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 News From The Front  

 

Prior dewdrops of wisdom from the illustrious Sage of Wexford are retained for posterity below:
 

News from the Front:  November 15, 2017

Probably my last update of 2017, unless something major happens before year-end, like Fiscal Responsibility coming back into vogue in Washington, but the return of Halley's Comet tomorrow would be more likely.  The Debt Monster will be kicked down the road again, is my best guess, so that when he comes back into town in the quarters ahead with interest rates rising worldwide due to massive defaults, he will be more ferocious than ever at robbing the younger generations today of their American Dreams and their debt-inflated Standards of Living.  These Bozo's that we put into office are like a nest of termites progressively eroding all structures of the United States:  societal, economic, financial, healthcare, and everything in between.  We can be thankful this November 23rd that the coming FINANCIAL PANIC has not occurred in Full Mounty Mode yet, so that the majority of Americans and planet dwellers can continue to munch on a bounty of hot media air and keep their collective heads in the sand as to the coming calamity.  Most are woefully unprepared for what is coming, whether it be financially or emotionally.  But the signs of financial strain, look no further than the performance of Junk Bonds Stateside as one prime example, are everywhere for the informed and awake observer to see.

 


This means that this corporate subset of unduly leveraged and very questionable/ credit-compromised borrowers are watching their less-than-subprime debt get whacked on price and require higher yields from brain-dead investors in order to unload this toilet paper.  I almost have to chuckle how investors have piled into Junk Bonds for years now, thinking there is a free lunch to higher than Fed-induced Zero Yields at the banks and money markets.  They are finding out that the term, "JUNK", means what it says, and the risk of owning this stuff is actually much, much greater than the Fed-suppressed compression of yield spreads from investment grades to junk grades, never more narrow, would imply!!  PLEASE TAKE A BOW ONCE AGAIN FEDERAL RESERVE MEMBERS FOR HERDING THE SHEEP INTO THE SLAUGHTER HOUSE CORRAL.  These knuckleheads will be retired on bloated pensions as the crapola hits the fan.

Note how the other class of brain-dead investors, STOCK INVESTORS, per the S&P 500 index graph in blue, continue to party on like the music will never stop .... NO MATTER WHAT NEWS OR EVENTS COME TO BE.  Weeeeeee, make sure you put your arms up in the air as the rollercoaster hits the DOWN SLOPE, kiddies.  I am being purposely disrespectful and snide of today's global financial market investors because even a rat can be trained by repetition to find the end of the maze or the cheese.  THESE GLEEFUL PARTIERS HAVE NO RECOLLECTION OF PAST EVENTS, LIKE OCTOBER OF 2008.  Got Gold?  Got Silver?  Got Ammo?  Got Cash buried in the woods at a 3,000 ft. altitude?

Yields are going up around the world, even if they still remain historically depressed and artificially maintained by a gaggle of Central Bankers that I am putting on the first vessel to Mars.  They probably won't make it due to their utter lack of fortitude to do the right things for all but the One Percenters and Sovereign Debt Issuers, but no great loss.  I know we already have way too much space junk out there now, but this may be the best way to save the planet from extinction.  Oh, and let's put Al Gore on that vessel also since the only man-made global warming that is occurring is when he opens that overweight and overpaid mouth of his.  I am surprised he does not need a cargo-type plane to fly everywhere, like a C10, preferably the Russian version with all of the propellers that are prone to failure.

But Quantitative Tightening is something we will have on our collective Thanksgiving Tables, served up with a helping of Loan Standard Tightening, Subprime Auto Loan Defaulting, Student Loan Defaulting & State/ Country Bankrupting that will assure the roll-over of the Global Economy is another trend change well in place.

