(As it turned out to be a very long article; If you need a summary or a primer, go watch my interview with Palisade Radio here (keep in mind it’s 2 months old): https://www.youtube.com/watch?v=wIjaoRVgOk0 – And Thank You for reading!).
Going into this article, i would like everybody to go into it with a particular mindset:
If you know something is about to happen, wouldn’t you prepare for it?
While this article will feature quite a few numbers and somewhat (basic) math, i wanted to start off writing a little bit about Prediction, as it goes to my motive for all of this happening. Prediction is trying to read the future via indirect evidence of where the passage of time might end up, so you can make an educated guess about where time will take us. While i’m sure there are some very smart people who’ve created some very complex math to describe Chance; that merely obfuscates the issue. Humans, through conscienceless, have an innate ability to predict the future.
“Predicting the future” sounds very grand; But it’s much smaller then it sounds. It simply means running the process of Action – Reaction – Consequence to its logical conclusion. And it’s something all of us do all the time. For example, if you’ve got half a carton of milk in the fridge and you normally drink about half a carton a day, you can very reliably state you’ll pick up milk from the grocery store tomorrow. Yes, it’s always a chance and the future is never a guarantee, that confuses people when thinking about it in the abstract. But, since it pertains to Your milk, Your milk consumption, and Your choices (free will) leading up to the event of You purchasing that carton; You know the future.
Sure, that is still not a guaranteed statement. You might get hit by a bus on the way to the store. But again, this confuses the issue. Life doesn’t work that way. It’s not like people get hit by buses on the way to buy milk all the time. Haven’t seen anybody wrapped in cushions lately to try and dodge those dastardly bus drivers. While we cannot expect any one event to happen, we can – simply through experience of events over a period of time – reliably know the future in the short term. Provided the conditions line up for it, of course (i don’t know somebody else’s milk consumption for example, so i cannot predict the time they go to the store).
Long Term Prediction is nothing more then expanding this process well beyond the daily routine. This too is a skill everybody possesses. If you drink half a carton of milk a day and you only buy one carton at the store, you know you’re going to run out in 2 days. Yes, there’s more possibility you’ll skip a unit of consumption, but the amount of times that happens in aggregate is still very small as we are creatures of habit. So rather then buying 1 item of each thing which would necessitate alot of daily store trips, we buy more and “plan ahead”. Personally i buy 4-5 cartons of milk each time. Simply because the milk i buy has a long expiry date and i know my milk consumption is such that i’ll run out long before i hit that date. As the milk always has roughly the same time in days until expiry which vastly exceeds my usage in every use case, i never check the expiry either: I am so confident that i know the future, i explicitly ignore data that could tell me i’m wrong. Another feature of humans.
Regardless, i’ll never be wrong. Simply because mechanically nothing can change. By law, they can’t suddenly sell fresh milk that expires in days in the cartons which are labeled to contain milk good for months. Naturally the law can change – but such a change would be so extremely strange (legalizing false advertising essentially) that there is no chance i wouldn’t hear about it via various news channels i know i’ll check every day for the rest of my life. The stranger the event the higher the buzz the less likely i’ll miss the event even if i come into contact with it much later.
Now, all of this seems perfectly logical. I doubt there is anybody reading this who hasn’t experienced a similar situation many times over. It is simply important to realize that, by the processes mentioned above, we can extend the prediction of the future, accurately, many months into the future. The reasons of why i drink milk will not change within the next year (just take my word for it this article will be long enough as is). If the milk has an expiry date a year out, and i drink half a carton a day every day (and because of the long timescale, we can average it out as the error margin becomes smaller with longer timesets), since there go two halves into one carton;
(1carton/2halves) x 365 days = 182.5 cartons in a year. Unexpected events have to be taken into account, as well as the expectation of being able to buy more (no food supply issues 12 months out expected), as well as small variations in the true expiry date (AND that the date is always conservative just to make sure nobody gets sued) so we introduce a “safety buffer” of about ~25% (and i like round numbers). So all in all, we can with an extremely high degree of accuracy state i can buy 135 milk cartons and i will use them all within a year. AKA, and this is important, i will not lose money if next time i go to the shop i buy 135 milk cartons instead of 4-5 – it will merely save me trips to the store.
Whether or not i’m going to do that depends on other factors outside of usage, for example storage issues. This is why the further you go out into the future the dataset required to make an accurate prediction about whether or not something is going to happen increases exponentially. That’s why if somebody says they know the distant future they’re bullshitting as the dataset required to be accurate that far out is so large no one human can remember or cross-associate all of it (trust me, i try). However – this pertains to general predictions: Again i cannot predict when and if i get hit by a bus, putting me in a coma and reducing my milk consumption taken over a year below the safety buffer. But the prediction of how many cartons of milk i will use up in the next year is still accurate: The error is not in the prediction of my daily usage, but in the prediction of my continued health. In short; Ya gotta be specific.
The reason i go so deep into that from the beginning is because it’s important to understand the relationship between the general continuation between events – the predictions we make every day like groceries and thus we don’t expect to change; Events that are inevitable – If i run out of milk, i won’t be able to drink milk; And generalized prediction about events that might happen infrequently, but do happen – Getting hit by a bus.
Because the First reason is why people aren’t desperately clamoring for Silver and Gold right this minute; The second reason is the reason why the Comex operates the way it does (or did), and the Third reason is the motive behind the largest – and legal – raid of precious metals in history, that thus far has gone unnoticed but to very few observers.
Let’s take it from the top, as i hope to reach a wide audience with this so forgive me if i run through some definitions first. Not to worry; I’ll introduce things along the way as we go along so it won’t become too much all at once. If the definitions aren’t entirely accurate, i apologize but i am trying to weigh specificity against clarity for the uninitiated.
So what is the Comex?
Well, the Comex is the Futures market for Precious Metals; That is to say Gold, Silver, Platinum and Palladium. As the Platinum and Palladium markets are tiny in comparison, they will be left (mostly) out of the story. Suffice it to say, i have 1 screenshot to prove the same thing is happening in Platinum as well, which at that point was already enough so i focused my efforts instead. I won’t go deep into the distant history of the Comex, honestly there are people far better suited for that then me. What i’m concerned with; Is this year, the now and the near future.
A Future is a contract that gives you the right to buy the underlying asset in the, well… future. They where created at some point as a hedging tool for producers of precious metals. Since you can’t predict when those unexpected events might happen such as rainstorms shutting down production, there’s no way to know the price based on supply and demand in the future either, as you can’t reliably predict either of those components. This requires capital buffers, which reduces capital available for investment.
So rather then selling the metal when it becomes available at whatever the current price is, by making a Future contract you can both time delivery (contractual rules obligate all contracts to deliver on the last date of the contract) as well as hedge future output. The Comex’s inventory then serves as a buffer between now and the next delivery date. Producers have the ability to make and sell contracts into the market both backed and not backed by the physical asset to achieve this hedging. The latter is called Naked Short Selling, and before we get into that, i’ll have to explain Shorting first. Not to worry – it is far less complex than it’s been made out to be.
Shorting, in short, is selling an asset you don’t have. Naturally, that asset has to come from somewhere. Well – you lend it.
There’s all kinds of traders in the markets. Day traders get headlines at the moment, which are on the short end of the time scale of trading. On the long end there are Institutional Investors – Think pension funds. These funds generally don’t sell their assets, or do so very infrequently, as they are making use of the fact that the market “always goes up”. Sure, in the short term it may take a dive, but over the long run it does go up, and has for a very long time. But conversely this means you need to hold those assets for a very long time.
Well assets that are not being traded are considered “dead” assets – they don’t generate any revenue. Sure, they will give you profits when you sell them – but only when you sell them. Same with cash in an account (at 0% interest), it just…. sits there. Economically this is undesirable, as you want your capital to work for you AKA generate more capital, and assets are part of capital too.
So what they do is, via a broker which connects the short sellers to the investors, they offer their assets (let’s say Tesla shares cause that’s hot right now) up for borrowing. As Lending carries Risk, a fee (interest) on the loan is paid, which provides income over otherwise dead assets. When somebody takes them up for the offer, they get the share. Since it’s a loan, the share is contractually obligated to be returned when the loan expires. Remember that loans are always denominated in the asset they’re made in – Dollar loans require Dollars, Share loans require Shares.
It’s also important to remember that Shares are Fungible. This means that 1 share of Tesla is 1 share of Tesla is 1 share of Tesla. Shares aren’t actually held by any one in their name – they’re held in an account in their name (and of course their activity is tracked against fraud). This means that if you sell a share of Tesla, then buy a share of Tesla at the same price, Effectively you’ve not traded at all – the share you bought is as good as the share you sold.
Finally, Time is very important, as the price fluctuates over time. Keep in mind that prices aren’t static; They change. So it is here where we get to the shorting. So keep it simple; i’ll be concise. Let’s say 1 share of Tesla starts at $100:
Investor lends 1 share of Tesla to Trader.
Trader immediately sells it into the market, pockets $100 (this stays within his brokerage account as an “active trade”).
Trader is now “Short” 1 share of Tesla.
Share price of Tesla drops to $90.
Trader closes (or “covers”) his short position in his brokerage account.
Trader HAS to buy 1 share of Tesla on the open market.
Trader does so at current price of $90.
Trader returns 1 share of Tesla to Investor + $1 in interest for the privilege of lending the share.
Trader pockets $9 in profit – Withdrawable from his account.
This is how money is made by “shorting” shares, as opposed to buying a share at $90, holding it until the price hits $100, and then selling it for profit. Naturally the process works in reverse too: Short a share at $90 and the price goes to $100, you will have to buy a share back for more then you sold it for, meaning you need to come up with more money. This is also where Margin Calls come from: If you only had $90 in your account to begin with and you now have to come up with $10 more, you’ll get a call from your brokerage to pony up more money. If you can’t – well you get “carried out the pit” (from the days before Computers, Viruses and Computer Viruses). You’re broke. And yes, the investor will not get his share back, because the person who promised to buy it back doesn’t have the money to do so. And that’s why lending always carries risk.
Anyway, all of this is important because of Naked Short Selling. The “Naked” means that the short position was never backed by an asset in the first place. In other words, the short seller sells an option to a share he doesn’t have and didn’t lend off anybody, so has no guarantee he can come up with it in the future. The asset doesn’t exist, yet the person sold the right to the asset anyway. Naturally this is extremely dangerous and was a big cause of the 2008 market collapse – share loans are in shares, and when the market dropped in 2008 and alot of these loans “came due” – people had to pony up alot more shares then often even existed of the asset in the first place! Can’t buy what doesn’t exist, so naked shorts imploded en masse. Naked Short Selling was banned in the US after the 2008 crash, for good reason.
However. On the Comex, it’s part of the design: Producers always make 2 contracts for every 1 bar of precious metal, 1 contract that is backed by the bar and one that is not. This because the Futures market is (supposed to be) a hedging tool: If the price of gold goes up between making the contract and delivering the bar, they will make more money on the contract backed by the bar – but lose the money on the naked short they have to buy back. In this case, the “naked” refers to the physical asset that was never there to begin with, the contract not backed by any precious metal expected to be produced. It’s fine for producers, because their income is from the bar anyway, it’s the spread they want to negate.
When the price goes below expectations, where the producer would previously lose money on selling the bar at a reduced price, now they still have to do so but they make more money then expected on their naked short. As when they made the contracts, they immediately sold them into the market (pocketing the increased cash), while the delivery happens at a later date which is when they have to buy back the short to balance out the market again (at a lower price of cash). Again the passage of time is important.
So, naked shorts don’t have to be a problem per se. On paper it’s a very good system that adds value in stabilizing prices for producers of precious metals, something anybody creating any asset desires.
In practice, it doesn’t work that way. Because of everybody’s favorite villains: Those Dastardly Banks. Bullion Banks, to be precise.
Now for the whole system to work, you need at least some sort of relative size. If you rely on just producers making these contracts whenever they produce these bars, and if there’s only a few of them, the price remains volatile because you’ve just moved the problem, not solved it. And considering we already have a large amount of gold and silver in the world that has already been produced, we can use that as a buffer. In case there’s some sort of unexpected event causing a production slump, the Bullion Banks – who are considered “market makers” for this reason – can create contracts backed by physical assets they already own.
Naturally what goes up must come down, so too with the prices of precious metals, some times they just go down. So to prevent bullion banks from permanent losses by only being able to sell contracts backed by bars into the system and then losing money when they have to deliver at a lower then expected price; They have the capacity to create naked shorts too.
And that is how the system got out of hand. Because the ability of the banks to make these naked short contracts is, as far as i know, completely unrestricted. If it isn’t – that just makes the situation worse because then they broke that rule and ran over it with a steamroller for good measure. The ratio of backed to unbacked contracts has gotten way out of hand compared to the close-to-1-to-1 ratio it’s supposed to be.
And finally, to top it off, these contracts are Fungible too. Obtaining delivery of a bar (so from a “backed” contract) is as simple as buying any random contract, and standing for delivery. Closing a short is as simple as buying a contract back, and not getting delivery (in the same way your brokerage would “close the short position” and you never really touch the money you sold the share for in the first place). While i’ve never stood for delivery on the Comex or am privy to its inner workings, it’s the only way the system can function in its current state. Even if there’s supposed to be safeguards against it functioning like this: It is what i observed, and the safeguards have been compromised. While i’m sure the ownership of bars is securely and accurately tracked in the bank’s books, you don’t actually need a serial number on the contract (not that they give us that data anyway).
As long as bars are fungible too (and they are as purity and weight is strictly controlled and verified, while the fungibility of gold is one of the reasons its money in the first place) you can just grab a random bar with a random serial number, look at whatever that number is, and transfer that serial number over to another account on paper. I’ll refer to this as “Changing the title” to the gold, as when the book says you “own” the bar, you own the title to that bar as you would own the title to a house. Holding a title to something is how we declare/prove we have ownership of something.
As the setup is complete, let’s start moving into how the Comex used to work. You see; Gold (and Silver) have fallen out of favor with the populace, especially as money. I can see why, it’s far more cumbersome to pay with heavy weighing metal then it is with a light plastic bank card. This has relegated those assets to basically industrial demand and their respective permanent fanbases, central banks included. Neither will go out of style, but they can go out of focus. That is where we are at currently, and that is where we were at in February of 2020 – the last month of “normal” deliveries before the Pandemic changed everything.
In the before-times, Nobody really took delivery of any metal on the Comex. Silver was delivered more then Gold in general, as Silver was suffering from a mining deficit (less produced globally then consumed) because of falling out of favor as money on the one end and increasing demand from the solar/semi-conductor industry on the other end. But both amounts where negligible in the grand scheme of things; The global precious metals markets. I’ve often heard the Comex referred to as a backwater market, as nobody ever took deliveries there and it was used merely as a speculative tool (WHICH is where the regulators should’ve stepped in really. But they didn’t).
What you’re looking at is a screenshot of the trading data for Silver on Wednesday October 28th, combined with a screenshot of their publicly available report of their current Silver stocks. While the numbers may be overwhelming now (i’ll ease ya into it don’t worry) i’ve highlighted the important parts. On the left is the Total Open Interest in Silver. Open interest meaning “Amounts of contracts available for trade on the open market”. If Open Interest (also referred to as OI) drops by 1, that means 1 contract was Destroyed (most likely by covering a short). On the other hand, if the OI goes up by 1, a contract is created (most likely a naked short due to the speculative nature of the market).
On the right is the Comex’s Total Eligible Silver inventory. As you can see, their inventory is split into multiple categories, Registered and Eligible. While we will get into the specifics of those along the way, for now, it’s enough to remember: Deliveries Come Out Of Eligible. In other words; If you want to exchange a contract for metal instead of cash, the metal comes out of the pile called Eligible – Cause it’s Eligible for Delivery.
Finally, it is key to remember the Contract Size. Precious metals are measured in Troy Ounces, which is about 31,103 grams per ounce. Naturally buying it one ounce at a time would be cumbersome, so the Silver contract size is for 5000 ounces while the Gold contract size is 100 ounces (due to gold being more expensive and less prevalent).
Simple math does the rest to show that the Comex is overleveraged; That is to say has far more contracts outstanding then they will ever be able to deliver metal. 157,041 contracts in total open interest times 5000 ounces per contract equates to 785,205,000 ounces of silver. While the Comex themselves have 247,317,624.951 ounces listed as Eligible for delivery. Assuming half of the contracts are shorts like they’re supposed to be, 785,205,000 /2 = 392,602,500 ounces of Silver needed to satisfy delivery of all contracts on the Comex. This exceeds even the total amount of Silver in the vaults.
However Registered cannot be counted as eligible for Delivery: The Registered category is where metal is moved to upon delivery. As i stated before, once you take delivery the title to the gold changes – But you still need a place to store it just as much as the producer/bank needed a place to store it. So while the metal might still be in the same vault and on the same balance sheet, in actuality the Title to that gold has changed and it is NOT available for trade!
If you need any example; the first day of deliveries of the July 20 contract in Silver is a great one:
Regardless of what both categories may be defined as by the CME Group (owners of the Comex), in a real life empirically measured massive delivery situation; This Is What Happens. Massive amounts of Eligible get transferred to Registered when people stand for delivery en masse. And the reason i’ll follow that event over any explanation, is because it’s an empirical observation of a large scale event; And the larger the scale of the event, the harder it is for any one person to manipulate it, obfuscate it or change the outcome. In other words, if you’re looking for truth in the markets, big events both expected and unexpected are ones to watch out for. No matter who might tell you otherwise; There is power in numbers.
Immediately we run into a problem that has so far confounded even me. If you can’t handle numbers not lining up better get out now because there will be alot of them. The first to start off with is the 33,336,037.954 ounces moved to the registered category on that date. Since 11,458 contracts where delivered, and each contract is 5000 ounces in size… That gives us 57,290,000 ounces of Silver. Now it may be just me, but i’d call a discrepancy of 23,953,962.046 ounces a slight numerical faux pas.
That is to say; You can’t trust these numbers worth Shiat. I have legitimately no idea where those ounces went or why these two numbers don’t even come close to lining up. I checked other days but didn’t see any movement. Regardless, while the numbers might not line up, we can still gather some information from this situation: During massive deliveries, massive amounts change in title by moving to the registered category from the eligible category on the balance sheet. It’s just not the total amount expected. For now this’ll do; The point is we have to look at Eligible ounces on the balance sheet (though somebody in charge should REALLY check it out….)
For anybody claiming different; I simply pose the counter argument of: Well if the title doesn’t change what the hell is the point of taking delivery? The movement of the metal doesn’t enter into it. If you don’t get ownership of the gold when you pay for delivery, then what the hell are you paying for? It’s the change of ownership that matters, something we can only see on the Comex/bank’s books – which i remind you nobody has any idea about because they remain Unaudited.
But i’m getting ahead of myself. Now that we know what the Comex is and how it works (and the rest is just fluff or not relevant to this article), let me run through the Comex in 2020.
This is the earliest screenshot i have. I only captured volume at the time as it was relevant to a post i was making, so it only serves to prove i was very much active and already looking at the futures numbers at the time that i claim i was. Luckily, i have a penchant for remembering numbers.
February 2020 was the last month of “normal” deliveries, as while the price of precious metals had already begun to slide at the end of February, the liquidation panic didn’t happen until March. At the time, i observed the following pattern in deliveries in Gold futures:
February 26th: 0 deliveries.
February 27th: 0 deliveries.
February 28th: 0 deliveries.
February 29th, last day of the contract: ~276 deliveries.
I can’t remember the number exactly, but i can remember it was in the 270s, the high 200’s for sure. In any case, it is to say: the normal pattern at that time and indeed on the Comex up to that point in time was that it wasn’t used for deliveries. Yes, you could obtain the physical metal, but few ever did. Most activity was in Silver due to its use in industry and its concurrent mining deficit; Industrials drew on the Comex to get supply. However this too was immaterial compared to the metal Comex claimed to have, so nobody outside of the hardcore silver/gold sphere ever looked any closer.
That includes me by the way; lest i become known as some sort of super expert on Silver before the shenanigans started. Up till February i was quite content just reading around on the internet on what others where saying on the status of Silver and Gold. Ofcourse i understand their value so i’ve always kept up to date – But i mean to say i read articles of others instead of writing my own, and the lesser form of knowledge that comes from reading information instead of looking for it yourself. I’d mention names if i could remember (all of) them but truthfully i rarely check sources. Due to my unique disposition of having to figure out human behavior, i can generally tell from a text by it’s logical inconsistencies – or lack thereof – whether it’s true or not. Sure, that has a error margin, which i negate by applying consistency: If i consider the information on its own merit 20 times, and i arrive at the same conclusion 20 times, there’s likely to be a significant amount of truth there. And if not; well. There’s always the apology.
But then. The Virus. The Panic. The Toilet Paper.
I’ll skip the event that all of us know but for mentioning the one thing i continue to harp on about: Crashes Matter. In this day and age of Algorithms, Central Bank Shenanigans and Balance Sheet Manipulation (The community can go adjust my EBITDA all day long) you’re not going to get truth from the markets. There has been record delivery wall after delivery wall on the Comex and while the price may be up on the year, economic conditions haven’t improved, the price of silver is still (at the time of writing on October 29th) down 22% off its August 10th peak. And then they say markets are forward looking -.-;
But humans are fallible. All it takes to fool a smart person is to draw his focus to a problem, and he’ll apply all his intellect to solving the problem; Not having time for anything else. Algorithms are no different; They are made by some incredibly smart people. The Key ingredient to Manipulation may be that the subject must remain Unaware; If the manipulator himself isn’t aware of his own environment, well…
There’s always a bigger fish.
In this case everybody got caught with their pants down by the virus, because everybody was focusing really hard on the problem at hand: The Repo crisis. Regardless of what Jerome Powell may say about “the virus caused this and we’d do well to remember that”, he personally printed $500,000,000,000 on December 16th to avoid Zoltan Pozsar’s doom prediction of the previous day, of the Repo rates spiking again around the year end funding problem, as they did in December of 2018 (Repo rates hit 4,4% on December 31st 2018, after being 2,5% on December 28th 2018, which stopped Quantative tightening and led to rate cuts throughout 2019). In fact; i managed to trace problems with the Repo market allllll the way back to December of 2009:
I’m not going to explain what’s going on there. If you’re deep into finance and you wanna track a ghost, be my guest – i’ve tried for a year to get people interested in it and nobody gives a crap. All the info you need is contained in the picture (right-click > View Image for the full resolution). For the general reader: It’s just to point out that the Federal Reserve’s straight up hardcore lying and i found systemic problems going 10 years back. Out of all the shit Jerome Powell has pulled in 2020, that one statement – That it was the virus – I will not let slide. He can do what he wants. Even before Zoltan’s prediction, in the early morning of December 8th 2019 i converted my life savings to physical silver and gold and put it in a private vault with a company that guarantees in all situations the contents of the vault are mine, legally and economy. I’m out bitches! Have been for a long time.
