So I look at Twitter yesterday going nuts on this report from Andy. I have no reason to doubt Andy, as everyone in the industry says great things about him. But I’d like to unpack some of this.
At the bottom, I pontificated this is Alice Walton. This is a GUESS.
Background – bonds and stocks getting killed
Last summer – everything that is pretty much happening now was evident to happen and I wrote about it here…the one variable in the whole equation off was the DXY kept going up, and me and many other thought it was going to roll over around 97. That being said, most everything else has unfolded with the rates.
So with that, we still are seeing gold and silver languish. Metals keep getting punished. But I still would like to ask the question I asked in this piece. At 17% inflation (or even 9% as CPI listed), why would you buy a 10yr at 3%? I would not. The ONLY reason you would is you believe in the gaslighting that inflation is temporary and they will get back to 2%. As each month’s CPI has continued to be over 8%, that fairy tale starts to become less reality, and with this, you could see how bonds can sell off as CPI continues to be hot. This, as nations like China and Saudi Arabia dump our debt.
And apparently all of the 60/40 portfolios are now losing money. As I wrote about above last year we would see this.
I do not have a crystal ball, for sure, but math kinda sorta dictates that it is stupid to buy something with cash that yields 3% if cash is losing value at 9%. It is also kinda sorta dumb to hold that cash if it is losing at 9%. Yet we continue to see “cash on the sidelines” as people wonder where to put it.
While the DXY has risen to drastic highs of 109, that is a measure of the USD against mostly the EUR, GBP, JPY, and CAD. All of which suck lately. The DXY is not measured against the East accumulating gold. It should. But the USD is losing value against goods because – it is taking more currency units to buy those goods because of all of the cash they threw into the system to prevent deflation. But…..I believe and continue to believe in Mike Maloney’s theory about gold moving to the East he called many years ago.
As the metals trial started, it seems reasonable to assume the government felt that the systemic spoofing going on was indeed criminal, and these gentlemen are being prosecuted for it. No one went to jail with the GFC of 2008. They were indicted, and most likely will be convicted. The irony here, is the defendants are being defended by….the former head of the CFTC when these guys were doing this stuff.
Can’t make this shit up people.
Still, you have the anti-manipulation guys pounding the drums…
I had brought this chart out a few weeks ago in my Twitter discussions with Keith Weiner. He ardently thinks there is no “sustained” manipulation, at all. The chart above could be read a few different ways.
But one way you can read this, which might support Weiner’s position is – “East is buying contracts of metal overnight to convert to physical. West, who own the mining companies, sell at the highest price of the day first thing”. This supports Maloney’s numbers he’s seeing.
Weiner could be right. Steve St. Angelo thinks it is a “waste of time” to put any mental effort into the metals manipulation.
But when you step away from the charts and add this calculus to your investment thesis – IF there is a manipulation, and IF that manipulation would end by shorts getting blown out, you can see the effects of this on Palladium from 2016.
So to me, I feel there is manipulation, and with this, the demand desire for this, coupled with the shorting leads one to project an outsized gain in the investment. You can also see the gold to silver ratio somewhere around 80, which is many multiples over the historic 5,000 year average. The 5,000 year average was 15:1, and in a sense, it means silver needs to do a 6x just to get back to that 5,000 year average. Maybe it won’t, but you can see how a paper shorting scheme has pushed down the value of the metal relative to gold.
The SD bullion chart above isn’t manipulation through that lens of legit buying and selling, and could support why the overnight price goes up, and the West smashes it down. Could be a lot of miners selling product at those prices, as they know they will go down throughout the day.
The banks are telling us at some point, metals are most definitely going up, not down.
The above chart is also showing that banks are net long silver.
With the manipulation, one can imagine that if true – the suppression has had the effect of muting price runs of metals and reducing the overall interest in investing in that class. I believe the “deniers” feel that it may be a “few rogue” people who are not acting on behalf of the financial institution and because of these rare and insignificant events, thus has zero net effect on the price of metals.
They could be right.
However, I’m in the camp where I can clearly read. I can read the cables which talked about price instability using futures. I can read the headlines of spoofing over the decades with “hundreds of thousands” of spoofs. I can read how these have been more or less “accepted practices” and Dodd-Frank made this illegal in 2010. But you can clearly look up metals manipulation and get dozens of stories.
This is in conjunction with the West denying gold is money. You have Bernanke marched out there saying central banks hold it for “tradition”.