For example, in the Third Quarter of 2017, subprime auto loans issued by finance companies (vs. banks & credit unions) had a 9.7% delinquency rate of payments past-due by 90 days or more.  The previous record of 10.9% in Third Qtr. of 2009 will likely be surpassed in the months and quarters ahead and probably be north of 15% before next winter.  Notably, of the $282 billion in subprime auto loans outstanding today, these loosey-goosey, Wild West finance companies have originated approx. $209 billion or a whooping 74% of the total.  TALK ABOUT AN ACCIDENT WAITING TO HAPPEN!!!  And we are not talking about a car accident here, but Tens of Billions of Dollars going down the drain and not down the pike.  And this is during an economic period that the Fed and the politically-leaning charlatans reporting data out of Washington label as a solid performer as to GDP growth and employment!!!!!!  These already compromised borrowers with stinko credit ratings are also the most likely to run into hard economic times with early-cycle job losses and other defaults (H-O-M-E) as the Obama Depression, Phase II really starts strangling everything with a pulse.  Bush was blamed for everything during the Great Divider's early rule (like the sun coming up in the East), so let's spread the Blame Game as it should be spread.  Obummer ran us into a ditch just like he accused Bush of doing.  Na Na Na Na Na.

And even though the Sage can see years into the future (with one eye closed!), I have no idea what this new Fed Chair anointed guy Powell will do with monetary policy, but my bet is that he will screw things up even more like Greenspan, Bernanke, and Yellen have done before him ..... AND with a vengeance.  When the crap really hits the fan in the not-so-distant-future, he will print money like all of his incompetent predecessors ...... pushing us toward a Weimar Germany moment with a dollar not worth a plug nickel.  Get that wheelbarrow ready to buy a loaf of bread!  That does not mean that he will not continue to raise interest rates as fast as possible IN THE INTERIM in order to have a cliff on rates from which to not only jump off of, but begin to reduce rates from.  Can't reduce rates with any effect on the American or global system from 1.25%, can you???  WE ARE DOOMED BY THE INCOMPETENTS WE SELECT TO RUN THE ASYLUM.

As to gold and silver, let me just say that Silver is telling the entire story as to where the Precious Metals are likely to go next.  While many "trading experts" out there point to the C.O.T. positions of Speculators as way too high on the Long Side to allow any near-term rallies in either metal in the short-term, TELL ME HOW MANY TIMES SILVER HAS BEEN KNOCKED BELOW $17 PER OUNCE OVER THE LAST 6 WEEKS AND HOW MANY TIMES IT HAS POPPED RIGHT BACK UP AND OVER THAT THRESHOLD.  This is not a sign of current or impending weakness, it is a sign of strength!  Silver and Gold are being accumulated around the world, even if American investors are too fickle (or thick) to realize a winding spring when they see one.  Physical demand is strong around the world for both precious metals, even if there are signs of weakness in demand Stateside in a country where the inhabitants are used to instant gratifications a la FANG stock & Bitcoin rockets, and were absent the day that the lesson on U.S. bank note failures was taught in school.  U.S. coin of the realm has failed many times during our brief history on this planet, AND IT IS DESTINED TO FAIL AGAIN IN THE MONTHS AHEAD.  It will fail as Debt Securities across the board begin to default in one fashion or the other.  The highest percentage of debt outstanding in the world is denominated in ..... wait for it ..... D-O-L-L-A-R-S!!!!

Buy when there is blood in the streets.

 



GOBBLE, GOBBLE, GOBBLE ..... GOD knows there are more than enough Turkeys running & ruining our country.  Happy Thanksgiving, and GOOD NIGHT.


SAGE OF WEXFORD
,  soon ..... regrettably, to be proven correct.

 




News from the Front:  January 15, 2018

Happy New Year, especially to astute bullion holders and buyers, AND NOT SO MUCH FOR FINANCIAL ASSET HOLDERS AND BUYERS.  Yes, the giddy Stock Market keeps going up almost daily, but in an economy that struggles with 3% GDP growth in nominal terms, a P.E. of 18x to 24x trailing S&P 500 earnings marks one of the most expensive and over-extended American stock markets in history.  But the real story at this very moment is not in the Bubblelicious Equity Scene (BES), but in the debt markets globally. Bond prices are declining around the world as debt investors become more skittish of issuers' creditworthiness and the real threat of inflation as prices rise in economies to match the rise in real estate, wages, and financial market prices.  Hot money creates more hot money.  Speculation with zero cost money creates more speculation and distorts asset prices across the spectrum of typical portfolio assets.  Gold and Silver are not typical portfolio assets due to their gross undervaluation in a paper-crazy world, or due to their abilities to be bartered for virtually anything at any place on the planet.

