65 are so prescient that I may run for President of Nova Scotia in 2012.  How about a $1421 Gold high on 12/7/10 and a $30.50 Silver high on 11/9/10, London PM fixes all!!!  Not beginner's luck my fans, but a dart board with laser-guided darts honed from 35 years of experience.  So I still need $74 in Golden Gains (WikiLeaks Bank of America memo shows officers laughing at Paulson and Bernanke for feathering their opulent nest! or BofA moving money offshore as bail-out money is received!!) and have exceeded my Silver Gains by $0.85 per ounce or 2.9%.  Silver is just getting started on this current run.  If you are expecting big pullbacks in here for either shiny metal, try your luck as well on the Shanghai Stock Exchange.  I kind of giggle when analysts get all bubbly about investing in China; what is the Chinese word for bubble?  In Czech, it is bublin.

If you are considering vault storage of your gold and silver to spare your back, having a stolen handgun stuck in your face at home by a Dream Act Alien (DAA!), or are tired of the spouse yelling at you to put that heavy stuff elsewhere, I have access (without compensation) to a new facility just opened in Fargo, North Dakota.  Having been dealing with the principals of this operation for several years now without a hitch, and we are talking $Millions in business, I can attest to their being totally trustworthy and with very competitive storage and insurance costs.  Insurance is provided by none other than Lloyd's of London.  Give me a call at 877-855-9760 and I will put you in touch with them AFTER I SELL YOU $100,000 IN BULLION.  Actually, no charge whatsoever for the referral.  Always good to have storage outside of the nuclear strike zone of the East Coast with a new despot being installed in North Korea!!


SO WISHING YOU ALL A VERY MERRY CHRISTMAS ( I am a Christian, I confess ) AND A HAPPY NEW YEAR IN TUMULTUOUS 2011.

GODSPEED FOR A SAFE RETURN FOR ALL OF OUR BRAVE SERVICEMEN AND SERVICEWOMEN OVERSEAS AND STATESIDE.  Although our Commander in Chief has never worn any uniform in his life, even on the basketball court, we are confident in the abilities of our military commanders in the field.  We can only hope to establish conditions so that oppressed peoples can be free to live without fear and deprevation, we cannot guarantee their freedom over time, only they themselves can do that.

THE SAGE OF WEXFORD, very glad to have been 97% out of financial assets since 2000.


P.S.

S&P 500 up a whopping 11.6% to date in 2011 (real gain of 4.6% after 7% real-world inflation!), while Gold has gained 24.8% as of 12/17/10 and Silver has smoked equities with a 71.9% ytd gain!  Still want to be in financials for the next decade???

TIME LIMIT EXCEEDED BY 50 MINUTES, PLEASE SEND COOKIES AND MILK.


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February 9, 2011:  The Black Swans Are Circling The Global Lake.


There is a kind of chill in the air that is not the fault of Mother Nature.  It is a kind of foreboding cloud over the world that will just not disperse with all of the feel-good talk and newly printed money coming out of world capitals.  It is partly intuitive and partly experience-driven, but "A Bad Thing Cometh" feeling permeates the air.

I know that I get all bubbly inside when I think of the Federal Government spending additional Billions of Federal Dollars to further bail out the States.  When such irresponsible stewards of the peoples' purse such as California, Illinois, Michigan, New York, Nevada, etc. start crying to Uncle Sam that they just must have more Federal Dollars in order to meet expenses, I know that I want to write a separate StateAid check when I mail in my quarterly tax payments to Washington.  Of course, Uncle Sam does not have the dough, he just prints it up through the Treasury and the Federal Reserve, but let's not get mired in the details here.

As Make-Jimmy-Carter-Look-Good Obama must think, it is all free money that will never have to be repaid, right?!!!  At least not on his watch.  I just love the couple of $Billion that the Prez has come up with as far as spending cuts.  And now he will bail out irresponsible legislators at the Federal and State levels that have provided Unemployment Benefits to millions of Americans up to an unprecedented stipend of TWO FRICKING YEARS!!  The Welfare State is clearly here.  And if Michelle Obama would have her way with controlling what we eat, inside and outside of the home, then we got the Nanny State!  And now small businesses will be saddled with Obama's proposal to increase the Unemployment Tax starting in 2014 in order to pay for his administration's current vote-bribing generosity.  Don't you just love those who are so generous with your money that generations to come will struggle to pay back.  Didn't the Anointed One promise not to raise taxes only a couple of weeks ago.  Who's on first?

The U.S. Dollar has now sunk to critical support levels headed toward 75 on the Index, ready to break multi-year lows on its way to Eventual Worthlessness.  Thanks, Bennie Boy Bernanke, YOU THE MAN.  One always realizes that most Western Developed Country currencies are severely compromised since the individual sovereign states have found every means possible to kick the can down the road regarding fiscal retrenchment and debt reduction.  The Bernanke Money Printing Strategy ( known as BMPS ) to save the world has definitely caught on around the world, and the countries guilty of this genre of Monetary Suicide will pay the eventual piper of higher inflation, lower standards of living, higher interest rates, fewer government services, and sovereign currency devaluation.  Of course, a basket of global currencies by definition can't devalue against all other currencies at the same time, so it is the ultimate guardian of sovereign solvency, GOLD, that all of these compromised currencies will depreciate against.  And since 2000, that is exactly what has been happening.  But the Dollar is surely going to get whopped in 2011 as we set new world records on spending another $1.5 Trillion in Fiscal 2011, so that Obama can maintain his to-date record of adding 10% per annum to the National Debt since he was sworn in two years ago.  What a guy.  Maybe we can clone him and send him to Iran to run for office.


 

Note also what Bernanke's announcement of QEII in the Fall of 2010 did for the Currency of the Realm, whacked it along with bond prices, yippee eye yea.  The best and the brightest at the highest offices of the land.  Are we a lucky generation or what?!

So as the United States plods merrily and cluelessly along the Road to Financial Ruin, the world does not stand still and just watch.  Since our leaders don't have a clue what the real problems of the nation are, they obviously don't have a clue how to solve them.  If they by chance did have a Revelation and did recognize the disasters headed our way, NOT SURE MANY OF THEM WOULD HAVE THE SMARTS OR THE POLITICAL COURAGE TO SOLVE SAME.  But the slaughter in the Treasury and Municipal Bond arenas is attempting to give them a clue, a very big fat clue.  Hang on to your seats.  The Black Swans are circling the Global Lake.

Now for those of you lucky readers that are provided the opportunity and privilege of reading this erudite epistle when the Sage is in the mood to pound it out on his worn keyboard, what is coming is technically not a Black Swan event to any of you.  It is not unexpected and coming out of nowhere, because the trusty Sage has been warning about such potential events for the last 5 years, if not 10 years.  But we will continue to utilize that imagery, since it is rather ominous symbolism and increasingly popular in the financial press right now.  And as graceful as these literary birds are in flight, they are not so entertaining when they land on your head.

Now I have taken out a non-collateralized loan from none other than JP Morgan-Chase, think it was unused 2010 bonus money from TARP, to short the socks out of the teetering Stock Market; I took $5 Million, they offered $10 Million, and I am just waiting for the inevitable Stock Market Crash, Number 3 in the New Millennium.  Now say after me:  "No revenue growth, no true, non-cost-reduction earnings growth".  And if you believe in the accuracy of Wall Street reported corporate earnings, especially U.S. banks and insurers, then Congress will produce a Balanced Budget in 2011, ha, ha, ha.  They had the unique NO BUDGET last year, but they will make an attempt at budgeting this year, even though all of us sober ones know it is just like Wall Street smoke-and-mirrors. 

Double dip recession in progress as the Greater Depression, Phase II, takes hold.  Housing and commercial real estate are leading the way, with retail sales right behind them and bank failures and bank write-off bringing up the rear where they belong.  You can only keep $4 Trillion of Ten-Cents-On-The-Dollar Derivatives on the books so long before they start stinking up the place.  Just ask Depression Suffering Japan:  Billions still on the books of the nation's banks that went bad as early as 1990 and 1991.  No recovery until the garbage gets flushed down the sewer.  To think otherwise is delusional.

With food and energy prices headed for their own moon landings, Americans are being hit from all sides.  Start thinking about $5 gasoline when you crank up that 5,000 pound monster you have taking up most of the driveway or garage!!  I truly expect food shortages as we enter Fall since Mother Nature has not been kind regarding heat and drought for several years now; if she doesn't bake us, she drowns us in flooding rains.  Higher fees at the Local level, and higher taxes of all forms at the State and Federal levels are inevitable since these spending drunks can't push themselves away from the bar.  Just one more drink they cry as they stumble forth, full of the promise of reform.  THEY ARE REALLY MORE FULL OF YOU KNOW WHAT.  Not only are Americans still deathly fearful of losing their current jobs, but $Trillions in Stimulus have basically gone down the drain with little or no net job creation to show for it.  If I hear one more mention of Green Industry from this business-experience-challenged President, I am going to puke!  Yeah, let's use energy technology that is 3 to 4 times more expensive than fossil fuel to acquire and operate DURING A FRICKING DEPRESSION.  Oh, since Uncle Sam will subsidize these still struggling technologies, I guess that makes Green Energy economically viable???  This removal from economic reality is another reason that even hints of additional Billions for more stimulus are being shot dead on arrival, not to mention the effect more Money Throwing will have on the Fiscal Solvency of the nation.  More and more Americans are getting discouraged and just dropping out of the labor force; this is the weakest so-called economic "recovery" in modern times when it comes to net job creation after the official end of recession of June, 2009, over 18 months ago!