Now, if you gaslight an entire generation or two into the uselessness of gold, don’t teach about gold in business schools (I went to 3 different business schools as part of moving), setup a futures strategy to discourage retail from holding, and openly say gold is not money – you are trying to move billions of people from what is KNOWN as money for 5,000 years.
To me, this could be the crux of the entire West vs BRICS struggles. The West prints up green slips of paper and creates massive deficits and builds massive armies. The East is more pragmatic with spending and sees these massive deficits and cannot fight the West in this kind of battle. These civilizations have been around for thousands of years and they plan wars for decades, not weeks.
It is clear we are in a struggle for money at the root at all of this. And, it is clear to me that gold should not be on the futures exchange as a commodity, as it is money. Silver? Yeah – as it is a major industrial commodity.
I would think that the saying is true – “gold is the money of kings, silver is the money of gentlemen, barter is the money of the poor, and debt is the money of the slaves”.
In this paradigm, gold is money at the nation-state level, and this is why central banks own it.
But one may have to acknowledge in their investment thesis, that IF silver is manipulated, then there are outsized gains to be had. This is why it is important to factor it into the thesis. IF it is $18 now, and it could 5x under a Palladium like move that might be building – it stands to reason that the upside is $100 and if you think the downside is $16, then it makes a helluva lotta sense to be long here. Even if you bought at $25 and are pissed at people now, you have to see this through a longer term lens than today or tomorrow.
I believe some are. And some of them apparently have deep pockets.
What I had predicted, and will continue to push, is that when the ruling elite sees themselves losing massive amounts of money in everything – the ONE thing that is left to hedge your spending power is then a throwback to the 1970s. Gold.
Rule and others talk about gold as a percentage of portfolios has dropped over the last 3 decades to one half of one percent, and feel that if it just has a mean reversion, then gold will go nuts.
Well, the numbers seem to look like that, but let’s unpack this as well. Assume gold has gone up a lot in 30 years, but other things went up….a LOT more. The “risk on” trades, 40 years of decreasing interest rates, and easy money have allowed for crazy expansion. But….that time may be near an end.
The woman who has billions from Texas willing to drop a billion on silver may also think so. My guess is she reads my stuff 🙂
But I ask you this – if you are seeing your fortune dwindle, and you have $50b, wouldn’t it make sense to have 2-3% of metals in your portfolio? To her, $1b in silver is 2%.
Now when we look at mean reversion, this can happen in one of 3 ways
- gold price drastically moves up with people allocating more to gold
- a deflation of net worth through losing stocks, bonds, crypto, and real estate with gold not moving increases the % of gold in portfolios
- A combination of the two above.
So one would contend that if we are seeing falling asset prices, stocks, and bonds – and gold simply holds steady and has moderate gains, that it could get back to its mean reversion.
If you are a billionaire, you might have “old money” and perhaps a few people on your staff in their 60s and 70s who were around in the 1970s. These people saw what inflation did, and they saw how metals moved.
From 1971 to 1974, gold went from $35 to $200. Then you could see a consolidation for 18 months where it lost half its value. And then, flipped to go massively higher over the next 4 years.
Many of us contend we have been seeing this long pullback from July 2020 only to be seeing the sort of melt up as Western currencies die a slow and agonizing death over the next 2-10 years.
IF you are “elite” and IF you have the benefit of having someone on your staff who lived through the 1970s, it would stand to reason you would up your allocation of metals.
While the rest of the plebes chase Apple lower, you and your fellow rich bastards are now buying up these extraordinarily low prices of metals for your doomsday hoard.
Got a question for you. IF this is true. How long until we can pinpoint who it is? It was described as a TX woman billionaire. I have seen the internet speculating that there are only 3.
If this person is named, and IF this person is interviewed about this – I wonder if any other elites may think she is crazy, or would they ask their financial people what she is doing, and why don’t I have any metals?
People are worried that $1675 wouldn’t hold. Well, it might not. I know I thought Nick Santiago a month or two ago sounded like a quack when he was talking about $1500 gold. I think it was him – don’t quote me on that, I remembered seeing the headline. I got in trouble with conflating people a few months back, so I’m not throwing darts at Nick here.
But what is the significance of $1675? It’s a chart number. I LOVE charts. But there are people who look at them as part of a bigger picture/strategy and mix it in with the macro, then there are those who look at charts and think they can predict the future with any shred of accuracy. I look at the charts in a probabilistic manner along with macro.