As David Stockman so aptly points out:  "THE BOND VIGILANTES ARE BACK!".  Meaning that the normal market mechanism of valuing bonds in the secondary and primary markets is re-establishing itself after a very long absence due to Global Central Banks' grievous manipulation of the Cost of Money; duration, issuer creditworthiness, inflation expectations, and currency exposure are all coming back into the Valuation Mix at the worst possible time for America, The Donald, the stock market, and the real estate market.  Central Banksters have so distorted the price of money that even widows & orphans have thrown money at Emerging Market or American Junk Debt since the Federal Reserve's acquiesced criminal activities of the banking system have stolen Trillions of Dollars from Savers since 2009.

 


 



DON'T KEEP ANY MORE MONEY IN A BANK THAN YOU NEED FOR MONTHLY EXPENSES, SAY 3 MONTH'S WORTH.  You are not being paid either the true Inflation Rate north of 8% OR are you being compensated for the real risk that your bank will become even more insolvent when the crap hits the fan in the months ahead.  Silas Marner had the right idea about where to stow his worldly fortune.  In the floorboards.

I am personally (and professionally!) amazed at the lack of physical bullion buyers in today's American gold & silver market at such favorable prices with the majority of transactions for 2017, at least for WCM, on the Sell Side.  Wow!  Talk about selling out toward the low in prices.  Gold could easily be $5,000 to $10,000 per ounce in the immediate years ahead, and Silver will easily surpass $160 per ounce in the same time frame.  But for a consumer who piles on more debt to take advantage of UNREALIZED STOCK MARKET OR REAL ESTATE GAINS or just to Feel Good with more worldly goods for the Holiday Shopping Binge, it is no wonder that priorities are arse-backwards, and short-term consumption is more important than long-term FINANCIAL SURVIVAL.  Many of today's stock market participants, and even bond market participants, are going to see their net-worth's plunge in the years ahead as they hang onto these now speculative assets well into 50% declines ..... thinking the Fed will come to their rescue once again as in 1987, 1998, 2001, and 2008.  AIN'T GOING TO HAPPEN OR CAN'T HAPPEN WITHOUT HYPER-INFLATION.

To the contrary, in 2018, the entire Gang of Global Central Banksters will be on a tightening campaign to drain monetary liquidity from the markets and economies just when stock and bond prices are at historically ridiculous levels and economies are running on their last embers of growth.  Eventually, the consumers of the world have to pay back all of the principal they have borrowed, even if the rates are at Depression Era levels!  The leading Quantitative Tightener, the U.S. Federal Reserve, as pathetic a monetary body as human history has even seen, never getting it right, will drain the Money Swamp by some $420 Billion in 2018 and by some $600 Billion in 2019.  The low rate party and subsequent speculations attendant to it are fricking over Sportsfans!!!  This will undoubtedly have an adverse effect upon bond prices with higher and higher yields coming to a stock market competition near you.

The Bank of Japan and the EU Circus Bank both will be turning off the spigots if not merely reducing the largess of printing they did in 2017 and prior.  What a Club of Clowns! They finally see the Light of Misguided Monetary Policies (LMMP's) simultaneously at  the very worst possible moment, and fall all over themselves to try to look like Paul Volcker's in vain.  MONKEY SEE, MONKEY DO.  No statues will be erected in the town squares for these Malicious Monetary Clowns as they will be going up for receiver Diggs of the Minnesota Vikings.  He knew how to catch the ball when the chips were down.  These Bankster Clowns have not only fumbled the ball at the 5-yard line, but burnt down the stadium with the fans still in it.  Pitchforks and hoes are headed toward every central bank headquarters in the years ahead.  Couldn't happen to a more deserving gaggle of overpaid and pompous academics.

