A curious mystic
The mystic's cry, "Ware the Bay!" is referenced by several other automated NPCs, as well as mocked by drunks crying, "Bare the Way!"
Behind the Scenes
While Mystics were never a playable character class, they were what we would now call Elemental/Mentalism hybrids. Their spells often focused on misdirection, including the ability to completely submerge their identity within a false persona, as well as utterly misrepresenting reality. Mystics also had powers of manipulating materials and transmutation.
His cryptic statements were actually subtle allusions related to the recent local history of The Unlife. That he was a mystic suffering from dementia was an allusion to the fate of Zenon, whose memory was wiped by the ruling mystic of Quellburn. "Silver mist" was the colloquial meaning of Quellbourne, the local name for what is now the Darkstone Bay region, thus making his prophecy menacing. "'Ware the Bay!" is most likely an homage to Lord of the Rings, when Galadriel warns Legolas to "Beware of the Sea", because if lured by it his heart will never return to its true calling.
"Terror rides the sea like the wind!" refers to The Iron Wind, the original power behind a certain nameless society of his association, with the specific order that destroyed Quellburn having been the cult of the snow lion (hence the question about his cat.) The cult behind the society is more likely the one modeled on dragons, with his quote implying the Dragonlord Oran Jatar from Mur Fostisyr. (The Loremaster Elor Once Dark once famously described Oran Jatar as a "terror beyond even the Ordainers", and that facing him was one of the only times in his life he knew true fear.) They were based on a large island to the north-west, across the Bay to roughly where Ruin Creek was put in the modern history. The younger days was an intentionally odd statement, because Kelfour's Landing was supposed to have been recently built. Before that there was only the destruction of Quellburn by servants of the Unlife, and the earlier destruction of Ugus Fost and the Blue Forest by The Iron Wind.
This unusual fellow is dressed in long flowing robes and a pointed hat. He looks almost comical except that his old face is caught in serious concentration on a shard of crystal he clutches fiercely in both hands.
"Seek your destiny in the bathhouse," whispers the curious mystic. "I entrust you with this great secret. Speak not a word about it to others."
YOU RESOLVE TO REVEAL WHAT YOU HAVE LEARNED TO NO ONE ELSE!
A curious mystic arrives, still looking deeply into his crystal.
A curious mystic murmurs softly as he peers into a crystal, "Mist, mist. Nothing but silver mist. Perhaps it will clear later."
A curious mystic looks into his crystal and declares, "'Ware the Bay! Terror rides the sea like the wind!"
A curious mystic laments, "No one remembers the younger days."
A curious mystic pats you fondly on the cheek and says, "You've great potential in you, my child."
A curious mystic asks, "Have you seen my cat?"
A curious mystic goes west.