And i did that because i realized what the Repo crisis truly meant: The United States of America went Broke. The day QE could no longer be shut off was always the day that started the hyperinflationary process. And that day was September 16th 2019. Can’t forget that Hyperinflation just means alotta-inflation. It starts off small, then grows, then goes exponential. There’s evidence for my claim of course: Go look at the 2 year – 10 year US treasure spread, you’ll find it bottomed in 2019 when it inverted shortly prior to the Repo crisis. Good Ol’ Yield Curve Inversion does it again. Though, i’m not sure i’d call an increase in the price of gold from $1541.30 to $1868 at the time of writing small. That’s still a 21% increase in the price of gold (which is still money!) in little over a year and we’re currently in a dip because the market is whining it might not get as much as an ungodly amount of stimulus with a split Democrat/Republican house/senate as it would with a sweep of either party. Forward looking markets my hiney.
In any case; this is just to indicate the situation at the end of February 2020. It’s this situation and expected money printing that all the “smart” people where focused on. It’s what led to Ray Dalio’s statement of “Cash is Trash” right infront of the liquidity panic – It’s because he was focused on the Federal Reserve’s “Temporary” repo operations that where supposed to end in April of 2020. Nobody expected that to happen, so the original outlook was that the market was going to crash somewhere in July, after 1-2 extensions of “temporary” repo finally spooked the market into no longer believing the system was safe. The start of QE5: QEfinity at the bottom of March ended the repo problems as it functions the same (and even better) in providing liquidity to severely overlevered market participants.
Naturally, a crash causes a flight into safety. Since Cash is considered the most safe, the markets rushed into cash and everything dropped like a brick in what we call a Liquidity Panic, since cash is the most liquid (universally accepted). Since to sell you need a buy, if nobody wants to buy because everybody is looking to sell, markets drop. Rewatch the movie Trading Places to get a good sense of this.
However, that only goes for the digital markets. So while the price of gold did drop, it’s because the price of gold is set by the futures market, which is digital. The people in the markets who own these futures often do it to have gold as part of their portfolio – and before 2020 that made sense because nothing was going on so it provides exposure to the price of gold without the mess of owning the physical. Once those same people started getting margin calls on their accounts because the entire market dropped, they had to sell whatever was available to not instantly go broke. Which includes gold futures, even physical gold if the need is bad enough – Losing a ton of money is better then losing all of your money.
But nobody wants to sell gold. Because Gold is considered the safest haven, even safer then cash – it’s just not taken for margin calls directly (dollar loans need dollars). Countries have gone broke before. Currencies have died before. But gold is eternal. As Warren Buffett remarks – it’s just a shiny rock. But that is precisely why the demand, and with it value, of gold is eternal. All trade is human. All humans like the shiny. All humans, at some point, desire to trade for the shiny. Whether it’s to retain value or because they’re increasing in wealth and want to display it.
I also just wanna dedicate a paragraph to call the people who say gold has no industrial use complete and utter buffoons. PURELY decoration is already an industrial use! GOLD LEAF you morons. Lots of stuff is covered in gold leaf to make it look pretty. If you say making things pretty is not an industrial use then lets get rid of the fashion industry as it is hella annoying. Also, gold is extremely non-reactive. You can swallow a pellet of gold and it’ll come out the other end untouched. I remember a popular teen alcoholic drink that had flakes of gold leaf in it – the selling point being “it makes your poo gold”. That’s still metal you’re swallowing, i wouldn’t try it with flakes of Lead. It’s this property that has made it so desirable throughout history. People didn’t understand chemicals, or bacteria, or Rust. All they knew is, you can eat off a golden plate and never get sick. You can use a silver knife and it’ll never rust – And the people who did use rusty cutlery didn’t seem to be doing so hot. We simply try to avoid using gold for industry because of its universal utility (the shiny) and thus monetary qualities. Gold leaf gets used because it’s extremely thin and thus uses very little actual gold, even though it still is gold. Smartphones ALL contain gold – but in minute amounts because we try to conserve it.
Which seems to be the only damn thing we actually put any effort into conserving.
In the market this was shown by the gold price recovering rapidly: On the 16th of March the gold price dropped below $1500 for the first time, but between March 23rd and 24th it recovered nearly completely – back up to $1668. Up on the year, because the January 6th spike as the Iranian retaliation happened against the US drone strike of their top general topped out at $1600. Not bad for a week after the fastest crash in history. I mean Bitcoin went from $9180.60 on March 6th to $6762 on March 24th. So it dropped sooner, and recovered much later.
Naturally me highlighting this human demand for gold is not without reason. It goes to proving the disparity between Paper and Physical. Even though futures are digital now we still call them “paper” gold, because they’re not real gold. They’re Futures – promises to future delivery of gold. Promises can be broken, and that’s just not good enough in a panic.
The reason i link that screenshot is not to brag (per se*cough*) but because of an event that happened not long after the crash in gold price. I was using a website that sells gold/silver in the Netherlands to keep track of local availability as the panic hit, so i saw the supply issues develop. On that website, when i posted i posted my twitter message calling the gold bottom on March 23rd (i wanted to do it on the Saturday before, but the site i looked at only allowed trading during market hours), they still allowed orders for gold and silver, though multiple messages warning of delivery delays because of excessive demand already littered that website as well as every coin dealer’s website i checked.
The day after i posted the March 23rd message, it was no longer possible to order any gold or silver on the website. All orders where closed due to supply issues. So even though prices where historically low – you couldn’t buy any of it, because nobody was selling any. Again, first rule of trading. To buy, you need a sell. Something alot more people will run in to going forward.
The point of this part of the story though is to show simply; there wasn’t enough Silver or Gold to go around at the time. Not for the consumer… Not for the Comex:
As the price rebounded, a difference in price emerged between the London market, the LBMA, and the US market, the Comex. This indicated that there where big delivery problems, as normally those prices trade very closely together. The LBMA and Comex use different sized bars (400 ounce vs 100 ounce bars) and the refineries in Switzerland where closed due to the virus; As well as all air travel shut down. This difference in price later lead to the “Arbitrage” explanation for the increased demand, where traders where supposedly standing for delivery to benefit off the price spread, only to sell it again when the spread went down. Considering there is still massive demand currently, with no metal being moved off the exchange, even though the London AM Fix at the time of writing this is $1896.85 and the live gold price is $1867.60. If there was ever a time to reverse that trade….
The continued shortages in gold ended up leading to not just 1, but 2 memos jointly issued by the LBMA and the Comex. This was remarkable at the time because the LBMA and Comex are supposed to be separate entities. They operate within the same system, the gold market, but they’re each their own. So for the LBMA to issue a joint warning to “please not panic” and do it twice is remarkable.
In any case, as the world had more pressing matters to attend to, the markets calmed down somewhat and the spread tightened a bit. However this changed nothing about the situation the Comex was in when it entered the panic, the way it was during the February deliveries: Extremely overlevered. Which is the reasons for the double memo in the first place. Had the world called their bluff the entire global financial system would’ve been dead and buried by now.
The moving on of time changed nothing about the general chaotic situation in the world and with it, the demand for physical. So when the first month rolled around that had a lot of contracts available for delivery, alot of people stood for delivery. At the time open interest was spread out more evenly across more months, but in general most of the open interest is located on one month. Silver and Gold exchange active month one after another, so while Gold is active and delivering in April, the open interest in April Silver is minor; And while the open interest in Silver in May is very large, Gold is almost non-existent in April.
Its here that i can offer my first screenshot of some actual numbers. While i don’t know the exact number of deliveries of gold contracts in April (or those of Silver in March) i thought they where around 53,000 in gold – so a total of ~5,3 million ounces, which is the number i’ll be using going forward. Trust me, once we get to the shadow contracts, specificity goes out the window anyway. Even if i’m off by a few thousand, the difference between 53,000 and 276 contracts standing for delivery 2 months apart should be obvious.
I took this screenshot at the end of April, awaiting the massive amount of contracts in May in silver and seeing how many would stand for delivery.
A total of 10,543 May 20 contracts of Silver at a total of 52,715,000 ounces stood for delivery on April 29th. Clearly, this is no small amount, especially contrasted against the 241 million ounces of eligible silver in their vaults now; Which was substantially less earlier in the year. Now the full and exact history of the delivery walls as i’ve come to call them i’ll leave up to others – their exact height concerning me less then the fact that they’re happening at all.
And they didn’t just happen once. I could understand a delivery spike after the crash, maybe 1-2 months after. Same thing happened in 2008 before dying down again after the immediate panic. But on August 28th, 4 months after the May silver wall, 10,548 Sep 20 Silver contracts stood for delivery. Clearly this change from no deliveries to massive deliveries is a sea change; a paradigm shift, some thing hidden yet known to alot of people has changed from “it’ll be fine” to “AAAAAAAAAAAAAAAAAAAAAAAAA”.
This does not have to be public knowledge of some sort of scheme by the way. You’ll find humans are very much alike and there’s plenty of us to go around. The change could’ve been nothing more then the 2 memo’s the LBMA and Comex sent out in March; And a mass of well-off/rich families independently of each other adhering to the adage “when they tell you not to panic, Panic.”
But, i’m getting ahead of myself. We have only just arrived at the May silver delivery wall… And here’s where the juicy stuff starts.
See, here is where the mindset i started the article with starts to pay off; And why i spent time on manipulation and shenanigans. After all the answer is almost self explanatory; Ofcourse if you knew something was going to happen, you’d prepare for it! But that comes with the caveat of having to know. Well, if you’re still with me up to this point it should be fairly obvious that whatever the case, the current situation cannot continue. The Comex was not set up for this many sustained deliveries, nor did they go into this situation expecting to ever having to deliver such massive amounts, I.E. Overlevered as all hell.
I’m just a guy behind the PC with a penchant for numbers and a nose for bullshit. I don’t know the exact numbers or whats on the books of the Comex or the bullion banks. Neither does pretty much anybody else, because again, they remain unaudited and the regulators…. Well they’re either complicit or criminally negligent at this point. Seems to be a theme of late. However, a few people do know what’s on those books: The Comex and the Bullion Banks.
And they started to sweat early on. Naturally they’re not going to say so, hence the memos. But while a manipulator can hide his words and his actions, he/she cannot hide the actions that they have to undertake to continue the state of manipulation. As i said before, they key ingredient to any manipulation in progress is that the subject remains Unaware he/she is being manipulated. Should they become aware, they rebel. That pesky free will again.
In this case, the memos are such an action – designed to curb demand. Another such action is to prepare to mitigate possible failure. Gamers know the “it’s not a bug it’s a feature” statement all too well. And as such, should the Comex not be able to come up with the Silver required under the rules and therefor break them, if the rules change beforehand, the rules where never broken. Comex changing the rules is also well known to the precious metals crowd.
Coming in via my good friend Robert Kientz from Goldsilverpros.com who brought this to my attention (and who has done good work on the Comex himself), the CME group (again the owners of the Comex) made this change on April 9th 2020, ahead of the delivery wall shown on the first screenshot. The document can be found here: https://www.cmegroup.com/content/dam/cmegroup/market-regulation/rule-filings/2020/4/20-184.pdf
First let’s start with the obvious: The Comex is straight up admitting they have no idea how much Eligible gold is actually available for delivery. While the language is somewhat ambiguous the end result leaves no question: “surveys conducted indicated no clear consensus as to how much gold is dedicated to long term investments”. If they don’t know how much is not-available for eligible delivery, then they also don’t know how much is available for eligible delivery.
“in an effort to represent a conservative deliverable supply that may be readily available for delivery, made a determination at this time to discount from its estimate of deliverable supply 50% of its reported eligible gold at this time.” There’s 2 things remarkable about this sentence. First is the obvious. The Eligible gold supply – which is the only supply they can draw from to deliver – is cut in half by decree. But the second one that might get easily missed is the wording. It’s strange. We humans tend to read over these things easily, but look carefully: “at this time” is contained twice in the same sentence.
Well there’s 2 options here. The likely one is that they made a mistake. In a document you can be assured they took great pains to word carefully as to not blow up a market with a lit fuse, then buried it in between filings since people are still going to look. The only other option if it’s not a mistake is that both “at this time”s do not refer to the same thing. So, what they’re effectively saying “Right now, We’re cutting the supply of eligible we think we have Right now, in half”. So this pertains to the eligible gold they thought to have at the time…. But not going forward. That might seem like a real nitpicky detail but that’s how they getcha. The devil is in the details as they say.
“The Exchange may, at a later date, determine not to discount such stock or to recognize a discount level that is more or less than 50% of reported eligible gold when calculating deliverable supply estimates.” This sentence shows more careful wording, and that the previous sentence was not a mistake. The first part of the sentence is a “recovery”. You’ve just dropped a bombshell on somebody (50% cut of eligible gold at a time of supply woes) so you need to tell them it might not be so bad, or in this case, “we might not do it again”. Or we might. That’s the second part of the sentence – We might also choose to discount more then 50% you don’t know go fuck yourself. While that might sound crude, i actually swear for a reason – a manipulator always hides behind sweet language. Swearing is abrasive to people, which causes distrust. Since it’s key that the subject remains unaware, you cannot afford to create any distrust. When you think about what i said, and what the language of the document says, while i might express it more crudely – the spirit remains the same. Which means that in reality i have not been any more unkind to you then the document has – yet due to the emotional reaction to swearing, you think i have. I fucked you but they fucked you with a smile. Since those trying to point out manipulation tend to be more passionate due to nothing more then having a conscience and they can’t stand for inflicted suffering, pure civility has extended many scams beyond even their physical limits.
The last part of the sentence goes to why i highlighted the “mistake” in the previous sentence. “when calculating deliverable supply estimates”. Taken in a vacuum, you might arrive at the conclusion that “Oh, in the future they’re just going to look at their eligible supply again and then recalculate their discount. That must be why they said it could go up again”. But when a pattern of behavior has been established, namely that they haven’t just recalculated the discount but also their eligible supply, the meaning changes.
They won’t be re-using any of the calculations of April 9th. When they “recalculate the discount” they’re not going to say “On April 9th it was 50%, we dropped another 10% so the discount’s at 40%”. No, the 50% cut has happened, and then from that basis scenario, if they decide the discount is 50% again, it’ll be 50% of the NEW level – 25% of the April 9th level total. However, when you or anybody who doesn’t know this document exists, reads about a 50% discount in the future, it will read as “Eligible supply has been discounted by 50%”. Even if you know of this document’s existence, your initial reaction would be “oh so it’s the same, ok”….. But that’s not what the text says.
Clearly, they where in trouble. The fact that the LBMA had to offer its gold up for delivery on the Comex, with the Comex willing to go as far as to introduce an emergency “sliceable” contract so 4 people could own 1 400 ounce bar, shows the situation was dire. This document change, along with other reported shortages such as the ETF GLD sourcing the physical for its demand from the Bank of England means the situation was truly near collapse.
On the GLD by the way, since i recieve many ETF questions; Same as futures: Get The Fuck Out. Today. Nothing in the Bank of England’s vault is owned by anybody but the Bank of England. There’s more reputable ETFs or you can just stop gambling with your soon-to-be-in-short-supply money and buy physical while you still can. SLV same thing, only you’re dealing with JP Morgan, so worse. You want more info on those ETFs; go look at the work Ronan Manly has done over at Bullionstar.com
And as i showed above; That’s not the first time i’ve said that.
If you knew the futures, wouldn’t you prepare for it? Well, the delivery wall months aren’t the only months with contracts on the Comex – as i said earlier, at the beginning of the year, they where far more spread out over the rest of the year. And you can trade all of these contracts just as well as the currently active month. They just don’t have nearly the volume of the active month, because all the retail CFD traders automatically switch over to the next active month. But trades still do happen, and those who are in control of the trades can see exactly who is trading what. They can see if a contract is traded from one entity to another, as in from a bank to a producer, a hedgefund or “other investors”.
Coming in via Alasdair McCloud who writes on Goldmoney.com (and does amazing work on the coming economic troubles), this shows the open interest on the Comex as per August 25th 2020. This isn’t a particular date of note, but it’s just a while back when i happened to grab one of his regular reports. I do remember seeing one such report in January, and one such report in May. The reason i remember those two instances is because on the first report, i remember seeing the “Other Reported” being a paltry 11%. In other words; insignificant in the scheme of things (though i’ll be honest – i can’t be entirely sure i looked at the right number a lifetime ago).
In May that had jumped to 41%. No doubt helped by the massive reduction in open interest after the market cratered. Now, these “Other Reported” are basically the rich and well off family offices that have a direct line to banks and don’t have to go through Robin Hood like the rest of us plebes. Clearly, the elite didn’t buy the V shaped recovery from the start, and given it was 43% by august and the most recent update on Goldmoney says it’s now 47% after reaching 48% not too long ago; They’re not even buying the supposedly beneficial for them K shaped recovery. Not only that, but “going long” in their instance means basically standing for delivery. After all if you exchange cash for gold then hold the gold on the exchange you can always sell it again for cash, or “take it off the exchange”. Which is another thing people are expecting these folks to do: Because all the gold is basically still located under Registered so technically it’s still on the exchange, they’re expected to sell it back into the market “when the arbitrage trade unwinds”.
I’m sorry but the spread has vanished and the political situation in the US has only gotten worse this year, not once did things get better as depressing as that is. These are humans holding the gold and anybody selling their gold now is an ox and a moron, which anybody can see. And they do hold the gold. Even though it’s still on the exchange, the title is theirs. The document i linked even says as much: “The inventory shall include eligible and registered gold. Eligible gold is gold that is acceptable for delivery against the Contract (i.e., which meets the specifications and approved brands of the Contract) for which a warrant has not been issued. Registered gold is eligible gold for which a warrant has been issued.”
Well when a warrant has been issued against eligible gold, and only that person has that warrant, and the warrants aren’t tradeable (cause that’s what the futures market is for), and the exchange is obliged to hold the gold issued against warrants in perpetuity…… Well then it doesn’t matter that the exchange has the gold in its vaults on paper, does it? You have a chain of custody. The warrant owns the gold and the other reported owns the warrant. Ergo, the other reported owns the gold. They decide, not the exchange, what happens to the gold tied to the warrant (which is just another form of contract, really).
We cannot see these other reported trades. We don’t know who owns what contract or who got what warrant. The deliveries have happened, but that doesn’t mean people bought those contracts on the day before delivery. You can buy a December 2024 contract right now and just HODL for 4 years. Naturally ones instinct is to say “Well the problem is happening now, wouldn’t everybody pile into the current contract?”
Well they did, and that prompted the change from the CME. The language is civil, but basically equates to “Back off or we’re gonna do this again and then the party ends right quick”. Again no collusion is needed; When there is only one obvious solution humans will take that solution independently of each other, as if they where communicating while they where not. I played many videogames at an extremely high skill level where this is the norm not the exception – chat is often not needed for professionals to do what they want each other to do. So the exchange managed to survive another day. But as that change pertained to right now, that does not change anything about later. And as they said, they might not do it later. So why not just buy and hold a later contract? And as i stated before, all the “smart” investors got caught with their pants down in March and they weren’t hoisted much higher in April. Meaning all of them had an incentive to play along, try to recoup losses and buy more gold with that (as evident by the ever rising Other Reported category regardless of price action).
In April after the change, they must’ve seen the shift in contracts behind the scenes and concluded the inevitable: This Turkey is Toast. There’s no salvaging this. People standing for delivery all throughout the year (by buying and holding contracts made in advance) means the continuation of the delivery walls, based on ratios, should’ve been fairly obvious from the beginning. And this is just based on monetary panic, even at the end of October 2020 outside of one off spikes the recovery rate of cases of the virus never fell below the detection of new cases. The early prognosis of “it all being over by May” was never realistic to begin with with a populace that so sternly refused to prepare in February. No event changes humans that fast. Jesus can come back to earth, miracles and all, and if the words he says contradict large parts of the bible he’ll be denounced as unchristian within a week.
So here we come to the discovery of “Shadow Contracts”.
Well, not entirely at the discovery of them. After all, another tool in the toolbox of manipulators is Gradual Change. The old “Put a frog in a pot of boiling water and he’ll jump out, but heat it up slow enough and he’ll boil alive” story. While that is an urban myth, all those myths exist because of a core of truth. Animals, which includes Humans, are incredibly susceptible to gradual change. As they are incredibly suspicious of sudden, drastic change. So when one looks at the above screenshot, one might not immediately notice something.
I didn’t. I missed it, even though i was staring right at it at the time. Captured it by accident. Can you spot it?
The deliveries do not match the reduction in open interest of the contract up for delivery
In fact, that screenshot exists in that current form because it was around the news that Nova Scotia, one of the bullion banks, gave up and quit their precious metal business on the back of huge losses from the crash in March. As i said everybody got caught with their pants down, including banks that suddenly in a panic had to deliver metal that they didn’t have. Naturally that doesn’t mean all metal is gone – it just means whatever’s left starts commanding a premium. Those premiums killed Nova Scotia’s precious metal business. A short time later they forced ANB Amro to sell and close their business in similar fashion and HSBC took huge losses as well.
Now as there has been some confusing sown over the name (and people don’t deal well with day/24h timespans), as the person who discovered the discrepancy let me make it clear once and for all what a Shadowcontract is specifically defined as:
“A Shadowcontract is a Futures Contract made in the current delivery month, slated for next day delivery.”– Kirian van Hest
There is evidence to support this definition.
The above screenshot is cobbled together from screenshots i’ve been taking of the current contract open interest in Silver for months. I tend to cobble the data together by just cutting and pasting stuff, because in the first place i have no 2D art skill what so ever so it’s never gonna look nice anyway (and you can forget about me being able to Photoshop *anything*. I can make a meme look decent-ish), and in the second place so that the data is both transparent and undeniable. I can make the raw, original stuff available on request (but i just save screenshots in layers of Paint.net, and with a 1440p desktop the files get kinda big), the only edit being i’ll crop out my 2nd monitor so it hides my horrible desktop management/what i was watching at the time. In any case, i wanted there to be no doubt as to the authenticity of the data: It’s all their own.
As you can clearly see, with 459 deliveries and 230 contracts removed from open interest, the numbers show a discrepancy of 229 contracts. Logic dictates that once you deliver a contract, be it a warrant or a bar, the contract must disappear because it has become worthless – the asset underlying is no longer the contract writer’s to give. Just like you don’t keep a job contract forever, once the job is lost, the contract is voided and legally speaking disappears – you are no longer employed at that business. Since the open interest changed with less then the amount of deliveries, and it pertains only to two very simple numbers – deliveries and total change of contracts that day, the inescapable conclusion is that: “A Contract Was Added”. In fact, 229 contracts where added on July 29th 2020.
