Silver at $25 seems nice! But gold is about $2250 as I write this. Or, a 90:1 GSR.

I stopped writing about silver incessantly. Not because I gave up, but because it was stuck in a channel for the longest time. It still kinda/sorta is, but with gold finding fresh new highs, in what looks to be a breakout move – it is reasonable to see silver play catch up here.

I have paid attention to PMs since about the end of 2019. And during this time frame – as you can see above, most of the time the ratio has been about 80. I believe that is about to change.

What most people just don’t get is that silver now is mined primarily as a BYPRODUCT of other metals. Meaning, there are no real silver miners left. There’s a handful, but not to any meaningful supply. You can say that a company that is at 38% silver as their “primary” metal is a silver miner – yes, but they need the lead, gold, and zinc to get by. Years ago when I first got involved with this, most of the “primary” silver miners were at like 60-70% silver. Those days are long gone.

To top it off – the deficit has grown year over year, like every year. I think the last I saw we are planned to have a 400m oz deficit this year. IF the world economy is to slow down – those mining lead and zinc will slow, and less and less silver will be produced as a result. The last I saw, it was like 90% of all of silver mined now is a byproduct of other metals. The truth here is that mines are still selling enough silver to fulfill contracts. And a less uncomfortable truth is that the ETFS may have 800 million oz of silver just sitting around.

The “paper games” here frustrate people to get out of silver – for example, selling SLV. Well, who is buying what you are selling? Perhaps banks are gobbling these shares up. They then redeem them, and send them out the back door. This destroys shares as well.

IF we are thinking there are huge deficits – it is coming from somewhere to keep making the solar panels, right? We all know the LBMA stock pile is getting drawn down. 3 years ago – I wrote posts noticing about the EFPs. I had then subsequently learned that these were off Comex settlements where they were possibly extracting metal from the LBMA out the back door.

Recently – we have noticed that Shanghai is offering much higher prices on gold and silver. Bai has been posting about it, and other Twitter accounts are then broadening the message. It seems – you have low prices, Shanghai offers higher prices – a bid is hit, and massive metal amounts are flowing out the back door to China. Why would you NOT play this arb?

Well, if you are China, and you want to get out of USD, how do you do it? One tin foil hat conspiracy I had back in the day was that when treasuries are maturing, they are taking those USD and simply converting them to metals. Now, it can also be going to other things like tech stocks in the US, and even farm land here. If China wanted to de-stabilize the US, they’d put up all of their treasuries today. But it would flood the market and they might get a 70% haircut. Then it would freeze the US, and perhaps stop all commerce with China overnight. China doesn’t have to SELL treasuries, they can just simply not roll them over, and organically take the maturity in USD, then buy gold with it at low prices.

US Banks push the pressure down on gold, and China says, “I’ll take that off your hands at that price in your debased USD, thank you very much!”

My writings had Godzilla moving silver with Toyota and the like starting to buy silver for parts. I didn’t think of a bigger Godzilla in China buying. They make tons of solar panels – and perhaps this is also a way of boosting their stockpiles so they can price gouge the US on solar panels for the decades to come. Chinese companies, in a pseudo-partnership with the CCP can then buy supply from them, and then pass the higher cost off to US consumers – who use taxpayer subsidies to even afford them.

Smart. Take the low price offered, hoover up this silver with USD you do not want, then pass off that premium back to US consumers with higher solar panel prices, of which the US taxpayer subsidizes with tax credits.

You cannot make this shit up.

I think everyone sort of is feeling this Godzilla move here in their bones. No predictions here other than to suggest that the GSR can easily get back to 60:1. If we see $2400 gold within the next month with gold kicking in the door, that then can suggest $40 silver. I don’t want to see that spike we saw in 1980 and 2011. I want to see a slope that gradually goes up to $75 over 5 years.

Miners

Miners are stupidly undervalued. I just banked a $1050 overnight silver micro profit, so may buy some miners with that. But take a look at the gold to miners ratio.

I’m using GDX as the proxy, others use the HUI. If you have tons of profits on crypto, NVdia, Tesla – whatever. This might be a really good place to start looking.

What has been hard over the last few years is that inflation has driven the cost to produce metals sky high, which has crushed margins for years. Now, we have gold starting to take off, and these companies are destined to be cranking out some serious profits soon enough.

I have a significant amount of holdings in miners – and a few times I bought breakouts in gold, only to get smashed back down. It’s possible many feel like I do here, being gun shy over the last few times of buying these breakouts.

