I also purchased a chunk of $MOS. The fertilizer stock’s technicals and fundamentals have aligned.

Oil has started to break out of its suppression. I did buy a couple call options in the oil infrastructure names as again, the technicals and fundamentals are both looking strong, $SLB, $HAL.

The Treasury Secretary Scott Bessent made a major announcement of a sort of operation twist on August 19th. He plans to issue even more debt in short term T-Bills and buy back selective long term US Treasury debt. That is not what a country in a position of financial strength does. Combine that with the ongoing interventions in the Japanese Yen, Oil, and likely other markets and everything is looking unstable, or looking to have a false image of stability. Immediately after the “dollar debasement trade” appeared to start its next leg up with precious metals and BTC and ZEC having major rallies. I probably need to write my first article on ZEC, it is likely to be one of my really big winners for the rest of this decade. In the short term, i opened a large speculative short term spot position in the DAT (digital asset treasury) company CYPH which is accumulating and mining ZEC. I expect this dollar debasement trade to continue for a very long time, likely culminating with the world or at least the BRICS settling on a new global reserve currency, and a major sovereign debt devaluation. Until that happens, I remain nearly all in on this dollar debasement trade.

Anyways, after a couple months of frustration, investing got a lot more interesting for me again in August. If you missed it, I wrote an article on who owns gold, hopefully it could help you recognize how early this trade still is in the west.

Good Luck in September and beyond!

If you would have said D, as I would have, welcome to bizarro world.

Anyone who goes deep enough into learning about central banking, money, and the way the world works from a big picture financial perspective already knows that some markets are controlled and manipulated. There is literally a WikiLeaks-released State Department cable (1974LONDON16154_b) in which London bullion dealers told U.S. embassy officials that a large-volume gold futures market would create high volatility, and that this volatility would diminish demand for physical holding and 'most likely negate long-term hoarding by U.S. citizens.

The price of oil is also largely set by a futures market where the buyer and seller never exchange actual oil.

We have now seen three months of wars fought from Friday evening to Sunday afternoon, which appears to be times timed to stay clear of market hours. We have a war that keeps getting paused whenever the stock or treasury market shows real stress. Finally we have had an abundance of large market bets placed just before major, dubious news releases.

There are some morals to this story, big picture. We don’t throw up our hands and walk away out of frustration. We simply keep learning and keep getting better at investing. Knowing where the manipulation occurs absolutely is a super power for an investor. I am going to end this monthly recap with a quick update on my personal positioning as well as some big picture lessons that this last 3 months has hammered home.

Position update:
July was another very tough month.

I took profits where I could and cut some small losses where I could to double down on what I have determined to be excellent risk reward in the gold and silver equities. I deployed leverage this month back up to my maximum comfort level. There is not much else to do now except wait.

I think the pain is mostly over for gold and silver and I have shifted my liquid portfolio to almost 100% in that category. It is the only investment category where I have extreme conviction right now.

If there is interest I can write a new post where I layout the positions I own as I await the next leg up in PMs (gold, silver, platinum).

Lessons:

1. Keep an open mind. I never thought that oil could be contained for this long with this sort of world event going on. What else could I be wrong about?

2. Keep my time horizon long on every trade I make. I need to be prepared to wait 2 years plus for any thesis to start to play out.

3. Expect market manipulation to a degree never before imagined possible. This is very bearish for the USD and UST in the long term as all credibility and trust is lost, but I need to always remember anything can happen in the short term.

4. Keep position sizes smaller on risky bets. Boy oh boy has that been reiterated to me by how underwater I have gotten on a host of my large positions these last few months (Brent Oil perps, Silver perps, $Corn, $Cane, Various OOM call Options, and the list goes on).

5. The biggest struggle of my active investing career has been reaching for leverage too freely. I clearly did that going into this war, and its safe to question whether I am again doing so now. The honest truth is I am not sure and that is why I would frame this a huge yet unresolved lesson. Both options contracts which are their own form of leverage, perps contracts, margin debt, and credit from other sources. The potential returns are so enticing, but how do you know or define when it is worth the added risk? How much leverage is enough? The thing is, there are no easy answers here. You are ultimately trusting your intuition and sometimes that intuition will lead you astray. I don’t have a solution here yet. I know there are investors who simply refuse to use leverage, and that works for them. I am not that kind of investor, but I have also been unwilling to define exactly how I use leverage. I sense an entire article coming on, so I think I’ll pause this lesson here, this is my biggest ongoing lesson and it is still not yet learned.

We can’t just skim over this point as it is essential and widely misunderstood.

If you had “claim” to gold that was in the banking system in 1933, you no longer did after FDR seized it and handed it over to the Federal Reserve. I explained how the gold was forcibly given to the Federal Reserve for $20 of paper per ounce in the article below (must read).

As covered in the link above, the next year the Gold Act moved ownership of that gold to the treasury with a new revaluation to 35$/ ounce leaving the people having missed out on that entire 75% revaluation.