Gold and Silver are headed much higher in the months ahead.  Get over it.  Accept it.  Act upon it.  Put your money where your prospects for financial salvation are the highest.  If history is any guide, and it repeatedly is, we have entered the most dangerous Financial and Economic Period in human history.  For those of you who have carefully studied the entrails of the chicken as I have for some 45 years now, I can say this without hesitation and with great confidence in its accuracy.  Smarter money than me is getting out of financials, real estate, and other illiquid assets, and plowing proceeds into bullion and colored diamonds.  Maybe not so much here in the Untied States, but in most developed countries across the globe.  Americans often are the last to get the memo.  Americans have short memories and long propensities to live for the moment.  Better to be an Ant per Aesop's Fables than the Grasshopper who ended up chocolate-coated on the grocery shelf.  The consumer is about to get consumed.
 


Silver has just broken out to $17.40 per oz. as the U.S. Dollar tests the 90 level on the index, a currency backed by nothing more than hot air out of Washington, the capital of the biggest Debtor Nation the world has ever seen.


SAGE OF WEXFORD,  the 2015 New Bullion Bull is prancing out of the stables.

 




News from the Front:  March 26, 2018

I was going to wait until April Fool's Day to compose this every-other-month epistle, but I then figured there were too many loyal readers who rushed to their computers every morning only to be disappointed that there were no new Dewdrops of Wisdom from the Sage.  "A Fool and his money are soon parted" comes to mind, in spades, in the financial and real estate markets today, and the stock market is soon to join the Bond Market Bear in progressively lower prices in the weeks and months immediately ahead.  No more waiting for a rationalization of equity prices, IT IS HERE WITH A VENGEANCE.  Mind you, the robo-machines will push equities spectacularly higher on a single day like today celebrating a China sitting down to the Trade Negotiation Table (TNT), good luck with that one, BUT THE TREND IS NOW DOWN, DOWN, DOWN.

The peak, or should I say lower & lower peaks, that has been put in so far this year is a little more than a so-called correction as defined by the Perma-Bulls on BubbleVision, based on the daily magnitude and volatility of formation.  No asset class rises for almost a decade uninterrupted in price appreciation without a comeuppance arriving at some point.  That comeuppance will be a true and deadly BEAR MARKET to the vast majority of stock investors who don't have the common sense to get out of the way of a speeding train.  Greed is still running rampant on Broad & Wall Streets. No disrespect intended for these Naive Ones, just appropriate contempt for any that may think a retirement fund bail-out will be their Constitutional Right in the years ahead.

 



Switching gears somewhat, but still on the path of DISHING OVERVALUED ASSETS (DOA), I have to giggle somewhat at people who still mistakenly think that residential real estate is the Easy Road to Retirement Nirvana (ERRN).  You get to live in it, put in a pool, scoop up your neighbors' pet's excrement regularly, pay property taxes on it, and pay a never-ending stream of repairs & maintenance on it, not to mention those very expensive Home Improvements that you likely won't see a penny worth's back upon resale.  Thank goodness that the Mortgage Deduction for Real Estate Property Tax is now capped at $10,000 per year.  I am tired of subsidizing high-tax States like New York, New Jersey, Massachusetts, Connecticut, Rhode Island (insolvent!), and California that inherently are uber-liberal and free spending.  Try being a Public Employee betting on full retirement benefits in those States!!

This will eventually have a depressing effect on the real estate markets in those States, stay tuned.  The effects of Cost of Carry have not been revoked from Asset Pricing.  Since I personally got rid of all mortgage debt in 2002, with a homestead downsize of Biblical proportions, I am not a strong advocate of the Mortgage Interest Deduction in the first place.  Why should homeowners be so subsidized to include deducting Property Taxes WHEN RENTERS, PROBABLY A SMARTER GROUP OF SHELTER-SEEKERS AT THIS JUNCTION, GET TO DEDUCT NONE OF THEIR RENTAL PAYMENTS.  Time to let the Real Estate Industry sink or swim with the rest of us mortals.