Now, like anyone addicted to spending, consumers will have that one last drink before trying again to go on the wagon, and that is what Holiday Spending, 2010 was all about.  You can't expect Americans to do without the latest gizmo or gadget when their neighbor or co-worker has one, do you???!!!  Plus, addictions are very hard to conquer.  Save little, spend more ..... the rallying cry for retail and home sales over the last decade.  This mentality has lead to the demise of a once great people and nation.  Silas Marner is rolling over in his grave.

So, getting off my soapbox, at least for a minute, where are Gold and Silver heading at this very nanosecond???  I may be going out on an icy limb here, BUT THE BOTTOM IS IN FOR THE PRECIOUS METALS.  There are just too many Dollars and Yen and Euros and Yuan and Francs decaying in people's pockets around the world for demand for Gold and Silver to do anything but head higher and higher.  Corrections to date have been adequate to wash out the weak hands, get the shorts to cover, and wet the appetites of new investors to take the plunge.  Retirement plan conversions to Precious Metal IRA's will set a new record in 2011, especially with stocks and bonds giving investors a redux of Deja Vue.  Remember you heard it here first.



 

 

Without getting into moving averages and all that techno-hocus-pocus that everyone and his uncle are looking at, the consolidation that we have had since early November for Gold and early December, 2010 for Silver has most likely run its course.  I watch prices constantly throughout the day until my eyeballs hurt, and I can get a good sense as to when price pressures are building to the upside.  WE ARE THERE IN THE PRECIOUS METALS. 

Now it may not be a Black Swan or Two that ignites the rocket know as PM, but there are no lack of fuses out there to send both Gold and Silver on another spurt.  Correct me if I am wrong, but there has never been a time in the history of the world when the affairs of man were so totally out of whack.  Maybe during the Middle Ages during the plagues, but we is in deep doo-doo economically and financially on a scale that is unprecedented.  Oh, I am such the fear-monger you say just to push my bullion sales?!  Au Contraire, mon ami.  I have been right for the last 10 years and am likely to be right for the next decade since I parked my rose-colored glasses back in 1997 and started personally getting out of financial assets and started buying gold.

A NEW REGIONAL CURRENCY IS WELL UNDERWAY AND IT WILL INCLUDE BOTH GOLD AND SILVER.  As I predicted that the housing market would eventually implode as early as 2004 on these very pages, I am making another Sage Prediction here and now.  And to think that you are now a part of history in the making by coming to this electronic page!  WHEN YOU GOT THE DOUGH, GO.  Timers usually get lost in the dust when the precious metals get a head of steam as they are building now.  And Black Swans are likely to poop on you before they land.


THE SAGE OF WEXFORD, telling the painful truth for over 11 years now.
(Wasn't this worth waiting 60 days for??!!!)


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April 6, 2011:  The Can Being Kicked Down The Road Has Nitroglycerin In It!!!


I have really come to despise American politics at this junction, but these Bozo's in Washington, including the Chief Bozo Obama, are ruining the Nation and making precious metals investors quite wealthy at the same time.  So I should love these Something For Everyone miscreants right?  Wrong.  I still have to live in this shell of a country when these Re-election Only Motivated Charlatans have spent the last American dime that will never be paid back for even 5 generations to come.  Expect a lower standard of living with fewer services from all levels of government AND A MUCH HIGHER COST OF LIVING, higher taxes on those of us who have done the right thing for the last 30 years, and more civil unrest in every fricking burgh in the land.  Not exactly a set of circumstances to look forward to as one heads toward retirement, but the Mess is going to get MessyER before it gets better.

I have come up with an analogy as to the kind of politicians we need going forward that comes right out of Osama Bin Laden's playbook.  I am not minimizing the barbarianism of terrorists when I make this analogy; it just seems to fit the time and place.  WE NEED POLITICAL SUICIDE BOMBER POLITICIANS GOING FORWARD.  These will be men and women who have not spent the majority of their adult lives as either Public Trough Feeders, Academics or Lawyers AND ACTUALLY KNOW HOW TO BALANCE A CHECKBOOK.  They will come from that much-despised business sector and HAVE A CLUE HOW AN ECONOMY WORKS AND HOW EXCESSIVE DEBT WILL KILL ONE IN A HEARTBEAT.  THEY WILL CARE MORE FOR DOING WHAT IS RIGHT FOR THEIR COUNTRY AND ITS CITIZENS THAN FRICKING BEING RE-ELECTED ON THE NEXT GO-AROUND OR SERVING THEIR SPECIAL INTERESTS MASTERS.

Let me repeat that sentence one more time:  THEY WILL CARE MORE FOR DOING WHAT IS RIGHT FOR THEIR COUNTRY AND ITS CITIZENS THAN FRICKING BEING RE-ELECTED ON THE NEXT GO-AROUND OR SERVING THEIR SPECIAL INTERESTS MASTERS.  The economic pain that they will inflict on their electorates will not be inconsequential, BUT THEY WILL BE DOING THE RIGHT THINGS FOR THE EVENTUAL SURVIVAL AND RECOVERY OF THE COUNTRY.

Please make note of the fact that Japan has been in a depression since around 1990 with the bad assets still on the books of Japanese banks from their extreme speculations in stocks and real estate from the Roaring '80's.  We are in similar shape today within our own financial and economic systems, albeit with a still-crippling 90% Federal Debt to GDP ratio versus a 200% ratio for Japan.  However, our Total Debt, not just Federal Debt, to GDP ratio of 370% wells exceeds the Great Depression peak of 300%.  How will we fare should a Category 8.3 earthquake hit the West Coast?  Where would California or the U.S. get the dough to rebuild??  Sell more Treasury bonds into a market where the U.S. Federal Reserve is the primary buyer today at 70% of issuance???  There is no margin of error to deal with Black Swan events in either Japan or the United States.  Unfortunately, Japan will take another 20 years to recover from the triple disasters it has just experienced.

THE UNITED STATES HAS A BROKEN POLITICAL SYSTEM FRAUGHT WITH VOTE-BUYING PANDERING, A BROKEN ECONOMIC SYSTEM OVER-WEIGHTED ON CONSUMPTION, AND A BROKEN FINANCIAL SYSTEM WITH BANKS LADEN WITH GARBAGE "ASSETS" STILL DESTINED TO FAIL THAT ONLY DEBT REPUDIATION, RESOLUTION, AND RETRACEMENT CAN BEGIN TO CURE.  IT WILL TAKE SEVERAL DECADES TO GET THIS ONCE GREAT NATION BACK ON ITS FEET, BUT WE ARE UP TO THE TASK AS A PEOPLE.  ( Since I will be pushing up daisies long before the final results are in, this is my pep talk to those non-gray-haired Americans out there to save the country from Third World Status! )

Since Americans are used to The Good Life with minor obstacles to their abilities to enjoy a high standard of living, they will reward many of these true patriots with removal from office.  But the November, 2010 results were just a microcosm of what is to come in America.  We the people will keep throwing the bums out until we get a set of "bums" we can live with.  The Spoiled Brat Americana has turned its head each time the tablespoon of medicine was put in its face, but the Political Suicide Bomber Politicians gathering support from the adults in the crowd are going to force the bitter medicine down our collective throats.  AND WE WILL THANK THEM IN THE END ( if we live that long!! )!!!  AND IF THE P.S.B. POLITICIANS DON'T SUCCEED, THE BOND VIGILANTES AND THE REST OF THE WORLD WILL PUT US IN OUR PROPER PLACE MANY RUNGS DOWN THE LADDER OF WEALTH AND INFLUENCE.

Election Day 2012 will see America firmly in the grasp of a Double-Dip Recession headed for the Greater Depression.  The political catchphrase:  "IT'S THE ECONOMY STUPID" will be dusted off and used with even greater relevance.  Monkeying around with the CPI and the Unemployment Rate will no longer work to pull the wool over the electorates' collective eyes.  The official Unemployment Rate has only gone down due to a shrinkage in the total workforce still looking for a job, certainly not the result of job creation from Federal Stimuli packages akin to throwing money at a wall and seeking if it sticks.  The money has not stuck.



 

The Sheeple will be too much in pain at the pump, at the grocery store, at the Tax Window, at the pharmacy and doctor's office, at the UnEmployment Line, and at the Utility Bill window to be other than Mad As Hell.  Ben Bernanke has already shot the last arrow in his Monetary Quiver.  Whether we have QE3 or not is irrelevant.  The point of no return was passed many moons ago, and this Princeton Academic who never ran even a candy store has run out of goodies.  No place to go with miniscule interest rates that have been killing the incomes of senior citizens and conservative investors for over 15 years now.  Getting an economy back on its feet with lower interest rates just will not work at these Lilliputian levels with a banking sector unwilling to lend due to a severely compromised balance sheet and consumers either unwilling or unable to borrow.  Shuffling the categorization of "assets" on the Fed's Balance Sheet will no longer serve to confuse and placate both domestic and foreign Treasury investors.  The amount of bad assets that the Fed would have to attempt to monetarize is readily over $6 Trillion and the inflationary effects of U.S. money printing has literally got the rest of the world up in arms.  Not to mention a domestic populace that sounds like a hornets nest about to explode with stinging votes and protests.