Since these contracts go per month, there must be an ultimate delivery date, where the contract expires and any contracts left must be delivered, as the next day the next month becomes active and available for delivery. There is, and for Silver in July for the Jul 20 contract, that date was July 30th. And indeed, we see all remaining contracts delivered. This proves conclusively that 229 new contracts where made the first day and delivered the second day, satisfying the “next day” condition. Furthermore we can conclude that, because those contracts where delivered the next day, and delivery can only take place with an underlying asset (it’d better otherwise you’re effectively getting nothing, Registered is compromised too and the problem is EVEN worse), that the 229 contracts made where not naked shorts – they where legitimate contracts backed by an asset.
And here we arrive at another crux of the story, another one that has sown some confusion:
Are Shadowcontracts indicative of Fraud? Yes. Are Shadowcontracts Illegal? No.
The beauty of it is that on the face of it, it’s perfectly legal. Bullion Banks are allowed to make contracts with an underlying asset. As Market Makers, that is literally their entire function in the market. It was set up this way from the start. There’s ways to be legally fraudulent too you know, by taking advantage of a system that was never intended to function in a certain way. If you find a glitch on a webshop that allows you to buy all goods for $1, that’s fraud too. It may be their website and their lack of due diligence, but that doesn’t give you the right to exploit that weakness.
“Give me control of a nation’s money and I care not who makes it’s laws”. What if you where in control of part of a global money system, Thé money system, the international gold and silver markets?
Every good story needs a villain. So let me introduce Jamie “That’s why i’m richer then you” Dimon, CEO of J.P Morgan-Chase. Considering the seriousness of the situation i can’t see how this doesn’t go all the way to the top, but for the sake of plausible deniability, let’s focus on the bank he’s CEO of: JP Morgan, the biggest bank in the United States and indeed, in the world. Until the Fed prints its way past JP Morgan’s derivative exposure, of course.
Besides being the biggest bank by balance sheet, they are also the biggest bullion bank. By far the biggest bullion bank. Below is a screenshot of their current holdings in Registered and Eligible Silver, as compared to the balance sheet i already linked earlier during the massive deliveries.
Focusing in on JP Morgan, we can see the change on their books was a massive 29 out of 33 million ounces during the delivery wall. As a ratio relative to their size, that’s incredibly skewed. They are (nearly exactly) 50% of all silver holdings on the Comex, yet on that date they consisted of nearly 89% of the change from Eligible to Registered Silver. There’s more evidence that JP Morgan is in deeper then they’ll claim. Here i’d like to introduce another famous quote; “I’ll give you the bottom 10% and the top 10% of any move if I get to keep the middle 80%.”
7340 contracts is nothing to sneeze at. At 100 ounces per contract (734,000 ounces) that’s 22,8 tonnes of gold. At June 1st closing price of $1763.70, it’s almost $1,3 billion exactly. In 1 day. That’s why i screenshotted it in the first place and drew the box.
However, this time, they fucked up. Because i drew a biiiiig red box around those numbers to make sure people would focus on the right numbers. And when it made me focus on them, it made me think:
“….Seven thousand isn’t Six thousand…..”
The one off Shadowcontracts in May was genius. Small changes. If anybody would’ve noticed, the CME could’ve said it was a glitch in the website. Glitches happen all the time in tech, most of them happen once in very specific conditions and then never again; repeatable glitches are often patched out. The observant among you might’ve noticed that the design in the last screenshot is different from the earlier designs – That’s because between the middle of May and the end of June, they changed the layout of the website. I am positive they where planning on running that as cover in case anybody noticed a “glitch” after the design changed. (My thoughts at the time where “Oh cool this looks better it’ll upgrade the look of my screenshots”) After all; “It’s a new design, haven’t worked out all the kinks yet haha (quickswitchtoplanB)”. Should the one before the change be discovered: “Well, that’s why we’re changing the site, it’s broken.”
Fooled me. But…. A difference of a thousand is too much for me to swallow. Even though the actual difference isn’t nearly a thousand, individual numbers matter. That’s why you see stuff priced at 9,99 – because we perceive 10,00 to be vastly larger then 9,99 – even though the difference is the same as 8,23 and 8,24. Even though the difference is only 483, i perceived it as 1000 – And that triggered the ol’ bullshit detector.
Now, i can draw conclusions on the flimsiest of evidence incredibly quick, but even i’m not that quick. I thought the same thing as all of you would: Must be a glitch. Unfortunately for the Comex though, i’ve done an IT education and have always felt very comfortable around computers, so i’ve seen my share of glitches. Computers are stupid. All that talk about A.I. is absolute baloney. There’s nothing intelligent about it, all we’ve done is tell the computers to iterate on its own code according to set rules, and after a few million simulations we can’t read the code anymore. Well the same thing happens if you let a couple of self-taught nerds code the program, it’ll work just as well and it’ll be just as devoid of intelligence when you look at the code. COMMENT, you bastards!
Bad code is bad code. And the computer only runs what it is told to run. So, if the computer is told to run bad code, it’ll run the bad code regardless of what it says. It could be a glitch that detonates all nuclear weapons on earth; Computer don’t care. It Computes. Ergo, when it is told to run the same bad code twice, you’re going to get the same glitch twice. That’s what Quality Assurance consists of in Game Development: Jumping 1000 times in a corner to see if you can create a specific circumstance to jump through the world, exposing bad code. Once you can replicate it, you know where the bad code is located (and if you can’t replicate it it doesn’t matter, because the glitch only happens once).
Now since i didn’t know what kind of glitch i was dealing with on the 1st (and i’m a system operator and a problem solver, i dig like diglett) so i opened up the daily delivery notices for June 1st:
Going through the list, there isn’t any particular pattern or discrepancy that pops out to me, so i assumed it was unrelated to whatever glitch there might be. Lots of numbers under “stopped”, which makes sense on a day with alot of deliveries. Now i’m not entirely sure on the specificity of that terminology; i think it simply means “contracts opened and closed”, including shorts, so that’s what i have assumed.
Well the thing that pops out obviously are the 3 big customers on that list: Goldman Sachs, BNP Paribas, and JP Morgan. Goldman Sachs and BNP Paribas are heavily slanted on the Issued side; JP Morgan on the Stopped side. I figure “stopped” contracts includes contracts that are delivered, as those are closed on delivery.
Now considering JP Morgan’s size i didn’t think it was odd for them to be on the delivery notice in such force, though i did note i thought it was weird Goldman Sachs was on there, as they are not listed as a bullion bank. PNB Paribas is a name i’d already seen pass my newsfeed: https://www.bloomberg.com/news/articles/2020-05-06/hsbc-bnp-repeatedly-breached-trading-limits-in-market-mayhem.
So i felt it safe to assume JPM was on the right side of this trade.
But a glitch is still just a glitch. One day does not a pattern make. But it does peak my interest. So i went back the following day.
On June 2nd it happened again. This time with a difference of 277 contracts. I did look at the deliveries, but nothing that caught my eye stood out so i didn’t screenshot it. Though that’d just mean that JP Morgan returned to a sane issued/stop ratio, or possibly even went positive for a day to hide their shenanigans. Well, a glitch of 277 is 3 digits as well, so it was not impossible that it is indeed a returning computer glitch, a bug in the website.
Except that i sniff out my own bullshit as well, and that theory just didn’t hold water. Fine, a glitch in the website – but the design had been live for a week or two and in those two weeks – no Shadowcontracts. The website also is programmed to just display database data, often SQL and all this stuff has been integrated into live feeds these days because that costs less effort. So it seemed unlikely the glitch was in the website and not the trading data. I’ve seen plenty of glitches develop on their own…. And i’ve also seen plenty of exploiters in my day too. So we wait another day.
3rd of June and the pattern changed! Now, Not only do the deliveries and the change not line up; they’re POSITIVE!
Positive change of 1597; Meaning the glitch expanded to 4 digits AND expanded to such a size that now the number’s become POSITIVE?!
Once is happenstance. Twice is coincidence. Three times is enemy action. If it was a computer glitch, it wouldn’t have changed 3 times in a short time: 1. It wouldn’t have come into existence out of nothing after 2 weeks of stability, it needs a trigger. It also did NOT happen the day before with more deliveries. 2. It started repeating itself after coming out of nothing which is not normal behavior for one off glitches, 3. It changed its behavior to expand on a massive scale again without any identifiable triggers. As stated, computers don’t change on their own. Certainly not this often. And i’ve seen alot of bad code in my day but i’ve never seen a “rotating” glitch that just hovers on a particular error effect before moving to the next one.
This is a pattern of intelligence. Somebody is somehow actively messing with the numbers.
Numbers don’t lie, people do. So it’s pointless asking the CME for an explanation for this. If they where likely to be forthcoming with the information as to what is happening, they would’ve never gone into this situation the way they did, both in terms of overleverage, and the specific wording of the official document i talked about earlier. They’re already actively trying to hide their actions and a lie is the lowest effort form of hiding your actions. After all i never pirated a single piece of software in my life.
*cough* There is still some skill involved though *cough*
There is more evidence of course. In fact there are many more pictures to come. After i had basically come to the conclusion there had to be direct manipulation going on (and knowing the authorities would be useless), i decided to start forming a theory on my own. While i might be capable of detecting a pattern on short notice, that tells me nothing about what the pattern does or is what it’s for (though this one’s pretty obvious). Context does that, and absent context, i know nothing except where to look.
In this case all i had to go on where the general conditions of the time. I’d spent 12 hours a day from January 12th onwards reading all the news i could find (from all kinds of alternative sources) so you can definitely say i was well informed on the global situation. On June 3rd when i drew my conclusions, the protests in the United States over the death of George Floyd where just heating up beyond simple riots in the city where the event happened. The lockdowns had become politicized, where the Democrat party first was against them in the beginning (the left was stuck in it’s “don’t be racist hug a foreigner” paradigm for a while) now they had gone full panic mode – Mostly in response to the Republican side and Trump’s actions of “It’s just a flu don’t muzzle me muh freedum”.
Look i’m a-political; I’ve been hurt far too much to care about either side and i’m not gonna lead your damn revolution either. I just have a fervent hate for incompetent authority. Both for the powers that be that have caused this situation; And the many supposed experts on the other side that have been calling doom and gloom for years but stare so blindly at trees they miss the forest – overlooking this pattern completely. All Y’all can get Fucked. Even if you ride precious metals up, if you don’t recognize when it’s overbought and when to rotate out you’re just going to end up riding them down again – Just like the people who rode bonds all the way up and are now stuck in that paradigm; Meaning they’ll ride those bonds down too in 2021 and going forward.
What i care about is Truth and Data. It’s simply a fact the virus became politicized quite rapidly and it’s a fact one party is mainly responsible for it with clear motives for doing so (a failing of their objectives so far, to get Trump out by any means possible). I’ll leave the Americans to their own devices, as Joseph de Maistre said “Every country has the government it deserves”. But it does have consequences. The Action was of Trump to dismiss the virus. The Reaction was the Democrats changing their position to the virus being a big deal. The Consequence was their Support-Beyond-Reason for the lockdown. As there hasn’t been a trigger to change this strategy, nor is it a strategy easily changed (geopolitically speaking it’s a “corrupted longshot”; It’s still a long shot but nobody’s going to appreciate you for trying if it fails considering the damage it brings. But if you win you can blame the previous guy) the logical outcome was that this was going to continue. As this is an election year with the elections slated for November with the lockdowns starting in March – a distance of 8 months – it’s clear what the objective and the timeline was: Depress the economy to get Trump out, as people vote economy. This too is a well established fact.
As much as the United States likes to think it’s the center of the universe; The precious metals market is bigger. Much bigger. This because of the universal utility aspect of gold. But so far up to this point, the precious metals market had – since the failure of the London Gold Pool in 1968 and the resulting Comex system – functioned as am “Overleveraged Mexican Standoff”. Basically put, rather then have 2 or 3 people all pointing guns at each other, there’s a few million. All of them know there’s far less gold then there’s paper – but not a single one of them benefits from pulling that trigger.
This too has been leaning against the universal utility of gold, as when one of them pulls the trigger, they too will not be able to get gold in the future – and they all want gold. Sure, you might be able to collect the gold of whomever you “shoot” that’s closest too you…. But holding gold is no good if you can’t hold onto it through the crisis. In a situation where the gold price runs out of control, nobody really wins. Some people will get rich… But collectively so many more people become poor that the standard of living drops anyway. That leads to undesirable situations like tax increases. Sure, you can always pick up and move… But home is still home. There’s a reason we find Treason such a horrible crime. Home’s not something you want to abandon unless you absolutely have to.
But again this is why crashes matter. If the crash is fast, deep and pervasive enough, scams come to an end. The deeper the crash, the bigger the scam that blows up. And in this case, “what changed” was that the environment where nobody benefited from pulling the trigger changed into one where a few firecrackers where lit and tossed into the middle of the crowd. Not all of them will see the firecrackers before they go off. The ones who do; Know: When the fuse is burned and the firecrackers go off, the similarity of the sounds between firecrackers and gunfire means somebody who did not see it was firecrackers, will pull their trigger. Once somebody pulls that trigger, the resulting much louder sound will set off more triggers, as people realize the paradigm has changed. This is essentially what we call “Doomsday Demand” or “A Panic”. It is where these Shadowcontracts come from; those who saw the firecrackers get tossed.
So the collection of data continued but i didn’t have to wait very long:
See when a scam has been put into operation, you’re basically just running with it while looking to see if anybody noticed. Well i did, but i was a nobody. I had 25 followers on twitter left over from working as a streamer, which by the end of January had dropped to 18 because people didn’t like me spamming about a virus. By the time June hit around i’d climbed back up to ~40, but nobody cares about that few a number. I did tweet at Chris Martenson as he’d been the only one kind enough to as much as like a tweet in the months leading up to that point while i was feeding him as much info as i could (So thanks big guy! You’ve done this planet a service). I decided at the end of January that, considering my highschool dropout background that if i made a Youtube channel about the progression of the virus i would harm the cause more then help it. Especially since i was already failing to convince the people who supposedly cared for me. So supporting others is the route i chose to help. I don’t need to make a career off emergencies and had anybody picked up on my tweets over the months on the Comex, i would’ve been fine with remaining in the shadows.
But apparently this world is even dumber then i thought. During June where i kept regular tabs on the futures market, i was gaining no traction with my warnings so again i’d just go at it on my own. It’s actually now that i decided on the name “Shadow Contracts”. I’d called them mystery contracts before, but that didn’t have a nice ring to it. And if you wanna gain traction in this goddamn world you gotta use clickbait. Which i hate but as i started realizing what was happening and the gravity of the situation, all rules went out the window.
As you can see, the Shadowcontracts continued according to the pattern established at the start of June. Since the discrepancy happened without any media coverage by main stream media or alternative media, one could conclude the “switch”; The change from the normal to the new situation, had worked. As i’ve stated before, humans are suspicious of sudden drastic change. If it happens and nobody gets suspicious, that means nobody noticed – not that they wouldn’t have gotten suspicious. Meaning if you change out of that situation again, the same drastic change has to happen again, so it’s necessary to continue the scam (this is one of the reasons Ponzi schemes don’t have an exit plan – you cannot lower returns lest people get suspicious).
Time moves forever forward and just as you can see the need for the scam, you can see the need to expand it. That’s why i included the dates above – 12 deliveries with a 784 positive open interest change is brazen to say the least. Looked at it in a vacuum it’s highly suspicious; After the lead-in i’ve written so far i’m sure there is nobody that doubts any more that there is something fishy going on. This is exactly why establishing a pattern of behavior is important to manipulators, that gradual change. LITERALLY nobody noticed this going on. Even with me pointing it out, on its own, it was too abstract. Others got stuck in the mindset “Well there’s been dozens of people saying it was going to crash what makes you any different”. But ask those same people if they’d buy bonds right now and their response would be “Hell no people who buy bonds are stuck in a mindset”.
Why should i be right? Evidence. Cold hard indisputable fact. I thought the June deliveries discrepancy where obvious enough, but i was wrong. So; How does one create indisputable evidence?
Well. I’m a believer in Science. NOT that Dredge that gets peddled as science in 2020. Actual science. I believe Wholly in The Experimental Method.
Observe. Analyze. Theorize. Isolate. Design. Test. Observe. Analyze. Conclude.
It starts with Observing an event happening. For example, the discrepancy. You Analyze the observation to try and determine what is going on using Logic and Reason. Based on your analysis, you form a Theory as to what might be occurring. Then you Isolate the Crux of your Theory: What Mechanic is unique to your Theory that cannot be caused by outside forces? You Design an Experiment (hence the name) that tests the Crux of your Theory. You run the Test and Observe the results WHATEVER THEY MAY BE. Then you use Logic and Reason once again to Analyze the outcome of your Experiment. Finally, with the Test results, you conclude whether your Theory was correct or incorrect. Your next action depends on this: If you where Right, Great! Saves you some work. If you where Wrong, then you take the 2nd Observation step, you start a NEW chain with it as the first step, and you run through The Method again. Do this, and you will never make a mistake. You will only learn.
I’d observed the Shadowcontracts coming into existence where there previously were none. I analyzed the situation and eliminated causes best i could. Based on that, i formed a working theory: It made no sense that additional contracts for delivery where made and delivered during a historical supply crunch, therefor there must be some incredible rush to deliver these contracts against all odds and get them out of the system by changing title, and it’s a reason which others are currently not aware of. After all should others be aware of it, it’s the same as the information about an exploit spreading, demand would go exponential, and this would only hasten the rush, something directly opposite to the desired outcome as well. The fact that the event didn’t end quick showed unawareness, and thus a propensity to continue the event.
I isolated the key components underpinning my theory: Manipulation and a Hidden Rush into Physical (as it pertains to deliveries in the current month, not future contracts being traded by CFD traders for example). But then came the next step: Designing an experiment. How do you test manipulation by an outside source you have no control over?
You follow a pattern to it’s logical conclusion. A pattern is nothing more then a chain of Action-Reaction-Consequence-Actions based on that consequence-Reaction-Consequence Etc. This is also why i opened up with prediction: The closer to the future you are, the easier it becomes to predict it, as the ARC chain is much shorter between now and the moment in time you’re trying to predict.
In this case since i was checking the numbers on the daily by now, and i noticed that Silver wasn’t showing any Shadowcontracts at all, while they where being created by the thousands in gold. Sure, Silver contracts are a considerably larger size so a smaller number discrepancy would more easily stand out. As i also wasn’t aware of the Shadowcontracts test in May – i only discovered it looking back through my files in September (i’m a packrat) – As far as i knew, Shadowcontracts had never happened before – they started in June in gold when i first observed and remembered observing them. I theorized that because Silver was unloved compared to gold (the large and sudden increase in the Silver price happened mid July) it was also neglected and thus the rush to get it out was less immediate. As i said, in a crash everybody wants the safest haven. In short: If there really was such a hidden rush, it would make sense the important asset would be secured first; Important being a contextual human definition ofcourse.
As you can see, during the May Silver Delivery Wall, no shadow contracts existed. While i couldn’t be sure if i’d missed any Shadowcontracts, i could be sure of when there weren’t any Shadowcontracts. From that i could also reach another conclusion, as it’s an observation in and of itself: During Silver Delivery Walls; Shadow Contracts Don’t Exist. Which was still true in June; Ever since i detected the discrepancy on June 1st, i kept looking for it, and i had not yet seen any positive change in Silver (which, in hindsight, adds to the suspicion as it is another drastic change: Shadowcontracts didn’t happen, then they did in May, then the website changed, then they didn’t happen until much later).
So we have an observable truth from before the Shadowcontracts started. Since the key components of my theory are Manipulation and a Rush to secure assets, Logically, it was only a matter of time before Silver would start showing the same pattern. It may be neglected and viewed as a industrial metal currently, nobody will argue it doesn’t have value or that it isn’t a precious metal with similar monetary functions as gold in a panic – which is what we’re headed to once this information spreads. Maybe Shadowcontracts didn’t exist there now, but if i was right, they would show up in Silver eventually. After all, if there was no rush on monetary metals, Silver would stay neglected – Industrial recovery seemed unlikely in June after the protests turned into riots and it became clear the Democratic party wasn’t going to do anything to stop them; rather take advantage of the situation to deepen the economic depression for political gain.
With the crux isolated and the experiment designed, running it was as simple as just taking screenshots of the Comex’s website with the open interest in Silver and patiently waiting. Luckily, there was another delivery wall in silver incoming in July.
I Was Right.
And thanks to their belief that they weren’t observed themselves in combination with the rush for metal meant they compressed the normalization process for manipulation in gold into one month for Silver, putting it on display for all to see – Proving both the Manipulation and Rush components of my theory.
Just to begin with, i want to apologize for snoozing on a few dates so the data isn’t 100% complete. After catching the Rona at the end of February and not receiving help because according to the Dutch government “You can’t have caught corona if you haven’t been abroad” (those where official guidelines), along with burning every social bridge i had over the course of the year by warning people, not being believed and not as much as receiving an apology after the fact; It’s a testament to my character that i’m even alive right now. Regardless that left me with memory problems – my longer term memory is fine and if i can force information in there i retain it (slowly getting better); But my shorter term memory took a beating. So something as simple as remembering to check something (especially with everything else continually still going on) and the CME website strategically offering no more then 5 days worth of data for free (and i’m poor) – i simply forgot to check quite often as i forgot when i made screenshots continually. Regardless – The data is by far complete enough to illustrate and prove my point. I merely mean to say the size of the heist might be even larger then i’ve observed in its totality. Luckily i was lucid enough to not miss two days in a row, allowing me to mostly calculate the difference.
So let’s run through the picture top to bottom.
On June 29th, 16,834 contracts of Silver enabled delivery. I say enabled, because as per the old situation, you can roll over contracts to a later month until the last day of the month as they counted down on a regular basis, the first day deliveries situation is the new situation, not the old one, where contracts “stood for” delivery on the very last day. The massive deliveries on the first day instead of the last are a sea change in and of themselves. To illustrate the breath of the situation: 16,834 contracts amount to 84,170,000 ounces of silver. Even if that number where to occur today, with 246 million ounces eligible listed that’d be roughly 1/3rd of all Eligible reserves on the Comex that they say they have without audited books. Pre-whatever discount they’ll apply in the future.
At first, no shadow contracts occur during the massive deliveries. While disheartening i didn’t see this as disproving my theory at the time; Not if i can find a legitimate reason for why the effect might be delayed. I reasoned that, because they’d just gone through that massive discrepancy in June gold they figured somebody might be watching July silver. I picked up quite a bit of skill in “you know that i know that you know that i know” playing Instagib CTF in Unreal Tournament 2004, but that’s a story for another day. I also know humans tend to get bored veeeeery quickly (stories from people face-checking bushes in League of Legends) – They live on a short timescale. Delay an event by just a few days and everybody will have forgotten to check. So i wasn’t about to stop my screenshotting. It was merely a setback.
8 days in, on July 8th, i hadn’t seen the Shadowcontracts yet. Also my statement that final and preliminary reports don’t change in the current month is slightly false – i have since observed some changes; But in every instance they have been very small, on the order of low single digits (while changes in whatever contract is actively traded are much larger). So again, while the exact size of the heist might be slightly larger or smaller, it does nothing to change my argument, theory or the soundness of the evidence. The error margin is small enough.
