“Buy it all, today“. I believe those short may need to start buying back their shorts, damn near immediately. I could be very wrong with this, so don’t go posting this everywhere. This is an academic exercise that is walking through some tin foil hat theories combined with REAL geopolitical moves happening – AT the precise time our banks are the weakest in my lifetime.
“Speak as you might to a young child or a golden retriever. It wasn’t brains that got me here, I can assure you that”
I’m seeing Tweets of Jamie Dimon going to China. Why?
If you look at the latest OCC report with derivatives, you have JPM with about $50T in PM derivatives. This chart lists 49,479,182 and it is listed in millions of dollars. I double checked this in Excel, and it is indeed $49.479T.
What are these derivatives? That’s beyond my pay grade here. But you can infer that from all of the articles you read, that there is a decent-sized short position in these derivatives. Articles on KWN need to be taken with a grain of salt – as much as I can understand where the author is coming from, this agency tends to have a lot of pro-gold sensational items on it. Then, many report on this as the source – or don’t source it – and you get an echo chamber.
This chart is also on the OCC report, and it talks about ALL PM notional amounts of PM contracts by maturity – it has the PMs going from $463B to $350B by end of 2022, give or take. Are these leases? Could this be the COMEX hedged short positions? They don’t break this down here by metal and by company. But $500B is a much different number than $49T that JPM has with PMs. That $49T number. WTF is it?
Anyone involved with PMs the last few years has seen JPM being painted as the Darth Vader of the PMs. I don’t know if it is true or not. For the sake of argument here, I will lean towards the tin foil hat brigade and assume for a minute that JPM has a short position in gold that is sizable. It’s a hypothesis that then goes like this…
- Treasury or Fed engages JPM to actively short gold. Or, perhaps they are leasing the gold the US owns.
- As gold prices rise (or silver) – banks use tactical short positions to flood the market with paper gold/silver
- Price is capped, and then falls.
- Banks make money on the short side down as they rinse out all spec longs who capitulate after being out-gunned by an unlimited supply of paper metals.
- Banks then go long after they wash out all spec shorts
- Rinse and repeat. They made a stupid amount of money just keeping this range bound for as long as they can, as long as no one actually wants to take the physical metals into their possession. This last part of this sentence is what you now need to keep an eye on.
Eventually – when they see the physical about to overrun – they get on the long side and ride it up.
There is plain evidence of this everywhere. And – those that like to call this pure conspiracy point to the big moves in gold (or silver). “They must be terrible at their jobs as gold went up 8x from 2000-2011”.
The key takeaway, I believe, is that the short position is important to keep the price from running away in some form of hyperinflation. As much as you WANT your PMs to go vertical overnight, the idea here is there is an invisible hand keeping it in a measured move up. If you look at the price of gold when it was $20 and equal to a $20 bill – and now, you see it went up 100x. Well, so did real estate and everything else.
The knock here is – as they lose control of the tactical short, they have to stand aside and let the gold lunatics buy in before then rugging them later. This volatility is required to keep gold from being money again in the US. And, I GET it. I do.
But….we may have a problem.
I believe there has been a strategic move against this country for years. Many years. All of these countries have invisible wars behind the scenes. Cyber, espionage, intelligence, patent infringement, you name it. None of that has to do with tanks. But a big one is currency wars. I believe that there has been a move against our currency for a lot of years – as our ability to control the amount of currency we create is thus directly correlated to the amount of…power…we can hold over many aspects of the rest of the world. Attack the currency, because you cannot attack the tanks. If you then control the currency creation, you thus limit the amount of tanks your opponent can make.
Well, to me, what appears to be happening, as I write this, is a poison blow dart to JPM is in the air on its way to them traveling a few thousand miles per hour.
It has been reported now that Chinese can save in gold, directly linked to their bank accounts.
If you read this, it leads you to believe that Chinese will now be able to directly invest in gold as savings, which is redeemable upon request.