THE PROVERBIAL JIG IS UP FOR THE FREE SPENDING AMERICA WE HAVE SEEN DRIVE OVER A FISCAL CLIFF IN THE LAST DECADE.  Kick the can down the road if you must, Washington, to TEMPORARILY save your own sorry arses.  BUT THAT CAN IS FILLED WITH NITROGLYCERINE AND WILL BLOW UP IN YOUR FACES AS WELL AS THE AMERICAN PEOPLES' FACES.

What is going on in Wisconsin is just the introduction to civil unrest and civil disobedience when the Public Trough is pulled away from any who have been feeding at it for any period of time.  The Public Sector in America has gotten way out of control as to breadth and scope, not to mention the cost of supporting it with now-too-expensive pensions and healthcare benefits in addition to out-sized total compensation packages.  If teachers in America actually gave homework to their students in every subject every night like I had in middle school and high school and worked 12 months out of the year, instead of maybe 9, I would shed a tear for them.  BUT THEY ARE JUST ANOTHER CLASS OF AMERICAN ENTITLEMENT RECIPIENTS THAT HAVE A SOCIAL TSUNAMI OF THEIR OWN COMING THEIR WAY.  Always remember that those of us who pay the tab for the Public Sector pull 3 to 4 times as many levers in the voting booth on each and every Election Day.

THE AMERICAN AGE OF ENTITLEMENT IS OVER.

Uncle Sam will no longer be able to give you lots of freebies from Cradle to Grave since he is now standing with his pockets turned inside out.  The Bond Vigilantes only went into hibernation for the last dozen or so years.  They will make sure that Uncle Sam pays a rate on his borrowings that is more commensurate with his sinking Credit Rating AND ABILITY TO REPAY.  The interest tab on the Nation Debt eventually will eat so much of the Federal Budget that default in a more obvious manner than Bernanke's Dollar Devaluation Strategy will be apparent to all with a pulse.  Foreign investors are already shying away from U.S. Treasuries partly because they pay a yield some 500 Basis Points or 5 Percentage Points below the true rate of U.S. inflation today AND partly because they are up to Bernanke's Dollar Devaluation tricks via Banana Republic money printing to attempt to keep the Federal Reserve Ponzi Scheme afloat.

That was going to be the title of this epistle, THE AMERICAN AGE OF ENTITLEMENT IS OVER, but I thought the vision of everything eventually blowing up as we know it due to the continual expansion of debt since October, 2008 was a much more riveting image.  Debt contraction by the citizenry has more than been countered by debt explosion at the Governmental and Corporate levels; total non-financial debt still hangs at Fall 2008 levels, where is the deflation in that category???  GOLD and SILVER prices reflect the dire conditions that the world and the U.S. are already within.  Currency debasement has been seen as a tool of preference for bankrupt countries since the Dawn of Time, and global investors are increasingly coming to the REVELATION that maintaining all of their wealth via paper currencies and their surrogates such as stocks and bonds is a recipe for degradation and impoverishment.

I have to chuckle somewhat with investors' hesitancy to buy the precious metals at $1460 Gold and $39.50 Silver.  They alternately don't seem perturbed to buy stocks at the S&P 500's level of 1340, but they freeze in the headlights at today's precious metals prices.  They are waiting for a correction to buy since they sorely missed $250 Gold and $5 Silver, but what if say Silver goes to $51.50 before any pullback AND IT ONLY CORRECTS BACK TO $42 BEFORE HEADING HIGHER AGAIN.  Timing is an exercise in futility.  Write that on your foreheads and you will prosper as a precious metals investor ( or any asset investor for that matter ).  Think you are smarter than the market and you will be left in the dust as many newbies are going to be as my fingers pound the keyboard.  Let's do the math here:  If the Sage is correct, and moi has been so for some 15 years now, then Gold will eventually hit $3,500 and Silver soar to $135 per ounce.  IS THAT ENOUGH OF A REASON TO BUY EITHER METAL???!!!  I think that is much more upside potential than stocks or bonds or real estate or currencies, whatever.  At a minimum, you will retain your purchasing power with each decaying Dollar converted to Gold and/or Silver.


HOW HAS YOUR INVESTMENT PORTFOLIO DONE OVER THE LAST 10 YEARS???!!!
 

THESE ARE HARDLY NORMAL TIMES IN MOST ASSET MARKETS.  DO NOT EXPECT SAFE HAVEN ASSETS AND TRUE STORES OF WEALTH SUCH AS GOLD AND SILVER TO BEHAVE NORMALLY IN THE RAREFIED SYSTEMIC COLLAPSE WE ARE SEEING UNFOLD AROUND THE WORLD.  BUT I BET MANY WILL BE BUYING AT MUCH HIGHER PRICES WHEN THEY CAN NO LONGER STAND ON THE SIDELINES AS GOLD AND SILVER ROCKET HIGHER OR THEIR INVESTMENTS IN FINANCIAL ASSETS FORCE THEM ELSEWHERE.



THE SAGE OF WEXFORD, voting with my feet and fleeing Conventional Wisdom Land.



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June 6, 2011:  A Double-Dip Recession into Depression Was Virtually Guaranteed.


As a lawful citizen of the United States, with a freshly renewed passport I might add, I am both horrified and saddened by the incompetence of the present and past leaders of this once-great nation starting in Jimmy Carter's era.  The Financial Collapse of 2008 was handled so poorly, with money being created out of thin air to throw at the unprecedented DEBT COLLAPSE to avoid a liquidity crunch without addressing the resolution of the underlying necessity for toxic asset write-downs, that our situation now is akin to a frantic mouse backed into a corner by a ravenous feline.  THERE IS NO WAY OUT WITHOUT SIGNIFICANT PAIN AND SUFFERING FOR AMERICANS AT THIS POINT.  Not only am I an ardent supporter of the abolishment of the U.S. Federal Reserve, an institution that has done more harm than good since inception with the exception of Paul Volcker's tutelage, but an even more ardent supporter of a total revision to the current political system in this country.  Retain democracy but get rid of most of the unqualified, self-serving scoundrels and a system that perpetuates absolute power devoid of regular citizen input and, hence, absolute corruption.  The United States is in no position in 2011 to preach the virtues of Democracy to any budding government in the Middle East or elsewhere.  We have truly lost our way.  As long as politicians are more concerned about being re-elected than doing what is fiscally sound for America, then our fate is sealed toward Third World Status vis a vis a progressively ( no pun intended ) lower standard of living that has already reared it ugly head.

AMERICANS ALSO NEED TO ACT LIKE RESPONSIBLE ADULTS WHO WERE GIFTED SELF-DETERMINATION FROM THE CREATOR, SUCK IT UP WITH FEWER TEARS AND RANTS, AND GRIT THEIR TEETH WHILE THE COLLECTIVE "DOCTOR" POURS DOWN THE BITTER MEDICINE OF NO-MORE-SOMETHING-FOR-NOTHING TO INFINITY AND BEYOND FROM BIG DADDY, aka UNCLE SAM.

That two Fed Chairman in Alan Greenspan and Ben Bernanke could foolhardily subscribe to a zero REAL cost of money strategy to sober up a financial and economic system drunk on excess debt accumulation for the last 12 years is an outlier in history that should never be repeated.  Academics need to stay in academia for the safety of the masses.  A review of the proclamations from these Elite Bankers proves that, not only can they NOT forecast the fate of the economy for the next 3 minutes, they cannot attempt to micro-manage a $14 Trillion economy without running the Ship aground.  The so-called "Wealth Effect" espoused by Academic #2 Bernanke as the savior to the DEBT COLLAPSE OF 2008 has proven to be a false idol.  QE1, QE Lite, and the now exiting QE2 have proven to be abject failures at stimulating and reviving the U.S. economy and financial system.  PERIOD.  On a temporary basis, only stock prices have been revived along with speculative fevers in basic commodities via the endless money spigot from the Fed.  Since investors and savers make nothing by holding cash, thanks again Helicopter Ben, AND REAL WORLD CONSUMER PRICES ARE SOARING BY OVER 10% PER ANNUM NOW, even conservative CD savers morph into a creature of the night and plunge into speculative investments.  Once the stimulative feedbag of money printing is reduced in volume, which it inevitably must be SINCE IT CANNOT BE ENDED ENTIRELY WITHOUT COLLAPSE OF THE U.S. TREASURY MARKET AND THE DOLLAR, the last prop under stock prices will fall just as the economic support of a very temporary "recovery" has fallen.  This so-called "Green Shoot Recovery" was given an Artificial Fertilization of Zero Cost Money and Misguided and Misdirected Fiscal Stimulus, ALL IN THE TRILLIONS OF DOLLARS, which the sobering rains of Spring 2011 have now washed away.  Oh, we can wait for more economic data to come forth, data that is sadly manipulated on occasion by those in power or fatally flawed in its computational methodologies, BUT THE JURY HAS COME BACK WITH A VERDICT ON THE U.S. ECONOMY.

AND THAT VERDICT IS:  Welcome to the Second Phase of the DEBT COLLAPSE OF 2008.  That phase is clearly a renewed or DOUBLE DIP "recession" as the politically correct may label it, but correctly defined:  IT IS THE GREATER DEPRESSION.