Then the 9th happened, and the first positive change showed up. I won’t lie, i had a little celebration that night even though i realize full well what this means. The Big Short is one of my favorite movies, and the person in there who ended up being right was Ben Rickert. And while that might be true, i’ve been through hell and the win was sorely needed. I didn’t know if i could warn anybody else in time, but i’d settle for just being right at that point.
On the next day, July 10th, they disappear again. This is counter to the pattern in June gold where the discrepancy started and continued unabated during the large amount of deliveries. However this is not without explanation from a manipulation perspective. Time moves forward and the next delivery wall for Silver was a month away from the one in Gold, thus it would necessitate the scam starting a month later. Since the scam had already been ongoing for a month at that point and thus might’ve already attracted some attention (just because nobody in the known media posts about it doesn’t mean nobody is watching. Hello There.) so the start had to be different. One change does not a pattern make; But both silver and gold showing the same pattern in the same circumstance draws more suspicion. Not when it happens at the same time, but certainly if the change “suddenly” starts a month after the first.
During the massive deliveries in June, since the change was new, there is always the possibility of claiming it was due to the system breaking under the weight of those large amounts of deliveries. Everything is done by complex software these days, so who really knows how that works anyway. Had important people noticed, they could’ve stopped it under that claim and try another method. But claiming that after the start in Silver is unlikely as it’s unlikely they themselves wouldn’t have noticed such a glitch in the system ongoing for more then a month, their explanation would always raise some suspicion – incompetence only goes so far. Again, the key to manipulation is that the subject remains unaware of the manipulation, lest free will get in the way.
So the change in approach to the manipulation is what is on display from July 9th to July 16th. There’s more ways to skin a cat as they say, and in this case to the casual observer looking at only one day at a time nothing seems out of the ordinary. A small discrepancy is more likely to be a glitch then a large one – on 7340 contracts, 483 where added in June. After the people expecting a large discrepancy dismissed the possibility after the delivery wall didn’t contain any, normalization was achieved by showing the “glitch” on and off. As i’ve said before normal behavior for glitches is that they reappear under the same circumstances because computers always run the same code; But one off glitches created by interacting systems do exist. Seeing a one off glitch appear and disappear leads to a singular thought:
“Oh, so it can glitch.”
Once you’ve had that thought, the trap has already been sprung as the normalization process has begun through the establishing of a pattern. Because after observing Thursday and Friday, if you then observe the positive but still slight change on Monday, the next thought you have is:
“Just another glitch day i suppose.”
It should become apparent how humans through the passage of time and the chain of events normalize this sort of behavior for themselves. Make no mistake; this is some high level shit. Whoever designed this plan is very skilled; and i would commend them on a job well done; There’s many more intricacies i’m noticing that i’m not mentioning merely for brevity’s sake. Let’s just summarize by saying: I enjoyed the chase.
But; The pressing matters remain pressing so no time can be wasted on any single stage. Thus the next stage starts on Friday the 17th – Continuous Shadowcontracts by having them on back to back days. While this officially constitutes a change in pattern, it is not apparant because +20 falls well within the range of the “glitch” of the past week. Humans are much more susceptible to a change in number then to a change in behavior, as we consider numbers to be absolute but behavior hard to read. One can be used to run cover for the other.
Just a few days later, on July 22nd, the pattern got hit by another change: The “increase stage” of the Shadowcontracts with a positive change of well over 200. Since each contract is 5000 ounces, on July 22nd, 1 Million 85 Thousand ounces worth of silver contracts where added to the pile; And for certain delivered within the next 8 days as not a single day thereafter contained a negative change indicating contracts rolling over. I can’t make the proof any more solid then that. On that day, 1,085,000 ounces of silver had a nominal value of $25,111,240. 3 days earlier, that nominal value would’ve been $21,403,795, because the closing price of Silver on July 19th had spiked from $19.727 to closing $23.144 on July 22nd.
You will notice that as time goes on, the stages become smaller – the next big lump of contracts happens just 2 days later. This is because they no longer need to test the limitations of how “wide” they can push the “glitch” – As the event where a massive positive change in gold beyond all deliveries had already happened and nobody noticed. True, had a large media organization jumped on this fact at this time, they would’ve been screwed. But that’s not what happened, thanks in part due to the normalization process by this time spanning well over 2 months – starting from the very first test in silver in May.
A day after the lump of +79 contracts didn’t draw attention, they applied the same positive change test to Silver with +233 contracts on the board which has also gone unnoticed.
It is at this point that i wish to draw attention to another fact that proves it is active human manipulation shenanigans and not organic trading or computer error. The pattern is Structured. This is proved by the simple logical question: If a positive change in contracts is possible as evident by the +233 contracts, Why didn’t it happen before July 27th?
One racing game i played alot is called Trackmania, which involves restarting a map as much as you like within a certain time limit – the objective being to make it to the end in the best possible time per run, giving you multiple runs to improve. The easy to use map editor is part of the appeal, driving through many zany maps you have little to no experience with and try and making it to the end. And from that game i learned two important lessons. The first being “just because you can’t figure out how to get to the end within a certain time doesn’t mean others are cheating – they are to be learned from”. Useful in games, but less so here (if you already believe me). The second lesson though was: “If you can hit the wall to the left of the finish, and you can hit the wall to the right of the finish, it’s possible to go through the middle”.
If it was possible to have a positive change in June gold contracts, and it was possible to have a positive change in July Silver contracts, then why didn’t it happen between the start of the deliveries and July 27th? Ergo, if we assume the system never changed and it was the same glitch all along, why didn’t it show itself before July 27th, even though Shadowcontracts proved to be possible long before then?
Random Chance says that is impossible. The consistent nature of Computers says that is impossible. But active conscience behavior says it’s possible.
On the last day, no Shadowcontracts are added as it is the last day the contract exists. Conceivably they could still add Shadowcontracts for same-day delivery on the last day, which’d show up as a discrepancy between the total open interest at close on July 29th, and the total deliveries on July 30th. However another good explanation exists to not do so: The number would have to be kept small as to not draw attention so it’s nothing in the grand scheme of things; And it constitutes a 2nd number that doesn’t line up. The more things that “break” the more calls to check the system for glitches, the more attention the scam receives. Better to lose a battle in order to win a war.
Arriving at the end, we can tally up the numbers:
- 16,384 contracts stood for delivery on June 29th. To the best of my knowledge, 17,294 contracts where delivered in July. This is a difference of 910 contracts, representing 4,550,000 ounces of silver, with a nominal value on July 30th of $106,297,100.
- If we leave out the contracts that rolled forward to the next month – AKA the days with a negative change and only count the disrepancy AKA the positive change (assuming fungibility of contracts), then that number grows to an unexplained 1,198 additional contracts made. This number represents almost exactly 6 million ounces of silver. As per the July 30th closing price of $23.326; this represents a value of $139,722,740.
In 1 Month.
The +3480 gold contracts in the week of June presented earlier would come to $592,261,200 at end of week price of $1701.90. And at this point i should mention that during the making of the July screenshot, the price of silver started to absolutely soar. Where the price of silver per ounce had been going sideways for a month and a half, from the 18th of June at a price of $17.508 it slowly started to tilt up, until the the week of the 19th of July when it went parabolic after hitting $19.727. On the 27th of July the price hit $24.501 (peaking at $29.915 on August 10th). During this time, 702 Shadowcontracts representing 3,5 million ounces of silver where made and delivered. While this initially might not seem a large amount on a total inventory of 200+ million ounces Eligible silver, i would refer back to the CME group’s document stating they actually don’t know how much is available – so to have to make 3,5 million of ADDITIONAL ounces of delivery is far more taxing then it at first appears.
Since we have reached the end of July; the focus switches back to Gold. While the evidence i collected supported my theories without fail up to this point, that does not mean my categorizing of the event ends. While i never made consistent screenshots of gold (so i have no idea how much gold or the value thereof was taken out) i did check visually on a nearly daily basis. My twitter timeline will contain many separate days if you care to look. Especially as July moved onwards and the August contract wall came into view. And just to show that i’m also not above publicly admitting mistakes, the prediction that Comex will die in December isn’t the first one i made:
Naturally by the middle of July with so many deliveries being made (and my knowledge of shenanigans) it was logical this not only was going to end, but going to end soon. I had seen the lead up to the June deliveries, so i knew very well the contracts had to roll over and would do so later. But the rate at which they would was what interested me. It’s easy to forget when you’re talking numbers like this, but there’s people behind owning those contracts. They may be banks, hedge funds or retail investors, but they’re all still people. Whether or not a contract rolls over or delivers is a choice that needs to be made by a human. So the shorter a time the more contracts you need to roll (due to overleverage), the more “voting power” that is required for more people to make bigger choices. Even if those people are whales in the market (meaning very large holders) the voting pressure doesn’t change – bigger decision, more risk.
Since i had seen June roll over with 30k to 36k contracts of gold at the same time, my mistake was assuming it couldn’t go much higher. In the end, on one day ~45k contracts rolled over and the next day ~49k contracts rolled over. Representing nearly 10 million ounces that decided not to stand for delivery. In the middle of the Chaos that was the planet end of July 2020. Murder Hornets, Regular Locusts, and Marxist Cockroaches all over.
Even so; i was damn near correct anyway. As the Comex has a habit of doing, they changed the rules in order to survive yet again. While the raising of margins is a well known tool they employ (and have done so this year again), on July 27th – 2 DAYS before the August Gold Delivery Wall hit, the Comex expanded their list of refineries for both gold and silver.
See, the Comex deals with 100 ounce bars per contract and those have to be made. Even the 400 ounce bars from the LBMA have to come from somewhere. Well, these come from refineries that have contracts with the Comex to deliver them bars to use in trade. Now, because gold is such a desirable good naturally the chain of custody – meaning the path from mine to vault – has to be trustworthy. It doesn’t have to be, we can always check the bars for authenticity, but that’d be an awful amount of effort on a daily basis and would hamper trade. So, by dealing with trusted refineries which are subject to heavy compliance, one can be assure that the bar in the vault is in fact 100% gold. Naturally, strict compliance means only a limited amount of refineries can comply. Fine in normal times, not very useful in a panic situation.
On August 24th via Ronan Manly at bullionstar.com i came across the reason why my prediction had failed: On July 27th, Comex added a massive amount of refineries to its “approved refineries” list, increasing from 69 Gold refineries before July 27th to 231 afterwards, and increasing the tally for Silver from 75 to 180 in anticipation of September. This is without a doubt a move of pure desperation as it ruins the chain of custody, and that alone is suspicious as fuck and should’ve caused immediate intervention by the authorities. While i’ve got nothing against any refiner added in particular; It’s not about them. It’s about the process, it’s about procedures that need to be followed because otherwise it opens up the system to fraud. Add more fine, add so many so quickly; No. At this point in time, it is impossible to say any of the gold bars delivered since August deliveries are genuine.
They may very well be, it’s even still highly likely – But the chain of custody and with it, Trust, was breached and now we have to deal with that. Which can only be done through a wholesale audit and checking Every. Single. Bar. It’ll be tedious, costly, and very likely amounts to nothing. But because of the Comex’s own actions, it has become necessary. Since scams within the gold market are not unheard of and infact, to show how recent those are this story broke on June 30th, concerning a 83 TONS gold scam out of China: https://www.insurancebusinessmag.com/asia/news/breaking-news/picc-several-other-insurers-tied-up-in-chinese-fake-gold-scam-226460.aspx. Again; Crashes matter. They tend to weed out scams. And the Comex did add Chinese refineries to the list, while being an American exchange, and i hear those countries aren’t on the best of terms right now. They can be completely legit, but trust carries an element of appearance with it, and this all doesn’t appear to be trustworthy.
You can read Ronan’s original article here: https://www.bullionstar.com/blogs/ronan-manly/lbma-comex-collusion-intensifies-as-cme-approves-267-lbma-gold-and-silver-bar-brands/
While the preliminary report shows 47k contracts, the final report which i didn’t screenshot showed 49k+ contracts rolling over.
While the number of shadow contracts slowed down somewhat towards the August contract wall, they still appeared at a regular basis. July 24th showed a +388 change. 300 shadow contracts on the 27th, A positive change of 481 for a total of 823 contracts on the 28th, and 1 on July 29th (shrug). Just these 5 days (4 really) amount to 1595 additional contracts for 159,500 ounces of gold at an end of month price of $1985,90 per ounce, so with a nominal value of $316,751,050. These are frightening numbers for discrepancies. Especially since the price ran into a glass ceiling just 6 days later, reaching $2089.2 per ounce of gold and dropping precipitously. Considering this was going on during the changing of the refineries list, which is not something you do in day in every circumstance, i have to question if that change wasn’t set into motion long before July 27th, or long before any date expected by others. As there is evidence of Shadowcontracts slowing into a delivery wall indicating delivery problems even for the perpetrators, which we will get to shortly.
If memory serves correctly, around 47k contracts ended up standing for delivery in August gold delivery. Now, that was still a stretch – they still have to deliver. But what many people forget is that as long as nobody puts a stop to the system and as long as the system doesn’t crack under the weight of demand, it fully functions as it always has. As i explained in the beginning, this all is being done via perfectly legal contracts, made via the exact way the system was designed to function, with bars being paid for in full. It Rapes the spirit of that system, but mechanically it’ll operate happily just like a computer will happily execute bad code.
They don’t have to deliver on the first day of the month. Per February; It’s infact expected (or used to be) that all deliveries take place on the last day of the month. So this made the amount of contracts standing for delivery interesting, but not final. Only when they make it past the hump for sure does it become final – a moment only the owners of the books are truly aware of. All we have is the numbers they give us, strategically obfuscated ones at that.
As for August gold, i actually don’t have any screenshots as it wasn’t of any importance as strange as that sounds. At that point time, start of August, nobody had yet picked this story or any of my tweets up; though i got a few likes along the way. My Twitter follower count started to climb after the July thread (which i just filled with hashtags for good measure) but i can’t remember it being much higher then 60ish. My personal life hit rock bottom, then went straight through it, so i wasn’t inclined to do much of anything anymore. As i hadn’t taken daily screenshots from the start in gold, i knew i hadn’t got a complete picture which is what people would demand. And i also knew the supply problems in Silver to be much worse as i was still reading a lot of news every day, especially any news pertaining to gold and silver supply problems.
The mine shutdowns for silver where much worse then for gold, as after years of neglect, most silver was mined as a byproduct of industrial mining, especially lead, zinc and copper. With the shutdowns and the ongoing pandemic, industry and with it silver supply remained depressed. To make matters worse, the main district where silver is still mined specifically for the silver alone is Mexico – Unfortunately very harshly hit by the virus leading to extended mine shutdowns especially in the second and third quarters. The site i used to check for local prices started taking orders again in late May at still a heavily depressed price. But the premiums on that silver, that used to be 4% when i bought my ounces in December, had been changed to a flat rate and cost €59 per kilo of silver – a 13,1% premium at the time. This pushed the price to just under where i had bought my silver in December, until it passed it a few days later and hasn’t been south of it since.
So let that be a lesson kids. Paper and Physical prices don’t line up. Paper goes too low, you either can’t buy the physical or the premiums go up to provide an actual price. Taking this into account, there where only a handful of days in 2020 where somebody could’ve bought below my 2019 price (and i know somebody who did actually). Even with the heavily manipulated and depressed price currently (i’ll get to that too); i’m still up 26% on the year on silver alone.
Focusing my attention on silver then, even though August was a “non-active” month (meaning it contains barely any interest to begin with) i continued making screenshots anyway. While i’d proven my pattern, the pattern itself was not done yet and would run its course regardless of my actions. After all once the big guys who are supposed to be watching believe nothing fraudulent is going on, beyond the regular shenanigans (have you morons never heard of burying a smaller chest so nobody goes looking for the big one?) GOOD LUCK turning that ship around.
Comparing July to August in Silver, we can just as clearly see the invisible hand at work. If it was due to the cause of something like balance sheet rebalancing (meaning a human hand, but a legitimate one following a set pattern), the pattern would repeat itself month to month: No Shadowcontracts at the start, lots at the end. The reduced open interest should only reduce the flat rates, not the ratios. But that is not what happened.
Coming up right from the start, the first day of deliveries shows a massive amount of Shadowcontracts. Taken as a continuation of July it makes sense; these contracts where being made and delivered en masse right up to the start of deliveries in the August contract. But out of context, taken as just the first day of August deliveries, a non active month, it makes little sense… Unless they felt it more important to continue the established pattern rather then the consequences of somebody looking at this in a vacuum, lending more credence to the rush theory.
4 days in, the pattern changes: Shadowcontracts crater and virtually disappear again. I’m sure at this point nobody behind the scenes thought anybody was looking or cared, so i doubt this is done out of anything but necessity. Naturally, due to the shrinking of open interest and it being a non-active month to begin with, they couldn’t push the Shadowcontracts to their limits unless the reasons changed (such as the situation becoming more acute – AKA the rush element increasing yet again).
I can offer a explanation for the necessity, and it is the same i’ve been offering so far: The continuation of the pandemic, the escalation of polarization within the US political sphere, and the continuation of linear time; The more delivery walls pass without abating, the more titles change, the worse the situation gets (but it’s going to get worse anyway, so you might as well continue).
In short; Just like they had the necessity to expand the list of refineries, they had the necessity to make sure they could actually make the September delivery wall in silver after the wall in August gold had passed. As the situation was more dire, it required even the pausing of the scam in order to make sure inflows/earmarked supply could meet the deliveries.
This is combined with again the continuation of time: They had already gotten 6 million silver ounces out under the radar and god knows how many in gold. We know the Eligible number to be highly fraudulent due to not knowing who truly holds the title to the gold. So maybe they just ran out of available supply altogether. That is not to say that the vault was empty, but again, if you know the future you will prepare for it. Since they do know who has the title to what, they (the banks/Comex) had to make sure that the expected delivery for September met with the expected supply. If you ask, why not end the scam right here since it has essentially succeeded? Because the system will mechanically continue to serve them as long as it doesn’t break under the weight of demand and nobody puts a stop to it either. One more bar out the back is one more bar in possession after Armageddon. And after Force Majeure is declared, whoever holds the actual physical, wins. More physical wins more. Greed is its own motive.
Since the numbers are so low there’s little sense looking for patterns; Nor do i see one when i stubbornly try anyway. It’ll be noise in the scheme of things and i’m going deep enough already. Suffice it to say they show evidence that the scam continues to be active as well as continually reduce towards the September delivery date even with very low numbers, ending at 0 before the final delivery date. In terms of delivery structure, August silver was the exact opposite of February gold; Everything early on instead of everything on the last day.
It is at this point in the story that i can offer some kind of summary; And my personal story takes a turn for the better. I may have been spamming the hell out of Twitter, it was anything but random (though i had to learn along the way). I’ve tried adding different people who i knew to be in various sectors to my various tweets to see if any of them, ANY OF THEM could actually recognize real shenanigans when they saw them. After all i’ve been hearing nothing but doom and gloom and permabullishness from the gold and silver bugs. While i’m sure some must’ve missed my work due to being busy and Twitter isn’t a communication platform anyway despite everybody being on there – And i will fully admit i didn’t know all of the people in the sector so i haven’t tried them all – i’ve reached out far more people then an Autist going through multiple traumatic events with a history of em should be capable of.
So thank god for Tom Bodrovics from Palisade radio. I’d already come across his channel when i started adding more precious metal stuff to my Youtube subs list and at some point, out of sheer desperation, i started tagging the Youtube channels within the space that i was following at the time. He had alot of varied guests, and i like lots of high quality different datapoints. Because i figured “I sub to those channels, i’m one of their much appreciated viewers, maybe they’ll have a bit of time for me then right?”….. Yeah no everybody is so busy these days. Fuck all of you, genuinely. Twitter’s hashtag algorithms can get fucked too, as well as anybody currently in charge of regulating anything. You’re all cunts. Again shout out to Chris Martenson who atleast gave me a few fucking likes. He’s an actual nice guy.
Thanks to the void that was my notification feed though, i immediately noticed it when Tom liked one of my slightly more detailed, but separate threads about the discrepancy. I had a bite! Naturally i wasted no time tagging the fuck out of him going forward. I like it when people recognize a problem when they see one! It didn’t take long after that for Tom to send me a message and he invited me to talk on the show. Naturally i said yes, but still being extremely apprehensive and anxious at this point (look getting others to look at an emergency fine but having to stand infront of thousands to proclaim it is something else) i asked for time upfront to get to know him (or in other words, time to suit up the armor incase i got another knife between my ribs).
But he very graciously understood and i met him on a Saturday. While it wasn’t determined how’d the conversation go or even if we’d record that night, we just started talking about the Shadowcontracts. Having finally somebody to talk to i more or less just unloaded everything – Which has turned away more people then you care to know in the past, but Tom just ended up getting more and more excited. As my mind is nigh uncontrollable when i get excited myself the conversation veered all over the place in economic matters and it quickly became clear to Tom that, though a faceless avatar on twitter, i knew far FAR more then any of those with a very slick professional photograph in a suit. Why do you think i keep the avatar? I don’t want to associate myself with those people.
We ended up just talking (or well me unloading really) for over 4 hours. Convinced he wasn’t out to screw me and it was clear to him i was the real deal, the interview was set for the next Monday. Just laying out what we where gonna talk about took another hour up front, and he STILL went into the interview more excited then me cause he got my name wrong off the bat and dropped a question about ETFs on me that, amazingly, up to that point we hadn’t talked about and i hadn’t even considered yet (so you wanna see me run through logic live, that’d be the question. Look for the pause). No slight to him; It’s just weird to see somebody get excited about what you know, even more excited then you, when nobody ever has. Needless to say we’ve become friends.
If up to this point in this story it has become a bit confusing because it’s all a bit much, trust me i understand. While none of this stuff is complex, it is very high level, meaning it requires you to hold many thoughts of importance simultaneously, as the place you aren’t looking is the place where the manipulation will be directed towards, the more skilled manipulators being better at this just like higher skilled Magicians are. So why not take a break and watch the video below which explains this all in a more compressed format as a recap (keeping in mind it was recorded on August 31st and this article was typed at the end of October, so with 2 additional months of knowledge and collecting my thoughts). And while i’m not that comfortable on camera anymore, it does have a photo in the thumbnail to put a face to the avatar.
To loosen up a bit allow me to dedicate a few words to those who’ve been on the social media grind a long time tryin’ to get followers, for right or wrong, for business or pleasure, what being featured on a channel with (at the time) ~32 thousand subscribers does to a true unknown channel. Yknow, the dream all of those people have of blowing up out of nowhere because you believe you’re special, just not yet discovered (hint: you gotta put in the legwork too). And since i only had a Twitter at the time, all attention was focused on it. So what did that interview do to my Twitter channel?
