Though the hot commodity topic now is the decoupling physical and paper gold and silver prices, many people have asked me to comment on the very quick plunge in oil price since the start of the year when oil was trading near a high of $66 a barrel to its low of nearly $20 a barrel earlier this month, a 69% drop in futures prices in less than three months. I’ve often written in the past that there is not one commodity in the world that trades in futures markets whose price is set, as it would be in a free market, by physical demand and supply determinants. To begin, the global futures markets for commodities is one plagued by fraud, and besides gold and silver, oil may be the third commodity in line whose prices are plagued by far more factors that physical supply and demand, including severe short squeezes being artificially manufactured to send prices soaring and political reasons and currency wars factoring into severe price dumps, such as the one we just experienced. Consequently, the severe decoupling physical and paper gold and silver prices happening in March 2020 should come as a surprise to no one. However, since I covered the topic of oil price determinants at length, in one of the handful of articles that I did not author in over 14 years of publishing financial articles, called “A History of Rigged & Fraudulent Oil Prices (and What It Can Teach Us About Gold & Silver)”, by my friend and journalist, Lars Schall, I will merely reprint the most salient points of that article. In his article, Mr. Schall interviewed F. William Engdahl, an American-German freelance journalist, historian and economic researcher with degrees in engineering, jurisprudence, and comparative economics from Princeton University and from the University of Stockholm, thereafter working as an economist and a free-lance journalist, during which he has written extensively about the geopolitics of oil, agriculture, and GATT, WTO, and IMF monetary policies.
During this interview, Mr. Engdahl quoted an infamous statement from Henry Kissinger: “Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world.” To make this statement even clearer, I would rephrase this comment to the following: “Who controls food prices controls the people; who controls energy prices can control whole continents; who controls fiat currencies’ purchasing power can control the citizens of the world.”
In 2011, Mr. Engdahl noted, “Total NYMEX open interest in crude is 1.4 m contracts or about 1.4 billion barrels of crude. Daily volume of crude traded on NYMEX is over 1 billion barrels per day. Total daily global demand is only 83 million barrels per day. The amount traded on one single exchange is more than 10 times total daily consumption. It’s a giant casino with prices being driven up by speculators and consumers having to pay more and more.”
Such a disconnect between the massive daily volumes of paper oil traded versus the totally global daily consumption and production of real physical oil can be utilized to squash oil prices and not just to drive prices higher in an artificially manufactured short squeeze (as Goldman Sachs bankers likely imposed upon massive oil short positions held by hedge fund Semgroup many years ago). Furthermore, regarding the opacity of global oil reserves and production data about which mass financial media erroneously report about as known concrete data, Mr. Engdahl had the following to say in 2011: “there is no independent, non-partisan authority on the planet that knows what the totality of really usable oil spare capacity is. The Saudis keep it a state secret and most other Arab OPEC countries keep it a state secret as well. Presumably the NSA and various intelligence agencies have access to certain sensitive data in these countries, but we don’t. Moreover, there are reports that OPEC has been cheating for a long time on quotas and already pumping at capacity.”
The only part of the above statement that was likely wrong was that the Saudis were already producing oil at full capacity nine years ago, as they have demonstrated their ability to increase production nearly at will in past years, in contradiction to many of their statements that their reserves are rapidly declining. Consequently, my speculation is that the Saudis, for decades, lied about their shortages of oil supplies and consistently and severely understated their true reserves in order to artificially goose prices higher. The one common denominator that the oil industry shares with the gold and silver industry is the complete lack of transparency that leads to total global reserves and individual nation’s reserves and production capacity being unknown, with much of this reported “factual” data likely being highly erroneous. However, the same type of decoupling physical and paper gold and silver prices does not afflict paper and physical oil prices, and thus the reason why I have maintained that the level of fraud executed in gold and silver futures markets is much greater than the fraud committed in oil markets.