Simply stated:  "One cannot have an outcome other than a depression when the underlying financial system has failed regardless of superficial, not fundamental, liquidity-not-solvency props to make it appear recovered.  One cannot have an outcome other than a depression when residential AND commercial real estate are either in, the former segment, or are entering, the later segment, a multi-year depression.  One cannot have other than a depression when the goods- producing capacity of a nation has declined by over 30% in the last decade AND A GREED DRIVEN FINANCIAL SECTOR HAS TAKEN ITS PLACE; this latter elite service-sector has not produced lasting "value" or wealth as evidenced by the Trillions of Dollars of toxic debt and "assets" putrefying in customers' portfolios that has yet to shrink to its true value.  One cannot have an outcome other than a depression when retail sales and total employment levels are entering a depression of their own."   ...............  The Sage of Wexford, June, 2011.

History will prove me right on this point, but who wants to be right when millions and millions of Americans are having a hard time putting food on their tables, a shelter over their heads, and clothes on their backs.

I hope all of you fence-sitters and market-timers out there have been paying close attention to the behavior of both Gold and Silver since the correction in the Precious Metals began back in late April.  Surprise, Surprise, Surprise as Gomer Pyle used to say on television.  Over the last few weeks, both Gold and Silver have been able to hold their ground if not rally WHEN THE STOCK MARKET CAME UNGLUED AT THE SEAMS.  What under Obama's Gray Skies could be happening here?????  Well, and I have been waiting for this day for a decade now, the Sheeple are finally beginning to realize that the financial markets are a giant Ponzi scheme tilted in favor of Wall Street and against Main Street, that Gold and Silver are REAL MONEY IN A TIME OF MONETARY / SYSTEMIC COLLAPSE, and that the Dollar's very brief dead-cat bounce is just about over.  I will give you a few minutes to digest these salient facts.  WE HAVE JUST WITNESSED A CLASSIC TURNING POINT IN INVESTORS' PERCEPTIONS OF THE PRECIOUS METALS.  It may have slipped by you in the chaos of daily battle on the investing landscape, but I say it is of utmost importance as to what is going to happen to both Gold and Silver prices this summer and beyond.

Now we all know that summer can be a soft period for precious metals prices, but we have a sea change going on here.  WE ARE ALSO ON THE VERGE OF ANOTHER BLACK SWAN LANDING AT ANY MOMENT SO I AM NOT PUTTING MUCH CREDENCE ON SEASONALITY OF PRICES TO TIME MY OWN ADDITIONS OF GOLD AND SILVER.  Sound like a sales pitch?  Granted, I would sell you Gold and Silver 24/7 if I could since as a professional investor I find very few alternatives out there that are making me steady money, but this is medicine you had better think about taking SINCE YOU CANNOT PREDICT WITH ANY CERTAINTY WHEN THE NEXT FISSURE IS GOING TO OPEN IN THE GLOBAL ECONOMIC AND FINANCIAL VOLCANO.  Markets are going to move very fast in The Panic of 2011.  Events are happening at accelerated speed these days, and your ability to not only get me and other PM dealers on the phone in a panic will be compromised along with surging premiums over spot and backlogs out to 8 to 10 weeks to get delivery of product.  I know this business from over a dozen years of being in the trenches and selling & buying Millions and Millions of Dollars of bullion to thousands and thousands of very satisfied customers.

 

THE NON-PRODUCING S&P 500 INDEX SINCE JANUARY 1998!!!  Looks like we are today at an S&P level first seen in March, 1999.  Talk about a lack of capital gains production!!!  For you guys out there that constantly tell the Mrs. you have everything under control for retirement, DON'T LET HER SEE THIS GRAPH IF YOU VALUE LIFE.
 

I do think that not only will the U.S. stock market continue the Bear Market Decline that it started way back in 2000 as a triple top attempt shows to have failed, but also that the Sovereign Debt Crisis that was born in Greece is going to spread through the EU and intensify in severity.  ANY COUNTRY, INCLUDING THE U.S.A., CANNOT KEEP THROWING GOOD MONEY AFTER BAD TO PLUG A VIRTUAL BOTTOMLESS PIT OF BAD DEBT.  The global banking system is hardly out of the woods as to SOLVENCY since the toxic assets in mortgages, derivative instruments, AND FAILING SOVEREIGN DEBT totaling TENS of Trillions of Dollars yet to implode ARE STILL SITTING ON THE BANKS BOOKS AT CLOSE TO FACE VALUE.  Whether they sit on the private sectors' books or the public sector's books via the domestic Central Banks or such failed entities as Fannie Mae and Freddie Mac, they are "assets" that will collapse in value as we go forward as the holders' hands are forced by new regulators AND THE CITIZENS OF THE LAND.  THE ABILITY OF GOVERNMENTS TO SPEND OR INFLATE THEIR WAYS OUT OF THIS DEBT COLLAPSE IS NOW BEING CAPPED BY SURGING CONSUMER PRICES AROUND THE GLOBE, SURGING INTEREST RATES FOR THE MOST COMPROMISED BORROWERS, AND BY A CITIZENRY THAT IS HOPPING MAD OVER THEIR GOVERNMENTS' THROWING GOOD MONEY AFTER BAD.  The last development of mobs in the streets is an attention getter that will unsettle financial markets like none other.  And expedite the rush to safety in Gold and Silver.

Your ability to time entry into any market is not only a function of luck, but also of a market environment that is devoid of the outsized probability of panic.  I think we are on the cusp of a panic of some variety, and you will see gold move $50 to $100 and silver put on $3 to $5 in daily global trading.  Has happened before, is about to happen again!  BUY PRECIOUS METALS WHILE THEY ARE IN A CORRECTIVE MODE POISED TO BREAK OUT AGAIN AND ARE READILY AVAILABLE.  I am going to be one frustrated bullion dealer when I cannot get access to reasonably priced and delivered product as I was in the Fall of 2008.  Thank goodness I have superb access to top-drawer fancy colored diamonds around the globe.  But I have personally been buying Gold since 1997 and Silver since 2003 in quantity; still own the same watch (1979), car, and home that I bought in 2002.  And I am still a buyer today at $1,550 Gold and $37 Silver.  ENOUGH SAID, I am the broken record, next missive in 60 days ( or maybe sooner if we have the looming panic beforehand ).


 

For those Dudes & Dudettes that claim that Silver or Gold is in a bubble, feast your eyes on this chart of the S&P 500 since January, 1950 to present.  Note in particular the exponential rise from January, 1995 to March, 2000 where the index of American Large Cap Stocks QUADRUPLED in just over 6 years.  Ask yourself how much corporate profits and the economy grew during that same period.  ANY WONDER WE HAVE BEEN IN A BEAR MARKET FOR STOCKS FOR OVER 11 YEARS NOW????  And at the beginning of a depression and the end of low cost money & negative real interest rates, are they undervalued or overvalued my friends???  NEWS FLASH:  WE HAVE SEEN THE TOP FOR THIS PEAK.  666 or below is the Devil's number.


THE SAGE OF WEXFORD, building the bomb shelter daily ...... brick by brick.



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August 7, 2011:  Banana Republic Status Confirmed.


Two alternative titles for this month's rant were:  "This is a fine kettle of fish you've got us into, Stanley!" OR "On The Road To Junk Bond Status".  Now all of us erudite adults out here in American-Reality-2011-Land know that the credit rating agencies are a gaggle of financial whores, laying down with anyone who will pay their fees, but my tattered hat goes off to Standard and Poor's for having the gumption to downgrade the United States' sovereign debt to AA+.  Most of us who have been in finance for almost 40 years now would give the country a Junk Bond status based on the utter inability of the U.S. Government to politically bite the bullet and rein in entitlement spending.  However, since the Black Boots have already been sent to S&P's offices to rough them up a bit, not to mention the busload of IRS Auditors right behind them, lest they cut another notch in the next 60 days, we will belatedly see the financial whores at Moody's and Fitch's do the dirty deed of hoisting the American Flag and downgrading the efforts of the fools in Washington to a rating a smidge closer to "credit reality".  The campaign slogan of, "Change We Can Believe In" has turned into a complete Fiscal Nightmare, and our Harvard graduate President will have one more very unique feather to put in his under-qualified hat.  I am personally having a neon sign made at great expense to hang in front of my office reading:  "IT'S THE ECONOMY STUPID!!!!!!!!!!!!!"  The exclamation points will alternate Red, White, and Blue with some paisley swirls thrown in.

I will donate the sign to the Guggenheim upon my expiration as the single most deadly phrase that will send Barack back to Chicago community service in January, 2013.  I will even pay his bus fare since he will not be campaigning on that trip.  He should serve without compensation 50 years of community service just like any convicted felon!  The American people at the ballot box will serve as his jury of peers in November of 2012.