And I can tell you this…
In order to understand the directionality of gold, you have to see what variables go into this.
This is sort of why your favorite metals guru cannot predict price and time. I know all of you out there want that “one guy who is right”. They don’t exist. There are many who are in the zip code more often than not, but they tend to use charts as a PART of their analysis. Those that only use charts and insist on 100% accuracy are like the below to me….
I don’t mean that as mean as it sounds, but it’s a sort of faith or religion of sorts. IF someone can claim this gift, I’d expect them to have no less than 3 cars in their driveway that are $100k+ cars along with a house that costs at least 7 figures. If they do not possess this, use their information as a guide and part of your analysis, but you cannot use it to get rich. Or else they all would be.
I bring this up because it is quite possible in the next week $1675 is breached. Many would say, “this lower low damages the technicals” and “sell algos would take effect below this”. I have also seen this V recovery now a few times which traps shorts – and can definitely see this playing out.
Because the physical buying is solid and premiums are still stupid high. Where there is massive physical buying, you are seeing massive paper selling. This is the unstoppable force and the unmovable object. Something has to give.
IF you are seeing big money start to look at metals, you have a dial about to move. You see, if I was stupid rich at $50b or the like, and I wanted to get metals, I’d first get my smaller denominations. This person apparently bought 900,000 eagles and massive amounts of junk silver for $50m. Some of the comments I received were, “they would be better off buying the 1,000 oz bars”.
IF you wanted the smaller denominations, wouldn’t it first make sense to clean out retail before you bought a billion dollars of 1,000 oz bars from the COMEX?
ONCE you got yours, wouldn’t you want to then signal to other elites that you did this, so they then also follow your footsteps to then make the value of your hoard go up? IF there’s a ton of paper selling going on, and IF a few whales did buy 1,000 oz bars next week to the tune of a few billion, would it not stand to reason we’d see silver beach ball higher? Not only with the bar demand – but what about the short covering?
To me, it makes perfect sense for this person to announce they bought this. They got theirs. Wen Lambo is now in effect with her. And, it’s quite possible you might just get some elites from this, IF this story is picked up in any form of financial media. Beyond me, of course.
IF I was to buy 1,000 oz bars of silver, I’d wait for that precise moment when gold moves under $1675, and the sell algos hit. Silver sell algos hit. You then place an order for 1,000 oz bars for the next few days of delivery, and this will get noticed if 2 million of the silver bars are removed from the COMEX. To me, that catches a lot of shorts off guard and short covering starts.
I believe that IF this story is true, 1-2 weeks from now we will be seeing it in the financial media. There’s always a lag for this type of thing. You can imagine some elites then placing calls to their advisors to get some before it is gone.
The physical gets drained as paper selling continues.
And then we go nickel.
This is a 2019 list. It is possible some of these mooned from here, but you see a few TX females above all.
To me, it is likely that if someone IS buying $1b in silver, it would be a small percent of their portfolio. The likely buyer is Alice Walton. Could it be Ann Walton? Avara, Frantz, Williams? Possibly – BUT IF true, wouldn’t it make sense for an elite to put 2% of their wealth into silver rather than 17%?
Alice Walton was born in 1949, and with this, was in her 20s during the 1970s and saw this inflation first hand. She has a BA in economics and married an investment banker in 1974 – so my guess is she has a very good understanding of the role of gold and silver in the world economic system.
It is hard NOT to see some form of manipulation. It is hard to unsee the cables from 1974. Or the various allocations to metals derivatives to circumvent direct investment into the real thing which mutes demand. It is hard to unsee the “unallocated” schemes. Or the $920m fines. Or the spoofers on trial. Or the 8:30AM selling every day. Or how algos sell on news before anyone actually digests what it means. Or the lower grades of silver. Or the lack of investment for 20 years. Or the structural deficits. Or the games the banks play with the LBMA.
What I can tell you is that when the elites are starting to get the metals, Shit has now Hit The Fan. Keep selling your paper, chief. Keep watching the charts and selling on your algos, and you will be the next Lehman.
What do I KNOW? I know that we have been watching the destruction of the Western Financial system as we know it in slow motion and all anyone cares about is a minute by minute tick on gold or silver.
Wake up, Neo. The cruise liner is coming in to the dock at 40 knots and no one is stopping it. These traders are throwing paper IOUs at the cruise liner. And elites may have just boarded it.