The COMEX gold market has run out of physical gold since November 2024, with 400 metric tons transferred from London to New York, signaling a seismic shift in global demand for physical gold.
Eastern central banks, particularly China and Russia, have been quietly accumulating gold since 2014, increasing purchases to 290 tons per year since Ukraine war sanctions.
COMEX gold market’s price fixing mechanism is weakening as demand for physical gold outpaces shorting ability, with gold reaching all-time highs amid growing fear of the US dollar.
The East is building gold reserves as a hedge against declining US dollar dominance, while the West relies on debt and paper-based financial systems.
The US Constitution has been betrayed by the government and Federal Reserve, abandoning sound money principles and allowing debt monetization.
The US faces a debt crisis due to reliance on debt-based systems, with the Federal Reserve financially repressing the economy by inflating away debt.
The Federal Reserve is misleading the public about positive real rates, with actual inflation at 12-13% using honest metrics.
A multipolar financial system is emerging, with the East building gold reserves and the West relying on debt.
The US is defaulting on its entitlements, interest expenses, and military budget.
The COMEX is under strain due to growing demand for physical gold and silver, and increasing use of leverage and derivative contracts to control precious metal prices.
The negative EFP spread indicates bankers are losing money as the ComX price exceeds LBMA price, reversing the previous basis trade profit mechanism.
LBMA’s actual paper to physical ratio is 100-400 to 1, far exceeding the reported 10 to 1 ratio in western futures markets, revealing significant market discrepancy.
LBMA vaults are draining, with 70 metric tons of gold and 1000 metric tons of silver depleted, signaling a dire shortage despite US importing 2000+ metric tons of gold.
US government proxies are demanding physical delivery at ComX, rejecting paper or cash settlements, causing ComX physical prices to surge.
LBMA vault inventory is double-counted, including 22,000 tons of ETF silver and 5,500-7,700 tons of allocated owner silver, according to researcher Robert Godlip.
LBMA’s gold vault decreased by 70 metric tons in two months, suggesting they’re borrowing from foreign central banks to meet delivery demands.
PSLV ETF short volume increased, with current -1.6% discount to NAV, potentially triggering physical silver bar purchases and limiting new vault additions.
The US money supply contraction since summer 2022 is a rare event, occurring only four times since 1913, each followed by a recession, suggesting a potential economic downturn by late 2023.
Regime uncertainty, characterized by significant policy changes, can exacerbate economic slowdowns and reduce investment, as demonstrated by the New Deal’s impact on the Great Depression.
The current 3.9% growth rate in US money supply is below the 6% rate needed to hit the Fed’s 2% inflation target, indicating potential economic challenges ahead.
The Federal Reserve’s monetary policy has benefited the wealthy and concentrated income inequality by increasing asset prices primarily owned by the rich.
The quantity theory of money suggests changes in money supply have a lagged effect on inflation, with current contraction expected to bring inflation to the Fed’s 2% target in 2023.
Steve Hanke and Greenwood accurately predicted inflation in 2021 using the quantity theory of money, advocating for 5-6% money supply growth to avoid economic instability.
Commercial banks, producing 76% of M2 money supply, have been constrained by Dodd-Frank regulations, Basel III requirements, and the nationalization of Fannie Mae and Freddie Mac.
Reforming bank regulations is crucial for restoring commercial banks’ role in money supply growth and economic stability.
A proposed flat 15% income tax with no exemptions could simplify the tax code and reduce compliance costs for individuals and businesses.
Hanke’s new book, “Making Money Work,” outlines a comprehensive reform agenda for the Fed and commercial banks to improve the financial system and promote economic growth.
Buffett’s 27% cash position and liquidation of long market ETFs align with Hanke’s view of an overvalued market, suggesting a potential 15-30% correction in 2023.
Technical analysis of the S&P 500 shows a downtrend since February 2023, with 50-day and 200-day moving averages acting as key support/resistance levels.
Gold’s new all-time high of nearly $3100/oz in 2023 is driven by inflation fears, geopolitical uncertainty, and central bank policies.
Gold miners have outperformed bullion in 2023, with the GDX ETF up 30% year-to-date as of March 2025, indicating potential continued strength in the mining sector.
