Freedom Ain't Free
Rich man, poor man, we all gotta pay.
Live from the other side, what you see?
A bunch of nonsense on my TV
Heaven on Earth is what I need
But I feel I'm in Hell every time I breathe
'Porting live from the other side, what you hear?
A bunch of nonsense all in my ear
Rich man, poor man, we all gotta pay
'Cause freedom ain't free, 'specially round my way
Wise words from a terrific emcee. Chicago’s-own, Lupe Fiasco.
Bye, Felicia
Dianne Feinstein died last week. She was 90 years old. Up until her official passing, her body was still holding a seat on the US Senate. Her mind? Up for debate. I don’t have much to say about this beyond the sentiment I’ve already shared about our geriatric government before. Is 70 too old? Maybe. Is 80 too old? Yes. Is 90 too old? Burn. It. TF. Down.
That’s a joke! I’m not a dOmEStiC tErRoRiSt….
But it’s not even age that made Dianne Feinstein unfit for office. The quote below is from a post on Twitter X by former UN weapons inspector Scott Ritter:
I met Senator Diane Feinstein once, in the lead up to the 2003 invasion of Iraq. She had just recently been assigned to the Senate Select Committee on Intelligence (in 2001), and it was in that capacity that she had a senior staffer from the committee ask me to come to Washington DC to brief her on Iraqi WMD and the allegations being made by the Bush administration that Iraq continued to possess them. We met in a secure conference room in the Capital building—me, the Senator, and a half dozen staffers and aides. It was a polite, professional affair, with the Senator asking questions and taking notes. Eventually she confronted me—“Your position is causing us some difficulty. You are making the US look bad in the eyes of the world.” I replied that my analysis and the underlying facts were rock solid, something she agreed with. I said that while I knew she couldn’t reveal sensitive intelligence, if she could look me in the eye and say she has seen unequivocal proof that Iraq retained WMD, I’d shut up and go away. She looked at her retinue, and then me. “I have seen no such intelligence,” she replied. She thanked me for the briefing, and said it provided her with “food for thought.” On October 11, 2002, Senator Feinstein voted in favor of the resolution authorizing war with Iraq. Later, she said she had been misled by the Bush administration and bad intelligence. I will forever know Senator Feinstein as someone who had been empowered by the truth, and lacked the moral courage to act on it. The blood of thousands of Americans and hundreds of thousands of Iraqis stains her soul. I hope when she stands in judgment before her maker, she is punished accordingly.
Bold my emphasis. Look, assuming this story is true; I don’t know if it’s possible to find a more scathing critique of someone’s moral compass without using profanity. But back to age for a moment…
Nothing might exemplify the age gap in technological competence quite like what we just witnessed last Wednesday at the House Financial Services Committee hearing on the oversight of the Securities and Exchange Commission. While the usual suspects tried to pretend the only people using crypto are scammers and drug dealers. Cooler heads tried to prevail.
An Ode To Ritchie Torres
Look, as is true with absolutely every politician, US Rep Ritchie Torres is not great on everything. But as it pertains to crypto and rULe oF LAw, his total disobedience from his party line is highly refreshing. After somewhat hilariously grilling SEC Lord and Chairman Gary Gensler on just what exactly constitutes and what doesn’t constitute the definition of an investment contract, Torres got right down to it. This exchange is telling:
Torres: Suppose I would have purchased a Pokémon card. Would doing so constitute a security transaction?
Gensler: You could purchase a Pokémon card. I don’t know what the context is. But if you’re just purchasing a Pokémon card out of a retail store, that’s not a security transaction.
Torres: Okay. If I were to purchase a tokenized version of a Pokémon card on a digital exchange via blockchain, is that a security transaction?
Gensler. I’d have to know more.
Torres: So for you, the process of tokenization transforms a non security transaction into a security transaction? I thought you were technology neutral?
Gensler: If the investing public is anticipating profits based on the efforts of others and they’re exchanging funds…
At that point, they started talking over each other and it was difficult to decipher what Gensler said. Torres was done. Brave souls can watch the entire hearing here via ScrewTube GOOG 0.00%↑ . Torres’ time started a little after the 2:12:00 mark. All I can say is, I absolutely love that Pokémon cards is the route Torres went with his time.
It’s almost like Torres reads this blog or something (he probably doesn’t) because the physical collectible analog is a point that I’ve made again, and again, and again. Simply digitizing collectibles does not immediately make them securities. The fact that Gensler said “I’d have to know more” after saying buying physical Pokémon cards from a retail store would not be an investment in a securities contract is an indication to me that Gensler might be trying to have it both ways.
Per Gary, The Pokémon Company distributing physical Pokémon cards through a retail store is fine, this much we know. However, the Pokémon Company distributing digital Pokémon cards (NFTs) through a public blockchain may not be fine. Why? Because, in Gary’s words, there may be an expectation of profit based on the efforts of others and funds are being exchanged.
But this also true of the Pokémon cards in physical form.
I don’t understand how Gensler isn’t seeing it. And I’m not alone. Torres’ reaction was telling. The reality of the situation is when the Pokémon company generates a profit from selling collectibles and the earnings from those sales are invested into expansion efforts or other product lines, it doesn’t matter if the creature pictures are on cardboard or on a computer screen; it is ultimately the same thing. And it shouldn’t be difficult to get somebody as high up in government as Gary Gensler is to understand this.
Frankly, the fact that we have a 35 year old US Representative even having a conversation with a sitting SEC chair about Pokémon cards during a financial services hearing is telling. Gensler’s SEC has gone way beyond the scope of what it should be focused on. And really, it’s worse than just overstepping. The agency has also been bad at regulating. Gensler’s SEC had no problem siphoning a 7 figure pittance from Stoner Cats and Kim Kardashian yet was completely asleep at the wheel when Sam Bankman-Fried stole billions from his clients and gave those ill-gotten capital to two thirds of Congress.
I mean Jiminy Christmas read that sentence again and try to tell me these guys are serious. I would say we need to vote Gensler out of office. But we can’t. He isn’t elected. All we can do is worry about what we can actually control and one of those things that we have the power to do as individuals is hedge this outrageous system with real world assets.
At Least The Metals Are On Sale Amirite?
A week ago, Gold was almost $100 per ounce higher than where it currently is. The selloff has been absolutely relentless. 6 consecutive red candles from a $1,925 close Friday September 22nd to $1,835 this morning. A 5% single week puke in a market like Gold is not unheard of but it’s far from fun if you’re a metal holder.
Here’s the thing though, these kinds of massive dumps are the reason why I ALWAYS keep some powder dry in my larger investment accounts. Unless you believe the Gold holders woke up last week and suddenly started caring about positive real yields (they didn’t), this move doesn’t make a whole lot of sense beyond being a stop hunting washout dump or a hedge fund aggressively shorting the market. According to Craig Hemke from TF Metals Report, 87% of this move down in Gold over the last week has come during open COMEX hours. Then there is this gem from Tom Luongo:
Gold is always the FIRST piggy bank raided in a margin call. Then it becomes the asset of choice when the real panic starts.
I think days like this one are terrific for tactical trading. The RSI-14 on Gold is under 22. It’s currently more oversold than it was during the COVID crash. For me, these kinds of futures-contract washouts are great days to try to buy physical metal if you can find a shop or dealer with low premiums. Anyway, these are my thoughts on a brisk Monday morning. Take them for what they’re worth.
Disclaimer: I’m not an investment advisor.