Well, by early August i finally passed my 100th follower. On August 31st the day before the interview went live, i had 135 (i checked cause i knew the future so i wanted to keep track). Didn’t sleep much, woke up early in the morning at 9 to go pee and when i came back exhausted i wanted to sleep; But decided to check my phone anyway – A notification from Youtube that the video had been posted 17 minutes ago. Since i worked as a streamer for 11 months i had plenty of time to think about this moment and getting it in this early was perfect, so i booted up the ol’ PC and checked twitter ~35 minutes after the video was posted. I was already up to ~225 followers.
The more speed you can put into that snowball in the beginning when you have to roll it, the faster it’ll go down the hill when it picks up momentum. So i got to work, replying to every single person and comment i could find. Feedback was universally positive, which is genuinely what has surprised me the most. No trolls, no negative comments, for weeks. A few hours later, i passed 500. Around 600 followers i had to abandon Youtube as the reactions on Twitter started flowing in so i decided to focus my attention there. I wanted to stay up and see if i could hit 1000 in a day, and around i think 2 in the morning i did.
When i woke up in the morning, again around 9, i checked my follower count immediately, and it had just passed 1350. I had 10Xed my channel in 24 hours.
While the rate slowed down and i’ve forgotten the milestones along the way, the one i won’t forget is 2700 – 20x in 10 days. Though, i lost momentum after my stomach started hurting and i had to drop out appearing at a convention called Silverfest (i owe Chris Marcus an interview). Spent the weekend groaning instead. It was checked (deepthroated a camera) and nothing wrong was found – so it could very well just have been recoil from pushing myself far beyond my limit for literal months. So i went up to 2780 where it hovered a long time in consolidation, then slowly started dropping towards ~2730 where it has been in the ~2 months since.
Goes to show; there is no organic growth on Twitter. Only external spread – people coming in via a large presence who recommends you (shout out to Willem Middelkoop who pushed me from 2200 to 2700 and has since become a fan) or an external source such as Youtube, via the same mechanic. Hashtag spread is minimal – i filled the July thread with hashtags but no tags of other people, it being by far the most viewed thread in August made at the beginning of it, pushing my followers from 100 to 135. Doesn’t matter who you are. It’s about who you know. Sharing works – but only to bring something to the attention of a established presence (if you like a tweet that mentions somebody enough it pops up in their notifications). If you are an unknown using the systems Twitter provides (and really any social media platform but Twitter is the one i know), You’re Fucked.
Anyways with my increased social media presence and exposure on Palisade Radio, it wasn’t long until i got a message from Robert Kientz from Gold Silver Pros. He had noticed the same beast as i had with his own research, but had only seen its shadow, observing various disconnected events in a vacuum. As i said before, if you look at any one day in a vacuum and you don’t focus on the same number multiple consecutive days it all looks like a glitch. It’s like he was looking at a large jigsaw puzzle without the picture on the box; Which i effectively made clear to him. That interview, though it goes somewhat deeper into the numbers and is harder to follow, can be found here:
As a note, people have noticed/asked why i sound very different in this video compared to the Palisades one. For the record, it’s because with Tom i had talked over 5 hours up front while with Rob we started recording almost 5 minutes after me meeting him. So it’s not that i was tired it’s more that my thoughts where uncollected and i was effectively talking to a complete stranger. Which for me means i have to do live calculations of what they expect me to say, as i’ve yet had chance to analyze their behavior and personality so i’m literally blind as to what to expect every single sentence. I don’t know how a person feels about what i said, until i get a reaction back from them. So basically having to calculate social behavior (don’t say anything that can be misconstrued) while having to recall and process high level information while remembering my camera presence… Well even i have limits :p Increases the time between sentences, explanations are redesigned literally while i’m speaking, and an added problem is my mind is always fast. I can’t slow it down, just as much as an idiot can’t speed theirs up. The information i’m trying to convey goes through my head so rapidly, if i can’t speak rapidly, i’m basically repeating words/sentences to myself in my head (literally idling thoughts) or i get ahead of myself and i lose the plot, making things worse. Effectively this means i sound sleepy. In normal conversation, you wouldn’t notice.
The moment the recording ended and i felt less need to perform, the conversation immediately relaxed. Especially since that happened to be during the start of the September correction in the markets, so they’d just taken a dive. Sorry for not catching that one followers! I really was busy and it was going to happen eventually anyway (after the market passed 10k on the Nasdaq and my “it won’t pass 10k again” prediction in June failed i admitted “i can’t call this market”, so this one ain’t on me!). We ended up talking another 15 to 30 minutes about the correction after the recording where only then as i cycled through various instruments to check their prices, Rob started to realize the same thing Tom realized upfront, that i knew far far more then just precious metals as my conversation speed increased and thoughts aligned. But i only learned then that he was also quite pressed for time and had to go. Ever since he’s been extremely supportive in trying to get the word out and he’s become a good friend as well. We have a new video series coming out on his Youtube channel soon!
Our little sidepath into the world of social media concluded (not without its use as the spread of information via social media will only become more restrictive going forward; So it’s important to know how it functions to skirt the system) let us return to the shadows. Because we are not yet done.
When we left off, August had concluded and the system was preparing for the September Delivery Wall:
Now initially on Twitter i announced i wasn’t going to take screenshots anymore as the information was out there, spreading. I needed a break and Robert was on the case… But the ol’ brain couldn’t leave well enough alone. Naturally i was going to check the site, and when i saw the contracts return on the 1st of September i knew the deal plan wasn’t done yet. Or well, it was, i stand by what i stated in the video with Tom: The plan has succeeded. The villain has won. None of this was illegal, it is simply making use of a broken system in a way that wasn’t designed for it. Gamers do it all the time (though i don’t approve of such in a multiplayer setting). You people really underestimate the massive skillset you can lift from videogames if you go looking for it.
Can people go to jail for this? Yes of course, the operators of that system should go to jail and the people regulating the regulators probably as well…. But the participants cannot be faulted for the failings of the operators or regulators. If they could, markets wouldn’t be able to exist. Planning for perfection never works.
Still a raid tho.
In the end i’m glad i continued the screenshots as the result exceeded even my expectations. See, as i read the September wall via the diminishing amount of shadow contracts, i concluded (for the time being as i had to wait too) that the plan must’ve worked, the vaults are virtually empty, they need every scrap to meet deliver and afterwards we’ll just see new inflows immediately be delivered so no metal effectively “touches” the Comex. Where the plan at first was selling paper at the front door to distract from the physical moving out the back door, now they’d just directly toss out the back whatever came in through the side door.
I haven’t seen anything that has negated that theory. If anything the intermittent pattern at the start of September confirms it: First none, then 15, then 101 contracts roll over to the next month, then 105 contracts get added, then a combined 162 removed.
This is not a Futures market. At this point it has started to function like a spot delivery market – and a inconsistently broken one at that. You tell me. I invite every Cynic, Skeptic and Non-Believer to give me one good reason why 101 futures contracts are either destroyed or rolled over to the next month, the day before 105 get added which could’ve been delivered god knows when because that’s too much transparency so it’s not published. You tell me the reason 230 FUTURE DELIVERY contracts are added on July 29th, 1 day before that contract MUST be delivered, 2 days before the NEXT contract becomes active and offers a MONTH worth of range in time to deliver the contract in!
These are FUTURES. They’re supposed to underpin future production and serve as a hedging tool for producers.
NOT TO DEMAND IMMEDIATE DELIVERY BEYOND CURRENT SUPPLY!
Again the only explanation that i could find is the simplest from a perspective of manipulation: Supply issues. They where still not sure if they could meet all deliveries before that important final date of the month. Their inflows had been planned, but not yet locked in. A plan isn’t a success until it works in its entirety. In fact i predicted as much: On twitter i said that the price of silver would be free to move up after open September interest reached below 2500. Lo and behold: I was wrong.
Well i got the location wrong, not the pattern. Prediction’s a Bitch. Anyway, i can pin you the date where the Comex was ensured of adequate inflows to meet demand: The weekend between Friday September 11th and Monday September 14th. I imagine the contracts before that date are some sort of result of them trying to balance the books. When scams get close to failing they tend to start “trembling”, or in other words start having severe unpredictable effects that are uncontrollable by the ones operating the scam caused by external pressure. At that point as with anxiety, hope is the last recourse; Hope that nobody notices.
My information might’ve already started to spread at that time, me or any of my new friends aren’t by any means big enough fish to affect change on such short notice (as evident by the scam continuing to this day). So the Comex survived this much as well, secured its inflows, and continued throwing everything out of the back door in preparation for the day they got served with warrants instead of dollars. While i didn’t make the connection at the time; Considering they had just tripled their list of refiners with the supply of goods having largely recovered (the civilian population might still suffer from the virus’s effects political or otherwise, mines have instituted controlled safety measures and have largely resumed production while China started stockpiling Copper/commodities like mad in preparation for hyperinflation of the Dollar, increasing industrial production); It’s only logical that inflows would increase tremendously. While demand would crater after September, as the next delivery wall was December – there being virtually no open interest left after the September wall. The moment the refineries came through – the shadow contracts exploded in their aggregate amount.
I’ll let the numbers on the picture speak for themselves. More then 14 MILLION ounces of silver, representing a value (on September 29th) of $351,885,775. That is $351 million EXTRA deliveries in 1 month of silver alone – lord only knows how big the true heist is when you account for the additional gold deliveries.
Not just that, but more numbers start to line up as the plan continues into its advanced stages – the trembles i spoke of earlier as margin of error decreases. The main event might already be over, but another day survived is another bar out the back, nor does anybody involved in this benefit from the situation ending. But it does start to show up in other numbers.
Comex works with Active and Non-active months. That means, some months have a lot of deliveries, and some have few. This used to not matter since deliveries where far and few in between anyway, but with the delivery walls it’s become much more apparent. One of the effects of the inevitable end can be seen in the spread of these contracts: At the start of the year, the total amount of contracts on the next active month as a percentage of the whole used to be less. Just compare these two screenshots:
Currently, 127k/160k = 79.80% of total. Back on May 11th (taking into account that was in the middle of a delivery wall most of the volume already rolled over) it was 102k/135k= 76% of total. The next active month – Mar 21 and Sep 20 respectively – contain 14.31% and 12.22% of total open interest. So currently, The next 2 active months contain 94,11% of all open interest, while in may that figure was 88.22%, which is a considerable change for a “stable” market. The reason for this is again supply shortages: The longer the time between now and the majority of open interest, the longer the time they have to find bars to match those contracts (pushing back dates to make payments). Ever since the 16k delivery number knocked down eligible silver, it has been building back up in anticipation of December, leading there to be far more metal in the Comex’s vaults now then before (not that they own the title though!!!).
Where on June 30th the combined total for Silver was 321,18 million ounces, today it is 381,8 million ounces. At today’s price of $24.065 an ounce the difference is worth $1,458,820,300. This includes both Registered and Eligible. Far more of this metal then people realize, due to title, will never trade again. At least not on the Comex. And i must say; Congratulations to them for finding 60 million ounces of silver (which weighs 1,866.18 Tons, or 16.5 fully loaded Boeing 747-400f cargo planes) in 4 months during the worst pandemic in history in Economical terms (There might’ve been more death before; We certainly never locked down the world before; And we only get to do it once “at the peak of Globalism” at the same time). I think people in general are very much unaware of the very real demand out there.
To return to the September shadow contracts; What i haven’t shown in the picture (for brevity’s sake because too many numbers spread too far apart make people go crosseyed fast) is the combined open interests between all the months between the start of September and the start of the December contract (which is around November 29th). Now, so far it’s been unimportant. As you can see from the overview from May, there’s no pattern to be found combining open interest until next month. It doesn’t line up with volume, deliveries and Shadowcontracts weren’t even active at that point. But, as the plan has started to tremble more due to lack of supply and reliance on inflows, it has started to line up with something; The Shadowcontract prevalence.
Again i can provide the data on request. When comparing these 4 rows, i wish for you to remember that the Combined OI includes all open interest at close for September, October AND November. So that is a spread of 3 months where contracts are continually created and destroyed and rolled forward. As the month of September advances and OI shrinks, October OI responded in kind by adding contracts. Same between November and October; And this is nothing unusual.
What is highly unusual though is the number of Futures contracts being added lining up fairly consistently with the pattern of Shadowcontracts according to the plan i laid out above: The moment Shadowcontracts reappear in force is also the same moment Combined Open Interest stabilizes around the same number. In order for that number to stabilize AND continue to decline when it does, the only explanation i can come up with is somebody must be actively balancing the total amount of open interest across 3 months against the availability of actual supply. If you were dealing with a mass of random traders requiring random amounts of supply, the change should either be at random times when it happens at once; Or continuous if it happens randomly continuously (since it becomes a linear line when you average it out). This is a staircase: Line goes down, goes sideways, goes down, goes sideways. And staircases are not natural patterns.
Up until now i haven’t even mentioned price, price action or the “general” manipulation of the Comex market. Others have done plenty of research on that so i’m not even gonna name names (find any Youtube channel within the Silver or Gold space according to personal preference and you’ll be down the rabbit hole in minutes). I wanted to focus on Shadowcontracts as they for the first time offer clear and undeniable proof that Comex has ceased to function properly and that the numbers provably and undeniably no longer line up by reason of invisible hand; Where before there was only conjecture and circumstantial evidence.
So while the manipulation of the Comex has been well known, nothing could be conclusively proven – at least nothing that could hold up in court. For the community at large that changed in late September: There had been an investigation ongoing into something called “Spoofing” for several years now, where the banks where accused of manipulating the price of the precious metals via this spoofing mechanic. Earlier in the year there had been a conviction related to this, so the news didn’t come as a total surprise, but it was welcomed none the less: J.P. Morgan-Chase was convicted of spoofing prices in the precious metals market and subsequently admitted to it and paid a billion dollar fine:
Since it involves our villain as well as some things i will discuss going forward, let me explain spoofing as i understand it. It’s really quite simple: It works off the modern algorithmic nature of the market, where something like 90%-95% of trade is done via computer algorithms.
If you want to make profits going up, first you place a small trade for something like 3 futures and have it execute. There is a delay between when it executes and when you place the order, as somebody else has to see the order, decide they want to buy that asset for that price, then place a counter-order for that asset, and it is within this delay that spoofing works.
After you have your 3 contracts, you place a buy order for a much higher price for many more contracts, say 100. Normally this’d be stupid, but the idea is to never execute that trade. Before others decide to trade, they have to see the order first. When the Algorithms see a massive buy order pass by, before it’s even filled, they will start front-running the buy order being filled. Speed is everything in our modern High Frequency Traded market. This starts to raise the price, but the order will not fill until orders below that price are filled: After all with an order put in for $100, when somebody fills that order, the price of the asset is now considered to be $100. So if you buy for $90 along the way, you make a quick $10!
As this process unfolds, before the order is actually filled, it is cancelled, as was the plan. By then, the computers have already decided to buy orders below that order. And then, when the price reaches its zenith you sell your original 3 contracts at a profit. And just do that all day long, effectively raising the price on the back of “fake” demand. Naturally, once the algorithms have bought into the market but their front-run demand doesn’t materialize, they sell again… But it takes time for that “failure of demand” to become apparent.
While this does affect the price of precious metals, it doesn’t do so in the long term in a significant way, only in the very short term. It does have a long term effect: Because the central banks of the world wish to depress the gold price and not raise it, the traders have been smart to slant their spoofing to the downside. As i’ve explained shorting before, it shouldn’t come as a surprise that this trick works with shorting too. And if you simply slant the times you spoof shorts and spoof buys towards shorting, over the long run, the price will be run continually lower by the algorithms, as front-running the spoof is instant, but the rebalancing against lack of demand takes time – Allowing for a cumulative effect.
But again this is minor compared to the real driver of prices, which is the creation and destruction of the number of futures contracts by Bullion Banks – perfectly legally and according to exchange rules (again the damn thing is broken). However, before we go deeper down that rabbit hole again, let me enlighten you what happened around the conviction of JP Morgan. Because it also happened to be around Options Expiry.
Options are another thing i’ve left out of view so far, as i didn’t check it until the options volume started to spike towards the end of September. This too is new, so if anybody wants to point to previous options expiries: Had they been significant as measured against the volume of open interest, i’d seen it. And at the end of September i did:
As you can see, a volume of 106k options on a futures volume of 406k contracts is quite significant; Over 25%. And September 21st was nowhere near its options expiry date: Options stopped trading on the 18th, Expired on the 19th, then the quarterly expiry of options was on September 30th and the next expiry was deep into October. By September 28th, options volume had returned to its average, as you can see by the size and shape of the light blue bar ontop:
Again this was 2 days before the quarterly expiration date (and 1 day before the conviction). So logically it’d make sense that after the 19th, the trading volume of the options would run up into the 30th, not spike long before then die down. Sure, most of it will be legit, but as you will probably understand by now – It’s easier to hide change in a sea of chaos.
So let’s return to September 21st and let me quickly explain what an option is: As per the name, it gives you the option to purchase the asset at a certain price at a certain date. The asset being one 100 ounce bar of gold here, the same as a futures contract. These options can be purchased at their price at any time, the objective being for the spot price to float up or down passing the price on the option to buy the asset at, making the option “in the money” where it previously was “out of the money”. If the price of the asset doesn’t pass the price listed on the option, you can’t turn around and then sell the asset at a profit, making the option worthless. By far, most options expire worthless.
However that does not mean they cannot affect price! Just like with spoofing, if you see somebody buying or selling a fuckton of options at any given date, you know that they’re expecting to buy/sell at that price at that time. You don’t need to know who, just volume, because alot of people doing the same thing at the same time means it’s more likely the event will happen (but not guaranteed!). And while i haven’t done as deep a research into options and their affect on price as futures, the logic carries. And again, big events matter.
So color me unsurprised when i went digging on September 21st and found this:
What you’re looking at are February 2021 Call options. And they got nuked to the tune of 205,400 ounces of gold.
How is this relevant you ask?
Because the gold price on September 21st got nuked too. It closed at $1962.10 on September 18th, and closed at $1910.60 on September 21st (weekend in between). It bounced off the bottom on the 23rd; At $1864.80.
And what you’re looking at are call options that offer to buy the asset at $1950.
Normally you’d say those options where sold because the price dropped too far. I mean, if it drops below $1950 they’re out the money so why not sell? Well, again, these are February 2021 options. According to the expiry calender (https://www.marketwatch.com/optionscenter/calendar/2021) they stop trading on February 19th 2021 and expire on the 20th of February 2021. At the time that was 5 MONTHS into the future. And i can assure you, not a soul in the professional space capable of making such large trades (as change matches volume closely) was thinking in September that the price of gold would be below $1950 in February. November, October maybe. But not February 2021. There is no way that price ought to stay muted after a date by which surely stimulus is long since passed (or don’t pass any and watch the economy burn even faster, Yknow i’m somewhat of a pyromaniac myself, and gold’d still go up due to additional doomsday demand) and the dollar will devalue significantly because of it. Gold was $916,20 in February 2008 after all. Still double now because of QE stimulus. So much uncertainty exists between now and then that nobody would sell those anywhere before the end of January. As evident by no other options in any sort of range close to it trading in large volume around that time (which i’ll get to in a moment).
First though i have to mention selling “pressure”. Now that you’re aware of how spoofing works, creating artificial selling pressure is the same process only on a much larger scale. It’s possible because in this digital world everybody watches everybody in real time as well as any data available. So for example, if the price is $1960 and you dump a whole bunch of $1950 call options indicating you are not only expecting the price to go down, but the price to go down significantly (because you dumped a significant amount of options), that creates selling “pressure”. Because other market participants see that action, see your expectations, and react to it. Here, the obfuscation of information works to the advantage of the manipulator: People can see the number, but they cannot see the reason.
Since bots are stupid and the people making them are even worse, they all have a laser focus on that lone number: Less options, Less demand. In essence, you can start treating options as well as futures contracts as assets in and of themselves, with all associated rules of Supply and Demand as such. However it is easier to think of it as having an inverse relation to supply and demand: A lower amount (thus supply) of options means a lower demand for the underlying, while a larger amount of options (thus demand(for options)) means a higher demand for the underlying.
I’ve only mentioned Calls so far, but Puts need a mention too. Puts are the reverse of calls; they give you an option to sell the underlying asset at the price the option dictates. Naturally somebody has to provide the asset to sell, that’d be the creator of the option (seller of put options). Many people get confused by this 2*2 nature of options (you can sell a call option or buy one, and you can sell a put or buy one), so i will leave it out of the equation as it’s not important here. Only the amount of put and call options available determine supply and demand; Location (who owns what) doesn’t matter to price.
With the above in mind, we can now let loose simple supply and demand calculations to see what the selling pressure generated, if any, by options was on September 21st (going out to Jun 21 after which trades where non-existent):
Remember, Calls = Positive price expectations, Puts = Negative price expectations. A positive number means more calls then puts where made (calls minus puts):
Oct 20 Calls – Oct 20 Puts = -1,561
Nov 20 Calls – Nov 20 Puts = 969
Dec 20 Calls – Dec 20 Puts = -1,200
Jan 21 Calls – Jan 21 Puts = 159
Feb 21 Calls – Feb 21 Puts = -2,201 (-2k Calls, +143 Puts)
Mar 21 Calls – Mar 21 Puts = -325
Apr 21 Calls – Apr 21 Puts = -192
May 21 Calls – May 21 Puts = 0
Jun 21 Calls – Jun 21 Puts = 363
Total Calls – Total Puts = -3,988 = sell pressure.
The October change is logical, since the price just took a dive out of nowhere and October expiry was less then a month away. It’s also important to note that the exact time of trades isn’t given, only the aggregate. November expected the price to recover, again logical by explanation of US election chaos which was guaranteed at that point. December is explained by the chaos calming down after the elections (what goes up must come down) as at the time, a “blue sweep” was still the narrative, so a quick end to the elections was expected. January going up can be explained by post-election stimulus explanations. Again, the further out to the future we go, the more difficult it becomes to predict and demand wanes, so the change in volume is less.
Compared to the months that follow, the creation of 143 puts in February makes sense. Now the market expectations change daily so the direction of the volume matters little. 325 puts in March 21 is trading in the margins for pennies and always happens to some degree. So within that context of which the bots surely are aware, to see 2054 February 2021 calls for 1 specific price vanish is a HUGE move. Even objectively it’s still a huge move, as looking at the overview that one option’s price trade (talking about the option itself) eclipses the next month down the line (October, which is the next month to expire too) by 25%!
The change of all options combined is also quite significant. The options are still for the same size as futures – 100 ounces each – so you can consider them to have the same effect on selling or buying pressure as a Future. On September 21st, the total open interest of Gold Futures was reduced by -4,685. Since the total calls minus total puts equals to -3,988, you could consider the “total selling pressure” on the Comex in Gold on September 21st to have been 8,673 Contract Equivalent, representing 867,300 ounces. Of that total, 45.98% of selling pressure came from Options, and again of the entire total, February 2021 $1950 Call Options accounted for 23.68% of all selling pressure.