This gold default mechanism fired again less than 40 years later. Even major nation states that thought they had gold by owning US Treasuries found out that they did not in fact own gold. In 1971 when Nixon unilaterally removed convertibility of U.S. Dollars to gold, these U.S. allies found themselves trapped in substantially less valuable paper.

This mechanism has fired twice already in the U.S. in the last 100 years. Two different types of owner, each time when the peg became inconvenient or unsustainable for the issuer. In 1933: the reserve ratio breached and the banking system was running out of gold; 1971: gold outflow rate was unsustainable at $35/oz. If history is a guide, could we be due for another generational gold emergency?

Today in the 2020s we are entering an all-out debt crisis that only has one realistic way out. The currency will be devalued (other solutions exist such as debt default, or financial repression but there is no political will whatsoever to solve this debt crisis). Same sort of trigger, different decade.

Allow me to ask you the reader, a few questions if you will indulge me.
1. If you own a share of a Gold ETF, do you have any way to convert that share to physical gold?
2. Does owning a share in a gold ETF equal owning gold?
3. What probability do you apply to living through a banking system/ sovereign debt crisis that the U.S. can no longer just print fiat dollars to get out of?
4. In the next crisis, what probability do you apply to a gold ETF seizure and subsequent gold revaluation leaving the ETF holders with devalued fiat?
5. What probability do you apply to LBMA or COMEX being unable to deliver the physical gold they are obligated to before this bull market ends?

With the preamble out of the way, let’s get to the question at hand. Who owns gold?

The Honest Answer: We Don’t Really Know

Starting with U.S. data, it appears nobody has reliable numbers on how many Americans actually own physical, investment-grade gold. Not the government, not the World Gold Council, not the dealers who sell it to you. What exists instead is a patchwork of small surveys, each with its own methodology, and they don’t agree with each other.

Industry surveys have put U.S. gold ownership, jewelry included, anywhere from under 1% to as high as 38% of retail investors, depending on the year, the sample, and who commissioned the survey. The most-cited recurring survey, a 1,500-person poll run periodically by a Gold IRA marketing firm, has shown numbers in the 10-12% range. But that survey is a simple binary yes/no: it asks whether you own gold, not how much, not what dollar value, not what share of your net worth. Pathetically, from a data standpoint, it has no quantitative element at all, which means it cannot distinguish someone who inherited a gold ring from someone deliberately stacking bullion coins as a hedge against currency debasement. Both register identically as “owns gold: yes.”

Even the Federal Reserve’s own Survey of Consumer Finances, the most rigorous household wealth dataset that exists, doesn’t track physical gold bullion as its own line item. The most authoritative wealth survey in the country doesn’t consider gold significant enough to break out. That absence tells you something on its own.

Gold was fully demonetized after 1971. At that point it dropped out of the statistical infrastructure the Fed and Treasury maintain. They simply decided it was not worth tracking. The IRS does tax gold gains at the higher 28% collectibles rate and requires dealer reporting on certain reportable transactions, so it isn’t total indifference, just a narrowly extractive interest rather than a statistical one.

So to recap, we don’t know, in part because our largest institutions have not cared to know, and in part because physical gold ownership (like physical cash, but without the inflation) is a last bastion of financial privacy. There’s no 1099 for a coin or piece of gold jewelry in your safe.

What we can say is we don’t know the precise number, and anyone who gives you one with confidence is overstating their certainty. But every independent estimate, however constructed, lands in the same small neighborhood. Something like 10-11% of American households own gold in any form, and the overwhelming majority of that is jewelry. Investment-grade bars and coins specifically likely sit somewhere between 0.5% and 2%. That roughly matches my own anecdotal experience talking with fellow investors. Plenty will consider a gold ETF, but of the ones I talk to about physical gold, maybe 1 in 20 to 1 in 30 seriously consider it, and fewer had already bought.

What It’s Worth to the People Who Own It

If ownership itself is hard to pin down, what it represents as a share of wealth is even blurrier, but a rough calculation is still worth doing, with its assumptions shown.

Total privately held U.S. gold is estimated around 24,000-26,000 tonnes. At recent prices near $4,000/oz, that’s worth somewhere around $3.0-3.3 trillion. Total U.S. household and nonprofit net worth stood at $184.1 trillion as of the fourth quarter of 2025, per the Fed’s own Financial Accounts. That puts all privately held American gold, jewelry included, at roughly 1.7-1.8% of total household net worth.

Remember: the overwhelming majority of that is jewelry, not investment-grade bullion. So the investment-grade slice specifically is a small fraction of an already small 1.8%, likely well under half a percent of total household net worth, though I’ll be direct that this last figure is extrapolation from the ownership-rate data rather than something pulled from a study built to measure it.

Compare that to Goldman Sachs’s separate data point on gold ETFs: 0.17% of U.S. private financial portfolios, down six basis points from the 2012 peak. Two independently derived numbers, physical gold as a share of net worth and paper gold as a share of portfolios, both land in the same place: negligible, and below where they stood over a decade ago.

