Summary
➡ The article discusses various topics including the impact of Trump’s policies on globalization, the potential for conflict between the U.S., Ukraine, and Russia, and the influence of China on COMEX silver pricing. It also mentions the rise in gold and silver prices due to geopolitical tensions and changes in China’s policies. The article ends with a discussion on the performance of different markets and the potential reasons behind their current trends.
➡ China is encouraging its citizens to buy more silver, similar to how they promoted gold purchases in the past. This move is part of China’s strategy to gain more control over global pricing. The situation is further complicated by increasing tensions in Europe, which could also affect the Far East. This could lead to significant changes in the global market for precious metals.
Transcript
And we’re going to talk about, well, geez, what happened last night if it’s driving, how it’s driving the markets. Let’s start with the markets themselves. Give you a couple of charts while we’re doing that. That’s gold on the left, silver on the top right, WTI on the lower left, and China government bond yields on the lower right. That looks like it’s a big move. Don’t, you know, it happens. It’s China, right? Okay, the dollar is up 10 after being down most of the night. One is $6.77. Ten yields are $4.47, slightly higher.
S&P 500 is unchanged, offered at $58.75. The VIX is $16.50 up 37. Gold is up $29 at $25.91. Silver is up $0.48 at $30.72. Copper is unchanged, bid at $4.05. WTI is $67.64. Up $0.42. Natural gas is $2.73. Up $7. Well, I think it’s volatile. Bitcoin, surprisingly, to me anyway, $90,500 and change, up $590. Ethereum, $3,064, down $10. Palladium, up $19. And $9.71. Platinum, up $14 at $9.55. Gold, silver ratio, softer. As everyone uninvests in gold and reinvest in silver, cover silver shorts. Grains are mixed. Soy being down $5.95, $9.94. Wheat being up $0.03 at $5.56 and corn unchanged, offered at $4.19.
Okay, we’ll come back to the charts in a second. A lot to catch up with over the weekend. All right, so let’s start with the homepage very quickly. Here’s the top three stories for us. We have a lot. We’ll mention what those are in a second. Starting with Michael Hartnett. Michael Hartnett’s very popular flow show report, which we thankfully, gratefully get and share with previous subscribers, goes through the markets in general. It’s not a gold report. And he’s been made very popular by Zero Edge because of their coverage of him for the over the years.
And so we’ve been reading him for, you know, five years as well in the understanding what the guy’s talking about. Okay. Anyway, so his report this week is entitled sell you brisk by humiliation. Basically, it’s a contrarian statement. And within his report, there’s a section every weekend. And the main section starts with this. There is no trading alternative to loan the US dollar. Long US stocks and short US treasuries post election. And then he goes on to give you alternatives to those post inauguration. But post inauguration by international stocks, by treasuries, if he yields rise to 5% and buy gold.
Now, those of you familiar with his stuff, what he’s saying there is he’s speaking to clients that are stockholders, that they have to be long stocks to some degree. And he’s saying to them translated, sell US stocks, buy some international stocks, buy treasuries, especially if he yields go up and buy gold. Now, taken together, if yields go to 5%, stocks are going to sell off. And he’s saying buy treasuries, because if stocks do sell off, then the Fed will be more likely to ease. And that’s why you’re going to buy gold, among other reasons.
So let’s get into the specifics of buy gold, right? His quoting him, buy gold, secular inflection point in globalization and coming inflection in demographics, plus massive energy needs of AI, gold and crypto remain best secular inflation hedges. So he offers two charts with that. So let’s go through the two charts. First quote he says is one of the reasons is secular inflection point in globalization. And I wrote in parentheses there, the M word, meaning mercantilism, the blue arrows. This is an excerpt from our premium post. The blue line going down, that’s a decrease in tariffs.
So that’s an increase in globalization. And he’s basically saying at every circle there, he’s giving you moments where you have reasons for tariffs to either increase or decrease. And the red circles. And at the end here, he’s basically saying it’s the end of globalization and the beginning of isolationism, de-globalization. The word you want to hear is mercantilism, because that has connotations of gold. And give me an idea, we’re off the lows, right? You’re off the lows and it can’t go below zero. Tariffs are either zero. What do you make from tariffs? Either zero or above zero.