I’ll be watching GDX this week. I’m not jumping on that today.

Bitcoin Inflection point

It’s no secret here I kind of hate on bitcoin. The cultists are strong, I’ll tell you. I write anything negative about it and you hear the usual…

  • “supply, man”!
  • “performance!”
  • “Halving!”
  • “Bitcoin go up”

Why do I care so much? Mostly, that the supporters of bitcoin think it’s a lot more safe than it is, and with this, they have too much of their portfolio allocated to it. Meaning, they do not take risk into account as much as they should, and what I care about here is people throwing themselves off of buildings over losing their entire fortune. One of the friends in my circle lost an extraordinary amount of money on an oil junior. I spent about 3 hours once begging him to cut back his exposure to it. I likened it to my junior minor investing experience. How high risk it was. He kept saying “but they have a billion barrels of oil”. What he was missing was – the resource doesn’t matter, if it cannot be extracted to be financially feasible. Then, think about how the Pebble Mine with 70 million oz of gold turned into nothing because they cannot get the damn thing permitted.

Risk is something many just cannot – or do not WANT to see. Many people today under 40 are struggling to get by. And, bitcoin is their lottery ticket out of poverty. Bitcoin “is going to $100,000” because…it is. Not because of any change in the macro. It’s…just because…network man!! This assumes you have more people year in and year out who want to buy it. This is assuming future demand on something that is not widely used. In other words, speculating on a future use for something.

I LOVE speculation!! But with this, you also need to account for risk. When I invest in miners – only a small percent of my portfolio is used towards junior miners. At a 50% loss, I cut them. At a 100% gain, I sell half and ride the rest for free. This should be your bitcoin speculation. Put in $10k, money machine goes up to $20k, take your $10k profit back out and ride the other $10k to a million if you think that highly of it.

But the cult is built around HODL. Period. Sort of like how GME went up like AMC. They had people flood into buy, told no one to sell, and those who were short had to buy back at extraordinary costs. Those who came up with the idea maybe made a 10x on the stock, or even 200x on the call options. Those who bought at the peak then have “loss porn” as they transferred their wealth to those who promoted the idea. In the case of bitcoin, there’s no real shorting here – but if everyone is programmed like a zombie to never sell, then the supply of bitcoin to be available for sell is artificially low, which supports the higher prices.

Ultimately, there’s one bullet up there I see a lot of smart people talking about, and worse, the Saylor Academy promotes it. Anyone who gets in an argument with me eventually tries to make it sound like I just didn’t research it enough. The problem is, I did. Any worse is the claims the Saylor academy make are absolutely wrong. And dangerous. And meant to separate your from your money. YOU are the person being told to buy GME at $450 to “stick it to the man”. Meanwhile, those who bought thousands of call options when the price was $8 for $25 call options for pennies then are selling to you.

YOU are the mark.

Supply. In economics, supply is one HALF of the price equation. The other half is DEMAND. They talk about scarcity of supply of bitcoin. “Only 21 million!!”. It’s silly. Why? Because that 21 million can be infinitely divisible. So, if you own a whole bitcoin right now, woo hoo!! You are one of the FEW!

Let me re-state that. Scarcity of supply of anything, means ZERO for the price. ZERO. NADA. This is the big part of the misleading of the entirety of the Saylor academy that gets all of you. Then you promote this to me, and I try and teach you economics, then you change the subject and talk about “performance”. That is the “money go up machine”. And I think it’s about to break.

I have taken a lot of economics classes. Most of you have not. Many of you really smart people out there that have been fooled by the Saylor academy – have PhDs. Law degrees. Math degrees. But, you have not taken economics.

Let me give you three examples here.

  1. Gold is rare! Today, it’s at like $2250 per oz. But platinum is 30x rarer. That means platinum should be $60,000 per oz, right? No – platinum is 1/2 the price of gold.
  2. Kid’s fingerpainting. My kid did a finger painting at daycare. It’s ONE OF A KIND!! SUPER RARE! I thus demand $10m for it!
  3. Bitcoin will be $1m because there are only 21 million ever to be made!!

All three of the above claim value based on scarcity. When you sell something, you can ask whatever you want. However, there has to be a demand at that price for you to be able to sell it. Do me a favor – put a sale price in for your bitcoin at $1m and just let it out there for awhile.

In the real world, demand is the other half of the price equation.