What Twenty Years of Retail Buying Actually Tells Us

If we can’t measure the stock of gold Americans hold, we can at least look at the flow: how much gold retail investors have bought, year by year, over the last two decades. This is genuinely useful, but it answers a narrower question than “who owns gold,” because purchase data doesn’t net out what gets sold back and recycled during price spikes. Still, the pattern is instructive.

U.S. bar and coin demand hasn’t trended steadily upward. It spikes hard during crises and cools off in calmer years. The U.S. Mint suspended production of collector coin versions entirely during 2008-2009 just to keep pace with bullion coin demand during the financial crisis. Demand surged again in 2011, near the last major gold price peak, and again in 2020 during the pandemic. That’s a pattern of retail chasing fear and momentum, not a pattern of steady, thesis-driven accumulation.

For scale: the U.S. Mint has sold a little over 22 million troy ounces of American Gold Eagles since the program launched in 1986, roughly 684 tonnes across nearly 40 years. Set that against the 24,000-26,000 tonnes of total privately held U.S. gold, almost entirely jewelry, and Eagles alone account for under 3% of it, before you even account for how many of those coins have been resold, melted down, or exported over the decades.

2025 is worth a closer look, because it’s where the pattern breaks. U.S. gold demand more than doubled to 679 tonnes for the year, but that was driven almost entirely by U.S.-listed ETF inflows of 437 tonnes, while bar-and-coin demand specifically softened in the high-price environment. Americans who got interested in gold in 2025 disproportionately bought the paper, not the metal. This development is worth keeping an eye on and has investment implications going forward.

A Different Story East of Here

None of this is true everywhere. More than half of 2025’s record global bar and coin demand, in dollar value, came from India and China combined, and Chinese bar and coin investment surpassed Chinese jewelry consumption for the first time on record. The recent acceleration in physical retail demand is overwhelmingly an Eastern story, not a Western one, which is entirely consistent with everything else in this piece.

It’s a different relationship to gold entirely, one where physical ownership never atrophied the way it did here, and it deserves its own examination rather than a paragraph tacked onto the end of this one.

Coming Next

We’ve established that individual, physical gold ownership in the West is small, likely under 2% of investment holdings, worth a sliver of a percent of total household net worth, and that even where American investors have recently gotten interested in gold, they’ve reached for the paper version rather than the metal.

Part 2 will cross the ocean and look at who owns gold in India and China, where the ownership question this article opened with barely applies, because physical possession never went out of fashion, institutions there are more encouraging of it.

Part 3 will turn to paper “ownership” directly: futures contracts, unallocated accounts, and gold ETFs like GLD, including the uncomfortable question of how anyone would actually know if the metal backing those claims were quietly double-pledged or borrowed against, since gold’s fungibility makes it structurally difficult for any audit to rule that out. It will also look at whether the futures market has been used to manipulate the price of gold for the last 40 years, and why.

Part 4 will turn to sovereign gold holdings: which central banks are buying, which are staying quiet about it, and what it means that virtually all of the recent accumulation is happening outside the West.

For now, remember this: your grandparents owned gold because they remembered what happened when currencies failed and governments came looking for it. We forgot, and the data on how little we hold today is the proof.

I understand some of the reasons why I have been

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B. Intellectual Curiosity: It’s hard to take an asset class serious if you don’t have skin in the game. It’s hard to keep growing if you just focus on one asset class when we live in a massive world of investible asset classes. One of my great investing hiccups so far has been to not take the AI boom serious enough, it is obvious I should have in hindsight

C. To Outperform: When you place strict limits on what % of your total exposure I give to any one sector, I have determined that I outperform. Case in point, I went basically all in on crypto from 2020-2024 and I was shocked how poorly I performed. Because I was singularly focused, I took on reckless leverage and I fell for dubious ways to try to outperform BTC itself. If I had simply had a patient more balanced portfolio I would have greatly outperformed in those years. I elaborate a bit more on why diversification to some of these other classes has helped me outperform since 2024 below.

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Precious Metals: By a long shot, this is my largest investment category. The thesis is unchanged. I am prepared for the rest of 2026 to be a bit disappointing as all three m…

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That’s a lot of data points, but as you can see semiconductors have absolutely crushed the stock market and even oil. KSTR (Chinese AI/tech) has performed strongly. The Yuan has strengthened against the dollar. The other major stores of value (gold, TLT, BTC) have not held up.

Now since this is the May Recap let’s just look at May:

OK wow, that kinda knocks my socks off. In a crisis that has only worsened from a fundamentals perspective, oil is down 15% on hopes and prayers. S&P500 is up 4.25%, semiconductor index is up 38% KSTR up over 10%

Markets will humble every single participant from time to time, and this month I have been humbled. I did not predict that tech markets could have face-ripping rallies in the face of this physical commodities crisis, and I didn’t predict oil could have such a bad month, in fact quite the opposite.

In situations like this, it’s time to ask yourself some real questions and be open to reevaluating your thesis if warranted.