And so globalization tops out as use of tariffs bottom out. So and I wrote a little comment there, got gold for trade. And you need gold if you’re raising tariffs for multiple reasons. So that’s the first chart. And that’s the explanation of secular inflection point in globalization, which I happen to agree with, but I’ve never seen it quantified like that. This chart I haven’t seen before at all. And I got to wonder if if if global governments are looking at this chart with the whole immigration thing, right? He says coming inflection in demographics.
Now, demographics argue inflation is here for a very long time. Now, this chart is called this inflation demographics peak in twenty twenty eight. So as the blue line goes down, OK, that’s a disinflationary environment demographically speaking. And as the blue line goes up, it’s the opposite. That law, what does that line measure? It measures the number of people that are of prime working age versus people who aren’t working. So at a very simple level, you’d say, OK, this is, you know, 40 year olds versus 80 year olds demographically. Right. So if you’re over sixty five, let’s say you’re 80 years old, you’re not working.
Right. And there’s there’s there are many more working people than there are nonworking people in terms of working age. Well, then the line goes down here. And as the population ages and it’s more than ages, but as the population ages and we get older or less productive as workers, right, the line goes up and going up is inflationary. Now, the reason I say it’s more than ages is because and the reason I say it’s kind of going to get baked in. It’s got to get baked in. It’s because the cure for an aging population is having kids.
Well, this chart also includes people under working age. So you’ve got, let’s say people over the age of say 15. This is his chart between 15 and 65. That’s working age. OK, I guess in some countries, you know, you’re 15, you’re working, you know, full time 15 and 65. That’s prime working age under 15. You’re dependent. You’re not working over 65. For the most part, you’re retired or you’re convalescent or you’re dependent or you’re not working. So when you when you cure the older population by having kids, well, you’ve got 15 years before that before that kicks in.
So looking at this, if you can’t see because it’s a smaller picture, let’s see if I can make it bigger. No, I can’t. Same size. That bottom red circle is 20, 20, 20, 20. It will be according to the chart. He has the end of demographic disinflation. So we’re out of disinflation. That’s anti Goldilocks. That’s secular stagnation of of disinflation. Basically, it’s secular. It’s anti Goldilocks. As I said, it’s the end of the Goldilocks are this was the Goldilocks error. OK, this is a younger population, more workers, better supply chains, OK, better globalization, better relationships and the Cold War.
Right. And this is the beginning of demographics going against us, the beginning of Cold War 2.0, the beginning of a an isolationist mercantilist society. So having never seen that before, it really caught my eye because I never really, really thought about demographics as a reason to buy gold. But there is he’s saying it. The world is peaking in disinflation due to demographics. Too many dependents and not enough workers in our future is inevitable, even if you all go have babies tomorrow. That’s it. So and his comment was buy gold, buy gold.
Right. And the three trades are sell stock, basically sell U.S. stocks. Thinking of as a U.S. person, sell U.S. stocks, buy U.S. Treasuries and buy gold. And what he’s really done if you’re if you’re if you’re a hard-knit person is he’s taken his barbell trade. His barbell trade is buy bonds in case of a crash and buy gold in case of inflation in the middle is where your stocks are. And he’s kind of taking that and he’s he’s making it bigger. He’s basically saying the barbell trade is becoming more important to him.
Okay. News and analysis. We put out a lot of content over the last three days. And I just want to do us some justice here for the moment as we head into Black Friday and you’re waiting for discounts from everything today. We have a story. Don’t be an exit strategy for Wales and Trump 2.0. That’s a contributing editor story to zero hedge. I think that’s very important as it was about gold. Now it’s about the euphoria surrounding stocks that Trump is going to be positive for. Fort Knox holds nothing but Boston IRUs.
We mentioned that last week. That story is about what we think is going on at Fort Knox. Sunday discussion. Bullion banks are broken. That was that is the preview to the to the master class on options. And it also is about bullion banks. China pricing influence in COMEX silver. This is what we said last week Friday. Yes, it is. And today there’s more evidence that effect based on China changing the capital requirements for silver trading on the SGE, which is we’ll come to that why silver and gold are up today. Okay.
