May 29, 2017
Regular readers are familiar with Warren Buffett's activities
over the past few years. He has been hoarding dollars – lots and lots of
dollars. This was first brought to the attention of readers in
At that time, Buffett was already hoarding $50 billion.
With U.S. markets already at bubble levels and the rapidly
decaying U.S. economy already showing signs of serious strain, the speculation
in that initial article was that Buffett was looking forward to an imminent
collapse in U.S. markets – and a feeding frenzy with his mountain of vampire
dollars. After all, Buffett was already 83 years old, and his hoard of dollars
was already the largest of his entire career.
Who knew back then that the bankers would and could continue
to pump U.S. markets higher for another three years? Who knew that Warren
Buffett would still be alive to see it? Who knew that over the last three years
that Buffett's hoard of vampire dollars would
swell to $100 billion in size?
How and why could a “long term value investor” like Warren
Buffett ever end up with $100 billion investment dollars sitting on the
sideline? In a
from the Financial Post, Buffett shows that even at age 86
he can tap dance with the best.
The Berkshire chief executive
officer spoke at length Saturday about his failure to pounce on opportunities
in tech stocks, the challenge of lining up large deals, and his frustration
with a cash pile that’s approaching US$100 billion.
“We shouldn’t use your money that
way for long periods,” Buffett said of the cash during his meeting in Omaha,
Nebraska. “The question is, ‘Are we going to be able to deploy it?’ I would say
that history is on our side, but it’d be more fun if the phone would ring.”
Buffett sounds like some coquettish 16 year-old, hoping to be
asked to the high-school prom. Buffett's equity portfolio is valued at $135
$100 billion in cash, that means more than a 40% cash
component, an unprecedented mountain of cash in the history of Berkshire Hathaway.
If Berkshire Hathaway wanted to invest a few billion dollars
in some large corporation, it's not like Buffett and friends would see any
doors slammed in their faces. What's the
real reason that Buffett isn't
doing more buying? The same article sheds some additional light.
David Rolfe, who manages about
US$6.8 billion including Berkshire shares at Wedgewood Partners, said he wasn’t
surprised that Buffett is bummed out by the growing cash pile.
have been rising for years, making it harder to find attractive investments
“A run-of-the-mill bear market
could certainly solve the cash problem” by offering opportunities for Buffett,
It's not that Warren Buffett can't find any companies in
which he would like to deploy some of Berkshire Hathaway's (and his own)
vampire dollars. It's that Buffett doesn't want to
pay bubble prices for
When you're 83 years old, you don't have long to wait.
Apparently, however, the opportunity which Buffett's banker friends promised
him was worth waiting for – for at least three more years. The problem is that
no “run-of-the-mill bear market” can provide the Oracle of Omaha with enough
stellar opportunities to deploy a mountain of cash this large, not in the time
Buffett has remaining.
Buffett has named no successor. If he was planning on simply
stepping aside and allowing someone fresher/younger to deploy the largest
mountain of capital in Berkshire Hathaway history, Buffett has given absolutely
no hint of this. On the contrary, all of his public representations indicate
that he plans on spending these dollars himself.
When readers were originally warned that the Next Crash was
and told that the most likely time horizon was the spring of 2016, there were
several reasons for presenting that prediction. Among them was the Buffett cash
That prediction was obviously premature. Bubble valuations in
U.S. markets have grown even more absurd. The mindless parrots of the Corporate
media call it “the Trump rally”, despite the fact that all Trump has done since
getting elected is exactly what any sane observers expected. He has continued
to shoot off his mouth erratically and already managed to get himself involved
in several scandals.
U.S. markets recently rose again for six consecutive
sessions. What was the
given for the sixth day of rising markets?
S&P 500 and Nasdaq Composite opened at record highs on Thursday after
minutes of the Federal Reserve's latest meeting showed policymakers expected
the economy to pick up momentum and that they would raise interest rates soon
The U.S. economy is “so strong” that the Federal Reserve is
going to raise interest rates (when have we
before?). Higher interest rates are bad for the economy. Higher interest
bad for markets.
Back when these manipulated
were at least being manipulated in a rational manner, the
markets would have gone down on such news. Back when the Corporate media at
least feigned paying attention to such phenomena, this would have been
portrayed as “irrational exuberance”.
Oil prices have generally trended higher over the past year.
For more than 30 years; U.S. markets have always gone down when crude oil
prices go up. Why? Because higher oil prices are like a tax on the economy,
since oil is such an endemic input in modern economies.
This is especially true for the world's premier oil and
gas-guzzling economy, the United States. But when oil prices have been going up
in recent months, the U.S.'s bubble markets have been going up right along with
them. Why? Because higher oil prices are now (supposedly)
good for the
higher oil prices: Goldman Sachs
According to the new mythology, the U.S. is “a rising energy
superpower”. The energy sector accounts for about 6% of the U.S. economy. So
higher oil prices are good for 6% of the U.S. economy, and bad for the other
94%, but the U.S.'s bubble markets go higher anyways – and the mouthpieces of
the Corporate media continue yammering their absurd propaganda.
The U.S. is a consumer economy. The U.S. is currently in the
midst of the
of retail sector bankruptcies since right after the Crash of '08. What
will happen if the Federal Reserve actually does (finally) start raising
interest rates with this train-wreck economy? Ka-boom!
The U.S. retail sector is currently going through the largest
wave of bankruptcies in seven years because of
several years of weak sales
in this consumer economy. The U.S.'s bubble markets have continued to go higher
and higher and higher all of this time.
The disconnect between U.S. market valuations and the
actual fundamentals of the U.S. economy is far, far greater than at any other
time in history
. Worse than in the Crash of '08. Worse than in the Dot-Com
Bubble. Worse than in the Crash of '29.
This is why Warren Buffett is sitting on a $100 billion hoard
of vampire dollars. And since Buffett clearly plans on spending those dollars
himself, this means that the Mother of All Crashes is coming soon. That's what
Buffett's mountain of money is broadcasting to anyone who is paying attention.
The Mother of All Crashes will take down almost all asset
classes with it. The one possible exception will be
Western bond markets
, where no legitimate trading has taken place
since at least 2008.
Even though these worthless bonds have already been
manipulated to record highs, they will likely be pushed even higher when the
Crash arrives. This will be to fuel the equally fraudulent narrative that
“investors are fleeing to bonds”.
As readers have also been warned,
precious metals will almost certainly get caught up in the wake of this Crash (assisted
by all the malicious might the One Bank can summon). So why favor precious
metals as our Safe Haven, despite knowing the bankers will attack these
Western currencies are worthless.
Western bonds are worthless, the IOU's of bankrupt nations.
Western equities are at all-time highs.
Western real estate is at an all-time high.
are already at extremely depressed valuations. Beyond
this, gold and silver have a 4,000 year track record as a bellwether asset
It was because of these factors that gold and silver (and
gold and silver mining stocks) rallied far harder and far faster than any other
asset classes following the Crash of '08. They will do so again.
The Dow just hit 21,000. The NASDAQ just hit 6,000. The Buffett cash hoard has just hit $100 billion. The only way things could get any more obvious would be to see the vultures already circling in the air.
Jeff Nielson is co-founder and managing partner of Bullion Bulls Canada; a website which provides precious metals commentary, economic analysis, and mining information to readers and investors. Jeff originally came to the precious metals sector as an investor around the middle of last decade, but with a background in economics and law, he soon decided this was where he wanted to make the focus of his career. His website is www.bullionbullscanada.com.
The views and opinions expressed in this material are those of the author as of the publication date, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.