Hanke’s gold sentiment score, which analyzes internet articles hourly, serves as a timing tool for buying gold when extremely bearish and selling when very bullish.
The Deep State, comprising entrenched interests like bureaucrats, lobbyists, and politicians, has successfully resisted attempts to reform the US federal government from a free market, small government perspective since 1980.
Jacksonians in the mid-1800s effectively dismantled the “American System” through a strong executive, achieving lasting institutional reforms including destroying the central bank, enacting free trade tariffs, and paying down federal debt.
Executive orders can be used to dismantle regulatory agencies, as the president has constitutional authority to ensure laws are faithfully executed, controlling how money is spent and determining constitutionality.
The veto power can be wielded against cronyism and excessive spending, as demonstrated by Andrew Jackson’s famous veto of the Second Bank of the US recharter.
Rotation in office, while criticized as the spoils system, can reduce entrenched bureaucracy by cycling in new people, potentially perpetuating liberty.
Appointing allies to key positions, like Russ Vought as OMB Director and Linda McMahon as Education Secretary, can achieve meaningful change by dismantling bureaucracies and challenging cronyism.
Executive orders like “ensuring accountability for all agencies” and “unleashing prosperity through deregulation” can rein in independent regulatory agencies by requiring presidential approval for major regulations.
Deregulating independent agencies like OSHA, FDIC, EPA, and NLRB through executive orders and appointments can stop cronyism, special privileges, and regulatory overreach.
Signing statements and impoundment can be used constitutionally to weaken spending and cut government, with the president deciding how appropriated funds are used.
Recess appointments allow presidents to bypass Senate confirmation and appoint allies when Congress is out of session, enabling dismantling of entrenched interests.
Publicizing cronyism and waste through social media can shine a light on government inefficiency and corruption, even if formal oversight mechanisms have limited power.
The Trump presidency demonstrated a Jacksonian spirit with a focus on eliminating waste, fraud, and abuse, signing more executive orders than most predecessors combined.
Economy has been in shadow recession since 2008-2009, with inflation underestimated by factor of 3 and actual recession lasting 15 years.
Markets are 200% overvalued based on 1880-1990 averages, requiring 65-70% correction to return to mean over 45 years at 2.5% annual growth.
Case-Shiller PE ratio at 36, significantly above 100-year average, indicating massive correction needed even considering last 30 years of above-average values.
Private debt and equity markets pose significant risk, claiming to be unregulated and unmeasurable, potentially triggering next economic crisis.
Markets “bitcoinized” with investors focusing on price speculation rather than revenue streams, leading to unsustainable valuations.
Passive investing and demographic changes distorting market, resulting in more investors buying same growing pie with smaller slices and higher prices.
Deliberate recession could purge bad businesses, leverage, and crazy investments, acting as metabolic recession flushing out economic byproducts.
Private equity profits by loading companies with debt, stripping assets, taking fees, then selling damaged shell to open market, despite 47% bankruptcy probability within 3 years.
Gold’s rise to $3,000/oz not parabolic, suggesting retail investors haven’t seriously entered market yet.
Platinum’s future demand tied to internal combustion engines and hybrid vehicles, which contain more platinum than traditional engines.
DAX index disconnect from Germany’s de-industrialization challenges suggests markets will eventually reconnect with reality, timing unpredictable.
Gold revaluation myth ($20,000/oz) flawed as market already set price at $3,000, practical questions about gold-backed treasuries remain unanswered.
Trump’s trade policies will primarily impact the stock market, causing disruptions and congestion in trade flows, especially with the EU, which imports $450 billion worth of goods from the US annually.
The Federal Reserve’s monetary policy is the primary cause of US trade deficits, flooding the world with excess dollars and making the country uncompetitive in global markets.
Trump’s protectionist trade policies stem from a primitive transactional mentality that views trade as a zero-sum game, misunderstanding the complexities of global trade.
The proposed 10% tariff on all imports from non-reciprocating countries is unexecutable and would lead to a disaster in trade negotiations with the US’s top 50 trading partners.