Founders Sunday reading. Well, that’s special stuff we give to founders, macroeconomic stocks, and sometimes we’ll give them a little bit more insight into gold because it’s just something we can’t share too publicly. We could get in trouble. Let’s put it that way. Analysis. Trump agenda speeds up the globalization. This is a story by this is a story. This is an analysis by TS Lombard. They’re an analytical firm. If you’re not familiar with them over in Europe and they’re not a bank, you know, they don’t have clients that they have to. They’re very good.
Okay. And when they talk about geopolitical stuff or or political stuff in the U.S. from their perspective, we kind of see them as pretty objective. And what they’re saying here is what they’re saying is kind of like what Michael every was saying, but in a little different way. And they’re saying that Trump’s policies will speed up the globalization, but they actually say the word of fractured. So they’re saying it’s not going to be just fragmented. It’s going to be fractured, meaning it won’t be fixable, at least for a long time.
And there’s some interesting charts in there to that effect. And at the bottom there, just clip at the bottom founders stocks are overbought, which is what we’re seeing that came out over the weekend. Politics geopolitics. Okay. So the big news geopolitically this week was Biden administration on Friday and the Kremlin’s reaction to that. So let’s just read this. Russia’s Kremlin on a reported decision by Biden administration to allow Ukraine to strike deep into Russia says these reports did not have official sources. If such a decision has been made by the U.S., this will usher in a new round of tensions.
It would mean a new situation with the involvement of the U.S. in the Ukraine conflict. If Western weapons are fired deep into Russia, this will not be Ukraine doing the targeting, but those countries which gave permission notice, they say, just give me a little meditate care, did not have official sources. So they’re kind of saying you got a chance to change your mind. That’s how it works. U.S. President Biden’s decision. This is the statement to allow Ukraine to use long range missiles missiles to hit the Russian hit the Russian death. We’re phrasing was communicated to Kiev about three days ago, while the motive behind the decision is to deter North Korea from sending more troops to Russia, according to source cited by Axios.
Okay. So it’s not official. It’s leaked. And that’s that gives the Biden administration cover. But the reality of it is anybody understands war. If you’re going to bomb Russia because of North Korean troops, you’re only going to make North Korean troops. If you’re going to bomb Russia with North Korean troops, you’re trying to avoid a world war. It sounds crazy, right? You’re not bombing North Korea because of North Korean troops. You’re not declaring war North Korea. You’re just declaring double war on Russia, which is going to make them pressure. North Korea helped them.
It’s just it’s a cluster. Excuse my French. Right. Let me just scan this here. So this is the rhetoric. Russia’s upper house international fast committee deputy head. I can’t say there’s a bar of said the decision to allow Ukraine to strike inside of Russia with U.S. missiles is an unprecedented step that could lead to World War Three and will receive a swift response, according to task. Furthermore, it was also reported that a senior Russian senator said the U.S. decision to allow Kiev to strike Russia with long range missile weapons, escalates escalation, et cetera, et cetera, et cetera.
And Ukraine could be no more. I think the phrase is like Ukraine. Ukraine will not exist or something like that anyway. So my unofficial educated but not expert opinion is. U.S. made that statement unofficially through Axios to get a reaction from Russia to let them know that they actually may do that. And Russia said if it’s not official, we’ll wait for it to be official. But until it is, we’ll chill. But in the meantime, you know what? If it is, we’re not going to mess around either. OK, so threats, the threats, this is an escalation of threats, but it’s certainly not something to take lightly.
And you may say, well, maybe that’s why gold is over up. And you could think that and it might be true, but I’m not sure yet that on deck housing and talking a lot of Fed talk this weekend, relatively late week. We got housing on Tuesday and housing on Thursday and PMI on Friday. And before we go through the markets, what we are putting out today today is over the weekend, we did a almost three hour conversation on anything. CFTC analysis, which is why the title tentatively was options. I’m sorry, billion banks are broken because, well, they are.
That’s our opinion. But we’re right. Thinkorswim is a platform that we predominantly use where options work. And so we walk users through that and how to use it as a thinkorswim tool, but also with an eye on how you use other platforms and similar things. We also talk about commitment of traders. I’m sorry, a CTA, commodity trading analysis, commodity trading advisors and their speculative positions. The long story short is they’re out of their gold longs, but that’s the CTAs. It’s not the macro discretionary. They’re still long, but it’s it’s a very long recording.