Now i don’t know about you, but i feel like that might have some sort of influence on the markets. So let me summarize the timeline here:
September 18th: Gold closes at $1960.80 an ounce.
September 21st: Option volume spikes, February 2021 shenanigans. Price closes $1910.60.
September 24th: Gold bounces off it’s lowest resistance for the first time, around $1852 an ounce.
September 25th: Gold Option volume returns to its long term average range.
September 29th: JP Morgan is convicted (and admits to) spoofing.
September 30th: Quarterly Gold Option Expiry. Price per ounce is $1895.50.
I haven’t dug deeper into options after September 21st. If it could happen once it could happen again, options consists of tables and tables of numbers and i think i’ve already done my duty going crosseyed with futures numbers for Months. Considering everybody needs to keep an administrative log of everything these days i’m sure they still have those trades on the books in great detail.
IF SOMEBODY WOULD ACTUALLY TAKE A FUCKING LOOK AT THEM.
To quote the late Billy Mays… But Wait! There’s More!
As time barrels forward forevermore and the tools with which the price can be sways decreased, October came around and brought us even more obvious shenanigans. But first; The data!:
There is little additionally revealed compared to the past few months. Other then the open interest declining further and further as the due date of December 2020 arrives and the plan culminates in the failure of the Comex. This causes the Shadowcontracts to stand out more as well as aligning the discrepancy in contracts standing for delivery and those actually delivered with the Shadowcontracts. The scam is now plain for all to see – Because the plan nears its end and it’s too late to do anything about it.
The pattern follows the same path as that of September, except more pronounced. Shadowcontracts disappeared on the first day when the large number of deliveries caused more fluctuations. But other then that, there is not a single day left where contracts roll forward. Meaning, regardless of volume, whoever ends up with the contract at the end of the day will stand for delivery at some point this month. Otherwise the total amount of open interest would’ve gone down – a contract destroyed by “rolling it over” AKA changing the date on the top of it. Current delivery month contracts aren’t traded for shorts either – all shorting (and 95% of trading activity) has been taking place on the December 2020 contract since August 31st.
The “flakiness” of the pattern’s also consistent with the explanation that they’re working mostly off inflows at this point. If the bars are delivered another day, well no sense in making contracts for it then, gotta wait till it arrives so you can note down the serial number of the bar. This explains days such as October 6th and 7th, where there may have been deliveries but no extra contracts – meaning they delivered from existing supply, probably earmarked for such an event at this point. It certainly can’t be price action: On the 6th, price opened at $1917.42 and crashed (and recovered) to $1887 at the start of the 7th, while it ended the 7th at $1890, ending sideways after a spike then a drop. Drop/Sideways for +1/0 Shadowcontracts, so that does not correlate.
Again the Shadowcontracts disappear as the delivery date for the next month arrive and margin of error decreases further with reduction in open interest until December. This causes more days without any Shadowcontracts then before. However, as is evident, once the plan has made the next milestone of securing deliveries for the next month, they come right back – This time right on the first delivery date as the size of the pile is small enough to engage in shenanigans immediately. As is evident by the +54 Shadowcontracts on October 30th in the Nov 20 contract. Both October and November are listed as non-active months, so there is no reason for the pattern to differ other then my explanation at this point.
Price movements can’t explain it either. However, i must dedicate a segment to it. As i made the claim before that price moves largely through the creation and destruction of futures contracts (outside of the delivery month). Before, this was hard to see as there where many tools employed to hide the price. But as we are nearing the end and various tools have been lost, the remaining tools must be employed more directly, even at the chance of increased discovery. And that has lead me to create the following picture:
Since it’s impossible to see What contract trades When, i’ve separated the chart by the days and the contracts delivered on that day. I’ve color coded it to make the end of the lines more apparent without drawing straight colored lines over the price action. The numbers below are the Total Change in Open Interest for that day. Clearly, both the positive and negative change of the total open interest lines up nicely with the price action: Positive amount price goes up, Negative amount prices goes down, a lesser negative amount and the price goes down less. The correlation is undeniable, even in a short a timespan as 3 consecutive days.
For years, many in the Gold and Silver space have been talking about “Price Slams” happening, in other words one or all of the Bullion Banks somehow controlling the price of the futures market to both drop and raise the price as they see fit, as well as keeping the price permanently low at the behest of (some, see the post-2008 Petrodollar system) central banks. But nobody has been able to offer any conclusive proof (partly due to the myriad of manipulations described above).
Well, Here It Is:
Since this is quite the busy picture (and the original contained a minor error i corrected), let me explain it in detail. I haven’t checked the change in open interest for every single day and there will be days that do not line up. I doubt this is the only tool they have left, and no matter what somebody might tell you, there is power in numbers. If the market panics at any point, this ends at any point. That is to say; if there’s a down day in the Nasdaq they don’t need to remove contracts, all of this isn’t happening irrespective of other markets. Regardless, you don’t need every single day to line up to prove manipulation, just enough of them to prove structure beyond random chance, and that i most certainly have.
Let’s run through the picture.
The first thing is the obvious one; JP Morgan got convicted of spoofing on the 29th of September which is when they lost that tool, as now the CFTC is actually watching (drunk and with one eye open, but watching), so the data before that date is likely to be harder to decipher (if not contaminated with other shenanigans such as options). I’ve also only focused on the time after the October 6 “Slam” of the price as it was the most recent large one at the time, and thus the one most likely to show up as something nefarious.
Open interest in gold went up by 837 contracts. So that’s not it at first glace; But this is part of the camouflage. It is well known within the precious metals community that gold and silver are Linked. They often trade in tandem, especially in times where silver regains its monetary properties due to general economic malaise and the inevitable stimulus to offset it; And the inflation that comes with that. Again, especially in our times.
So we must keep the silver open interest in mind in tandem. And what do we find? On the day of the October 6th slam, Silver Total Open Interest went down with -1,432 contracts. Initially this seems insignificant vs 837 gold contracts which command a much larger premium in price. I’ll be frank, until very recently the mechanic puzzled me as well.
However, it makes sense again if you think of it in terms of Supply and Demand, as i explained in the section with options. If the contracts are assets in and of themselves, if a significant amount is reduced, then due to the inverse relationship between futures supply/demand and the underlying asset, because there are less futures, less assets are expected to be produced (in the future) – as that is the function of the market, to hedge future production – a depression of which is always the case in depressed economic conditions relative to before, if you take it on the whole (that is, all futures across all producers of the metal to average out individual local production problems).
Since the underlying asset production is what is important, the picture changes: Silver contracts are 5000 ounces VS Gold’s 100 ounces per contract. So where 837 contracts of gold stand for 2,6 tonnes of gold, a reduction of 1432 silver contracts stands for an expected reduction in production of 7,160,000 ounces of silver, representing 222.6 tonnes of material!. That’d be 2 fully loaded Boeing 747-400f’s.
Clearly, we must weigh silver contracts alot heavier when it comes to price influence then gold contracts. This explains why on days with slams where gold doesn’t show a reduction in open interest, but silver does, the number of silver contracts reduced can be considerably less then the amount of gold contracts needed for the same effect.
With that in mind and the mechanic laid bare, the picture becomes clear:
October 6th Slam: -1432 Silver Contracts.
October 9th Spike: +11,061 Gold Contracts.
October 13th Slam: -4,910 Gold Contracts.
October 15th Spike: +7,142 Gold Contracts, with -1,171 Silver contracts as an explanation as why to the price didn’t explode higher.
October 19th Spike: +4,635 Gold Contracts. with +356 Silver contracts (Nasdaq went from 11,722.92 to 11,488.88, general market malaise explains the drop).
October 21st Spike: +9,342 Gold Contracts.
October 22nd Slam: -11,286 Gold Contracts.
October 23rd Slam: -3,230 Gold Contracts.
If once is happenstance, twice is coincidence and three times is enemy action, then this looks like a fucking machinegun nest to me! HOW did nobody catch this?!
The final line on the chart is the resistance line. I don’t know if it’s coincidence or market forces, but all the slams stop on a neat little line. This is just theory and conjecture at this point, but i think due to reduction in volume of actual contracts good for the asset the creation/destruction of contracts tactic is running into diminishing returns, AKA the real market bottom, which has been forever marching up this year. The actual market bottom would be defined as the point where NO ONE is crazy enough to sell, and conversely, everybody is willing to buy. The price we see is either the last trade done (which is why sometimes prices glitch all over the place during volatility) or an average of all trades within a timeframe I.E. candlesticks.
The first rule of trading still applies. To sell, you need a buy, and to buy, you need a sell. Even shorts need to buy back contracts in order to close their position, which requires somebody to sell it first. Because at this time the market in general is still under the impression that owning a future is as good as owning silver or gold because it’s deliverable (HAHAHAHHAHAcough) at some point people aren’t going to sell their future anymore. Title is important when dealing with open market contracts too: You can see it as the “location” of an asset. Since we have no idea who owns what in the markets, by design, nor do we know their inclination is to sell or buy, we have no idea about the actual volume available for trade.
But the Comex must at least have an inkling. They must’ve seen this happen behind the scenes, less and less actual volume indicating when the end would come:
The December 2020 Delivery Wall.
There are several reasons for this. The first is the concentration of both Silver and Gold contract walls on the same month: December. While this is by design (August leaps to December for Gold while September leaps to December, presumably for buffer for end of year balancing), at this point in time it’ll work against the Comex trying to survive. Because now they won’t just have to deal with excess demand in Either gold or silver allowing refiners to focus on one at a time, they have to deliver everything at once.
The second is the concentration of open interest on those months. By continually having to move contracts to a later date behind the scenes because of more time needed to secure delivery, as a percentage of trading volume, the next active month trading volume has started to eclipse other months during trading at the end of the month. For example: On May 11th, 36,804 out of 40,568 contracts where traded in the Jul 20 contract: 90,72%. On October 12th with similarly average volume, 69,632 Dec 20 contracts where traded out of 76,719 contracts: 90.76%. Still the same, but then i present you this:
On the last day before the Silver Jul 20 contract was forced to stand for delivery, compared to the trading volume of the next active month (September), Delivery volume of the current month was about 1/5.64th of the next month. Going into the September delivery wall, at the very end at a very active month, activity in next month’s contract was already considerably higher in the days leading up to the last day of the August contract then leading up to the July deliveries. This culminated in the next active month’s trades being only 1/11.34th of total volume on the last day before delivery!
In short; If nobody is trading, nobody is selling. At some point they’re gonna run out of runway. Considering that last day before the September wall the next month active month already had 91,18% of all volume, i don’t think there’s that much runway left for December. Especially not because the global situation’s only gotten worse since.
If some of you have noticed by the way that volume is MUCH higher on some days then others, that’s true. August saw upto 400,000 futures contracts traded on a single day. While there’s probably something to find in the pure volume changes as well (considering everything else is soaked in corruption), i haven’t kept specific check or screenshots so i’ll leave that for the investigators to uncover.
Yknow; Don’t wanna give the whole game away.
The third reason for the focus on December is the US elections in November, on November 3rd officially. The December contract becomes active for delivery on November 29th (or thereabouts, it varies sometimes and i can never keep track), nearly a full month after the US elections. Since the lockdowns became rapidly politicized all the way back in April and May, it was a guarantee the election wouldn’t be pretty. As in such a scenario, either party would have to admit they where wrong if course is changed too drastically, and that ain’t ever gonna happen in an election year. The George Floyd protests and the Democrat unlimited backing of such showing Covid restrictions to be political to the general populace ensured the election would be chaos due to now vested interests. This is simply to say it was predictable from the start that November would be a mess, regardless. Chaos always drives doomsday demand, US elections always drive doomsday demand, and Chaotic Contested US elections in recessions (and the pandemic!) is sure to spike a flight to safety. Gold is the obvious choice, but The-Poor-Man’s-Gold, due to it’s years of neglect and negative production (with producers of solar panels draining supply), it is the real danger.
The Fourth reason would be the inevitable demise of the US Dollar. Currently the US economy is kept on life support through stimulus and increased unemployment benefits, with forbearance taking care of the rest – ALL of which must end at some point, soon. This has become politically untenable for both parties: Currently they’re not arguing the amount of stimulus, but which set of elite should get the money first before it’s supposed to trickle down. Print they shall, so the USD will go down in response. Those expecting deflation are fools.
This is not a debate either. The problem was already too large, it’s getting larger by the hour, and there is simply no way to turn 75 years of fiscal mismanagement around in 5 months, 5 years or even 20. This is gonna take a long time, so it’s gonna take a long time before people feel comfortable enough to rotate out of safety back into growth. If you at any point think this is not the case (After all of this?!) i’ll simply point out 2 numbers: As per QE5: QEfinity, the Federal Reserve is still buying $80 billion in Treasuries and $40 billion in Mortgage backed securities a month (making them the largest landlord of the US!). Naturally, all of this is new, freshly printed (well, “We print it digitally”), unbacked currency.
Divide that by a 30 day month, you get $4 billion a day. All the Eligible Silver on the Comex on Friday October 29th (Remember Registered is tied to the Warrant, so it’s gotta come out of Eligible! And the Discount possibility!) was 246,341,496.401 ounces. At the closing price of $23,36 on that date, i’d be worth $5,754,537,355.93, or $5,7 billion. Of Sound Money. Backing 155,764 Total OI Representing 778,8 Million ounces with a nominal value of $18,193,235,200 of paper promises.
Gold’s 20,156,685.93 Eligible worth’s 37,652,689,317.24 ($37,6B) by the way. Backing 545,623 contracts representing 54,562,300 ounces worth $101,922,376,400 ($101,9B) of paper promises. Or 26 days of QE regardless of shenanigans. I mean c’mon it’s not even a full fucking month.
Did you know USdebtclock.org lists the total amount of money the US has spent but not yet found a way to pay for as $155,271,000,000,000 at the time of writing? I’d be more specific but it goes up too fast. Approximately $1 million every 5 seconds, or 535.3/42808.2 ounces of gold/silver, every 5 seconds, respectively. In contracts, that’d be 5.3 Gold and 8.5 Silver contracts.
Every. 5. Seconds.
I think i’ve made my point. However, just because i was gonna do all of this anyway – i got curious. So, to offer atleast one full month of Gold data, Here’s the data of Shadowcontracts for the full non-active month of October:
At this point, i’ve put forward all the evidence i’ve collected. And make no mistake, this is indisputable evidence that the system is broken. For the same decade since i moved out i’ve held a movie night with my Father every Tuesday as we’re pretty close, during which we watched all the detective shows we could get our hands on. Anything by Agatha Christie, the old Sherlock Holmes series from the 80’s (not the new one though, this world’s become devoid of logic), and quality-though-more-recent shows like George Gently or Jack Irish (we’ve also watched every movie involving time in some way! My favorite is ARQ from 2016). I’ve watched all episodes of Law and Order as well. I might not know the letter of the law but i know evidence when i see it.
The absolute minimum i can claim is that the Comex has utterly ceased to function according to the intent of it’s functionality – To be used as a hedging tool for FUTURE ACTUAL PRODUCTION OUTPUT of mining companies. In 2020 it has started to function as a spot delivery market, and a very broken one at that as it gives very unfair advantage to its participants in the way it was set up to function.
At most it’s the biggest precious metals heist in the history of man kind. At least in terms of 2022 nominal value.
So just to be absolutely clear; This is my claim:
The Comex has been drained. Not being drained, in November 2020, it Has Been Drained, and now is usurping the world’s precious metal supply. Massive amounts of Title have already changed and the rest cannot be made certain of. Its balance sheet is Fraudulent and serves no other purpose at this point other then to obfuscate the truly important metric: Title to the inventory. Registered gold is a red herring, as it will be earmarked to whomever holds the warrant – or a warrant even, depending on how these things are exchangeable in even more cloak and dagger settings, like tender bonds. The situation where everybody benefited from the same system continuing has changed, and those first in the life boats win. I suspect this to be JP Morgan, due to their long and now proven history of corruption within the precious metals markets. Since they also at the time of writing hold 61,12% of all Eligible silver and 35.04% if all Eligible gold on the Comex’s balance sheet under their name, and because of it are by far and away the largest player in the markets, even if they’re not directly responsible they must be aware of the situation. Thus at a minimum they have failed in Compliance, as it is everybody’s own personal fiduciary’s duty to report such BLATANT inconsistencies to the authorities.
To see Peter Schiff get a hatchet job done while this very real problem is happening at the same time behind the scenes is an affront to the truth, journalism, and just humanity as a whole. We ought to be better then this by now.
Finally i want to get ahead of the inevitable question that’ll be asked: What are my motives in all of this?
I have none – none against the specific players involved anyway. Genuinely, i’ve suffered a lot in my life and this year has been hell ontop of that hellish existence. And all i’m concerned about anymore is trying to prevent others from going through the same as much as i can and leaving the world a bit better then how i found it.
A LOT of people will suffer because of this (in ways i’ll explain momentarily for preparation purposes). The time where everybody can be saved has long since passed – the main reason the Shadowcontracts started appearing in the first place. I’m not the only smart guy on the planet, even if i’m smarter then others, access to better data sooner will have given others the same insights as i’ve had independently of that data. Waiting for the fraud to come to its inevitable conclusion will hurt more people then trying to reach those willing to listen when there’s still time. People who cannot recognize danger when it’s staring them in the face are already lost and i’ve stopped trying to save them. A person who panics while drowning will drag you down with them, and i’m looking at an ocean.
If there’s anything that can be said about my motives, it’s that through my experiences and trauma in my life (which i have no problems sharing anymore. I’m done taking prisoners) i’ve gained a MASSIVE HATRED for incompetent authority. While i can still empathize with the common man who refuses to think because they just want to live their life, i cannot abide any longer by those in power who just aren’t fit to be in power. I care not for the existence of elite – Anarchy is the quickest way to dictatorship, as the Ruthless will be at an advantage (i’ll kill you then i’ll tell the next person to obey or die. People are generally kind and fearful of death, more will obey then resist and the moment any slight bit of competency is introduced, numbers win). So i don’t really care what flag waves above my head there’ll always be one. And since this is mainly a American issue – Comex is under THEIR supervision – as a Dutch person i have no political skin in the game. ‘t kan me werkelijk geen kut schelen. Tis wel vermakelijk.
But i’m not going to let them slack off and lie their way to wealth causing untold suffering along the way. ALL of us have to work hard to survive. If you want to seek power, any kind of power, fine, i have nothing against that. But you better GODDAMN learn how to wield it properly. I hate what this rock has become and what’ll happen in order to restore some sensibility to general populace, irrespective of my actions. Simply put; I’m not a big enough fish to turn this ship around at this point, so i’m gonna sit on the sidelines and wait for y’all to come to your senses. I’ll tell ya how to do it along the way, either for you, or for future generations to maybe learn from history this time around. Whether this generation listens or not, i don’t give a fuck. This is therapy for me at this point. I’d talk to a shrink, but considering i’ve got a few traumas coming FROM those motherfuckers including a fresh one from 2020, i’ll have to go at it alone yet again.
Financially i have few motives at this point either. Since i don’t care about money (there is no replacement for clean mental health, ask Keanu Reeves or Jim Carey) i have no problems sharing my income either. I get ~€15,000 a year in Dutch Wajong social security (and associated subsidies like rent) – a social security afforded to those incapable of work before the age of 18 (mental trauma/severe autism (Aspergers, so still high functioning) in my case). I’ve had it since i was 20 when the Aspergers diagnosis came through. I moved out at 23 and lived in the same apartment ever since (33 now). While €15,000 might seem alot to some (i have no clue from which country the reader is), it amounts to 75% of Dutch minimum wage. So basically – the bottom of society financially speaking. Because of something called the social minimum, i literally cannot get less money or the government gives out more in additional social security.
Yet i have 0 debt and no credit history (not that i can have one with this income anyway). I’ve lived debt free all this time through simply living frugally. I’ve not once turned the heating in my apartment on in 10 years to save on heating costs – it’s cheaper to add a layer of clothing and i’ve always been alone anyway. None of my friends saw it fit to visit me in my home, though i invited. I own 2 pair of pants, which i bought 2 years ago after the last 2 pair of pants started showing a hole in the right knee a week apart from each other – after 8 years of use. Fun fact: I bought those at the bottom in 2009 (cause the previous ones had holes) which was a pleasant suprise. I was expecting to pay €60 Per for pair of decent pants, but all the stonewashed stuff had cratered thanks to the 2008 crash. Got 2 of the highest quality fore €30 each! That’s what being frugal means: pocketing the €60 in savings, rather then buying 4 pair of pants when i make do with 2 anyway.
This is not to say i never spent money, sometimes even frivolously. I love videogames, so i have 754 games listed in my steam library alone, though many come from developer collections i wished to have, which where massively discounted in one of their famous summer/winter sales. I guess not having a girlfriend does help. I’ve wondered many times if that spending was justified somehow – but considering it helped pay for alot of developer’s food on the table, even it was on sale – i feel not the least bit guilty about it. Entertainment products are still products, and dead money is still undesirable, even when savings most certainly still are.
I felt it was only right not to waste my income and live frivolously since my income comes solely from tax payers, many whom i’ve never met so i can’t have ill feelings towards. I thank you all regardless.
As for capital, i had about €10k of life savings on December 8th 2019 which i converted to 2 ounces of gold, 305 ounces of silver and 1k of cash which has been put into the markets since. I always considered this money not to be mine, as i don’t need much and the outlook was perpetual poverty, so it was to serve as starting capital for my (eventual) children instead. The $10,000 starting capital proposition for each kid absolutely isn’t a bad idea – only when that money comes via a wealth redistribution scheme of the government.
As i converted it i worried a lot about what my future children would think of me, as i was essentially spending it on their behalf, though i had no desire to sell the assets i was spending it on. Even though i was wracked with anxiety what kept me going was their questions resounding in my head: “if you knew something was going to happen, why didn’t you do anything daddy?”. Sometimes knowing the future isn’t all that cracked up it’s made out to be.
The money i put into the markets i put into Gold, Silver, Rare Earth, Ethical Nickel/Cobalt junior miners and a Uranium miner i don’t talk about publicly (always sell your best asset kids!). Also Gazprom, because a $182 billion book value company with a $46 billion marketcap at a 0.24 price to book ratio WITH a 10% dividend?! are you FUCKING kidding me?! I’ve got €300 (which is a washing machine, so alot for us!) of both me and my beloved Sister’s money in there. You can keep your Teslas at 742 P/E and supposed 23 P/B values. Dictators or no business is business (as witnessed by sanctions by the US on the EU just to sell 25% more expensive gas to save the overleveraged shale industry that’s destined to die and consolidate anyway. What the fuck guys. Thought we where supposed to be allies). Needless to say by my investments in commodities – i expect massive currency deprecation. Almost, but not completely, global this time.