The fragility of financial markets means that once the stock market starts to decline, it will be difficult to halt, driven by fear and panic rather than rational decision-making.
Trump’s trade war with Canada is described as insane, jeopardizing $1 trillion in annual trade over a relatively small fentanyl seizure worth $400,000.
The drug trade issue is disproportionately emphasized, with 43 pounds of fentanyl seized at the US-Canada border in 2022, compared to larger seizures of heroin and cocaine.
Trump’s China fixation is a significant concern, with insiders suggesting he believes China controls the global drug trade.
Stockman suggests that understanding monetary policy is crucial for addressing trade deficits, rather than focusing on trade deals.
The interview emphasizes the need to look at the Federal Reserve (“Eccles building”) as the source of economic problems, rather than blaming trade partners.
Simon Kuznets, creator of the first national income statistics in 1934, argued against including government spending in GDP due to the lack of a profit motive and voluntary consumer choice.
The current method of measuring government’s contribution to GDP, based on government spending on final goods and services, was criticized by Kuznets as flawed and not reflective of true economic value.
Kuznets proposed using tax revenue as a proxy for government services’ value, but this approach became problematic with the rise of deficits and elevated spending since the Great Depression.
The US Department of Commerce, influenced by Keynesian economist Richard Gilbert, changed national income statistics to include all government spending during World War II, overriding Kuznets’ objections.
The Department of Commerce had a vested interest in increasing government’s importance in GDP statistics to secure more funding and resources for their department.
A vigorous debate between Kuznets and Department of Commerce officials in the late 1940s resulted in the permanent inclusion of government spending in GDP calculations.
Murray Rothbard’s “private product remaining” concept suggests subtracting government employee salaries and the greater of tax receipts or government spending from GNP to measure genuine private sector economic output.
Rothbard argued that government spending should be subtracted from GDP as it creates zero or negative productivity compared to the private sector due to lack of profit and loss mechanisms.
The debate over government spending’s role in GDP remains timely and relevant today, with ongoing discussions about whether government’s contribution is overstated.
Including government spending in GDP has real-world implications for understanding the economy and the effects of government spending and taxation.
The inclusion of government spending in GDP marked a shift from earlier views of government as a necessary evil in the 1800s and early 1900s when it was a smaller share of the economy.
Kuznets’ early writings suggested including government services like the post office in GDP, but he later shifted to using tax revenue as a proxy for government services’ value.
Gold mining stocks have dramatically outperformed gold itself, with majors tracked by GDX up 70% in a year and 40% in Q1 2023.
Central banks are buying gold in a price-insensitive manner to protect against US dollar hegemony, fueling the commodity bull market.
Junior mining stocks are experiencing increased access to capital and financings, creating a target-rich opportunity for investors.
Brien Lundin recommends adding exposure to select juniors with strong resources or near-term catalysts, such as Banyan Gold and Delta Resources.
Q1earnings are expected to reflect gold’s strength, potentially making gold equities too strong to ignore for generalist investors screening for performance.
To avoid selling winners too early, investors should evaluate each stock individually and periodically take profits to create capital for new opportunities.
The US government faces staggering $130+ trillion in total liabilities, exceeding the estimated $141 trillion private net worth of Americans by $11 trillion.
A potential 75% decline in the US dollar’s purchasing power could lead to a 25% decrease in Social Security and government benefits’ value.
Allocating 2% to gold in a portfolio could save 10% if gold prices increase 3-4 fold, while a 10% allocation could shield 40% of the portfolio.
The current 0.5% market share of precious metals in US savings is 4 times lower than the 4-decade mean of 2%, suggesting significant growth potential.
Real interest rates are negative, with a 4.5% return on a 10-year Treasury resulting in a 3% loss over 10 years due to 7.5% purchasing power deterioration.
The government’s reported 2.6% CPI inflation rate excludes critical factors like food, fuel, and taxes, masking the true inflation impact.
copper The copper market faces a structural deficit due to 25 years of underinvestment, leading to supply shortages and price increases.
Corporate America is rebuilding its commodity acquisition strategy to secure domestic supply, while countries like China, Japan, and India are locking in copper resources.
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