Homeownership is not a Constitutional Right, nor is it appropriate for many individuals who are so heavily buried already in every other form of debt:  Student Loan, Auto Loan, Installment Loan, and Credit Card Debt that the Home Mortgage is the last ounce of debt burden just enough to break the camel's back.  Real estate is going to be a dog of an investment over the next 30 years, just like my residence here in lovely Virginia which is still over $100,000 below the 2005 peak and MAYBE ONLY $20K above COST BASIS for a 2018 selling price AFTER A 6% COMMISSION!!  A less than 10% before-tax return after 15.5 years!!!  SORELY BELOW THE RATE OF INFLATION PER ANNUM ..... SOME INVESTMENT!!!  And I am not deducting for after-tax carrying costs such as repairs & maintenance.

Just a roof of varying niceness over your head.  Nothing more, nothing less.  Get used to this concept.

Told an incredulous neighbor here in 2006 that I never expected to make any money on this cottage-like home on a whopping 1/3 acre lot, and he is about to find that out on his decade-plus holding now up for sale in a barely middle class neighborhood (from my 1950's/ 1960's evolutionary, growing-up comparisons!).  No insult intended to anyone, just a fact based on likely income levels, final education, occupations, and lack of manners and consideration of others; we used to call the latter shortcoming a Lack of Upbringing in the Old Days, but that is Totally Politically Incorrect (TPI) today!  And renting space in your Single-Family home to a non-family member(s) is hardly Middle Class economic behavior by any metric or regularly practiced by prior generations.

One crucial rule of real estate investing:  Never own the most over-improved house in the neighborhood.  I was in that camp in the early 1990's in Leesburg, VA, but was eclipsed in the later years of that decade by my over-improving neighbors.

Oh, and based upon the number of newer model year gas-guzzlers sitting on the street and in the driveways, since the two-car garage has been either filled with piles of junk or converted into a Romper Room of some genesis, these same people are more than likely up to their proverbial eyeballs in all varieties of debt, especially mortgage.  Their residential property has effectively become the Greenspan ATM.

But I digress something BIG TIME here.  Just some New Year Venting.

Gold and Silver are looking and acting great.  I know I have said this many a time since 2011, but the Entrails of the Chicken are lining up for one heck of a bull market pulse as my wrinkled old digits pound the keyboard.  (Ever notice as you are reaching your so-called "Golden Years" that your skin looks more and more like a waterlogged alligator??!!!)
 

Gold has now completed a classic Cup and Handle formation which from my 47 years of investing has proven to be the most reliable and predictive technical price pattern for a budding break-out to higher prices.  Silver is in a declining wedge pattern that the majority of the time is resolved by a very strong break-out to the upside.  Plus, the Speculators on the COMEX have now gone net short in the futures pits on Silver, which normally is a very bullish contrarian sign that this hot money is soon to be burned in the opposite direction.  Short covering rally comes to mind.
 
Let's look at some of the fundamentals that are providing a very strong tailwind to the Precious Metals for Second Quarter, 2018:

1.  Budding Trade Wars around the world where the Donald takes the lead and the non-U.S. players counter with one domestic-industry-saving tariff after the other.  If you think China will play nice under any negotiated deals as of today, I have a Bridge to Nowhere to sell you.  If they continue to steal our intellectual property left & right, you think they will adhere to any trade deals going forward???!!  Higher domestic U.S. imported prices are coming on top of a Declining Dollar due to loss of confidence in Washington getting its fiscal & political crap together.  Reminds me of the trade wars culminating in the Great Depression of the late 1920's!

 


    U.S. DOLLAR HEADED TO MUCH LOWER LEVELS.