Let me make it very clear; i’ve grown very tired of being poor and wasting my talents because i’ve come to realize i cannot connect with people in a normal way even if i dedicate over 80% of my intellect to running real time social calculations just so you idiots don’t have to put in effort talking to me. I can count the people who don’t forget that i’m autistic within 5 minutes of me saying it to them on one hand, and it doesn’t even include family because i’m just that good at hiding it when i want to. I’m actively behaving autistic by choice now because of it. I can reason humanity, but i can’t feel it. THIS DOESN’T MEAN I DON’T HAVE EMPATHY. Common misconception. My feelings are useless for communication because they’re vastly stronger then others. This is not a brag. I don’t have too little empathy, i have too much and this makes me feel very uncomfortable. When somebody is sad because they’ve lost an uncle, it’s not right for me to feel like my father died – to experience a stronger emotional bond to the dead person then the actual family member even if i don’t know the dead guy. And since emotion isn’t quantifiable (i can’t tell you i’m 8.3 angry right now, makes no sense) well…. it’s useless as a method of communication. It does explain my genuine care about all people though. I feel other people’s suffering quite strongly when it’s unnecessary or was preventable.
And you people have just stopped listening to information wholesale and have gone hard into pure emotion and following the party line, getting worse as long as i can remember. So since i’m destined to be alone on an emotional level, i’d rather be so with lots of money. Though, while i’m totally not above taking a wad of cash if you already have capital (any big channels or even main stream media wanna interview me, fine! I’ve watched big Youtubers explain their ad revenues, and i understand competitive bidding 😉 ), i’ve still spent these last 2 months responding to practically every message on twitter (replies to tweets are iffy because of twitter, very few of em relatively speaking pop up in my notification feed and i can’t manually go back constantly) and answering questions to random people with no followers, social media presence or any identifiable information whatsoever. A Human is a Human. Got alot of them out of ETFs. Because how sure are you they’re gonna stop printing shares – the promise to exposure of PHYSICAL assets they’re supposed to have – when they can no longer find physical, but still find buyers for shares at ludicrous prices? If you can’t find the physical at this price they can’t either. Again, reminder that GLD already went deep into “loaning” gold from the Bank of England, up to 77 tons of it, currently worth $4,645,548,660.90 (1.2 days of QE, 80%ish of all Eligible Silver on the balance sheet).
Finally since Americans are soooooooo predictable: AM I RUSSIA?!?!!!1!!1one. No. Born and raised in the Netherlands. Don’t have an accent anymore because i spent a large amount of time playing online with Americans and i hate the Dutch accent to begin with so i had no problem losing it. Some might remember me depending how far this article spreads, until ~2018 my nickname was TheSwiftSniper or TSS (but my eyesight went and years of weed use slowing me down as well as age made that a little less true then it used to be) and i’ve been going by Deso/Desogames since then. Ran with a British accent for a while when i was younger and playing with alot of Brits. Mirroring is the first trick i learned. While real life might’ve been hell – cyberspace and its inhabitants have always been a refuge to me since skill was what mattered not how weird you where. Or well, before the normies started invading social media atleast.
I do have a close Russian friend, as well as a close Chinese friend from Hong Kong who i would both mention. They have been with me since i worked as a streamer for 11 months, 5 nights a week 5 hours a night, later scaling up to 1x3H, 4x6H and a 12H stream on Sunday (went live every single day at 21:00, never missed it once. And before you start quoting wajong, the independence let me do it and i still cracked) upto August 2019 – while not posting about the economy until December. Since after those 11 months i ended up with an average viewership, measured over 30 days, of 3; Even after getting big raids…. You can be assured i have been far FAR too uninteresting for any long cons up until mid 2020. I owe those 2 a large part of whatever’s left of my sanity instead.
If any budding streamer out there wants advice: You NEED a gimmick. I was just as smart then as i am now. I invested in quality, always got praise. Continually advanced channel functionality. Socialized after streams, networked with small but bigger streamers, grew followers with a few but didn’t get the same viewership retention as them. I did everything right – except adopting a gimmick because i felt it was just like putting on clown makeup – they laugh cause of the funny makeup not because of your knowledge (not to slight genuine entertainers). And i’ve been deep into games FAR longer then economics so i felt i could entertain regardless. After going through the grind as an unknown i can honestly say…. Just put on the damn makeup.
If you can’t do that, UNLESS you have a prior audience from another place (Follow me on Twitch.tv/desogames for future audio/streaming content! 😀 Bringing it back soon for podcast live recordings or relax streams!) or some sort of amazing skill that others want to see (follow me on Twitter.com/Desogames too for (semi)daily commentary :D), it’s better to just go do something productive. Cause i made about $100 in 6-7 months. On that note and in honor of my dear friends who continually push me to promote myself better/more (inferiority complex) – More contact info can be found at https://www.desogames.com/contact/ including a donation link/paypal info 🙂 While selling some stock info has given me a bit of breathing room (my current account hit €120 in April before i got “vacation” money in May, and i cannot overdraw) i’m still (outside of no debt) dirt poor and i genuinely could use a new gaming rig. The ol’ I7 6700k’s starting to struggle thanks to windows 10 as a service (WHY is MS valued so highly? Windows is still their bread and butter and W10 as a live service SUCKS. If people convert to Linux (i hear gaming drivers are good now) it’ll be Internet Explorer 6 all over again. Give me a 1 off stable OS that doesn’t automatically patch and fuck things up please. Fuck i miss XP SP2. Stable as a rock and either just ran or died) and the new AMD stuff coming out soon looks sweeeeeet. Can’t afford it tho. Toss a coin to your Witcher!
But only give if you’ve secured your own future first, please. To summarize the above:
With my motives made clear, we are not done yet. Action – Reaction – Consequence never stops, as actions can be reactions in themselves to consequences (but the chain always contains consequence). All of this is going to have effects going into the future. So what do i expect those effects to be?
Well, when the Comex fails and it becomes apparent the amount of gold and silver available is far less then the general market thought there was, there can only be one outcome regardless of blame: We need to ascertain how much gold and silver there actually is still available. This’ll take some time and the price is expected to spike until that process is finished as it’s clear the outcome will at the very least be a substantially higher price then the current situation of all precious metals – so Silver and Gold will go up multiples of themselves. My twitter followers will know of my regular comment: Calling price in this market is Folly. Regardless, i wouldn’t be surprised to see silver 10x within 1 or 2 months, while gold 5-6Xes. That’d be north of $200 – $10,000 an ounce, respectively.
This process is what i call “The Great Revaluing”. This is not the much vaunted and talked about Great Reset. The Great Reset is a monetary question, and while Silver and Gold are money – they are also in an asset class in and of themselves. Gold is an irreplaceable good (the name gibson good got stuck in my head and i can’t find the actual name anymore; But there’s a specific name for special commodities that supply a need which ONLY they can supply, like gold’s universal utility aspect). Supply and Demand affect the price of gold and silver outside of their monetary qualities: If we shoot half of all gold into the sun, the remaining quantity doubles in price regardless of the fiscal policy of nations. I’ll give a short example to explain it clearly:
If we have 100 dollars, 100 euros, 100 ounces of Silver and 100 kilos of copper in the same economy, we can easily figure out their value via supply and demand: €1 = $1 = 1oz = 1kg. As you can see even though the unit of measurement is different for each good, they are still comparable economically.
First, say a ship transporting 50 ounces of that silver is lost at sea. Many famous stories about this in antiquity. Now we have $100-€100-50oz-100kg within that economy. Naturally, 1kg, $1 and €1 can now only be exchanged for 0,5oz (explaining how that price eventually comes to be through equilibrium trading wouldn’t make this a short explanation). This is because of supply/demand.
Second, should at that point the US government decide to print $100 more, the ounces at the bottom of the sea aren’t magically recovered. The economy will be $200-€100-50oz-100kg. Naturally this pegs the exchange rates at $2-€1-0,5oz-1kg. Since every 1 ounce of silver now costs $4, from an Americans point of view, the silver price goes up. This is because of fiscal policy.
If the EU starts printing as well, we get $200-€200-0,5oz-1kg. In this case, the dollar and euro are exchangeable $1:€1, but the price of Silver is now $4 and €4, but priced in Kilos of Copper, Silver still is 1oz:2kg. This is how inflation isn’t apparent anywhere except in commodities, while large swings between them are supply and demand governed. All governments are printing currency, so they keep parity in this situation – Except to commodities. Since Gold has universal monetary utility, it’s the leader of the pack when it comes to reacting to inflation. Did i mention it went from $200 an ounce to $2000 an ounce over the past 20 years?
The first example is the great revaluing, when we find out how much of each good there is. You can consider that as a “now” only. The second is the great reset which comes after, which concerns “what comes next”. If we look at purely supply and demand now, US M1 stock is $5,545.5 billion. If we go purely off the Comex’s Eligible gold (which we know to be fraudulent so this is generous, but we need some sort of number) which is 20,156,685.93 ounces, at October 30th closing price of $1868.70, valued at $37,868,365,856.69. Divide the first by the latter, we get 146.44. Divide 100 by 146.44, and you get 0.6828%. Purely on that basis, the value of the US dollar should drop by 99.31% in the great revaluing alone. Naturally it won’t be that bad as this doesn’t account for all the gold in the world’s central banks, whatever’s still left in Fort Knox etc. But again i need some sort of number, and just like i don’t know how much gold the central banks have, i don’t know how much gold the Comex has either. This is why we need the great revaluing: Uncertainty is wrecking the system.
Though, the calculation isn’t as far fetched as it may see. That is from an American perspective. If i run the same against the Russian M1 stock (RUM1 vs Comex Eligible) we get 29,513.46 billion rubles vs 20 million ounces = 779.37 times. However – that is from an Russian perspective. The Ruble and Dollar have an exchange rate too, currently $1:79.4408 RUB. So if we divide 779.37 by 79.4408, we get 9.81 times in dollar terms compared to gold. This is what the great reset pertains to, because as soon as the Ruble’s done being compared to gold, it’ll be re-compared to the Dollar. Only this time, Via Gold. Even though the numbers are bogus, they do afford some logical evidence of what might happen in an event like this: While nominal numbers might change drastically, ratios often do not. Since 9.81 is 14.93 times less then 146.44, we might expect the dollar to drop 14,93 times harder in the revaluing.
Because of a recent interview i did, i happen to know that the Russian Ruble (M1) is backed for ~82,5% by the gold the Russian central bank holds (but i heard they sold a bit, probably because of this very fact, so it may have changed). Naturally when the Revaluing happens it’s not gonna go off the gold in the Comex alone – that’s gone anyway. The national currencies will be backed by the gold held by the (national) central bank, as they wouldn’t be caught dead giving their gold away (Just google what happened when Venezuela wanted its gold during economic troubles). Since we can’t be sure of anything inside of Fort Knox either (Feel free to read this article by Jan Nieuwenhuijs from December 2019: https://www.zerohedge.com/commodities/us-official-gold-reserves-auditor-caught-lying) we’ll have to rely on more reliable people, the Russian central bank numbers.
Yes Americans. You brought that on yourselves.
Since the Ruble’s backed by gold to the tune of 82,5%, in the revaluing, it’ll drop by 17,5%. So if gold was 100 RUB per ounce, it’d become 117.5 per ounce. Since the US Dollar would drop 9,81 times more, $100 an ounce would become $981. By that same logic, the closing price of $1878.70 on October 30th would become $18,430.05 per ounce. Again calling price in this market is folly, but if you want a ballpark figure for an unpredictable event in scope size shape and what the hell the countries will do to each other at the negotiating table; That’s the best i got.
I’ll let you do Silver on your own, it’ll be on the test tomorrow.
Still, you could say “Well then life just becomes more expensive for Americans what do i care?”. Well there’s an additional problem. Because of Comex’s “Data driven” nature as well as the US Dollar (still) being the reserve currency of the world, the entire world prices gold in dollars, as they price pretty much everything else in dollars. But that price, the “spot price” you see, isn’t actually spot. It’s the futures contract price on the Comex. Feel free to look at your favorite silver price measurement and try to find it’s source – you’ll find most if not everything tracks back in some way to the Comex’s currently active month contract. Which i remind you, since August 31st has been November 29th delivery (the Dec 20 contract), so y’all have been trading future prices, not now prices.
Anything happens in the meanwhile (like this article) that spot price is going to vary wildly. And there’s no guarantee that when that final delivery date rolls around and they HAVE to deliver, they won’t cash settle people out (in fact that is the most likely scenario) – Not useful when you where expecting gold and the cash you get is a fraction of the next physical you actually find for sale (TO BUY YOU NEED A SELL AND TO SELL YOU NEED A BUY HOW OFTEN MUST I SAY THIS). Not to mention that the REAL price you pay (because if you actually want the metal, you have to have it delivered) is spot+premiums, and as anybody buying this year can tell you, if the spot price drops too far the premiums just go up. We might easily see $1 silver and +$230 an ounce premiums, as it might be the only way to actually determine price in the short term, by aggregating premium prices across many bullion dealers. The futures contract relegated to a worthless derivative until all contracts have been cash settled out for pennies like a penny stock.
But because gold prices on the Comex, and gold still retains it’s universal utility component in the eyes of the people (AKA all eyes are on the gold price cause Gold Is Money), EFFECTIVELY the percieved value of all goods in the world RIGHT NOW is tied to the Dec 20 contract on the Comex. Non-deliverable until November 29th.
NOW you see why the gold price has been actively suppressed for so long. Not the Russians. The Americans, and their need to fund frivolous spending somehow. You don’t have to print more if stuff costs less.
This realization after the great revaluation (or during, i’m flexible) is going to cause people to ask “Do we want that system to continue?” WELL. Think we can all guess the answer to that one. That is when hyperinflation will start hitting unbacked currencies (did i mention i have a Russian friend, getting paid in Rubles, who likes me very much and will bail my ass out if it comes to that?). With the US’s fiscal future in little doubt this is gonna go a whole lot faster then people think. The digital dollar won’t help it’ll just make it worse.
When the digital Dollar was proposed, it was stated that the deposits made to the wallets would be on the Liability side of the Federal Reserve’s balance sheet. This means it’s Debt. Doesn’t matter to whom. Aside from the question of whether the entire nation should become indebted to a private bank, we’re in a solvency crisis not a liquidity one. The system of money as debt is cracking due to the Unbacked Interest Paradox. And because money = debt and debt = money, that means debt = debt = debt, just like gold = gold = gold. That makes Debt, Fungible. Since debt is fungible the system can only clear itself if the TOTAL amount of debt goes down, not the local debt in some bank or another. Didn’t we learn from 2008 all those damn banks are interconnected? Since the Digital Dollar is Debt, and Debt is Fungible, it’ll make things exponentially worse when people are forced to spend it.
The Great Reset will come when the above reaction (Which they will implement regardless of what i say since another day of survival means another day outside of a noose) becomes untenable (information still needs time to spread because people need to stop believing in the system of their own accord and some convert faster then others) and reaches it’s logical conclusion: The Death of the Dollar and the Money as Debt system. While i still think the Comex will die in 2020; No calls on the date of the dead dollar. 2022-23’s looking pretty tasty though (Read my article on Virtual Labor later for an actual solution!)
SO. The final part of a very long article. What can YOU do to protect yourself?
First off, i’m not an accredited investor, and you should ALWAYS do your own goddamn due diligence. Anything you recommend to me, you can be goddamn Eric Sprott i’m still going to research it first (dudes gonna be LOADED btw. In researching companies i’ve seen him pretty much everywhere with private placements). For no other reason that he’s much richer then me and rich/poor people invest differently. If you’ve got 10 minutes to listen to the next Youtube video you’ve got 10 minutes to read a quarterly report. There is no better source then the source. No need to have any prior knowledge about mining, i certainly didn’t until the start of this year. Just fucking start reading. After i’ve seen a dozen quarterly reports talk great news about 4g/t of gold grades and i find an unknown talking about a 5g/t+ potential discovery, my ears perk up. I haven’t seen 6g/t average outside of spikes – clearly, the age of 6g+/t gold is over, otherwise most companies wouldn’t be getting so damn excited about 4g/t in a linear progression system. Don’t know a thing about geology tho. Lotta rocks end in -ite, apparently.
With that said, since the regulators who’re supposed to make sure the markets are fair are also the ones who’re checking those accreditations… well fuck em. Consider this life saving advice. No hyperbole either; I’ve got enough of a backbone to actually tell you what to do (First thing: think for yourself https://www.youtube.com/watch?v=QereR0CViMY). Don’t care bout your lawsuits my reputation will far exceed my capital soon enough and you can’t sue that away, i’ll still be fine. I will go medieval on your ass though, i tend to get bored quickly and i’m always looking for a challenge. Wonder what’ll happen when i pick up a few law books.
Thanks to my background of still being poor in this situation, i can atleast offer a unique perspective on what to do. I’ve seen plenty of Youtubers recommend real estate – yah good luck with that on 15,000 a year social security. Think the age of 3% down payment is over. So i offer a list below. The list is ranked in “Investment Capital Available” ordered from -$10,000 (deep in debt) to $100,000 (considerable investment). I’m not even going to touch anything above that without personal interaction cause while i may be a rebel, i’m no fool. I’ve got a bit of leniency in good will here but not unlimited amounts. Again; There are plenty of Youtube channels who offer good advice between that and a few million at which point you want to have face to face meetings anyway (if you’re still looking for advice and not directly investing yourself at that point).
The list is so ordered that each next step includes the advice of the previous step.
Well you’re basically screwed. Generally people who are this deep in revolving debt already have a pile of other debt ontop of it which makes things worse. Regardless, not all is lost, as the system takes time to crash. FIRST OFF you need to stop spending. ANY expense has to go. If this is not an option because you’ve already exhausted it there’s only 1 option left: Just Walk Away. If you owe $1,000 you have a problem, if you owe $1,000,000 the bank has a problem, and that problem WILL persist until the debt in general is allowed to clear. Pick up and move, leave the country, declare general bankruptcy, or just move to another town and change your name. That used to be a thing before the government started obsessively tracking everybody to collect ever more taxes. THE ONE THING YOU DO NOT WANNA HOLD during hyperinflation is Adjustable Interest Rate Debt. Because those rates will skyrocket with US bonds when they finally go (feel free to look at a few charts: Both the US AND Japan bond markets bottomed in September 2019 as did the 2Y-10Y spread after the inversion) and when those rates go up you need to start generating exponential income to outpace it – which is gonna lead to a “walk away” scenario anyway.
If you have an adjustable rate mortgage (After 2008?! REALLY?) convert it to 30 year Fixed rate TODAY. The US 2 year to 10 year spread has already bottomed with the 2019 repo crisis when the yield curve inverted. Since the spread is now increasing with rates set at 0%, there’s literally nowhere to go but up. The US 30 year is now 1.658 points after being 1.189 in August. Within that same timeframe the 2-10 spread has gone from 43.95 (August 4th) to 71.56 last Friday October 30th. These rates are NOT going to last as long as people think. Rates now are still historically low, and history is a very long time. You will not regret paying these rates for the rest of your life, even if they still plummet and go negative. ANYTHING the dumbass banks are still willing to take for fixed rates, you take with all 3 hands. Grow a new one if you have to.
Credit card debt is nuclear waste at this point, get rid of it. I’d rather engage in a 5 year fixed rate loan to pay off all my credit card loan today if i could (or had any, remember, debt free). Car loans, same thing, there’ll be plenty of cars on the market nobody can afford soon enough (just ask the Turks). If you can work around not having a car, sell it now, use the money as investment capital to get rid of adjustable debt. Fixed rate debt isn’t going to matter because your income will go up in hyperinflation, just nowhere nearly fast enough to keep up with rates – who cares about a $4000 mortgage payment when you’re getting $3,4 million a month (but the adjustable fools have to come up with $5,6 mil a month). Again Digital currencies, as long as they’re based on debt make this whole situation worse because people get more currency to spend faster.
Forget the market. YOU are not gonna get rich. If you get any free cash at all (and i do encourage to not toss everything into debt repayment) buy a few ounces of silver. We’re talking 20ish ounces. If you can structure your funds to buy silver early in the month and repay debt later, do it. When the dollar goes down continually metals go up continually. The reason is why you want 20 ounces of silver is because you cannot plan for perfection. Things might happen that activate a walk away scenario at any given time (The time to prepare was when Shadowcontracts started, this is a sprint for the exit). You can always just bury 20 ounces in the yard when the collectors come and go back for it at night. During the hyperinflation you can sell it or trade it one ounce at a time so you can be sure you always have food and water. No matter what happens, you can always just walk into the woods and build a hut for shelter and start a fire for heat (RESPONSIBLY, CALIFORNIANS AND AUSTRALIANS), but obtaining food in a situation where everybody does that is impossible. It’s uncomfortable and it sucks – but you’ll be breathing and not dead in a ditch from starvation. Google The Maduro Diet.
I’m still assuming other debt such as car/mortgage, but this is for the people not that deep into credit card debt. First step: DONT GO DEEPER INTO DEBT! Maxing a credit card for the great revaluing hoping to sell and clear before the reset is what’s gonna get you killed. This is not a situation to gamble your life in. I’m sure some desperate folks will do it and some might even pull it off. Most won’t. Just keep this one sentence in mind: “Whatever you buy does you no good if you have no ability to hold onto it”.
Again the type of debt here matters: Get rid of adjustable, apply for fixed rate loans. Since you have more space to engage in new debt, again i’d highly recommend converting revolving debt into fixed rate long term debt. Whatever capital the spread frees up, buy physical metals with. If you’re wondering where to store it: Go look for a private storage company in your area that specializes in precious metals storage. Those companies have exploded since 2008 so there should be more then you think. Private vault storage space is the next great bull market that’ll exceed even gold/silver (i looked; Couldn’t find shares of those companies, most are locked up in non-profit foundations so there can’t be any hostile takeover. Well done). They might be able to mine more gold from existing mines, building a vault securely for more space takes time.
What you have to make sure: The company must offer that the contents of the vault are ALWAYS yours, in every economical and legal circumstance. In other words, when the company goes bankrupt, the contents of the vault do not get added to their balance sheet. Somebody else might buy the company and your contract, or the company might liquidate and you can go collect your assets, but they cannot confiscate them by contract (and when title contracts are negated all hope’s lost anyway and we have anarchy). This is NOT the case for bank security deposit boxes!!!!! Bank falls over, the contents get confiscated and you get a cash payout for the insured amount from the insurer who’s a different company. And this does you no good in a hyperinflationary scenario where they take your gold while the cash becomes worth less the moment you touch it – and there’s no more gold to be found because to buy you need a sell.
With a spare $100 you can start thinking about investing. Remember that assets need to be produced. Gold does well, Gold Miners do well. They’ll generate cash, but you can always immediately reinvest (companies will happily print more shares so there’s no supply issues there) that so the time you spend holding it is minimal, and you’ll always need some current account cash income – this will rise with the asset, which rises with inflation, atleast. People have asked me if to invest in these markets considering they’re so rigged – Yes, Conditionally. Whatever somebody might tell you there is powers in numbers and the riggers know this. That’s why they will only rig what has the most attention: The Federal Reserve has bought a fuckton of bonds in the open market (https://www.federalreserve.gov/monetarypolicy/smccf.htm) but you’ll find that they’ve only bought bonds from large corporations who definitely don’t need the money. Go look, lots of names you recognize. That’s the point. Because that’s where the attention is. There’s no Junior Silver miners on that list and there never will be, while even Buffett sees the value of silver. Again; forget about getting rich, you’ll have to catch the next cycle. Invest only in major producers which will do well for sure – you have nothing to gamble on juniors.
