Tarrif ruling explodes the exploded deficit: Gold and Silver explode

 

The most important aspect of the SCOTUS tarrif ruling involves the trillion dollars of revenue the administration was budgeting to offset their military expansionism.  Already running a 2 trillion dollar yearly deficit the extra trillion (through only 175 billion has been collected) was supposed to make the global military expansion - with ICE at home and wars across the globe - deficit neutral.  

Now, on top of having to fund thousands of court cases that will result in billions of dollars of refunds, the military  ventures both domestic with ICE and foreign with wars in South America, the Middle East and potentially with CHina/Russia, will all have to be funded with deficit spending.

I'm not going to go through the math.  Do it yourself.  But the numbers are so vast and fantastical that if you compare the size of the beficit spending to the size of the gold and silver markets you'll find it necessary to multiply existing monetary metals valuations by mind numbing denominators.

And what this implies is that silver too is becoming a monetary metal.

This is debatable because most central banks are not using silver as a monetary metal.

But China and the US have both designated silver as a critical mineral that must be hoarded for national security purposes.  This is because it is by far the most efficiant electricity conductor of all the metals and as such is vital to every critical tenchnology from Electric Cars to AI to advanced weapons systems.

The fact that is was a monetary metal for 3 thousand years of human history means that for many private consumers acrosss the globe it is still used as a store of value, even if the central bansk no longer use it that way.

But now that gold is firmly over $5000 and climbing it is clear that for many outside the top 1 percent silver is a viable way to hedge against the persistent and ever increasing monetary debasement.

As long as governments continue to deficit spend this trend will continue.

MICHAEL BURRY: SOME OF THE GOLD VOLATILITY DUE TO BITCOIN COLLAPSE

 

The gold volatility continues knocking gold back down towards (shudder) $4800.  Still, double where it was a year ago.  But with no change in the fundamental story which begins with the central banks of the world buying as much gold as they can source.  China's gold binge is only accelerating with Chairman Xi posting to the government website a proclamation maintaining that China's strong currency will be backed by GOLD which will serve as the underpinning of China's strong economy.

So why the continued volatility?  Michael Burry of the Big Short fame, opines that much is due to institutions that unwisely "invested" in Bitcoin being forced to cover losses by selling profitable gold and silver positions.  This can only continue so long though, as the US corporate institutional support for gold is  but a tiny fraction of the Central Bank support.

It does, however,  point out a falicy in the Bitcoin as "digital gold" argument.  Because bitcoin has no use value other than as a means of money laundering by the criminal class of both private and government varieties.  Private and government criminals can get money out of countries to safe havens, and government criminals can set up meme coins (validated by the bitcoin narrative) as a means of accepting untraceable bribes.

But otherwise bitcoin is a digital pet rock. (though a rock has some use value as a weapon or a bookend or a doorstop.)

Gold is used by the central banks of the world as a reserve currency and by Eastern and Mideastern and BRIC goverments ever increasingly as a settlement currency for commodity trades.

So as crypto implodes there will continue to be some volatility in precious metals, but as the "digital gold" falacy becomes increasingly obsolete that money will shift into gold as the only efficacious monetary  debasement trade.  So over time the crypto implosion can only benefit the gold price.

As an aside: Zero Hedge posts this analuysis of bitcoin: Richard Farr, chief market strategist and partner at Pivotus Partners, has issued a stark prediction for Bitcoin (BTC-USD), setting a price target of zero for the cryptocurrency.

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Anatomy of a fabricated crash.

 

Gold and silver crashed 20 and 40 percent respectively in the course of 2 trading days.  Bear market, right?  Massive technical damage, right?

In normal times, perhaps. 

Not now.  These moves were simply the product of an unprecedented manipulation that transferred hundreds of billions of dollars from the hands of leveraged small and mid sized speculators into the hands of a few bullion banks (JPM, HSBC, BAC) and a cadre of government traders for the benefit of central banks, sovereign wealth funds and well connected political executives. 

How?  Simply by raising the margin requirements on silver and gold trades 8 times in 4 weeks, until everyone trading on margin (Borrowing money to trade) got squeezed out of their positions and went broke, while the Government connected Bullion traders front ran the margin announcements with massive short selling that they covered at the bottom of the squeeze.

This was done first to make a ton of money for those who always make a ton of money in today's rigged financial markets.  But also because the futures exchanges have become stretched to the breaking point by large financial institutions standing for delivery for gold and silver contracts when the exchanges are trading at somewhere between 35 and 50 times the paper promises over actual deliverable ounces in storage.  This squeeze enabled the exchanges to temporarily source gold and silver at much lower prices to service current  delivery obligations.  

The fact is, while the paper price dove during this operation the delivery price on real gold and silver as quoted on the Shanghai exchange went down at a much small rate.  The premiums simply exploded.

So this is obviously a temporary fix.  But one that the exchanges and corrupt government agencies can replicate any time as long as smaller traders continue to trade on margin.

However, over time, if the paper price and the physical price continue to diverge the paper exchanges will eventually cease to function and only those holding physical bullion will retain their hedge against the thoroughly corrupt fiat system. 

This is why central banks, sovereign wealth funds and billionaire concierge facilities are buying bullion hand over fist  Because once the paper exchanges break down real bullion will become extroardinarily difficult to source and hence extraordinariy valuable.

So what's the upshot here?

A) DON'T TRADE PRECIOUS METALS ON MARGIN!

In fact, if you're going to trade paper gold and silver in a market the has to go up over time as long as the fundementals remain in place, always trade in small enough quantities that you can survive the inevitable corrupt government sponsored raids.

B) Buy real physical metal and stick it in a (allocated) vault.  Don't trade.  Invest.