I’m going to release a part 2 of the May 2026 Recap for paid subs. Look out for that later today or tomorrow. In it, I’m going to ask some tough questions about what is going on in the markets right now, as well as provide an update on portfolio positions and dig into the precious metals markets.

In short, my thesis is not much changed. We can delay the inevitable but we can’t prevent it.

Active investors never stop learning lessons in risk management, investor psychology, and patience.

Good luck to you all in June

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1. Trump is timing this at points of peak US Treasury Bond dysfunction to help keep the long end of the US debt market from getting out of control, and this is pure market manipulation/ market intervention. In such a case, these posts should be seen purely for domestic propaganda and market control.

2. Trump legitimately is getting duped into thinking there is a peace deal nearby, getting played by his deep state or by Iran itself. I am discounting this possibility.

3. Trump is buying time to avoid congressional approval challenges, but the deal will ultimately prove just as meaningless as the last several similar "peace deals" that never panned out, OR Trump is giving up and will try and save face by declaring victory and taking credit for reopening the strait. You can read some insightful analysis by Erik Townsend who hosts the fantastic Macro Voices podcast here:

4. Israel is not ready for a peace deal, and so the rest is noise?

I obviously don’t know exactly what is going on, but it’s useful to have multiple mental frameworks through which to analyze this bizarre moment in geopolitical history.

What now?

What do we do now, with these possible frameworks, and also a long weekend that has already seen the following:

and also claims of a ceasefire violation with expectations of retaliation, see here:

Translated:

Statement of the Ministry of Foreign Affairs regarding the US violation of the ceasefire.

The terrorist US army, continuing its illegal and unjustified actions since the ceasefire announcement on 19 Farvardin 1405—especially repeated maritime piracy against Iranian commercial ships—committed a flagrant ceasefire violation in the past 48 hours.

These aggressive acts, coinciding with ongoing Pakistan-mediated diplomacy, once again exposed America's bad faith and malice toward the Iranian nation, the region, and the world. Iran strongly condemns them as a clear breach of UN Charter Article 2(4) and the ceasefire, holding the US regime fully responsible for all consequences.

The Islamic Republic of Iran will not leave any aggression unanswered and will not hesitate in defending Iran's sovereignty."

What we do is we fade these oil dips and treat them as buying opportunities. We prepare for a future where gold silver and yuan supplant the USD/ UST as settlement and reserve assets, and we brace for volatility in the meantime.

Even if we get a peace treaty with Iran, why would that help the longer term USD price of oil come down, if the treaty disrupts what was the status quo petrodollar system? See my 3 part series on the Petrodollar System starting here.

I’m long oil and oil and gas equities for the foreseeable future. Good Luck!

Buffett waves his hand. Dalio makes an intellectual argument.

The clip is from his March 3rd All-In Podcast appearance with David Friedberg. Give it a watch if you have not already.

This article unpacks what he said, the core monetary questions, and the investment implications, including whether gold belongs in your portfolio if you already hold Bitcoin. I hope the answer will be obvious by the end of this piece.

One more thing worth noting before we get into it: this is not a new position for Dalio. He has been making this argument since at least 2012, when he told the Council on Foreign Relations: “If you don’t own gold, there is no sensible reason other than you don’t know history or you don’t know the economics of it.” Thirteen years later, and clearly he is not reacting to a moment, but describing a cycle.

What Dalio Actually Said

Dalio’s argument starts with a reframe that most investors miss entirely.

“Gold is not a precious metal that’s speculated on, like most people have come to think of it as. It is the most established money. It’s the second largest reserve currency that central banks hold.”

Read that again. Gold is not, in his view, a commodity or a crisis trade or a precious metal that speculators pile into when things get scary. If gold is money, the most established money in the world, then the question is not whether you should own it, but why anyone would choose not to.

From there, Dalio explains what makes gold uniquely qualified for that role. It starts with how money itself works.

“Money mechanistically is debt.”

Debt-based fiat currency is a promise from a central authority to deliver you buying power in the future, a promise they can’t keep. As the money is borrowed and literally backed by debt, eventually there is no check on spending or the creation of more debt, and the promise is constantly diluted via the currency. This is not a conspiracy, but a mechanical description of how every modern debt-based fiat currency works, and Dalio has spent 50 years watching it play out across dozens of countries. (If you want to go deeper on where this system came from, I covered the invention of debt-based currency in my Bank of England series.)

So what money actually escapes that trap? His answer:

“Gold is the only asset. It’s a long term historic asset for reasons that means that it can be transferred. They can’t print a lot of it, and it is not dependent on somebody giving you something.”

That last phrase is the key. Most assets -- stocks, bonds, dollars, Treasuries -- require a counterparty to honor a commitment. Gold does not. You hold it, you own it. No promise required.

The Four Reasons Bitcoin Is Not Gold

Here Dalio’s argument gets precise. He doesn’t dismiss Bitcoin, but is giving a clear-eyed assessment of why it fails the monetary test on four specific grounds.