Now one of my Soviet-launched spy satellites has seen Helicopter Ben oiling up the Monetary Printing Press again, but he knows in his heart of hearts that a lynch mob that shops for its own food, shelter, and clothing will be at his front door if he pulls the lever.  As the stock market goes into Panic Mode, which it already is well within, and more and more signs of economic retracement hit the slanted news wires, he will probably put on his black cloak and hood and secretly employ some form of liquidity injection in a Zero Interest Rate environment.  I have a newsflash for Bennie Boy:  "One cannot think about borrowing even dirt cheap money when one needs a diaper to stay unsoiled in a very, very, very scary financial and economic landscape".  I have spent hours going through old boxes of textbooks in the musty basement, and I found a tome that I am going to send Bennie:  "Economics 101".  Please refer to Chapter 1, Page 3, Not-Going-To-Be-Knighted Bernanke, where they talk about the Propensity to Borrow.  A populace caught in the downward spiral of Loss of Confidence is not going to revert back to old credit-induced spending habits just to keep the U.S. economy afloat when they can barely meet current obligations and are worried sick about job loss.  The recent increase in Consumer Credit is more use of plastic to pay existing creditors than to pay for new shiny automobiles sitting in the driveway.  At some $30,000 a pop, I can do without new wheels for another 10 years, just watch.  Ford better be producing one heck of a quality automobile to justify their current pricing schemes, because my brother is still seeking reimbursement from Ford for a premature failure on a 2005 Freestar's transmission.  Class action lawsuit currently in process ( no kidding! ).

Using credit to pay creditors is a page from Bennie's erudite handbook titled, "How to Inflate the Global Economy in Four Quite Easy (QE) Steps".  Bennie will attempt to ride to the rescue in the not-so-distant future in a remake of "Fist Full of Dollars", but the poor lad is pushing on a string as the Second Phase of the Greater Depression unfolds.  Using more and more Credit to put Humpty Dumpty back together again after falling from a Wall of Debt will just not work.  Putting good money after bad is the proper description of the addicted tendency of Central Bankers and Politicians around the world today to try to inflate their way out of this Debt Collapse.  But the American Public has had enough of it as evidenced by the stinging political polls and those very ornery Tea Party types amassing in the streets and hitting politicians over their free-spending heads with Notices of Eviction from Office.  Standard and Poor's merely saw how poison the political environment was in America Today that the labeling of Tea Party members as civilian-killing terrorists by the Vice Prez was the final straw!!  Way to go, Biden!!!  Dan Quayle thanks you, Joe, for taking the title of Goofiest Second in Command from his legacy just like Jimmy Carter thanks Obama for taking the Worst President in Modern History title.  I have also found out that the CEO of S&P is a card-carrying Tea Party member, but this is confidential, so don't spread it around.  Shred this ezine after reading.

GET READY FOR PANIC IN THE STOCK AND BOND MARKETS GOING FORWARD.  What will happen tomorrow, Monday, August 8th, me not know, but deep doo-doo begets a very stinky financial environ.  We will have some of the Government subsidized hedge funds and Money Center Banks selling Gold and Silver futures on this occasion or that to get liquid FROM LOSING POSITIONS as the Crash of 2011 gains momentum , but physical bullion buyers are lining up as I type.  It was a very busy bullion and colored diamond selling week last week and I expect to be even busier this coming week as the wheels fall off the Obama bus.  How you people out there ever elected this bozo who was never even a Cub Scout or who never ran a lemonade stand is beyond me, but I am holding you folks responsible for letting the 50-ish kid get both of his hands in the fiscal cookie jar.  Now he is stuck just like Pooh Bear in the honey jar. 

Stocks are selling at some 20.19x projected earnings and as the economy slumps further South in the weeks and months to come, those profit projections are going South as well.  Note that at the March, 2009 interim low that the PE only got down to 15x ....... not cheap when the historical average has averaged 10x to 12x AT MARKET BOTTOMS, and when at the crash lows of 1921, 1932, and 1981, the PE was from 5x to 7x.  Stocks are not cheap even after the recent pummeling, so the Sage feels that we have another 50% to 60% down in stocks to go since the denominator, Earnings, are going to keep pushing the ratio up as the economy goes into Phase II of depressionary decline.  In fact, the PE today is very close to valuations that existed back in 1965 when stocks entered a torturous 16-year Secular Bear Market that did not end until August, 1981 with a 7x times PE ratio, a 66% decline from here???  Do definitely think we will exceed the March, 2009 low of 666 on the S&P.  500 would not be surprising for the S&P 500.

This secular bear market started in 2000 with the highest over-valuations for stocks in recorded history, some 44x earnings.  IS THERE ANY WONDER THAT THE EXCESSES OF THE TECH BUBBLE OF 2000 HAVE YET TO BE WRUNG OUT OF STOCK PRICES WITH TWO CONSECUTIVE OVER-ACCOMMODATIVE FED CHAIRMEN FOR THE DURATION TO DATE???

WE ARE IN A SUPER SECULAR BEAR MARKET IN STOCKS THAT WILL MAUL MOST RETIREMENT ACCOUNTS AND INVESTORS' NET WORTHS BEFORE IT IS OVER!

 

We have a Global Contagion in Sovereign Debt Defaults now in progress with the S&P Downgrade, so man the lifeboats of Gold and Silver because things are going to get very ugly in the trading pits and on Main Street.  Higher interest rates for U.S. credit, whether it be at the Federal, State, Local, or private/consumer level is inevitable as the world adjusts its price for giving more fire-water to the drunken American Debt Machine.  It will happen.  The rush into Treasuries as the least-of-all evils last week pushing the 10-year Note yield perversely down to 2.6% from the 3% region is totally herd instinct and very counterintuitive in my book.  Let me do the math:  Over ten years I make 26% in still-borrowed interest payments from Uncle Sam WHILE INFLATION EATS MY LUNCH BY 100%.  IS THAT A DEAL OR WHAT??!!!***##@@@ 

My savings account at USAA, the military insurance company, is at a whopping 0.30% and it literally pains me to hold cash although I do know with some confidence that USAA is one of the few solvent institutions out there.  SAVINGS ACCOUNTS & MONEY MARKETS ARE JUST PARKING PLACES FOR MONEY WAITING TO FIND A BETTER DEAL.  If your money market holds European Sovereign Debt instruments or European Bank instruments, you had better take a second look at whether the $1 per Share GOAL will be met!!!  And those better deals are coming on the interest rate front for American savers, stay tuned.  I guess Barack gets a Bronze Star on his forehead for that aspect of spending us into oblivion in the shortest amount of time in history ....... AND EVENTUALLY GIVING SAVERS HIGHER YIELDS IN THE PROCESS.  See ........... no politician can be totally incompetent!


 

Let's see, U.S. Treasuries are on their way to further credit rating downgrades, inflation is north of 9% domestically, the Federal Reserve has monetarized $Trillions in Treasury issuance to date and has pretty much spent its last nickel, U.S. Federal Spending is on a runaway trajectory, WHICH WAY DO YOU THINK THIS CHART IS HEADED IN THE MONTHS AND YEARS AHEAD???!!!

If you are waiting for $1500 Gold and $32 Silver I suggest that you not stand on the sidelines in the immediate future as all currencies are recognized for what they really are:  A Promise To Pay Or Retain Buying Power That Is Issued By A Sovereign State That May Be Insolvent.  The rush to the bottom for competing currencies is well underway so it will only be a case of what currencies end up at the top of a depression in the earth as to purchasing power.  Europe is a morass that is too lengthy a topic to go into in this missive, but trust me when I say that Spain, Italy, and possibly France are going to tip the Ship of Euroland into very muddy waters in the days ahead.  Another Mega-Credit Crisis in Europe is inevitable at this point, and this will be on top of a Liquidity Crisis that is developing in China, one of the few global economic cylinders still firing.  The newly issued debt of the PIIGS and Then Some have grown utterly toxic.  I do not expect the EuroZone to survive in its current configuration of Haves and Have Nots. 

CONTAGION IS CLEARLY IN THE WIND!  What is your retirement nestegg in stocks and bonds going to look like if this Waterfall Decline in Equities proves to be farther and faster than the Fall of 2008???!!!  I say a collapse is coming and the Fed and the Tooth Fairy haven't a single EFFECTIVE arrow left in their quivers to shoot the Beast of Lost Confidence dead in its tracks.

Enough for now, I think there is the sound of Black Boots outside my door.  Gold is going to $5,000 per ounce and Silver to $150 before this is all over in the next decade.  New long-term forecasts from the Sage of Wexford, but in my wildest dreams, and they can be pretty weird, I never imaged such a debacle of incompetent leadership around the globe as we have now.  Nor could I have ever imagined the amount of un-payable debt that has been created in the $100's of Trillions that has yet to evaporate on the ledgers of history.  Good night, Mrs. Calabash, where ever you are as the late Jimmy Durante used to close with.


THE SAGE OF WEXFORD, determined to survive the Maelstrom with something of timeless value.  And a steamer ticket to Norway.

NEWSFLASH, MONDAY, AUGUST 8TH:  STOCKS CRATERING AGAIN, MY, OH MY, OH MY, WHO WOULD HAVE THUNK IT.


Post-Postscript:  We are in recessionary territory AGAIN with Consumer Sentiment or Confidence.  In fact, we are on the way to setting a new low for the series.  How can an economy 70% dependent on consumer spending experience any growth if Confidence is plunging??????!!!!!!!  HOW CAN CORPORATE PROFITS GROW IN A DECLINING ECONOMY???  The signpost up ahead reads, "You are now entering the Loss of Confidence Zone" in the Greater Depression of 2008.

 

GO BLUE!

