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.

 

A GOLD CRASH?

 

Gold briefly touched $5600 and then plunged in 48 hours all the way down to $4800.  An historic plunge unmatched in dollar terms, marking extreme volatility for this supposed safe haven asset.

On the other hand, you could say that over the course of the last year gold has moved steadily from $2500 to $4800 with brief bouts of weekly volatility.  Like almost every other asset during every other period in history.

It all depends on your time frame.

If you are a gold trader and you got in recently - well you got whacked.  The moral is: don't trade gold.  Unless you are trading for a central bank or a bullion bank you're out of your league.  

If  you are a gold investor and you've been in for the long haul, this is barely a hiccup.  If you're a new gold investor just hang in there.  Every condition that has been driving gold up over time is not only in place but intensifying.

Debt is spriraling out of control everywhere and especially in the United States.  Federal debt is growing at a trillion dollars every 100 days.  And consumer debt is at all time highs and growing rapidly.  Consider this: GDP is rising while real wages are falling!!!  GDP simply measures SPENDING.   So spending is rising while wages are falling.  What bridges that gap? DEBT.

Deglobalization is intensifying.  Those who only consider only the trade deficit think this a great.  But anyone who considers the other side of the balance sheet - the CAPITAL ACCOUNT DEFICIT knows this is a disaster for real inflation.  Just as it is a disaster for the value of the dollar.  Those 2 sentences mean the same thing.

And geopolitical tension are boiling.  The country is being torn apart by hatred.  Just as we are attacking enemies and one time allies alike, riving the world with hatred.

Those who celebrate this as the Neo Mercantalism and the rise of a realpolitik are missing s most important point about mercantalism which is this: There was a give and take to the colonial system that fueled 19th century mercantalism.  It may have had brutal aspects but colonializing powers often brought some stability to target areas: they brought industry and paved roads and schools and brought vaccines and modern medicine and hospitals and clean water, and electricity, just as they seized natural resources, and exploited native populations.  This worked for all parties to some extent.  The NEW 21st century MERCANTILISM is closer to neolithic barbarism seeking to bring nothing and take everything from rivals.  And everyone is a potential rival.  This brings nothing but instability everywhere.

So what has changed to bring the gold price a bit lower?  Nothing.  It's a market.  Markets are volatile because human appetites are volatile.

Only fools and those with a very real knowledge/power/monetary advantage seek to trade them.

So invest, and hold on, as long as the underlying conditons are intensifying.

GOLD $5000 - what next?

The market loves round number milestones.  Gold $5000 is just that.  It's getting a lot of media attention now and everyone's wondering - what's next?

You can look at the gold price through many historical lenses - price to S and P shares - price to federal debt, price to total debt.  All these stories show gold is not really at historically high levels since the massive US debt bubble is outpacing the price of gold and stoking the value of equities as well as hard assets.

You can view the gold price through technical lenses (RSI, stochastics, commitment of trader reports etc) and conclude that gold is quite overbought after all, it has rallied over 60 percent in one year.  Surely we're in for a steep correction?

But really, to understand the gold trade you have to understand a fundemental shift in global markets that has taken place over the last few years.  And this shift involves gold's return from  being traded as a commodity ever since the monetary gold standard was broken back in 1971,  back to being a monetary metal as it had been from about 6000 BCE to 1971 AD.

How do we know sgold has been transformed back into a monetary metal?

For one thing the central banks of the world = especially China, Russia, Eastern Europe, South East Asia, Central Asia - and the BRIC nations are telling us this.

But if you want harder proof - since it is very hard to accurately gauge central bank buying - you need only look at the STAND FOR DELIVERY statistics available at all western gold exchanges.

At the Comex - Every single contract month in 2025 set delivery records. February (an inactive month) saw 15,500 contracts delivered—unprecedented for a non-traditional delivery month. April delivered 18,200. June hit 21,800. October’s active contract exploded to 58,061 contracts ($23.5 billion notional) through October 22 alone. December, while final data awaits publication, appears to have cleared approximately 27,000 contracts—surpassing December 2024’s then-record 25,642.

This shows that even as the gold price shot higher, the appetite for physical bullion of the largest, wealthiest buyers in world grew ever greater.  Real gold bullion is being accumulated by Central Banks, Hedge Funds, Sovereign Wealth Funds, and Billionaire Concierge vaults.  And the stand for delivery contracts make it impossible for the traditional bullion banks to control the gold price by dominating the paper trade as they have done for the last 50 years.

Now the reason for this transformation is not widely understood.  But it is clear.  It is sometimes called tbe debasement trade.  This means that as the debts of all nations soar the respective governments compete in inflating the value of the debt away making all fiat currencies worth less and less vis a vis real things.  Such as gold.  And this debt is compounding and increasing at an alarming rate.  In fact such an alarming rate that the world's wealthy are now responding by shifting their own reserves from paper to gold.

This is also called the Sell America Trade - because the predominant debt in the world is dollar denominated.  And our government is intensifying its spending needs through global conflict just as it is weaponizing the currency itself through confiscations, tarrifs, sanctions - and outright theft (such as the seizing of Russian treasuries and Iraqui oil profits held at the Fed.)  Thus all central banks are seeking to move away from dollar denominated debt to the only other Basel Tier 1 Reserve Asset: GOLD.

So as gold hits $5000 per ounce what could reverse these trends?

I can't see anything.

That doesn't mean gold goes straight up from here.

But it also doesn't mean there is any good reason it shouldn't over time, other than the recency bias of looking back to see how it traded for 50 years as a pure commodity.

SOME RECENT GOLD PRICES: 1/20/26

RETAIL BULLION GOLD EAGLE AT APMEX: Nearly $5000 $4,958.19

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Who can you believe? Believe Gold.

 

Even amongst those who believe whole heartedly that Gold is the only asset that will get you through this period of intense global chaos, there is intense disagreement about what is actually going on.

Half the gold community believes that chaos is emminating out of Washington D.C. right here in the US of A. seeking to distract the US public from a horendous affordability crisis and the moral decay of a Pedphile ring that reaches the White House.

The other half believes that the chaos is emminating out of the Russia, China Iran axis of evil and Washington is taking the appropriate steps to protect istself.

Either way, gold at $4500 and silver at $90 is telling you the chaos is real.

Half of the gold community believes that government sponsored jack booted thugs with face masks are terrorizing American cities.

The other half believes government agents are justly trying to right decades of a lax immigration policy.

Either way, gold at $4500 and silver at $90 is tellling you the situation is dire.

Half of the gold community believes that Major cities in the blue states are imploding with crime, violence and communism.

Those who actually live in those cities don't see any of these problems but believe that the Red States hatred for the blue states is blinding them into a frightening rage that is tearing the country apart and that this is all part of the distraction campaign,

Either way gold at $4500 and silver at $90 show that this rift is real and dire.

So no matter where you come down on this Great Divide perhaps the most concrete fact we can look to to gauge the crisis temperature is the price of gold.

And the one thing the gold community can agree on , no matter which side of the divide they reside, is that gold will preserve your own personal wealth during this ongoing and seemingly insoluable crisis.