Congratulations! You’ve upgraded to Broke. I’m going to assume additional debt still, but managed against income so you just don’t have savings. Previous advice still applies – at this point you definitely have costs you can cut further to live more uncomfortably. Do it. Compounding earnings means the more earnings you can generate early on, the bigger your gains will become down the road. The time factor is what most people forget.
Again, buy and hold physical first. Make it the majority of your investments, 50%+. You’re still not in any position to get rich, but you might start thinking about being better off when the physical starts rising and trading up in assets along the way. The rest goes into the markets into silver and gold miners. At this range, you can start thinking more about actually getting a gram or two of gold as the ultimate backup; Maybe keep it in a locket or whatever so it goes where ever you go, but isn’t too large a loss to replace if you’re robbed.
The advice of being able to hold onto it continues to apply but in this category that becomes far more about not incurring more debt and upsetting that balance. For example, when your car loan that is manageable now starts to rise with rates, it becomes toxic and you need to ditch it even if it means repoing the car. If you don’t, you’ll end up selling all your gold to pay for a car nobody will buy a few months later when you hit rock bottom. Source of income matters: Government employees will see their cash incomes rise much faster then Private Sector people. Nepotism makes the world go round after all. Income generated from asset production of significant or universal utility goods is preferable in all cases during high inflation. Prices may go up – but people still NEED some things.
For the Renters, keep in mind that rents will also go up as landlords need additional income just as much; All of which comes from you. Forbearance won’t last forever. Since you have some ability to generate cash, it wouldn’t hurt buying a tent or other emergency equipment just in case for when shit hits the fan. For example I bought a MSR Guardian Water Filter for 350 worthless papers which i will never get over, that it was possible i mean. It’s secured my entire families water supply for years, and €350 will be nothing next year (Yes, the Euro is gonna go after the Dollar, just later because Europeans can’t agree on anything, not even incompetence. Next year’s an election year though). And i live in a city essentially built on a refilling aquifer (doesn’t mean the power company can pay its bills though, and those pumps don’t run on fairy dust). Just think about what that’ll save you in buying bottled water during hyperinflation – and health costs from not having to drink out of a puddle directly. Don’t plan for perfection.
With some actual savings you can actually invest. Most likely additional debt, but let’s say you’ve managed to pay off a (beat up) car and have a second one on loan instead (otherwise we’ll just get stuck with that). Get rid of the 2nd one, use the proceeds as capital. Ridesharing is annoying but manageable, we’ll only work more from home, the virus will pass, and whatever you can put into commodities now will (relatively) multiply itself later, while a car is a deprecating asset. Don’t forget that we’re all in this together: Car companies will drop prices and try to survive too, so they’ll still bring out new models – just oriented differently, more towards small economical cars without bells and whistles. Go look at the Sears catalogs from between 1928 to 1938 to see what i mean, Warren Buffett will direct you to em. Discomfort now for additional comfort later pays off dividends.
You can also start thinking about divesting. Remember: Divestment is smart, diversification is stupid. What’s the difference? Diversification is divestment for the sake of divestment. “Oh well i allocated 15% of my portfolio to Gold now i need to allocate 15% to Tech even though i hardly ever touch a computer. Guess i’ll just buy Apple like everybody else. They make computers right?”. No, stick to what YOU know. Into lumber? find a good lumber company. Work at an Aluminium plant and see orders increase? Buy stock. Good companies run competently producing value will adjust to the new situation, albeit slimmed down – but first one to survive the market makes a killing in the recovery.
You don’t have to 100x every investment. Getting rich is about getting it right consistently, not getting it right once. Put $1000 into a Silver junior and see it 100x to $100,000, then plow that into the next hip company at the top and watch it evaporate all the way down to $1000. If you can get 3x your money 5 times from $1000: $3.000, $9.000, $27.000, $81.000, $243.000. This is irrespective of inflation: We’re simply talking about investing in a company that will do well and creates value for shareholders through growth, 5 times in a row. Inflation has nothing to do with a company owning 1, 3 or 10 mines.
Divestment means analyzing the reason why something is going up, and buying something related for the same reason. For example, if you expect gold and silver to go up because of inflation, Platinum is an obvious 3rd. At the 30th close, gold was $1878,70 an ounce, while platinum closed at $847.10 an ounce (that’s not a typo). If you look up how much gold and platinum there actually is in the earths crust, it’s 4 parts per billion for gold and 5 parts per billion for platinum. Purely on that basis, platinum should be $1500 an ounce. Then there are the troubles of South Africa where most of the stuff is mined, similar to Mexico and Silver, except worse because the country is slowly collapsing. However, even though platinum has on occasion been used as money, it doesn’t share gold’s universal utility. Refine and polish it and it’s not shiny: It’s a grey metal so it resembles Silver closely. Silver is a much softer metal and melts at a much lower melting point making it easier to work with as well as being far more common so supply is less of an issue, so it is preferred and platinum is relegated to industry.
So that is why it is neglected. But again: If you expect Gold to go up because of hyperinflation (and it’s monetary qualities just push it harder then the rest), well hyperinflation means a reduction of the purchasing power of the currency due to excessive supply. Since the supply of platinum is limited, people will look to invest in it regardless of industry. At that point, supply and demand matters, so the prevalence in the earths crust matters: Rare stuff will be worth more. Platinum, with its many industrial uses and thus has a great situational utility regardless of monetary policy, will go through the roof as well. With South Africa’s output depressed, only more so.
So if you have your 15% in gold, it’s stupid to divest 15% in tech, but it’s smart to divest 15% into platinum, as well as 15% into silver. This raises your “precious metals exposure” to 45%…. but who gives a fuck. You’ve got an empirical data driven reason for it to go up. Markets stay irrational for longer then you expect, but only for so long. “You can fool some of the people all of the time, all of the people some of the time, but not all of the people all of the time”. If you stay true to the trading rule of “You must be able to hold on to your assets”, it doesn’t matter if something goes down a little before it goes up. Don’t trade on margin kids! Not in this market. A gold slam or scam blowing up unexpectedly will lose you your shirt.
Get on my level scrub. At this point you should be aiming for debt free minus the mortgage. It’ll only drag you down. Yes, i know a credit history is important, but then use a credit card to pay for small amounts, make sure you have that cash IN CASH available and always pay off IMMEDIATELY. DO NOT TOUCH LATE FEES! Honestly i’d like to just work around that entire system, but if you must, that’s the way to do it. If you have a car it’d better be paid off – Switch to used if you have to. Spreads is investment capital. Trust me, biting on a piece of wood as we Dutch say to get through the uncomfortable time will get you so much more in the future right now, especially at this capital level, i should know. Plenty of those 2nd hand cars to go around soon anyway! (the 2nd hand market Hertz a little right now).
At this level (physical in a private vault, money in PM miners) you can start thinking about derivative effects. Not derivatives, that word has become quite contaminated. I mean, things such as platinum, only more steps removed from the precious metals market. For example, Gold and Platinum are going to go up because they’re rare and rare things due to supply and demand will go up in price tremendously. But just because Copper isn’t rare, doesn’t mean it doesn’t cost energy and effort to pull out of the ground. It too will go up in price, just not as much and not as quickly (until the curve hits that exponential trigger). China knows this; That’s why it has been buying up truly incredible amounts of strategic commodities, such as the imports of copper spiking since July; As if the US recovery happened and got an additional 25% on top! And it has been selling down its Treasury holdings to come up with the money to do it: Their treasury holdings are set to drop from $1,000 billion to $800 billion this year. That is beyond remarkable considering major bond movements over the past 20 years.
I mentioned before i own rare earth miners. I’ll tell you the reason why. First off, they’re commodities being pulled out of the ground, so hyperinflation affects them just as much. The “rare” doesn’t come from their prevalence in the crust: They can be found all over the place. But in industry, many materials can often be substituted for others. Copper and Aluminium both conduct heat very well, copper just does it a little bit better. That’s why CPU heatsinks have aluminium fins, but copper heatpipes: The copper fins where substituted with aluminium fins (early designs featured copper much more – but it’s also heavier, and i don’t know if you’ve seen a heatsink lately).
In the case of Rare Earths, China has been cornering that market since the 1980’s. They’ve used state subsidies with dumping, combined with the fact that early rare earth mining was very environmentally unfriendly so nobody had any problem leaving it to the Chinese in the first place, to gain about a 80% market share. Now, they’ve already used Export Caps on these things in 2017 in a dispute with Japan. The US challenged it at the WTO and won, so the Chinese dropped them and prices normalized. But what it does mean is: They’ve used the option before. And now, the WTO appellate body (that has to give the final ruling on appeals) is devoid of judges: They need 3 to make a ruling and only 1 is left residing. Because the US has continually blocked new appointees while the old ones retired, so now any dispute that is challenged will never be ruled on. Nice going guys, real smart.
China hasn’t done anything yet, but that’s because Trump is decidedly more anti-China then Biden, and would be a far stronger leader in a conflict due to his bullying nature (think Winston Churchill – who wasn’t that much of a military genius either). And any antagonizing moves China makes right now just translates into rally-behind-the-leader-votes for Trump. Naturally they’re not going to do anything until February 2021 and the election result is final, then it doesn’t matter. They will make a move, because they have to: Regardless of who wins, whether it’s a hard decoupling under Trump or a soft decoupling under Biden; Globalism is done for. It’s insane to get 87% of your antibiotics from any one source even in a planetary utopia. What if the three gorges dam had broke and flooded Wuhan – Known for the virus now, but it’s also a medical drug production hotspot.
Less industry in China means less profit for China. And the Communist party runs on economical expansion – this is a public secret and part of the social contract in China; Improve our quality of life and we’ll tolerate your corruption. Naturally that requires expansion. They can’t do that if the EU and US economies first decouple their production then implode in hyperinflation. This is already going to lead to conflict one way or another, and wartime production hides slumped consumer production. Insane, yes, but again. Another day survived is another day outside of the noose. You don’t wanna know my timeline concerning Taiwan.
Anyways they can’t put export caps on the antibiotics outside of open war. Hurts the civilian population far too directly (suffering because of lack of medicine isn’t abstract while prices are) and it’ll turn the world against them – they need to avoid a Casus Belli as long as possible. Export caps on Rare Earths are an indirect economic measure – it’ll just raise the price of goods in the US – which will hasten the US’s fiscal decline; The more they need to spend on commodities, the more money they need to print, the faster the moment the Dollar goes parabolic arrives. China can’t beat the US in open war (The US doesn’t have those factories now but it didn’t at the start of WWII either and look what happened. You don’t wanna wake up the giant; You wanna suffocate him in his sleep) and they know it. But with the US being financially weak, and a financial decline being inevitable… well. Same reasoning as the Shadowcontracts; first in the lifeboat gets the best seat. Hyperinflation always ends in a hurry and nobody knows how much gold the Chinese actually have. But it’ll be a lot.
For my investment though, the ultimate result doesn’t matter, the process does. 80% is not 100%. There are Rare Earth mining companies outside of China. I won’t mention which i own here cause again i’m not gonna step over the line but i’ve made my portfolio well known on twitter and in messages to people, so it’s not impossible to find. When China caps Rare Earth export output and starts stockpiling them domestically in preparation for conflict, the companies outside of China, especially in the orbit of the unprepared western alliance (coughaustraliacough) will do extremely well. Feel free to look up the long term stock prices of Rare Earth companies in both 2011 and 2017 – Then imagine those peaks coinciding.
And then major conflict actually breaks out (Currency war > trade war > hot war. US imposed an Oil embargo on Japan in 1937) and one or more large economies switch to wartime production. With alot of Rare Earths being used in military applications these days (such as jet turbine blades or highly specialized guidance systems) that’ll add a demand spike ontop of inflation AND a supply crunch in the Western hemisphere.
Is it going to happen for sure? Nope. The system is so unstable and digital technology makes things so unpredictably fast we could be looking at hyperinflation by the end of January; And war runs on its finances. No Money, No War. But since i am already guaranteed right on one price spike (hyperinflation); being likely right on 2 additional others is a trade i’ll take any day. Yknow, if i have the additional money to invest on Likely events. Had i not had the $10,000 life savings, i would’ve stuck to gold like a fly to honey covered in shit.
I’ve never had anywhere close to this kind of cash (you can probably afford to pay for advice really). More derivative sectors, but again diversification is stupid. If i had a trillion i’d still not buy Tesla at 742 years of forward earnings. I’m not even sure my legacy will last that long let alone me. Remember that hyperinflation affects EVERYTHING. If you where looking to buy a new PC, buy one this year after the new stuff’s come out. PC components require raw resources to be pulled out of the ground AND labor added to them in order to be produced, so they go up just as much. Ya can’t print it, it goes up. Note: Company shares can be printed. You can’t escape Due Diligence otherwise you’re just gonna end up investing in a miner that’ll dilute the entire way up out of greed.
I can offer an economics view on real estate: Don’t go into it. It will not keep pace with inflation, even with fixed rate debt (buy a house to live in!). You won’t go broke entirely but that’s far worse then actually riding a good asset up. Riches can be made in these scenarios even when you’re really poor, but you have to be in the right asset at the right time, and housing ain’t it. Buying a house as an investment is stupid anyway we oughtta move back towards a society that views housing as value-generation machines, not investments in and of themselves: Houses can be used to House people, equipment, technology. Clue’s in the name chief. Things that together produce additional value that didn’t exist before – but that didn’t come outta the house. Those ghost cities built in the 2003-7 boom that where sold to investors are STILL empty. WHAT VALUE have they produced?!. Warren Buffett’s comments that pertain to gold pertain to houses as well: Ya make the brick, ya put it in the wall, then what? It just stays there until you tear it down to build a new house out of NEW bricks! At the very least we get to keep the gold.
So far the rising prices of houses has come directly from artificial demand from artificially suppressed bond rates that determine mortgage interest rates. If payments are lower, more people can afford it. Consecutive US presidents have been pumping the market up by increasing the people eligible by reducing down payments, across both parties, for half a century. 3% down is FUCKING INSANE, and incredibly irresponsible. This’ll end in a hurry. And that’ll cause massive oversupply.
But; This’ll initially be masked by inflation. Because inflation means the currency becomes worth less, ALL prices denominated in that currency go up, even if demand is decreasing or supply is increasing. A quick example: $100 economy, $1 bread, $10 pair of pants. Print $200, bread goes up to $2, because everybody needs to eat the same as before. But, wages/income always lag inflation, as the inflation has to be measured first before institutions adjust their policy to it (yearly raises, not daily) yet through the law of averages and trading activity, prices in the real economy react virtually immediately. Because of the timelag, relatively speaking people’s food expenses start accounting for a larger part of their budget then before. This means their discretionary expenditures, the stuff they don’t have to buy, are delayed or cancelled. On an aggregate, that means the pants will go up in price to $18, with $2 bread and $200 in the economy. While there has been 80% inflation in the nominal value of pants, there has in actuality been 10% deflation in the real price of pants. Some call that disinflation, but that’s confusing the issue again. There’s only inflation, and only deflation, but currency can inflate while prices deflate. Especially on a Fiat standard.
That is to say, if you’d try to sell pants in the $100 economy, you can buy 10 breads with the proceeds. If you try to sell pants in the $200 economy, you can buy 8 breads with the proceeds. Wealth is relative, so you’ve become relatively less wealthy.
This is backed by real world research ofcourse, which i came across earlier in the year trying to warn people of this fact. If you wanna know what happens to…. Anything, in hyperinflation because a country went broke, there’s no better example then the Masters; Argentina: https://www.globalpropertyguide.com/Latin-America/Argentina/Price-History
All of this is logical of course. Unless you’re flippin houses within a month or 2 (which is not gonna be a short enough timespan pretty soon), your income comes out of Rent from tenants. If their incomes aren’t going to keep pace with inflation, YOUR incomes aren’t going to keep pace with inflation.
There is one exception to this, but it has to be timed properly. Hyperinflation is basically “just alotta inflation”, but it’s defined separately because it has additional, psychological effects. Faith in the currency is lost, so once it starts, people will wanna get rid of it regardless, so the process can no longer be stopped – only slowed down by the authorities (who will certainly do so, again, noose) so the final collapse takes time. During this time it’s still perfectly possible to lend ever increasing amounts of money – business continues as normal until it can’t no mo. Not everybody is rich or in charge, us plebes have to just deal with reality.
But due to the nature of hyperinflation and the time component of loans, by the time it has to be paid back, the currency has inflated to a degree where a new loan will eclipse the old loan. So if you where to lend money, spend it on assets immediately, then use those assets as loan collateral a few weeks down the road when they’ve appreciated against the currency (if it gets to a days timeline you NEED to exit), you can easily pay off the old loan and buy more assets. There was a famous German who did this in the 1920’s Weimar inflation – and the populace actually cheered him on for it! For gaming the system that took all their money. He ended up owning 25% of all factories in Germany at some point. Alas, greed can be found in us all and he took it too far. Gotta be able to hold onto it.
His mistake, was not quitting while he was ahead. As i said once it hits days you need to exit (and REALLY don’t take my word for it you’re on your own with daredevil stunts like this). The last loan you make you NEED to pay back with the proceeds of the sale of assets AKA debt-free income, while there are still buyers at inflated prices. I’m fine with just 1% of the factories in Germany mind you, so i’ll lend until i have 2%, then pay it back with the sale of 1% to which ever shmuck is stupid enough to run that plan to the end. Hey i’m sorry, like i said, you engage in daredevil stunts like that, not only are you on you’re own – You’re also competing against everybody else AND time. Naturally it won’t work if everybody does it at the same time (not that most have the stomach for it anyway) and timing is a REAL bitch. So genuinely my advice is don’t do that…
…maybe not on a large scale.
With $100k though my strategy would be two fold: Use $50k in stuff that goes up guaranteed, will do well in the process, and offers dividends while riding the stock up. Nothing wrong with dividends folks. Barrick, Gazprom, Yamana, First Majestic, names you know and you almost don’t even have to research… But you still should because it gives you valuable information about what numbers you’re looking for in a good company. Truth is rare, use it when you find it. If i see the same numbers on a junior’s balance sheet as i see on Barrick’s balance sheet, just with a few zeros less, it’s a buy and hold for me.
If you fuck up – that $50k will provide the “you have to be able to hold it” buffer. Remember to increase that buffer in size as your investments grow in size. No shame in taking a guaranteed 5x for safety instead of trying to find the next 50x junior. Again, consistency.
But the other $50k goes towards many more, smaller mid-sized to small cap companies with balance sheets and quarterly reports i think look good, according to my methods. Again, STICK TO WHAT YOU KNOW! I know logic and reason, so i use logic and reason, it’s universal applicability is just a bonus. I will be able to process and handle many more different companies for the same amount of money as you can, but that doesn’t make me right more often on the whole.
Regardless you should understand how investing works. You don’t have to be right all the time. Not even the majority, not even a significant majority of the time. Consider this (and i’m gonna run through numbers fast because you need to be able to handle that while investing. If you can’t; Don’t invest. Find somebody who can, and pay em a commission):
$10k, 10 companies, $1k each. 7 go bust, 2 do well, 1 is a money shot and hits a major discovery. 2 years down the line, your investments are: $0, $0, $0, $0, $0, $0, $0, $4523, $8303, $47362, non-inflation adjusted, this is just value-added growth by the company, inflation comes ontop of that when others spend cash on shares you already own and more capital flows into the same assets. The 2 companies that did well gave you your money back with a little bit of profit, and a 14% annualized return is nice – but it’s not gonna get you rich on discovery investment. There’ll be down years too, planning for perfection doesn’t work. Regardless of what some people might say, stocks DO go down. And while it’s true that over the long run the market goes up, this is inconsequential to you specifically: What matters to you, is when you buy and when you sell. Go into margin at the top and get margin called out of the bottom, HOW are you going to get that money back? Your capital just evaporated, where are you gonna get new capital? Not a problem for the rich with an established reputation; But i certainly wouldn’t try it.
Chances to repeat the same trick year over year are low. But… You only need to be right on that major discovery once. 47x for a company is far from unheard of. The more you read the more you do the more experienced you get, the more often you can hit higher multiples. And the more capital you accumulate, the lesser the multiple you’re looking for. To hit $40k with $1k you need a 40x multiple, but to hit $400k with $40k you only need a 10x multiple. Patience and Consistency.
For all steps, and for all budding investors and experienced as well, aside that any comments made by Warren Buffett and Charlie Munger things to be considered very closely, but not religiously (They’re right very often. But not always), i encourage you to watch the below video before you pull the trigger. I think Peter Lynch in his 1994 speech put it in better laymen terms then i could, and if you wonder how i would word it instead (YOU WANT MORE?! ARE YOU NOT ENTERTAINED?!) I would simply say; “He’s Right.”
At this point i’ve said all i can say about this topic. This is really the best i can do and i wanna move on. Yes! – i’d still love to do interviews and talk about this is anybody needs clarification or is just interested! I’ve been starved for attention long enough so trust me that’ll go into a deep hole that’ll take time to fill 😀 Though, i feel more comfortable off-camera these days and it’d be great if people could deal with that and not desire yet another talking head. I’d rather not have people wonder why i’m looking at the keyboard and just listen what i have to say instead. I’m not camera shy, i can do an real life interview just fine. But i’ve watched SO MANY videos this past year of faces lying with a smile i’m just averse to it, even if i know the person to be genuine and telling the truth. Grew up using Teamspeak, Ventrillo and even Battlecom back in the day so i’m pretty used to making friends with voices (don’t quote that out of context). Also i suffer from excema in my face on top of everything else and i haven’t had the mental fortitude to smell chemicals for a month to get minimize it again 😀 It’s less noticeable in real life then on a HD camera close up. And i’ve got bad teeth… My lying smile isn’t that convincing anyway 😉
But i just mean to say. Think i’ve done enough carrying the team for one day. I need a vacation. This all cost an enormous amount of effort and my body demands i suffer the recoil. Time for the rest to get off their lazy asses and do something. Just gotta spread the knowledge now.
Y’all been saying for years the Comex was gonna collapse inevitably and eventually?
Well. Future’s here. Get to work.
Welcome to 2021.
– Kirian “Deso” van Hest.
You can find me at these places:
Twitter (For daily stuff and contact!): https://twitter.com/DesoGames
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Youtube Channel (Future repository i suppose, neglected ATM): https://www.youtube.com/channel/UCLVuYr6ahkoDu3yrPflStKA
Podbean (Via which i’ll distribute Podcast Audio content):
Check out my previous work once you’ve secured your future!
THANK YOU FOR READING AND YOUR SUPPORT!!!!!