The above is where you find your equilibrium.

With the supply – it then needs to generate demand. In many cases, this is “what is its use, or utility”. In the case of bitcoin, it is “what is its FUTURE use”. You are SPECULATING on the future use. And, you are trying to get others to buy it, because if you do, your bitcoin price goes up. You need to recruit others into this vision in order for your speculative asset to go higher.

So far – the best recruiting tool you have had is “performance!” and “money go up”.

That may change. And soon. Why?

You can see that previous TA worked pretty well on this. TA is about the psychology of investing, and with no macros, and pure greed/fear, this is something much easier to predict. Check out the previous “domes of death”

This also had the head and shoulders…

But then the lows…the desert for while.

Then it roared back to life on “halving!!” And…”ETFS!!”

You see the cup forming. Will this do a double top…or perhaps a triple top, and go back down?

You can see with the two previous peaks, these were spikes up, that came back down. In this case, your price has been languishing for 3-4 weeks. Could resistance be overcome? Or, did a lot of people who bought at $65k last time now unloading their bags?

Ask yourself – if everyone knew the halving was coming, did everyone who wanted to buy bitcoin already buy it? If the ETFs then got on board, who exactly are the litany of buyers at $70k?

Could this stall out? I cannot tell you if from here the sellers capitulate, but if you are now dealing with professional institutional traders, they may be shorting you to death until you capitulate. This is why gold and silver have been capped for a long, long time.

I see this as an inflection point. It could spike much higher and shorts buy back. Maybe it does get to $100k? Or, maybe the shorts overwhelm and capitulation happens back down to $20k quickly.

When talking to bitcoin people, they all talk about this cycle. That they are buying at $20k, the halving comes, and they sell. It’s a “money goes up machine”. Rinse and repeat.

But if it starts dipping below $60k. $55k. Maybe those who bought at $30k start to realize the run is over, and they get out to preserve profits.

The bigger question is this. If EVERYONE has your cycle strategy, and you are trying to recruit all of these people, who are you selling to at $55k? $53k? If everyone KNOWS this is going back to $25k or so again, who the hell that you recruited in is buying as this is going down?

I believe institutional got in here to make this a “money go down” machine and will short the ever living hell out of you until $10k, and at THAT point, they will buy everything back, the price will recover up past $35k again – you all get excited, get FOMO, and they rope a dope you again from $60k down to $5k.

Institutional was brought in to break you. Not be your friend.

Few.

There is no such thing as a money go up machine. There are people in NY that sit around making 7 figure bonuses each year finding new ways to part you with your money.

This is why I talk about you understanding risk. If gold should be around 3-5% of your entire wealth portfolio, there’s nothing wrong with a 1-2% speculation on bitcoin. However, many of you are ass deep into it.

Risk. You just aren’t understanding the risk profile of this. And that is my only problem with bitcoin. If you want to talk about it going to a million, and you are risking 1-2% on that bet, GREAT! But I know many people who see this as some “can’t miss” horse race who literally has no idea how horse racing works. Someone gave you a tip on horse number 3, and you are betting your kid’s college fund on it to get your lottery ticket in life.

Be careful. Trim your positions. If you are at a double, sell half, rotate it into something else, and ride the rest to a million for FREE. That is how you speculate.

Sorry if I’m screaming from the rafters. I LOVE speculation. MAYBE bitcoin goes to a million? But you just are really not discounting the downside risks here, and for that, you have to see the inflection point that bitcoin is in could make this go to $100k next week, or $30k next week.

I’d say the best result for bitcoin is to look at the last two channels. They went sideways for months, then had a breakout. This move higher was phenomenal, anticipating the halving along with the ETF. IF bitcoin wants to keep going higher, it’s going to need to settle here, build a base, and use $69k as support to slingshot off of. The problem is this. If you break down below $63k, it’s a REALLY quick move down to $51km then a much quicker move down to $44k. Maybe it regroups there as the bottom? However, look at the last channel. The breakout was over $32k. THAT may be the next long-term support which you run your next cycle from.

Or, it could be $100k next month.

Everyone thinks that you can just buy bitcoin and get money for free. No. It’s highly volatile, and you now invited professional traders to your game. They are about to buy another mansion in the Hamptons off of you.

And they will buy your bitcoin back when you are on your last $10k. They don’t care about your feelings. I’m trying to keep people from throwing themselves off of buildings.

Just be careful. Speculate responsibly.