The Election's Already Over

  • Debate night: The 5 answers the call of civic duty
  • David Stockman says the campaign is over… and the collapse is about to commence
  • How to join Stockman’s inner circle — and get his new book — for only $4.95
  • Gold stocks: The (very) long-term perspective
  • Why is Warren Buffett rising to Donald Trump’s tax bait?
  • A new front opens in the War on Cash… a reader inquiry about retirement account fees and new federal rules… Mark Cuban’s gullibility… and more!

Mindful of how the first presidential debate went, my wife and I settled in after dinner last night to perform our rightful civic duty.
We watched our Green Bay Packers host the New York Giants. Pretty good game; the Pack’s offensive line made all the difference.
The second debate, you wonder? As with nearly everything else campaign-oriented this year, I followed events almost exclusively through the Twitter feed of freelance writer and VICE contributor Michael Tracey. It’s about the only way I can retain my sanity…

Michael Tracey

The man has a point: The Second Vermont Republic is as close to a viable secession movement as exists in these United States.
And we daresay Mr. Tracey is not engaged in hyperbole when he speaks of “collapse.” Not after seeing the post-debate missive from our own David Stockman this morning.
“The 2016 election campaign is over,” he writes this morning at his revamped, subscriber-only Contra Corner. We felt it was worth giving you a peek behind the paywall.
“The establishment media have destroyed Trump’s candidacy — not by refuting a single issue in his indictment of the status quo but by destroying the entirety of his already flawed character.”
Yep. Was there anything we didn’t already know about Trump’s character before The Washington Post put those interview outtakes online late Friday?
Doesn’t matter: The effect amounted to assassination by media, says David: The Post took out Trump “not because of his potty mouth and sophomoric locker room braggadocio, but because he dared challenge the War Party neocons who rule on the say of the poobahs who inhabit the Post’s editorial suites.”
And so it goes with the elite governing and financial classes — which nearly to a person have fallen all over themselves signaling their virtue this year by denouncing Trump.
The unanimity is breathtaking… and vociferous to the point of descending into parody. From an NBC “fact check” after the debate…

NBC News

Little wonder the elites are circling the wagons, says David: “For 30 years, they have mired the nation in war, debt, rampant financial inflation, economic failure and the suffocating rule of the Imperial City.”
Trump threatened their rule. He had to be destroyed. Fortunately for them, he was a fatally flawed candidate and made himself an easy target.
But what now? “The next four years are destined to become a time of epic financial, economic and political failure,” says David.
“The blame will fall directly on President (nearly elect) Hillary Clinton and our current ruling elites.”
Here’s the good news: David sees a massive political realignment materializing from that failure. “The chance is at hand for the ashes of economic and political failure to burn America’s own Leviathan down to size.
“Indeed, from the grand political realignment now possible, there could emerge a new party of peace, prosperity and liberty. Just imagine that — a fresh-start party stripped of the neocon warmongers, the social-con morality police and the legions of beltway bandits and racketeers that populate both parties.”
The problem is what happens between now and then — “the current drift toward fiscal bankruptcy, war with Russia and a thundering collapse of the Fed’s giant financial bubble,” as David describes it.
In other words, the collapse that would make the Second Vermont Republic look quite attractive, heh.
David warned about two of these dangers — the war with Russia part is a more recent development — in his massive 2013 tome The Great Deformation.
Now he’s out with a shorter book called Trumped!: A Nation on the Brink of Ruin… and How to Bring It Back. Publication is set for Friday. The price at Amazon has just been discounted to $18.
But because you’re an Agora Financial reader, you can get a copy today for only $4.95. Your copy will include a special bonus chapter with specific investment advice shaped by David’s decades of experience in Congress and in the Reagan White House and as an investment banker.
You’ll also get a 30-day trial to David’s daily Contra Corner emails… and instant access to a model portfolio to see you through these coming turbulent times. You can examine all the privileges and benefits of Contra Corner — and get your $4.95 copy of Trumped!when you review this invitation from David. There’s no long video to watch.
Trading is thin on Wall Street, it being one of those days when the market is open even though it’s a federal holiday.
The major U.S. stock indexes are all up a half-percent or better. The Dow rests at 18,349. Treasury yields are flat, the 10-year at 1.72%. Gold is holding steady after a late-day recovery on Friday, the bid now $1,258.
The big mover is crude, up nearly 3% at $51.28 — after Saudi Arabia’s oil minister said a jump to $60 in the near term is “not unthinkable.” Too, there are rumors Russia is on the verge of joining OPEC’s plans to trim production.
Maybe there’s something to it, but we caution that all of this is so much arm-waving until OPEC has its semiannual meeting at the end of next month. Then we’ll know who’s all-in.
In thinking about gold and gold stocks, it might help to examine the long term. Very long term…

Gold Stocks

Gold stocks doubled from the bottom late last year to the peak over the summer. So where from here?
“My view is that the bull has far yet to run,” says Byron King, senior geologist for Rickards’ Gold Speculator. “Why shouldn’t the gold bull continue, even with up-down interruptions along the way? Let me count the ways:

  • “We have a world of stagnant growth: Japan, China, EU, North America, developing markets
  • “The world is awash in massive and unpayable debt: U.S., China, developing markets and more
  • “We’re staring down the barrel of major shifts in monetary power. There are looming changes in how things work at the International Monetary Fund (IMF) and with special drawing rights (SDRs)
  • “Broad political uncertainties: the U.S. election, Brexit and the future of Europe, breakdown in governance across the Middle East and North Africa, rise of Russia and China as global powers
  • “Winds of war: Eastern Europe, Middle East and North Africa, South China Sea, Korea and others.