OH, AND ALL YOU STOCK CHEERLEADERS OUT THERE, HERE IS A REVELATION:  CREDIT RISK & DEFAULT RISK DO MATTER IN THE EVALUATION OF CORPORATE PROSPECTS GOING FORWARD.  HARD TIMES ARE NOT A TIME FOR ATTEMPTING TO SERVICE INCREASINGLY EXPENSIVE DEBT.  JUST ASK THE U.S. TREASURY IN THE NEXT YEAR THE SAME QUESTION!!!  AMAZING CORRELATION TO MOVEMENT OF S&P 500.  TIMBERRRRRRRRRRRRRRRRRRR.  MUCH MORE DOWNSIDE IN STORE FOR THE S&P 500 COMPANIES' STOCKS.

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October 17, 2011:  Precious Metals Bull Just Grazing In The Pasture Gaining Strength For Next Rally Phase.


 

I thought I would break with tradition today and start my ezine with a discussion of the precious metals.  I get so worked up with the political crap that has engulfed our everyday lives that I very often vent profusely in introduction and have little steam left for discussing the most precious of the metals, Gold and Silver.  I think with every ounce that I sell of either metal in the future, I will include a box of Pampers and a fishing rod so that my clients are better able to cope with the vicissitudes of these two increasingly popular commodities necessary for a healthy life.  The fishing rod is better than prescription tranquilizers in soothing your nerves and keeping your eyes off the minute-by-minute price charts of the precious metals.

BUT EXPECT GREATER VOLATILITY IN THE PRECIOUS METALS IN THE WEEKS AND MONTHS DIRECTLY AHEAD.  THINGS ARE ABOUT TO GET VERY NASTY IN THE FINANCIAL MARKETS AND THE ECONOMY, NOT JUST STATESIDE, BUT GLOBALLY. 

But the trend is your friend and we remain in a very powerful long-term Bull Market in both Gold and Silver.  Stay the course and sell the vacation home to buy more on dips like we just had.  Conviction must last two decades in here, not just months and years.

When silver investors, for example, start looking for the nearest cliff to end it all over, after a 25% CORRECTION in a matter of days, one has to step back and realize that in the Fall of 2010, silver was still trading around $23 per ounce.  Seems like we are in a consolidation zone right now from $28 to $32 per ounce, so a 30%ish increase in just a year's time is nothing to sneeze at and should keep you a safe distance from that perilous cliff you just discovered via Google.  Compare this return to what your friendly (or unfriendly) banker or money market is paying you right now.  Hard to save for retirement or anything else at interest rates under 1/4 of a Percent, especially when the Pump Priming by global Central Bankers has caused food prices to rise so quickly you are tempted to pull an Occupy Wall Street and campout in the fresh produce, diary, or cereal aisles.  Although Greenspan and Bernanke have damaged both the economy and financial system of our once-great nation during their tenures, us Precious Metals Owners are deeply in their "debt" for attempting to inflate the United States AND THE WORLD out of the Greater Depression of 2008.

 

And don't forget that Gold was trading at $1320 a year ago, so today's $1670 price per ounce still nets long-term holders a fine inflation-beating 27% gain.  Now the Comex is on a mission to stamp out speculation in the futures pits by increasing margin requirements once again for both Gold and Silver, BUT DURING A PRICE DECLINE, NOT A PRICE SURGE!!!  What about the U.S. Treasury Bond market ........ oh ever-so-vigilant overseers????  If there ever was an accident waiting to happen it is in intermediate to long-term bonds, especially U.S. Treasuries and secondarily Corporates and Municipals.  Since Harrisburg, PA just filed for bankruptcy last week, expect more and more municipalities to follow this route to avoid outright fiscal collapse and preemptive take-over by State governments.  With U.S. inflation north of 9% as my nimble digits fly across the keyboard, don't us Peons need at least 10% interest on our money to stay even, much less ahead?????!!!!!  Cash is trash, but keep some buried in the backyard for the inevitable Bank Holiday that is not far away.

Please also realize that Gold is a First Tier Monetary Metal ( FTMM ), so with new central bank buying, which I predicted over 7 years ago on these electronic pixels, the correction in Gold from $1920 to $1595 represented a 17% pullback, roughly 50% less on a percentage basis than Silver's 25% correction.  Silver may be considered a Second Tier Monetary Metal ( STMM ) for the purposes of future central bank reserves that will be necessary to restore sorely lacking confidence in fiat, paper currencies within the next decade or so.  Silver is also a thinner trading market, so it doesn't take as many contracts from JP Morgan or Goldman-Sachs to whack the metal southward AND it happens to have the massive short position owned by JP Morgan that requires fainting spells so that the bank's officers will get their next paycheck, much less any bonuses this year.   Is it any wonder that Occupy Wall Street is full of citizens who feel disenfranchised from the rewards of investing??!!!  But JP Morgan's day of reckoning regarding its massive short position in Silver is fast approaching as the political winds blow against the Wall Street Thugs, who regardless of political contribution truckloads sent to Washington for 2012, will lose tremendous political influence in the months and years ahead.  Another Sage Prediction that you can bank on.  Wall Street has now become a very convenient Political Whipping Boy for politicians who fear being in the unemployment line in the not-too-distant future.  Many will make it into that line regardless.

 

NewsFlash:  The S&P 500 at 1205 right this second was at 1186 one year ago.  That is a whooping 1.6% return, or some  7.4% under the U.S. inflation rate of 9%.  How is that asset class working out for you Baby Boomers like me out there who want to avoid being a Wal-Mart Greeter at age 80???

CREDIT AND DEFAULT RISK ARE COMING TO A BOND YIELD NEAR YOU.  Uncle Bernanke, who will be fired 10 nanoseconds after Barack Obama is thrown out of the White House in January, 2013, is serving no one with Zero Interest Rate Money in the United States.  Even if the banks could afford to take the risk of lending money out of their vaults, WHO THE HECK IS CREDITWORTHY ENOUGH TO GET A BIG LOAN TODAY AND WHO THE HECK IS IMPRUDENT ENOUGH TO TAKE ON MORE DEBT WHEN THE TREND IS TOWARD DEBT LIQUIDATION AT THE CONSUMER LEVEL!!!

Anyone still doubt that hard assets such as gold and silver are the enemies of bankrupt governments who are threatened by their substitution for freshly-printed currencies and Sovereign Debt as stores of wealth?!!  While the Nymex/Comex can attempt to put a lid on PM prices during a portion of the 23-hour trading day, this is a global market for Gold and Silver, and as I have said until I am purple in the face:  THE DEMISE OF THE STATUS OF THE UNITED STATES WILL INCLUDE A DEMISE OF AMERICAN TRADING EXCHANGES ON THE PRICE DISCOVERY MECHANISM FOR ALL ASSETS TRADED.  Wall Street may have a bunch of  1960's hippie throw-backs / prodigy camping out on their front lawns today, but it will be more and more Wall Street employees that will be camping out on their own front lawns tomorrow as in the movie, "Everything Must Go".  Will Ferrell was a beer alcoholic in this tragic comedy, but the Wall Streeters are addicted to Unprecedented Leveraged Speculation, unearned compensation, and outright fraud when it comes to full disclosure of total risk pertaining to their Designer Securities peddled across the globe to widows and orphans.  MAIN STREET IS ENTITLED TO BEING MAD AT WALL STREET.  Where are the bail-outs for the man or woman on the street???  Oooppps.  The piggy bank is broken.  Europe has just come to this realization also regarding its own PIIGS and ALL EUROPEAN BANKS.

( SEE HOW THE SAGE IS CONSTANTLY DRAWN INTO THE POLITICAL MAELSTROM OF 2011 IN HIS DISCUSSIONS OF THE PROSPECTS FOR GOLD AND SILVER GOING FORWARD!!! )

While the Lefties are going to pour money and support behind the Occupy Wall Street "mobs" in the classic me-too, me-too of flailing, failing politics of money looking for a cause, some of the biggest contributors to the Obama Administration's coronation have been the targets of these disenfranchised groupies, i.e., WALL STREET.  Watch a finally coherent message come from near-term interviews of participants as the Union and Move-On.org monies and infiltrators flow into the sea of unwashed or poorly kept demonstrators who should have a shovel-ready job by now.  The Tea Partiers, who at least did not offend the olfactory nerve by wearing clean clothes while in public and never were documented as either spitting on or destroying anything or anyone, were previously referred to as terrorists and unruly mobs by many elected officials in King Obama's Court, esp. former Speaker of the House, Ms. Nancy Pelosi.  Both Nancy and Hillary Clinton really need a new line of make-up these days since the Fall From Power and the Rise To Power, respectively, are having adverse effects on their television persona's.  Not a sexist comment, just an observation from a homo sapiens, many women I know have made the same observation.

Remember the Disney cartoon movie, "Ferdinand The Bull"?  He was such a gentle creature that they just couldn't get him mad enough to participate in a bull fight.  He pranced around the flower-filled meadows like a hoofed bumblebee, until he got stung by one.  Then he snorted, figuratively breathed fire, and charged at anything that moved.  That is our current beloved bovine, the Precious Metals Bull.  He is so good-tempered right now even with the Comex sticking sticks in his eye, that he cannot see the big, bad Bumblebee coming to set him on fire again.  Here are just a few Bumblebees buzzing around out there to reignite our most beloved Bull:

 

1.  The Nitely News decides to report the real state of the economy and it is clear to everyone with a Third Grade education that The Double Dip Is Here.  ( Antidotal Evidence from The Sage:  Just got a UPS package this Monday PM that was ordered on Friday from a company in California.  Transit and processing times for retail orders have shrunk to days from weeks. )  THE RETAIL SALES GAIN JUST REPORTED WAS ALL SEASONAL ADJUSTMENT, NOTHING ELSE, NO LIE.  Great work if you can get it.