Plus, we have an outline to help you get through it. OK, current events. Let’s look at the markets. There we go. There’s the daily gold chart. Stretch it out a little bit. OK, the yesterday during the Sunday discussion, we usually had a discussion going around and asking people what they think of the market will do. And I was put on the spot like, what do you think? So that I and the whole conversation was I bearish, OK, gold has longs that need to get out of the market. And they’re like, what do you think Sunday night? I was being asked that one of the other founders said, hey, guess what? This.
And I went, oh, shit. All right. So we’re going higher. So my answer was higher, higher Sunday night and maybe lower by the end of the week. Higher Sunday night because of the the Ukraine unrest because of the you know, we’re going to bomb the shit out of them or whatever it is. Right. OK. But I wake up this morning or the markets open last night and gold opens higher. Opens five creeps up to 10, opens 15. It just keeps going, you know, and silver is tracking it and copper is not. And my initial reaction is that’s war.
But silver is performing too well. And then you look at the dollar and you say, why was the dollar was a little bit lower at that point? And why wasn’t the dollar up? Yeah, I mean, you know. Look, the dollar may not be a place to put your money. We may not feel safe with it, but certainly it’s safer than Europe, which could no longer exist if this continues. So I went to bed thinking, thinking it might be all bullshit and some shorts are covered and gold will come in unchanged tomorrow, then they’ll sell it again.
But, you know, I woke up this morning and I’m like, look at that. The dollar is a little bit higher. Gold continues to rally. Silver continues to outperform and copper is nowhere. So that’s that sounds like a war to me. You know, stocks are a little bit lower. Vicks is higher. That sounds like war risk. And then and then Bai Jiajun made it clear that China changed their policies with regards to silver and I think gold. So so you can if you want to put a why they hire, you could say 50 percent of it is is escalation of European war fears.
That’s bona fide. You know, it’s like I’m a boy in bank. I’ve just got my ass handed to me for five hundred dollars in gold. And then I read a headline like that. It’s like, oh, no, here we go again with this shit. And I start covering at night. Right. That’s that’s that’s what’s going on. Right. And then and then the silver thing, the silver thing coming out of China. I mean, I’ll cover this tomorrow. Right. But I’ll just tell you what it means. I have to parse through it. I don’t know. There’s a language barrier.
All this other stuff we have to figure out. But what it means is China is escalating its desire and actions to take pricing power from the West. And you’re doing it in the form of enabling their local population, their their empowering their citizens to buy more silver. So it’s like saying, you know what? We as a country need to buy more silver because of our industry or whatever the reasons. Right. And now they’re saying to their people, you know what? Silver is pretty cool. You should maybe think about buying some. And that’s, I think, the desire and effect.
Now, well, if you’re looking for a parallel, like, oh, well, that won’t work. Yeah. Well, that’s what they did with gold. That’s what it was called two years ago. The CCP said to its citizens, you can link your physical gold account to your savings account. Can’t do that in the U.S. So you can take your savings and you can buy gold without doing anything except saying, I want to buy gold. It’s like having your brokerage account linked to your checking account. You can buy stocks in a heartbeat and they’re doing that. And it worked. And you may remember a famous statement by 2016, a general, a retired general, I think, who actually had a was on the board for the PBC at the time afterwards.
When asked by the IMF. How much gold is China really have? Because it seems like they were underreporting. He said to the I think it was the IMF, or maybe it was the World Gold Council. He said, gold. China owns gold through its people. And the West took that as, oh, you know, they’ll confiscate the no, that’s not what he was saying, which could be true. He was saying back then he was saying. China’s people are loyal to China. Chinese people own gold, and if we ever needed it, we would be able to get it from them.
Just like Korea did in 1998. OK, he’s talking about national pride, not confiscation or communism anyway. So what did they do back then? They said to Chinese people, buy gold. And now what they’re getting ready to say is buy silver. So you could start to see this happen again. So now you’ve got two drivers under these markets right now. You’ve got Chinese market structure, which is changing to say buy metals. Right. And you’ve got European unrest, which is now saying potential for escalation is growing. And that escalation in Europe is also going to spill over in the far east because North Korea is involved in this.
That’s world war. Well, I’ll try to have a good day. All right, guys. And at noon today, we will have that long, thorough class on options. Take care. [tr:trw].
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