Today’s massive decoupling physical and paper gold and silver prices as well as decoupling physical and paper platinum and palladium prices have been generating a lot of attention among gold and silver industry analysts for the first time ever. However, this is a topic that I’ve been speaking of for more than a decade now, including even the article referenced in this one. In 2011, I revealed that precious metals consultancy GFMS executive chairman Philip Klapwijk acknowledged that the IMF’s country specific reports on gold reserves were inaccurate, confirming my allegations for years prior that such physical gold supply data was inaccurate. Secondly, back in 2011, I stated, “The banking cartel succeed[ed] in creating ‘false’ prices for commodities such as oil, gold and silver through their creation of bogus paper markets (futures, ETFs, etc.), in which sometimes a hundred times or more of the commodity [was] bought and sold in paper form than exist[ed] in real physical form”, thereby explaining the mechanisms that created wild divergences between paper prices and physical prices for precious metals in many years prior to 2020.
Because I already published the full interview between Mr.Schall and Mr. Engdahl on my news site in 2011 here, anyone interested in reading this highly informative interview about the real factors that move oil prices can do so by clicking the aforementioned link. Unsurprisingly, nothing about the manipulation of oil prices has changed in more than a decade. Thus, this compelling interview about the numerous external factors besides physical supply and demand determinants that move oil prices, for the most part, is still highly relevant as of March 2020. Of one extremely interesting note is that Mr. Engdahl spoke of the historical role that Wall Street bankers played in presenting themselves as the savior during many global crises that afflicted various nations from Greece to Ireland. During these moments, Mr. Engdahl mentioned that Wall Street bankers often gifted a “Trojan Horse” as part of their solution that ultimately achieved a more sinister hidden goal of allowing bankers to transfer the wealth of a nation, at pennies on the dollar, to themselves. Recall that various global financial publications, during the midst of the 2008 financial crisis, presented images of then US Central Bank Chairman Ben Bernanke with the monikor “Savior” plastered all over their magazine covers, again deifying a wolf in sheep’s clothing.
Though this following opinion of mine is very unpopular, I have often stated my belief that bitcoin is a “Trojan horse” of Central Bankers, presented to us as a way to “save” us from the evils of Central Bankers, while really playing to our naivete to convince us to invite a Trojan horse into our homes that will lead to the eventual destruction of our financial independence and sovereignty. I have not made these speculations without the support of strong circumstantial evidence. As my patrons know, I used my rationale and reasoning behind calling bitcoin a Trojan horse to call the exact top of BTC prices at the end of 2017 at $20,000, and to successfully predict a halving in price to $10,000 and another subsequent halving to $5,000, with both predictions made well in advance of the actual events. Back then, I speculated that bankers would use some of the mechanisms they’ve used for decades in knocking down gold, silver and oil price to do the same with bitcoin, as bankers introduced BTC futures in December of 2017, and the BTC crash materialized shortly thereafter. In the end, my guidance has always been the same.
If you’ve followed the guidance I’ve been providing over the past decade of always buying physical gold and silver, especially coins with a liquid global market, the most recent smash in silver paper prices should have left you completely unfazed, as the prices of physical silver coins barely moved lower during the much greater banker engineered paper silver price smash. In fact, every day, I still see silver analysts analyzing charts of movement in silver futures prices, speaking of how silver prices have not broken the current long term trend higher, when paper silver prices that cannot be found in the physical silver market are completely irrelevant. It still baffles me why any analyst would continue to focus on artificially created irrelevant paper silver prices when any person interested in buying physical silver cannot find a single ounce of four nine fine physical silver at these prices. If we truly desire to elevate the understanding of gold and silver’s monetary role among the world’s citizens, every analyst should only discuss real physical prices from this point forward when they speak of the “price” of silver and gold.
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P.S. Now that former IMF, US Central Bank and World Bank employee Nouriel Roubini is pushing the narrative of an imminent cyber World War III, make sure you also read my article below so you don’t get fooled by Trojan Horses should a cyber war on a global scale precipitate.
20 September 2019. The Greatest Threat to World Stability No One Knows About