2.  Germans decide that their Teutonic Heritage is more worthy of preservation than preservation of the Euro, and they vote NO! on bailing out more PIIGS that can't fly.  EURO may survive but it will be a much thinner version with fewer, more solvent participants.  Dollar has benefited from EuroMalaise of late, but that jig is just about up also.  The Sage  not buy, however, the requirement for the Dollar to decline for the Precious Metals to ascend.  The Dollar is toast anyway you slice or dice it, just a question of when it ends up in the Fiat Trash Heap of History ( FTHH ) ......... Gold and possibly Silver will be called upon to back-up the New Greenback when it is created.

3.  The default of Greece is only days, maybe some 9 days, away and the European banking system will come to the brink a la 2008 bringing down the U.S. banking system with it.  The Eight largest banks in the United States will subsequently have to be restructured using Private Funds, not Public.  Occupy Wall Street will turn into Obliterate Wall Street if any substantial taxpayers monies are used to restructure these banks.  This is what should have been done in the first place back in the Fall of 2008; risk-takers must fail if they make stupid, imprudent, greed-induced decisions to include A.I.G., Chrysler, and Government Motors.  No other long-term approach will preserve American Capitalism Principles ( ACP ) that once led us to greatness.

4.  Congress and the White House continue to be at loggerheads concerning government spending and taxation and another Government Shutdown Possibility is right around the corner.  Americans and our trading partners lose faith in America's will to get its fiscal house in order, we get another downgrade in our credit rating but from all three rating agencies this time, and the sale of U.S. Treasuries, both freshly-printed and secondary-market, suffer from a lack of bids with yields having to rise sufficiently to attract new suckers, I mean investors.  China uses selling points all over the world to unload as many Treasuries as possible under the radar.  Currency Manipulator Legislation from U.S. Congress more than poorly timed.

5.  Large States such as California and Illinois become insolvent and have difficulty selling new bonds at any price or yield.  Greek Contagion has come full circle, and public-service employee layoffs soar along with disorderly demonstrations and sit-ins.  Services are cut while tax increases are passed at the local levels upon a populace that already can barely make ends meet.  Civil unrest spreads to the taxpayer level with the escrowing of tax payments awaiting reform gaining in support and practice nationwide.

6.  The S&P 500 confirms its renewal of the 2000 Bear Market with a close below 1100 as quarterly earnings are replete with losses and missed guidance, Europe implodes at the Euro, ECU, and bank levels, and bond yields rise to more correctly reflect default and credit risk, not to mention inflation risk, AND STOCKS CANNOT TAKE THE COMPETITION.  An economy re-entering a Depression it never left without fudged inflation adjustments is not going to produce 15% to 20% year-to-year profits growth as the market is priced right now.  Expect corporate earnings by 2013 to show negative comparisons to prior even with U.S. Bastardized Corporate Accounting ( USBCA ).  500 to 430 on the S&P 500 here we come.

This is only 6x Bumblebees to put PM Bull into charge mode, I am sure either you or I will come up with 5 more by breakfast time tomorrow.  Me the Humble Sage thinks it is only days, not weeks, before a bumblebee stings.

WELCOME TO THE LOSS OF CONFIDENCE PHASE OF THE GREAT DEPRESSION OF 2008.  IN TIMES OF DISRUPTION TO THE FINANCIAL, ECONOMIC, POLITICAL AND CIVIL STRUCTURE OF ANY SOCIETY, GOLD AND SILVER HAVE PROVEN THEIR METAL.

Don't be a market timer in here!  I have told you this for the last decade plus.  I just bought some more Silver this morning and watched the price go down 50 cents after doing so, but to coin a phrase from Alfred E. Newman, "What Me Worry?".   Would rather own it than chase it or not be able to get it at any price.

 

a.k.a. Alan Greenspan a.k.a. Ben Bernanke a.k.a. Timmy Geithner a.k.a. Eric Holder a.k.a. Vladimir Putin

Delivery times are going further out as demand soars during this "correction" with 3 to 4 week delays common, premiums at the refiner/mint levels are going up, and it will be more difficult with time to buy the amount of both Gold and Silver that you want to buy in a timely, cost-effective manner.  Sit on the fence or market time at your own peril.  Rocket ships are hard to mount by earthlings once launched skyward.  Bucking Bulls even more so.

And this is no bull.


THE SAGE OF WEXFORD, right on about Gold and Silver for over 15 years now.



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December 7, 2011:  THE SHIP OF FOOLS HAS RUN AGROUND.


One can't help but feel both the emotions of disgust and depression at the Current State of Affairs.  No, I am not talking about Herman Cain's alleged misdeeds, but what passes for governance in the World today.  For European bond investors to reduce Italian bond yields at auction merely due to a pledge by Sarkozy and Merkel to strive for more central Brussels control over miscreant EU member state budgets and spending is a bridge to nowhere.  If the United States stands little chance of getting a constitutional amendment requiring a balanced Federal Budget each and every year, good luck with getting acceptance by Greece, Italy, Spain, and Ireland where austerity measures are already causing riots in the streets.  While we have 50 States to present the proposal to, the European Union has but 17, BUT OF DIVERGING AND HISTORICALLY UNIQUE DIFFERENCES OF PRIORITIES WHERE LANGUAGE AND CULTURAL FEATURES ARE MORE FRAGMENTING THAN UNIFYING.  We supposedly speak one language, English, in the United States, but language is only one element of differences between increasingly torn members of the Euro countries.  And if France wants to wait until June of 2012 to attempt ratification of these proposed Euro Treaty changes, Rome will have burned to the ground along with most of its countryside by then.  THERE ARE NO PROPOSALS ON THE TABLE THAT WILL SOLVE EITHER THE EUROPEAN OR AMERICAN CRISES OF TOO MUCH FRICKING DEBT THAT WILL NEVER BE REPAID.  THERE IS NOT ENOUGH TEA IN CHINA TO COVER THIS EVEREST OF DEVELOPED (?) WORLD DEBT!!!

Now Ben Bernanke, just like his predecessor Alan Greenspan, has some distorted notion of his ability as Fed Chair to put out every global financial fire with buckets of freshly printed Dollars, BUT NEAR-TERM LIQUIDITY IS ONLY ONE ASPECT OF A MUCH BIGGER LONG-TERM SOLVENCY ISSUE FOR HIS LUCRE RECIPIENTS.  Bennie Boy is like the Little Dutch Boy that races to the compromised dike with a bottle of Elmer's Glue instead of buckets of quick setting mortar.  Actually, there is no mortar in quantity enough to plug the Broken Dikes of World Insolvency.  THE TENS OF TRILLIONS OF DOLLARS OF DEBT COMING DUE IN THE NEXT 18 MONTHS IN EUROPE AND THE UNITED STATES ARE JUST TOO HUMONGOUS TO BACKSTOP.  Only time and massive defaults can stop the tidalwave of global financial insolvency.  THE UNITED STATES FEDERAL RESERVE WILL BE REINED IN UNDER ANY NEW ADMINISTRATION IN THE WHITE HOUSE AND CONGRESS IN 2013.  The frightening question is how much additional damage an uncontrolled Fed Printing Press will do in the interim.  Does Bernanke have any grandchildren that will be stuck with the towering bill he is creating for generations to come?????????????????


 

Courtesy of http://www.jsmineset.com/

Don't you feel all warm and cozy inside knowing that your very own Central Bank is creating liabilities known as Dollars out of thin air in the $Trillions on an annual basis, literally giving them away at interest rates a fraction of what they should be to COMPROMISED OR INSOLVENT BORROWERS, and never telling you the American People that these Dollar Swaps or Loan Facilities may create $Trillions of losses for American generations to come AS EUROPE IMPLODES FINANCIALLY AND EVENTUALLY ECONOMICALLY.  Confidence in the United States Federal Reserve AND THE UNITED STATES GOVERNMENT is rapidly waning as one failed attempt at saving the economic and financial system of the world proves to be short-lived in effect and TOTALLY INEFFECTIVE IN RESULT.  We are in a time warp right now as world events will occur in increasingly more rapid succession entering 2012, bringing the very real end-result of systemic collapse to a venue near you.  Yes, Systemic Collapse is what we are facing now due to The Ship of Fools, just ask Jim Rogers or even George Soros.  HAVE 3-MONTHS OF LIVING EXPENSES BURIED IN A MAYONNAISE JAR IN THE BACK YARD BECAUSE A 60- TO 90-DAY BANK HOLIDAY IS ACOMING.

Now enter S&P, a rating agency that has been slow-on-the-draw to make ratings changes as everyone but Santa's Elves knew of the rapid development of compromised credit conditions of a multitude of borrowers, Stateside and across the globe.  Including France and Germany in a 17-count list of potential AAA & AA has-beens, S&P throws cold water on the EURO SALVATION CROWD with a dose of financial reality:  Even the Teutonic Bastion of Fiscal Soundness, Germany, with a debt to GDP ratio of 200%, is not immune to getting a much deserved down-grade in its credit rating.  Especially if Reich Minister Merkel is proposing some form of Euro Slush Fund to attempt to save the proliferate spenders of Europe from themselves and effectively putting the citizens of Germany on the hook to bailout the bankrupt Southern and Western European countries.  Financial, and hence, economic reality is seeping into the trading markets for European Sovereign and Bank debt at an accelerating pace.  The credit markets get it first, the equity markets next.

