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Microstrategy or strategy, you know, I again, it should be called microstrategy, but it's called strategy. Strategy shares fell 30 % this week in one week. 30% reduction. 32% off from my podcast on June 5th. So, they held up fine for the first two weeks, losing only about 2% so that Saylor could restore the yield or raise the price to 100.
So, his investors are not losing money because he promised them they wouldn't. He should raise the dividend, but they've already had a hard time convincing the markets that they can pay 11-12. If they had to increase the yield to 13, 14 or 15%, that would compound the problem because now you have a bigger obligation, ahem, under the "Strategy"; because now " Strategy" must pay even more income than it does not have.
And what I knew now was that they couldn't sell more with a stretch anymore, because the only way to sell more with a stretch was to raise the price to 100, but he couldn't do that without significantly increasing the yield. Peter Schiff says gold and silver have taken a big hit this week , with gold briefly falling below $4,000 and silver collapsing below $60, but calls it the most oversold sentiment in years.
He claims this is the bottom, citing Greenspan's own criteria for gold, based on the Fed's criteria, and says silver is headed for $120 and above. And when gold was below 4,000 and spent two days during the week trading below 4,000, on Wednesday and Thursday, sentiment on gold became very negative, and it oversold like it hadn't in many, many years.
It's more of a fact, I think it's more oversold now than it was overbought when it was at 5600. So, I think this negative sentiment that reached these stops, you know, there's a good chance that that's what bottomed out this decline. Uh, silver, you know, never went down to 50. I don't expect it to go down to 50.
And honestly, I didn't think it would go down that low. Uh, but it went down. But given the context of the bull market, the price of silver at $59 compared to where it was a year ago, that's a huge bull market. This is a big breakthrough. Yes, silver has fallen more than 50% from its peak, but it tripled before the fall .
So the price of silver went up in a way that I've never seen in my career, going from 30 to 120 in a very short period of time. So the fact that it pulled back, and again , the catalyst for the pullback was the war. The war started, and it was "buy the rumor, skip the fact" because part of the reason precious metals rose was the expectation of war.
Then the war started, and it was already overbought, and we had to "buy the rumors, skip the facts." But the recent subsequent decline has been related to Kevin Walsh and the perception that he's some kind of super-hawk, that he's the reincarnation of Paul Vulcar. This is not true. And all these talks, all these tough talks, are just talks.
I don't know if the Fed is going to raise rates at all . The market is now predicting two or three rate hikes. But that's a quarter point rate hike. Even if we get them, they are too little and too late to actually bring inflation down to 2%. They need much more aggressive interest rates, which are not going to happen.
But I do n't even know if these raises will happen . And so the markets, gold and silver, are pricing in a rate cut that will probably never happen. We will have , I mean , rate increases. The market is factoring in a rate hike that will not happen. And so this is a great buying opportunity. Yes. Both gold and silver fell this week, but they are completely different assets.
And one of them is shopping. Gold and silver. Bitcoin is just air coming out of a bubble. So what are the options for people who are still in Bitcoin, either in strategy or in stretching? You can sell and then you can take your money and you can buy gold and silver which also fell because Bitcoin will not rise to reach a new high of 120,000 from 60,000.
But silver can easily go from $60 to $120. So you will get your money back even if you bought 120,000 bitcoins. You don't have to pay back this money in bitcoins. You can get out of Bitcoin, take tax losses, pocket them, and maybe even file a lawsuit if...well, if you just bought Bitcoin, I don't know, but if you bought Strategy, you can.
But you get your tax losses and now you buy some silver. And when the price of silver doubles to its old high, you'll be broke, right? Instead of losing more money. And I don't think silver will stop there. I think silver is still far from over. I think 120 will just be a stop on the way to 200 over time.
Uh, so, uh, you can make up for your losses on cryptocurrency, uh, and fool's gold by taking on real gold. I criticized Stretch's marketing strategy from the beginning because I called it a Ponzi scheme, which is exactly what it is. Because the mechanism for paying dividends, 11-12%, uh, you know, coupon or preferred dividends, was not income that Strategy generated as an operating company, because Strategy did not generate any income; it is actually unprofitable.
There's a tiny software business under the pile of bitcoins, but that software business can't support, uh, I don't know, 12 trillion, 15 trillion, uh, preferred, plus there's another five, I mean, 15 billion preferred, and there's another five or six billion of convertible debt . I'm not sure of the exact numbers.
Uh, but the software business can't support that at all . And the money that Strategy was counting on to pay its dividend obligations to preferreds was supposed to come from selling a larger number of preferred shares . This sailor would continue to issue more preferred shares through Strategy . And as he raised money, he would use some of that money to pay dividends on preferred stock and the rest to buy more bitcoins.
And he would continue to do so, increasing his number of bitcoins per share and raising money by selling Stretch. And the reason why Saylor claimed that he could do this, that he could afford to pay 11.5%, was because Bitcoin would grow by 30% per year. And since Bitcoin is growing at 30% per year, he could afford to give the first 11.5 % to Stretch and remove all the volatility.