1. Privacy

“Bitcoin does not have privacy. Any transactions can be monitored and then indirectly perhaps controlled.”

This is a structural disqualifier for the single most important category of gold buyers in the world: central banks. A central bank can move gold bars between vaults, conduct bilateral transactions with another sovereign, and leave zero digital trail. There is no blockchain recording the movement. That is not a historical accident. That is a feature of physical money that no cryptocurrency replicates, and central banks know it.

2. Central Banks Won’t Buy It

“Central banks are not going to want to buy Bitcoin and being able to hold it.”

Gold has surpassed U.S. Treasuries on central bank balance sheets entirely -- the first time that has happened in nearly three decades. Central banks have been net buyers for years and are accelerating. The World Gold Council’s most recent survey found that 95% of respondents expected global central bank gold reserves to increase over the next twelve months. Bitcoin has none of that institutional infrastructure. The privacy problem above explains exactly why, and that problem is not going away.

3. Equity Correlation

“It tends to have a pretty high correlation with the tech stocks. So from an ownership standpoint, the supply demand is affected by -- if somebody gets squeezed in one thing, they sell something, whatever else they have.”

This is the portfolio construction argument, and it matters as much as the monetary one. A true safe haven is supposed to hold value when the rest of your portfolio is getting destroyed. Bitcoin has repeatedly failed that test. When investors face margin calls, they sell Bitcoin. It trades like a leveraged Nasdaq position, not like money. If you own it as a hedge, you may find out in the worst possible moment that it is not one.

4. Market Size and Controllability

Bitcoin is a relatively small and, in Dalio’s words, relatively controllable market. At roughly 4% of gold’s total market cap, it is susceptible to large actors, coordinated selling, and regulatory pressure in ways that gold (with its five-thousand-year head start and $35 trillion market) simply is not.

None of these are necessarily permanent conditions. But they are the reality today, and that is what matters for how you build a portfolio right now.

So Does Gold Still Belong in Your Portfolio If You Own Bitcoin?

Yes. Unambiguously yes.

Dalio recommends holding between 5% and 15% in gold regardless of your market view. Not as a speculative bet, but because of how gold interacts with every other component in a portfolio during a crisis. It is a diversifier that does something none of your other assets do: it holds value specifically when trust in the financial system breaks down.

Most investors, even gold bugs, want to put capital to work and participate in growth, innovation, and compounding returns. Dalio's 5-15% recommendation leaves 85-95% of your portfolio free to do exactly that. A small allocation to physical gold is not a rejection of growth. It is prudence. It is an understanding of history and economics. Nobody questions the wisdom of paying for life insurance, home insurance, or health insurance, and nobody accuses you of being a doomer for having it. Physical gold that you can custody is the same idea. A finite, non-correlated asset sitting outside the financial system, making sure that whatever storms hit, your purchasing power survives. What is physical gold if not the oldest insurance policy ever written? Insurance that enables you to weather various financial storms, and preserve optionality and freedom into the future? That is not pessimism. That is portfolio construction.

Bitcoin might play that role someday, but not today. The reasons are not software bugs being patched in the next update, but structural features of what Bitcoin is.

To his credit, Dalio holds roughly 1% of his portfolio in Bitcoin for diversification. He is not telling you to sell it. He is telling you to know what it is. Bitcoin is a speculative asymmetric bet on a future monetary architecture that may or may not arrive. Gold is the monetary architecture that already exists, already anchors sovereign balance sheets, and has done so for five thousand years.

Owning both is not a contradiction. Confusing one for the other is.

What’s Next

This brings us to the deeper question: why does any of this especially matter right now, in 2026?

Dalio’s monetary argument does not exist in isolation. It sits inside a much larger framework -- one he has spent years developing and has recently updated with urgency. The U.S.-led world order that has dominated global finance for nearly a century is, in his view, breaking down. The implications for where capital flows, which assets survive, and how investors should be positioned are significant.

That will be the subject of a Part 2: Ray Dalio and the Changing World Order.

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That deal had one core assumption embedded in it. When the Gulf states needed protection, America would be there.

That assumption is now being tested in real time. The results are not encouraging for the dollar.

The Promise That Is Breaking

On February 28, 2026, the United States and Israel launched strikes on Iran. Within 48 hours, Iran retaliated against every single member of the Gulf Cooperation Council. Saudi Arabia. The UAE. Kuwait. Qatar. Bahrain. Oman. All of them.

Iran targeted airports, hotels, oil infrastructure, US military bases, and civilian facilities across the region. On March 2, 2026, two drones targeted Ras Tanura, Saudi Aramco's largest refinery. Saudi air defenses intercepted both. Debris caused a fire and the refinery shut down as a precaution. Saudi authorities attributed the drones to Iran. Iran denied it, with an IRGC-linked source calling it an Israeli false flag. No independent technical verification has been published. What is not in dispute: the refinery shut down, the attack occurred during Iran's broader regional retaliation campaign, and it happened to one of the most critical oil facilities on earth. Whether Tehran ordered it or not, the Gulf states are living in a war zone they did not ask to enter.