Full stop. Let’s do some math here.
If the US has 8100 tons of gold, and China and Russia are thought to have 2,000 tons each, it stands to reason the US is in good position IF there is any kind of move to gold. However, you could see the de-dollarization happening, where many central banks since 2009 have been buying gold.
There have been many who feel China has under-reported its gold holdings and are only now disclosing the buying of gold because it suits them. These same people suggest that China may have 25,000 tons of gold, and Russia might even have 10,000 tons by now. There’s no way to verify these claims – however, if you look at it through the specter of a currency war, and these countries have been accumulating an “anti-dollar” nuke device, you can see a potential at the very least for these countries to be able to defend themselves against US sanctions of the dollar.
So the math I want to do here is to just project out some savings that the Chinese people could be doing with this program. Assume, for one moment, that China wants to attack the US currency. Assume they now have these controls set up where people can buy gold directly from their bank account. China now has 1.44B people.
Can we assume that these 1.44B people don’t all work, and perhaps many of them may be poor. Can we perhaps assume that 500m can save 1g of gold per month in gold savings? That’s perhaps $60 or so in USD today. Give or take.
500m x 1g = 500,000,000g per month in gold.
That is 16,077,170.42 troy oz per month. In gold.
When you look up how many troy oz in a ton, you get 32,667. That is about 500 tons of gold per month. Or, about 6,000 tons per year.
Question. Where is this gold to come from?
Now imagine you are a massive too big to fail bank in the US, and this was announced yesterday in China. Would it not stand to reason your CEO would be on a jet flying over there then? Why?? Well, imagine if you are a Chinese bank and holding this gold – JPM can be trying to get the business of hedging the value of this gold. Meaning, for every single oz that is sold to these people, there’s a hedge on it. That’s some good business, if you can get it!!
The other potential way of looking at this is….
“Holy shit – we are now at the peak of gold prices, we usually hit this peak with tactical shorting to push the price down. Banks everywhere in the US are starting to fail, and now a country is telling their 1.44B people to BUY GOLD near the HIGH in USD which is typically shorted to hell by too big to fail banks – that may or may not hold massive gold short positions. HOLEEEEE SHIT this could be something. I need to get on a jet and get them out of doing this”.
So I don’t know how this is going to turn out. I can’t tell you about the $49T in derivatives that JPM has, or the $50T that goldman has. I can’t even speculate. But I can tell you that 500 tons of potential gold demand, per month, from a single country, would threaten to suck every cheap ounce out of the hands of the west that has been keeping this price down.
And, to top it off, you could see USD – that are abundant in the world – coming in to pay for it. They give you excess USD, they sell your treasuries, and they take the gold you have kept down in price.
Meanwhile – the banks that have held all of these short positions get blown the hell out. They have to buy this physical to then deliver?
This is all wild and crazy speculation – but if the tinfoil brigade is correct, you could see a strong move in the gold price as big banks start moving aggressively to get the hell out of short positions. My guess is this – China WANTS a wealthy US to buy their products. They do not WANT to kill our banks. However, this would be a move to then take the pricing power out of the hands of the US banks and put the price of gold into the price of the Chinese citizens. Consider that a gram of gold each Chinese citizen would buy today at perhaps $60 per gram could double or triple in USD terms inside of 5 years IF the tactical shorting of US banks is overrun by the physical demand of the Chinese people.
The counter-narrative to this Vince Lanci mentioned – perhaps JPM is successful in talking to China to hedge their gold with JPM. This would serve the interests of the Chinese people by pushing the price of gold down $400 or so (Vince’s calculation) and with this, provide cheaper gold for the Chinese to buy. The one issue I have with this thought is that this isn’t paper gold the citizens would be buying – it would be physical, and with this, any short would have to be hedged 1:1 with real physical gold – and delivered. And, I can’t see 500 tons per month being delivered. I just can’t.