In fact, everyone is expecting a big Bitcoin surge to save Sailor. Where will this growth come from ? If Bitcoin couldn't go up when Strategy was buying up all that Bitcoin, then how the hell is it going to go up when they stop buying it or when they have to sell it? And the more Bitcoin falls, the more Stretch falls, the more Strategy falls , the more losses investors suffer, which means more investors file lawsuits, and the lawsuits involve more and more money.
You will have tens of billions of dollars of money that Strategy will owe to investors in these class action lawsuits. In fact, just the other day, it seems like yesterday, a law firm came out and said, " Yes, we're organizing a class action lawsuit against Strategy." And I expect there will be more, well, lawyers , you know, because every time people lose a lot of money, well, you know, it's like, you know, sharks smelling blood.
They all match. Eh, it's a win-win situation. This is an easy win-win situation if you phrase it correctly . While the plaintiffs agree that they bought it thanks to Saylor's statements. It was Sailor who convinced me to do it. These were his statements. Uh, that's why I bought it. You will win. So when investors realize that these liabilities will accumulate, it will be another reason to sell Strategy.
Greenspan's arrogance was that he believed he could use his own judgment to create a de facto gold standard. And that's exactly what he said he was doing. When he testified before Congress and was asked about the gold standard, he said he used gold as his primary indicator. He said that if the price of gold rises to $400 an ounce, it means I am too loose and I should raise my rates.
If gold falls below 300, I'm too tight and I have to lower my rates. So he argued that although officially we weren't on the gold standard, unofficially we were because he was using gold as a way to know whether his interest rates were correct or not. Because how can you know that? You just can't guess.
You need some kind of market indicator. And Greenspan said that the best indicator of whether you have interest rates too high or too low is the price of gold. Well, if 4,000 meant it was too loose, what do I mean, if 400, if $400 gold meant the Fed needed to raise rates, what does $ 4,000 gold mean now ?
This means they really need a raise. They're way behind the curve, aren't they? Based on Greenspan's criteria, the Fed needs, you know, massive rate hikes, quantitative easing. So he was the best at understanding, but he still made these mistakes. He still chose inflation over the alternative . When the stock market crashed in 1987, Greenspan chose inflation, right?
So if a guy like Greenspan is a gold digger, when it comes down to it , if he chooses inflation, why would Wars be any different? He is not like that . Bitcoin fell just 8.3% this week , and sales of the strategy fell 18%. Michael Saylor told people that the strategy has no volatility whatsoever . That it was removed.
That if you are willing to take the risk, you buy Bitcoin. If you don't want to take the risk, you just take the confidence with your 11% return and buy Stretch. Stretch actually fell more than Bitcoin, despite the promise of no volatility. And since my podcast on June 5th, it has fallen by 20%. Hmm, so most of the drop happened this week, but it fell 20%.
Although Bitcoin was growing. The reason these stocks fell this week is because Bitcoin stopped going up and started going down. Believe it or not, the low of the day on Stretch was 71 and a quarter. This is a drop of 28.75%. Someone sold it there, and that person may have bought it for 100 a few weeks ago and now has lost 28% of their money.
That's more than two years of dividend income. So some conservative retiree who believed this nonsense, who wanted 11%, buys this a month ago. Maybe he only received one dividend. Now they pay every two weeks. So, you probably got a couple of small dividends , but now it has lost dividends for over two years.
In fact, if you don't sell the stock and own it now, it will take you two years of collecting those dividends to make your money back, even if you want to sell it. Well, what I meant to say then is, why would shareholders want to be sacrificed in this way? Hey, I'll let someone else be sacrificed, but not me.
If this is a new business model, I'm walking away. Because the reason the strategy belonged to the people was because it generated positive returns for Bitcoin. He was increasing the price of Bitcoin per share. If he's going to reduce the price of Bitcoin per share, even if you like Bitcoin, why do you like it?
You would simply sell your strategy and buy some Bitcoin yourself. So at least you would have kept your Bitcoin instead of, uh, a sailor sacrificing it to prop up the price. Just own Bitcoin and avoid being a victim. So I knew that sales like that would further undermine the strategy. And then, the more the strategy falls, the more Bitcoin it loses every time it sells shares to raise cash to pay dividends or buy more Bitcoin.
And I knew that a weak strategy would turn into a weak series. And it would all be like a self-reinforcing spiral that would eventually spill over into Bitcoin itself, which is what happened, because now everyone knows that Saylor is selling Bitcoin, and he will be the main seller the more the stock falls.
In fact, at some point his shares will be so cheap that they will trade at such a huge discount to their net asset value (NAV) that there will be no justifiable way , especially when he is already being sued by shareholders, to do anything that will strengthen the case of the people suing him because he is intentionally destroying shareholder value in order to prop up the price of Bitcoin.
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