Qatar, the world’s second largest LNG producer, declared force majeure after a drone strike on its main LNG facility at Ras Laffan. The Strait of Hormuz, through which roughly one fifth of the world’s oil and gas passes, has effectively been closed to tanker traffic since early March.

Let that sink in for a moment. The Gulf states that built the petrodollar system, that recycled trillions of dollars into American debt and kept the dollar as the world’s reserve currency for 50 years, are now having their airports bombed and their oil fields struck as a direct consequence of a war launched by their protector.

On March 5, 2026, the Financial Times broke a story: three of the four largest Gulf economies, Saudi Arabia, the UAE, Kuwait, and Qatar, had quietly begun reviewing whether they could invoke force majeure (back out of) clauses in existing contracts with the United States and scale back hundreds of billions in future investment commitments.

Richard Werner posted three sentences in response. Werner is not a commentator. He is the Oxford-trained economist who coined the term “quantitative easing” in 1995, predicted the Japanese banking collapse in 1991, and spent decades at institutions including Bear Stearns and the Asian Development Bank analyzing how monetary systems actually work. His book Princes of the Yen is a seminal work. He posted: “The petrodollar deal is US military protection in exchange for selling oil against the US dollar and investing in the US. The military protection turned out to be an empty promise. The petrodollar is dying.”

What the Gulf States Are Actually Doing

The Financial Times report sourced a Gulf official, who told the FT that three of the four major Gulf economies had jointly discussed the economic strain the war has generated.

These were not small investors. During Trump’s Gulf tour in May 2025, Saudi Arabia, the UAE, and Qatar alone had pledged hundreds of billions in US investments. A Gulf official told the FT the review was driven by “the budget strains these countries are facing due to reduced income from energy, due to the slowdown in output or the inability to ship.” Those commitments were treated by the White House as flagship diplomatic achievements. They are now under quiet but serious legal review.An adviser to a Gulf government confirmed the story had already drawn attention at the White House.

China Fills the Vacuum Washington Created

While the United States has been fighting its war, China has been doing something different.

On March 4, 2026, Chinese Foreign Minister Wang Yi called his Saudi counterpart Prince Faisal bin Farhan. According to the Chinese Ministry of Foreign Affairs readout, Wang Yi told the Saudis that China “appreciates Saudi Arabia for exercising restraint,” called the Saudi-Iran reconciliation “rare and valuable,” and announced that China would dispatch a special envoy to the region for mediation. Special Envoy Zhai Jun arrived in Riyadh on March 8 and met directly with the Saudi foreign minister.

China simultaneously called Iran, Russia, France, Israel, Oman, and the UAE. It positioned itself publicly as the region’s peacemaker while the United States was its warmaker.

Al Jazeera subsequently reported that Iran had thanked Saudi Arabia for not allowing its territory to be used as a base for the war against Iran. That is a meaningful diplomatic signal. It suggests that whatever China communicated to Tehran, and whatever the Saudis communicated through Beijing, produced a concrete result: Saudi Arabia was partially insulated from the worst Iranian retaliation even as American bases on Saudi soil were struck.

The sequence matters. The Gulf states called Beijing when they needed protection. They did not call Washington, because Washington was the reason they needed protection in the first place.

This is not an accident of timing. It is the payoff of a two-decade Chinese strategy. While the United States spent four trillion dollars in Iraq and Afghanistan with little to show for it, China was building railways in Kenya, ports in Djibouti, refineries in Saudi Arabia, and an alternative to SWIFT called CIPS that allows the non-Western world to settle trade without ever touching the dollar. In 2023, Saudi Arabia began selling oil to China in yuan. The BRICS bloc extended full membership invitations to Saudi Arabia, the UAE, and Iran, placing all three in the same economic and political grouping. All of these moves were made before the first bomb fell on Iran.

The wounds are self-inflicted, and China is positioned to fill the diplomatic and economic vacuum Washington is creating

The Mechanics of How the Petrodollar Breaks

Understanding this as an investor requires understanding the actual mechanism by which petrodollar breakdown affects markets. It is not a single event. It is a feedback loop.

Step one: oil revenues fall as Hormuz disruption reduces Gulf export capacity. Saudi Arabia is already rerouting crude through the East-West pipeline to Yanbu on the Red Sea, with export flows surging to nearly 6 million barrels per day through western ports as of March 9. But the Houthis are now threatening to close the Bab el-Mandeb Strait as well, which would effectively bottle up Saudi oil entirely. If both chokepoints close, the world faces an energy crisis that dwarfs anything since the 1970s.

Step two: reduced oil revenues mean reduced petrodollar recycling. Less dollars flowing back into US Treasury bonds means less foreign demand for American debt. Less foreign demand for American debt means higher yields. Higher yields mean higher borrowing costs for the US government, which is already running deficits that would be impossible to sustain without continuous foreign Treasury purchases.

