Making sense of Junk bonds, Gold, and skyrocketing Insurance Premiums

Originally published at: Making sense of Junk bonds, Gold, and skyrocketing Insurance Premiums. – Peak Prosperity

The signs of economic weakness are spreading rapidly across the US landscape. The ISM services came in weaker than even the depths of the Covid debacle, housing and autos are stagnant (if not frozen in several markets), and inflation continues to eat into family budgets crushing consumer sentiment. At the same time, junk bonds (CCC) are busy sneaking out the back door, which is usually an early indication of financial difficulties being right around the corner.

Yet stocks serenely float ever higher. So, what gives?

In this week’s episode Paul Kiker and I discuss all of these issues and many more including the fact that central banks are openly and transparently buying gold while telling everyone about it.

To say the least, this is unusual and we should all endeavor to understand what’s really being said and take steps accordingly.

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“To do what you believe is right has career risk in the financial business”.

Chris, I love that quote. It also applies to all other aspects of life. Thanks for remembering that Hussman’s quote.


In the world of economics I’m a little field mouse. But I’ve been watching what the Brontosauruses and Tyrannasaurs are doing with their assets (i.e. buying gold and bringing physical gold home from far away places). I don’t know exactly what’s going to happen, but I’m copying them. And I expect to survive the imminent catastrophic meteor strike.

We retired to Concord, NH and built a house in 2019. Our house has appreciated about 60% since then. Last year labeled Concord the hottest residential real estate market in the country. It still is I suppose. Most houses get a signed sales contract in three days or less after listing at 10-20% over asking price. Some sales go to buyers who never physically see the house. They make a winning offer based on the internet listing. “Unfortunately” we’re where we want to be when The Collapse occurs, so the only way to capture the appreciation in our no-mortgage house would be to sell and leave. :disappointed:

Has anybody considered the Falkland Islands or Saint Helena Island?


Sven nails the corruption…again:

Even an old pro like Sven has started to use quote marks when writing the word ‘market.’

I love it!

Ha ha hahahaha!

The world is starting to catch up to my view of things. :slight_smile:


Paul, Some experts could be arrogant, but many could be brainwashed or in it for their paycheck without thinking beyond that. They are self important and say things to look good amongst their peers, at any level. They see themselves with power and success. We are the ones who interpret that as arrogant. New information doesn’t mean anything to someone who is repeating someone’s conclusion or a sound byte. Only a critical thinker can add new information and change their conclusion.

The other side is the listeners. Many just don’t have the mental energy to apply critical thinking so they turn to anyone to tell them what to do. It is a feed back loop that has been created in our current society with fear and greed that has been going on for eternity. Satanists prey on everyone they can. We are their sacrifices so they can live on forever. Heaven on earth can only be when more people will stand up against wars, money, power, and slavery… In the meantime Heaven is somewhere else.

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We couldn’t believe a word on the news about Biden’s mental state for years, and now that dam has cracked. I think the same will happen in economic news. Right after the election is my guess, but in any case it has to be soon. The effects of inflation are right there on everyone’s household budget, the same way that Biden’s blank stare is right there on everyone’s news.

Also, the comments about the Connecticut insurance company being put into rehabilitation made me picture the scene from the movie Idiocracy. Couldn’t stop smiling through that segment.

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While some insurance companies may be having to compensate for CRE losses, State Farm is a mutual insurance company, think Credit Union for insurance. They publish their results:

The document in the above link says:

Homeowners, CMP, Other – The net written premium for the remainder of the State Farm P-C business represented 35 percent of the P-C companies’ combined net written premium. Earned premium was $30.5 billion. Incurred claims and loss adjustment expenses were $28.0 billion and all other underwriting expenses totaled $7.1 billion. The underwriting loss was $4.7 billion.

Comparable 2022 figures were: earned premium, $27.6 billion; incurred claims and loss adjustment expenses, $20.0 billion; all other underwriting expenses, $6.7 billion; underwriting gain, $849 million.

So it does look like they underwrote more than they took in as premiums. Now you can ask why? My guess is primarily inflation causing much higher costs to rebuild properties.

While companies need to fail based on their actions, when your in an industry that is highly regulated by politicians, I find it a lot harder to blame the company when their businesses are beholden to the actions of regulators who dictate prices not based on the market or actual risk but on how they look to voters.