So – I am not writing this to project any of this will happen. I wish I had the insider knowledge here. I can tell you where OTHERS are seeing the chess pieces, and extrapolate out where a checkmate could be coming. Consider the extreme weakness of our banking system right now, it stands to reason that the timing of this move could be a strategic play – here and now – to push the price of gold up and take the pricing power from Western Banks to Eastern Exchanges. THIS could be THE move for it. Given the frailty of Western banking – it’s thus hard to naked short 500 tons of gold per month where you can see legitimate delivery happening. And – IF you are doing naked shorting, of sorts (spec or tactical with no metals backing your short) – you are simply giving a horde of buyers a cheaper price that they are buying regardless of price. The tactical short, in this case, isn’t going to rinse paper specs to drive down price, it’s simply going to be an albatross around your neck with physical delivery happening. It’s simply giving Chinese stackers, by the hundreds of millions, a cheaper price to suck your gold bricks out of the vaults. This, of course, then forces more derivatives to be unwound (perhaps some form of contagion then happens) – which then perhaps deals with TBTF banks in US needing bail outs with perhaps trillions of these derivatives blowing up. Or, perhaps, we then finally see bail-ins. This could be where the socialists then force our banks to take anything over $250k in deposits to pay for this. With the FDIC now trying to paint a picture that perhaps they will backstop all $17T in bank deposits with $150B or so in insurance funds, this paints a picture that deposits that rolled from regional banks to the TBTF banks are still in danger.
Remember, we are only 1/3rd the way through 2023, and the amount of bank failures, by nominal value (not inflation adjusted) – is higher than the GFC of 2008 and 2009 combined.
One last consideration. IF we can assume that China and Russia together have over 40,000 tons of gold between the central banks and citizenry (as tin foil hat sites have reported with sources they can’t name), would it not stand to reason that they have accumulated enough – and at right at this precise point in history – trigger a massive short squeeze on Western banks to produce the metals they have re-hypothecated many times over? Could it be that Powell and company knew the vulnerability we had when we printed $6T and potentially semi-hyperinflated the dollar that these dollars could rotate into PMs and why – for the first time in my adult life at 47 that we have seen M2 decrease? Could they understand this better than we think and are trying to unwind the damage of COVID spending – even at great suffering to our economy short term? Could kicking the can down the road finally be at the end of that road? Could there be a continued gaslighting/rhetoric campaign in place to continue to try and assure to the American people all is well – at the risk of literally all credibility because the stakes ARE this high? Trying to buy more days or weeks to try and unwind hundreds of billions more? Each day they can kick the can now is a small victory.
Remember a month or so ago some leaders around the world hinting there’s going to be a rugging of the USD coming? Could this have been the move they are talking about?
Consider the impact of 500m Chinese being able to buy only ONE gram of gold a month, and what that will do to too big to fail US banks that are short gold by the tons? Consider the geopolitics here where BRICS+ is trying to get credibility with currency and encourage others to get out of the USD? What better way to get out of the USD than by taking those USD and buying gold? By the hundreds of millions of grams per month. Now imagine US citizens somehow grasping this and rotating their BIG deposits over 250k out of US banks and into physical gold? How does this play out with TBTF banks? How can this be stopped – IF it is the currency end game? I don’t think it can. But – this is where their 400 PhDs at the Fed come in – they are essential to preserving the dollar at all costs. To me, this accelerates the chess game over the next few months. BRICS+ may be making their gold move. Today.
I think this has a bigger impact than even the tin foil hat brigade realizes?
While this may be a slow roll out and only be a few thousand grams a week, this does have a potential then to be very, very bad 6-12 months from now. To me, IF I was US-based banks, and IF I cannot get my hedge book open to them, I have to pull the rip cord and get out of my shorts, immediately.
May 8, 2023 at 12:15 pm
great article. wow you write these soon after news is announced (China/ Gold/Savings accounts)
My take: China will tell Jamey Demon to his face that he has 3 months to exit his gold short or else JPM will be in a house of deep pain.