Step three: as Gulf sovereign wealth funds slow their US investment flows and begin redirecting capital toward domestic and Asian markets, the dollar faces structural selling pressure. This is not a currency crisis triggered by a single event. It is a gradual reweighting of global capital flows away from the dollar.

Step four: as more oil trade settles in yuan, euros, or other currencies, the structural demand for dollars that the petrodollar created begins to erode. Every barrel of oil settled outside the dollar system is one less reason for a foreign central bank to hold dollar reserves.

This loop does not unwind in a week. But it has now been set in motion by events that cannot be reversed by a ceasefire.

What This Means for Your Portfolio

Part 1 ended with the observation that the Iran conflict is not just a war. It is a stress test on the collateral underlying the world’s reserve currency. Now that the stress test is actively running.

Read more

The answer is oil.

More precisely, the answer is a secret deal struck in a conference room in Jeddah, Saudi Arabia in the summer of 1974, between a former Salomon Brothers bond trader named William Simon and a king who was already being threatened with a military invasion. The details of that deal were kept classified for 42 years. When they finally came out, almost nobody noticed.

That deal and the financial architecture it created quietly powered American dominance for 50 years. The war in Iran has shattering implications for that system. In Part 2 we will discuss why this war disrupts that system and the investment implications. But first, you need to understand the machine.

A Brief History of Why the Dollar Should Have Died in 1971

The story starts at the end of World War II, when the United States was sitting on approximately two-thirds of the world’s monetary gold reserves. The rest of the industrialized world had either spent its gold fighting the war or shipped it to America for safekeeping. Either way, the United States had the gold, and gold was money.

In July 1944, representatives from 44 nations gathered at a resort in Bretton Woods, New Hampshire to design the postwar monetary system. The framework they agreed on was straightforward: every major currency would be pegged to the US dollar, and the dollar itself would be redeemable for gold at a fixed rate of $35 per ounce. Every nation in the system was ultimately anchored to gold through the dollar, and America was the anchor of the anchor.

This worked well for a while. American productivity was unmatched. The dollar was trusted. Foreign central banks happily held dollars as reserves because they knew those dollars could be converted into gold on demand.

But then the 1960s happened. The Vietnam War was expensive. The Great Society programs were expensive. The United States was spending money it did not have, and it was printing dollars to cover the gap. By the late 1960s, foreign governments, led by France, grew concerned about this disconnect. They started doing the sensible thing: redeeming their dollars for physical gold.

French President Charles de Gaulle was particularly pointed about it. He sent the French navy to New York harbor to collect France’s gold. Other nations followed. The vault at Fort Knox was quietly draining.

On August 15, 1971, Richard Nixon went on television and did something that had never been done before in the modern era. He announced that the United States would no longer redeem dollars for gold. Foreigners holding dollars were simply out of luck. The Bretton Woods system was over.

This was a default. It was dressed up in diplomatic language about “temporarily suspending convertibility,” but it was a default. The world’s reserve currency had just broken its most fundamental promise.

The dollar should have collapsed. The logic was simple: if the dollar is no longer redeemable for anything tangible, why would the rest of the world continue to hold it? Why would foreign nations continue buying American debt? Why would oil-producing countries accept paper dollars for their most valuable resource?

Henry Kissinger had an answer to all of these questions.

Kissinger’s Play

Henry Kissinger’s mark on history as a consequential American statesman of the 20th century, is indelible and controversial. His record includes the bombing of Cambodia, the destabilization of Chile, and back-channel negotiations that violated the chain of command so regularly that his own colleagues installed a secret wiretap on his phone. He was also a genuine strategic genius whose thinking operated several moves ahead of everyone else in the room.

When Nixon ended the gold standard, Kissinger understood immediately what the problem was. The dollar’s global dominance had rested on gold. Gold was real and finite. Gold was something a foreign central bank could hold in a vault and trust. Paper dollars, once severed from gold, had no intrinsic value. For the dollar to remain the world’s reserve currency without gold, it needed a new anchor, something that nations world wide needed badly enough to keep accumulating dollars for.

Kissinger’s insight was elegant and brutal: make the world’s most critical commodity, oil, purchasable only in dollars.

If you want to run a country, you need energy. If energy can only be bought in dollars, then every nation on earth must maintain large dollar reserves just to keep their economy functioning. The demand for dollars becomes structural, permanent, and global. You do not need gold backing anymore because every barrel of oil in every tanker on every ocean in the world is, functionally, your backing.

The Jeddah Deal: What We Know

King Faisal bin Abdulaziz Al Saud had been ruling Saudi Arabia since 1964. He was, by most accounts, the most capable Saudi leader of the 20th century: deeply religious, politically shrewd, and genuinely suspicious of Western intentions. He had led the 1973 oil embargo that punished the United States for supporting Israel in the Yom Kippur War, and that embargo had quadrupled the price of oil, from roughly $3 to $12 per barrel, generating a tidal wave of dollars flowing into Riyadh.