2.  Flight of capital from U.S. stocks and bonds and real estate as one market after the other has peaked out or is in the process of doing so (domestic real estate the last to get the memo!).  Economy is crapping out as I type, but don't tell that to the statisticians out of Washington.  Too much debt burden everywhere to support incremental economic growth at this point, not to mention mortgage rates and interest rates headed higher with Default Risk and Inflation Risk now firmly back into the pricing formula for Debt.  The Bond Vigilantes are back in town.  The party is over in the financial markets.  Reality will be very costly for those who overstay these markets.

3.  The Fed is on a Quantitative Tightening binge that will drain $100's of Billions from the Treasury and Mortgage markets over the course of the year.  The Ten-Year Treasury is at 2.84% and counting, with 2.5% having been the critical level for labeling the bond market as being firmly in Bear Mode.  Mortgage rates are now up over 50 basis points since the last quarter of 2017 with a lot of marginally qualified buyers now knocked out of the box.  The Fed has never been known for astute timing or effectiveness of policies (Volcker & Martin the exceptions), so they are most likely trying to build a buffer into interest rates so they will have some room to lower rates at the next financial crisis that they finally see is just around the corner.  Taxpayer bail-outs as in 2008 will cause riots in the streets since Wall Street, not Main Street, has benefited from the grossly misguided Fed Policies of the last 30 years.

4.  The United States has descended into Political Dysfunction & Fiscal Collapse.  The spending bills being pushed out of our Pork Barrel Congress and signed by the Donald are adding Trillions & Trillions of Dollars to the National Debt over the next decade alone.  Already we have passed the $21 Trillion National Debt marker without either party making note of even the existence of the Country Crushing Debt Monster coming down the road.  The U.S. Dollar is now firmly in a bear market that is going to see the Dollar Index sink to 70 or 60 from around 90 today over the next two years.  Very bad for U.S. inflation, sales of U.S. Government Debt without much higher interest rates, and very positive for alternatives to fiat currencies, GOLD and SILVER.

 



THE PRECIOUS METALS LOVE UNCERTAINTY, LOSS OF CONFIDENCE, INFLATION, AND CHAOS.

Enough for now.  Need to take some aspirin to get rid of the headache this dire reality is causing me.  Maybe they should be Gold and Silver coated capsules, n'est pas?  U.S. buyers of Gold and Silver are on strike right now across the bullion industry.  They will wish they had purchased at today's prices when they had the chance.  If you want to live like a Rothschild, "BUY WHEN THERE IS BLOOD IN THE STREETS".


SAGE OF WEXFORD,  eventually even a monkey at a typewriter types a word.


 

  
PRIOR DEWDROPS OF WISDOM VIA "News From The Front"
 

 

News from the Front - ARCHIVE IV



 

The information and opinions contained within WCM's "News From The Front" have been compiled or arrived at from sources believed to be reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. Neither Wexford Capital Management, David W. Young or the Company's agents or assigns accepts any liability whatsoever for any loss arising from the use of this free newsletter or its contents. All periodic "ezine" articles posted on www.goldsilverbullion.com are strictly for informational purposes only. No statement or expression of any opinions contained within this electronic newsletter constitutes an offer to buy or sell any financial securities or surrogates mentioned herein. Readers are encouraged to conduct their own research and to perform extensive due diligence and/or obtain professional financial advice before making any investment decision, especially in the exceptionally volatile asset markets of today.  WCM's Principal, David W. Young withdrew the Company's Registered Investment Advisor status with the S.E.C. and the Virginia Division of  Securities in May of 2005 and no longer offers financial-asset managed accounts receiving continuous supervision of assets.  WCM's principal, David W. Young, was a Registered Investment Advisor in good standing from October, 1985 to May, 2005.  Furthermore, the company does not engage in any fee-based or compensatory provision of financial or investment advice.  The brokering of tangible assets sales via U.S. Rare Coins, Precious Metals Bullion, and Fancy Colored Diamonds is the sole business of Wexford Capital Management and the company cannot be construed under any measure as being in the "financial newsletter business".




 



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