Once confidence is shaken in credit markets, it can take years and years to restore same.  Just ask any country that has defaulted on its debts to foreign creditors as to how many years it took to get back to manageable, serviceable interest rates.  Now it is up to Moody's and Fitch's, two more slow-on-the-draw credit rating agencies, to ante up to the bar and downgrade the United States in step with S&P's earlier downgrade.  IT IS INEVITABLE, REGARDLESS HOW RETICENT THE GRADING AGENCIES MAY BE TO AVOID A POLITICAL HAILSTORM ( and even more profit-killing regulation ), FOR THE UNITED STATES AND EUROPE TO APPROACH THE JUNK STATUS OF SOVEREIGN DEBTORS.

The current ratings on the entities in question is a joke, and if the agencies want to remain germane and even marginally profitable, they will swallow the bitter pills of Sovereign and Domestic Bank credit downgrades.  THIS NECESSITY APPLIES TO BOTH U.S. AND EUROPEAN ENTITIES, SPORTS FANS!!  Of course, our Miscreant Congress will attempt to put them in the slammer for finally doing their jobs, but there is plenty of room there also for Congress.  How about that Pelosi Insider Trading scandal!!!  I have sent Nancy the unlisted phone number for Martha Stuart who can give her some knitting tips for Nancy's upcoming stay in West Virginia.  And Nancy, your last face-job pulled things a little too tight!

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$


Now on to Gold and Silver.  Many investors seem enamored with the recent rally of the stock market back above its recent trading range highs, but it is a FOOL'S RALLY.  To think that European leaders, or American leaders, if we have any!, can solve the current DEBT COLLAPSE VIA EDICT OR MONEY PRINTING GETS ONE A FIRST-CLASS CABIN ON THE SINKING SHIP OF FOOLS.  Hope springs eternal in the hearts and minds of stock investors that think somehow, some way, we will avoid hitting the rocky shoals of financial and economic meltdown with one tidbit here, one flotsam there of better-than-expected economic news or more sound-and-fury of reform out of European leaders.  The European cow is not only out of the barn, EuroDaisy was last seen climbing the Matterhorn.  We are firmly within the grasp of a multi-decades-long DEPRESSION and only time and debt dissolution will get us out.  Very simple.  But the U.S. economy is no beacon of light on the horizon for the wallowing vessels of foreign lands, because Americans and the American Government have feasted at the trough of Public Largess and Entitlement for over 50 years now AND WE ARE LISTING BADLY TO PORT.  (That is the LEFT side of the ship!).  Such an imbalanced vessel cannot steer straight and certainly is in no shape to navigate the dangerous shoals the Ship of State is caught within.

Although my gut tells me that some major sovereign, economic, or financial entity is going to founder sooner rather than later to cause chaos in the markets, we can set a horizon of Spring of 2012 as a end-post in our planning.  Both gold and silver are being wound up like tightly-wound springs, not susceptible to panicked selling due to exploding global demand, forget the defunct trading venues such as the Comex.  The MF Global failure is a fatal arrow in the raison d'etre for the Comex and this exchange will never recover from the failed supervision and oversight of one of its major trading members.  If one thinks that both Gold and Silver will fall 40% along with a 70% decline in stocks and a 50% decline in bonds in the very near future, then by all means stay in cash under the mattress ...... not in a bank or money market that pays you 0.15% to 0.30% per annum.

I have watched markets for almost 40 years now, and I know technical strength when I see it.  Gold and Silver trading since the end of summer are eliciting all of the traits of markets that are merely consolidating for their next moves higher.


 

TAKE THE LONG-TERM VIEW IN INVESTING AND YOU WILL SEE MORE CLEARLY THE INTACT UPTRENDS IN BOTH PRECIOUS METALS!  Note the ascending wedge pattern building in Silver.  Jump on the train, because a speeding train is tough to jump on.  BACKLOGS ARE ALREADY COMING BACK IN MOST BULLION PRODUCTS.

The differences today in the bullion investment landscape versus October of 2008 are striking.  Investors have seen Government and Central Bank efforts to revive domestic economies and financial systems fail.  Americans have nothing to cheer about when their Government tells them we have made money on this TARP program or that, because there are many programs used to bail out financial entities in the United States and Europe that We The People do not know about and that will almost surely fail to return principal to the American taxpayer as a financial collapse occurs.  And these clandestine programs are in the $Trillions, not in the $100's of Billions as existed under Paulson's tenure.  Government Motors has proven to have been a bad investment for the American taxpayer, not only as the much-beloved-by-Obama Volt catches fire under load, but $Billions are lost on stock sales of GM on behalf of us-little-ole taxpayers.  AIG is still an accident waiting to happen, the final chapter has not been written yet.  The FHA has become the Fanny and Freddie of the Obama Administration, effectively guaranteeing many new residential mortgages.  See, We The People continue to go into the hole of blackest Public Debt even as we struggle to reduce our Private Debt.

Faith in Government and the U.S. Federal Reserve is not what it was in the Fall of 2008.  Hard to believe that U.S. Treasuries will cop a bid this time around as the Safe Haven of Choice.  These compromised CCC promissory notes barely pay for the electricity to place the order for them online.  Placing my bets on Gold and Silver being those safe havens! 

The debasement of currencies, sovereign debt, bank debt, and most paper assets is well underway and on an unprecedented scale.  Desperate governments and Central Banks are doing desperate things that only guarantee greater insolvency of the issuing parties in the future.  No solution has been found for the Debt Collapse of 2008, we are merely in a new phase of it, a much more dangerous phase where printing money seems to be the path of least resistance and the hard political decisions are delayed indefinitely, i.e., the Congressional Super Committee.  People who have never even thought of Gold and Silver as alternative investments are buying bullion in size and on a regular basis.  The mindset of investors is much different than in the Fall of 2008, redemptions from stock mutual funds over the last 3 years is just one example of abandonment of traditional investment avenues, partly out of lack-of-trust and partly out of Total Lack of Performance for the last decade for equities.  Scandals on Wall Street, with former NJ Governor Corzine's complicity in the disappearance of $1.3 Billion in client monies the most telling recent example, have created a "Them Versus Us" mentality with investors.  Hence, Occupy Wall Street makes a curtain call.  The entire financial system, to include intermediaries such as MF Global, has grounded on the very rocks that they once could maneuver around with ease as regulators watched with half-closed eyes.

Many European banks are on the brink of failure as I type.  HENCE THE UNAUTHORIZED, PANIC MOVE BY THE FED TO PROVIDE DOLLAR SWAPS AT INTEREST RATES SUBSIDIZED BY THE AMERICAN TAXPAYER.  Their balance sheets are leveraged some 26 to 1 compared to U.S. bank leverage in the 13 to 1 range, both exposed to evaporation of equity positions with 4% to 8% revaluations of Assets Held.  Revaluations of CDO's and CMO's on their books, NOT TO MENTION EUROPEAN SOVEREIGN DEBT, an event that may well be forced by the markets and/or the naughty Credit Rating Agencies in the near future should pretty much do the trick.  It is just a matter of what rock hits the hull of the European Bank Ship ( EBS ) in question, not if or when.  We did not have the European Situation in the Fall of 2008.  It is here now with a vengeance and getting worse by the day as the Eurocrats fiddle with makeshift "solutions" and debt payments across Europe come due every month.


 

Courtesy of Phoenix Capital Research http://www.gainspainscapital.com/ ...... an excellent market commentaries source!

THE PERFECT FINANCIAL AND ECONOMIC STORM IS HERE FOR BOTH GOLD AND SILVER TO PROVIDE A STORE OF WEALTH IN A TIME OF UNPARALLELED WEALTH DESTRUCTION.

NEWSFLASH:  THERE HAS BEEN NO ECONOMIC RECOVERY SINCE THE 2008 RECESSION BEGAN.  FUDGED GDP DEFLATOR NUMBERS FROM THE BUREAU OF LABORED SCAMMING ( BLS ) HAVE BEEN SUPPRESSED TO NOT SHOW THE 9% TO 10% INFLATION THAT EXISTS IN AMERICA AT THE CONSUMER LEVEL.  ANALYSTS THAT STATE THAT INFLATION IS WELL-CONTAINED MUST HAVE THEIR WIVES DOING ALL OF THE SHOPPING.  Does Ben Bernanke ever do the shopping for his family??

THE SAGE OF WEXFORD, Merry Christmas To All and To All A Good Fright.


P.S.  Check out the Sage Predictions in December, 2010 for Gold and Silver for interim 2011:  $1755 for Gold and $42.75 for Silver, what a genius!!!  Then I got carried away and gave new targets for 2011 of $1835 for Gold which did rise to the occasion and bested my forecast by closing in London at $1895 on September 6th.  Now my second/follow-up forecast for Silver of $57.20 has not been achieved yet ....... BUT THE SAGE'S CRYSTAL BALL SAYS WE WILL HIT THAT LEVEL BY APRIL 15th, 2012.  No guarantees, but am accepting Xmas gifts of gratitude for those of you who benefited greatly by my Sage advice.  Could use a new BMW to adorn the driveway!  Stockings of coal also accepted, I will forward same to Congress and the White House AND TO THE BULLION NAYSAYERS.



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