“Looking ahead,” Byron concludes, “my money is on a continued run for gold and mining shares. Sooner or later, pre-election or post-election, we’ll shake off the dust of this week’s sell-off and be back in the race.”
Why is Warren Buffett feeling so defensive?
“Warren Buffett Fires Back at Donald Trump’s Comments About His Taxes,” says an alert from CNBC.
“Remark” would have been more appropriate than “comments.” Buffett’s name came up during the debate last night in the course of a typically Trumpian word salad. Here’s the “context,” if that’s what you can call it…
“First of all,” sayeth The Donald, “I pay hundreds of millions of dollars in taxes. Many of her friends took bigger deductions. Warren Buffett took a massive deduction, Soros, who’s a friend of hers took a massive deduction. Many of the people that are giving her all this money so that she can do many more commercials than me, gave her — took massive deductions.”
Buffett felt compelled to issue a statement rattling off a few figures about his 2015 return, with an adjusted gross of $11.6 million, on which he paid $1.8 million in federal income tax. “Returns for previous years,” he allowed, “are of a similar nature in respect to contributions, deductions and tax rates.”
Why Buffett would feel compelled to give Trump’s remark the time of day we can’t say. Guilt pangs over how his darling Wells Fargo opened bogus accounts in the names of real customers?
We’ll leave the amateur psychologizing to others. But we have to point out that when it comes to the super-rich, income taxes tell only a small part of the story.
If you’re a longtime reader, you’ll have to forgive our regurgitating a key passage from the 2009 book Endless Money, authored by our acquaintance Bill Baker at Gaineswood Investment Management.
“Tycoons such as Soros and Buffett can call for higher taxation of income,” he wrote. “This is a very cynical and downright mendacious strategy, for they know full well this burden would fall primarily upon members of the upper middle class, who have not yet achieved the threshold that would permit them to shift income to tax-minimizing structures…
“Once a certain threshold of wealth is achieved, taxpayers have some latitude in structuring when and where income originates.”
Thus, Google executives Larry Page and Sergey Brin “pay themselves just $1 in W-2 income,” Baker wrote, “but each year, they may accrue millions or even billions of dollars of unrealized capital gain.”
Buffett isn’t quite so obvious about it… but even then, he’s paying an effective tax rate of 15.5% on his adjusted gross — not too far off the mark of what many in the upper middle class can pull off.
“Regarding the reader who couldn’t get cash out at his bank four days prior to Matthew,” begins today’s mailbag: “Good that you had some cash stashed, but also consider it might not be a bad idea to have some small gold (10th-ounce) and silver one-ounce coins on hand.
“I’m sure in an extended crunch they’ll be accepted in many, if not all, places. In the meantime, you might get some appreciation from your coins but probably not your cash.
“Please comment,” adds the same reader, “on the Merrill Lynch announcement that all retirement accounts will be fee-based beginning next April.”
The 5: Other brokerages might well follow Merrill’s lead, driven by federal regulations that kick in, as you say, next April.
Aside from that, there’s little to say that we didn’t say more than a year ago when the rules were still on the drawing board. (Scroll down to the “timestamp” at 02:50.)
Back to the War on Cash: A reader writes, “I just got a rule change from Wells Fargo in the mail, stating, among other things, that as of January 2017, they will no longer offer ‘CASH’ from their charge cards.
“So even though these banks were charging 25% or much higher for interest rates, they aren’t going to allow any more cash advances. It sure sounds like the kind of thing that Jim Rickards has predicted — stopping people from having any access to cash.”
“Ha! I knew Mark Cuban wasn’t so bright!” a reader writes after Louis Basenese mentioned on Friday that Cuban was among the luminaries taken in by Theranos CEO Elizabeth Holmes’ song-and-dance.
“Good! So tired of his smugness acting like he knows everything, including presidential politics.”
“So Mark Cuban was taken in by hype,” says another. “What’s that say about his choice to support Hillary? Guess Trump’s right to call him ‘dopey Mark Cuban.’
“P.S. I figured out how to read your issues in 5 Mins. or less — recognize the lead-in to the sales pitch and skip ahead. But this only comes with years of familiarity from reading all you guys. Which I have. Keep up the good work. Love The 5.”
The 5: If we’re offering you knowledge — if not necessarily wisdom or truth — above and beyond the sales-pitch aspect, then we know we’re doing our job. Thanks!
“The truth is that the media are scared s***less of Trump,” a reader wrote in before we began assembling today’s episode.
“He violates everything media people have been taught in the ivory tower universities they attended. He often says what he thinks, without self-censorship, and such honesty is beyond the ability of media people to understand. They will do anything and everything to defeat him.
“I don’t like him, but he is looking more attractive to me every day as the only real alternative to the slinky triteness of Clinton. I was going to waste my vote on Johnson, as a protest, but may change my mind and go for Trump. I don’t trust the media when they get past the nuts-and-bolts data — and suspect they even mold that to spread their doctrine.”
The 5: We suspect you’re far from alone.
That said, David Stockman believes if Mrs. Clinton is indeed the shoo-in now, the best thing that can happen is that as many people as possible either stay home or vote third party — the better to deny her any claim of a “mandate.”
Not that it stopped her husband from claiming one after he got only 43% of a very weak turnout in 1992. Heh.
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. Early-mover advantage if you want your $4.95 copy of David Stockman’s new book Trumped!: Act within the first three hours of today’s 5 hitting your inbox and you’ll have the chance to listen in on a subscriber-only conference call with David; it’s at 7:00 p.m. EDT tonight.

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

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