The king had a problem, and it was the same problem every oil producer now shared. They were sitting on mountains of dollars. Newly devalued, gold-free, floating dollars. What do you do with all that cash?

The publicly announced part of what happened next involved Kissinger and Saudi Crown Prince Fahd signing a “Joint Commission on Economic Cooperation” on June 8, 1974, in Washington. It was a framework for technology transfer, infrastructure development, and military cooperation. Oil was never mentioned in the written document. Officially, it was just two nations deepening a friendship.

The real deal came one month later.

In July 1974, Treasury Secretary William Simon boarded a classified flight from Andrews Air Force Base, destination Jeddah. Simon was not a diplomat. He was a former bond trader from Salomon Brothers who had run the firm’s Treasury desk, who once publicly compared himself to Genghis Khan, and who, one week before this trip, had called the Shah of Iran a “nut” in front of reporters. He was an odd choice for delicate diplomacy. He was the perfect choice for this particular negotiation, because he understood better than anyone in Washington exactly what US government debt was worth and how to sell it.

The framework Simon brought to the table was, as later described in documents obtained by Bloomberg News through a Freedom of Information Act request in 2016, strikingly simple. America would buy Saudi oil in dollars and provide the kingdom with military equipment and protection. In return, Saudi Arabia would invest its enormous and growing oil revenues back into US Treasury bonds, financing American deficit spending.

The king agreed. But he had one condition that Simon accepted without hesitation.

The Treasury purchases had to stay strictly secret.

For 42 years, they were. The existence of the secret arrangement was not confirmed to the public until Bloomberg’s FOIA request cracked it open in May 2016. The story appeared, briefly made news, and then largely disappeared from mainstream coverage. The Treasury confirmed that Saudi Arabia held $117 billion in US debt. Analysts immediately noted this was almost certainly an undercount: Saudi Arabia had reportedly used offshore financial centers, custodial accounts in London and elsewhere, to hold additional holdings that would not appear in US Treasury data. Some estimates put the real figure closer to $750 billion.

The deeper revelation in those documents was a mechanism called “add-ons.” Rather than competing in normal Treasury auctions, where all buyers submit bids and prices are set by the market, Saudi Arabia was allowed to purchase Treasury securities separately, outside the auction, at non-competitive rates. The United States Treasury had carved out a special lane for its most important foreign creditor. When a congressional subcommittee tried to investigate this in the late 1970s, they found that Treasury officials refused to cooperate in any meaningful way. “I’d been at the subcommittee for 17 years, and I’d never seen anything like that,” said Stephen McSpadden, a former counsel to the committee that pressed for answers.

By 1975, every member of OPEC had followed Saudi Arabia’s lead and agreed to price their oil in dollars. The petrodollar system was operational.

The Stick Behind the Carrot

No account of the Jeddah deal is complete without mentioning what was happening in the background while Simon was in the negotiating room.

The London Sunday Times reported in February 1975 on the existence of a classified US military plan called “Dhahran Option Four.” It was a contingency for invading Saudi Arabia and seizing control of the oil fields by force. The plan was real. King Faisal had almost certainly been made aware that it existed.

Kissinger himself had said in a private State Department meeting in 1973, referring to the oil-producing nations, that it was “ridiculous that the civilized world is held up by 8 million savages.” He had discussed military options with Secretary of Defense James Schlesinger. The Saudis responded by making clear they would burn the oil fields before allowing a foreign occupation, a threat the CIA assessed as credible.

In the end, the Jeddah deal was struck without any military action. But the threat of force was part of the negotiation’s atmosphere. Simon’s offer of military protection was not simply a diplomatic courtesy.

King Faisal was assassinated on March 25, 1975, less than a year after signing the deal. He was shot by his nephew during a public audience at the royal palace. The official Saudi investigation found the nephew acted alone, motivated by a personal grievance. The nephew was tried, found guilty, and publicly beheaded. The case was closed within months.

If there is more to Faisal’s assassination it will have to wait for a future article. For now, we can say this: Faisal had been one of the most powerful Arab leaders in modern history. He had used oil as a geopolitical weapon against the United States and had forced the world to take notice. He had signed a deal under significant pressure, with secret terms he found embarrassing. And after his death, the promise Kissinger reportedly made to him, that Israel would return to its 1948 borders, was quietly forgotten. Make of that what you will.

The Unanswered Gold Questions

There are theories and speculation about gold agreements within the petrodollar framework that was struck. Lets look at the documented record which is interesting enough in and of itself, and then consider some questions.

What we know about the Saudi framework’s duration and secrecy:

The public Joint Commission on Economic Cooperation, signed June 8, 1974, was renewed in five-year intervals for exactly 50 years. It expired on June 9, 2024, when Saudi Arabia declined to renew it. That is on the record.

The secret Treasury bond purchase arrangement, the one Bloomberg exposed through a FOIA request in 2016, had no disclosed formal term or renewal mechanism. It simply continued operating under institutional protection for over four decades, hidden in plain sight inside aggregate “Gulf state investor” data that Treasury published instead of country-specific figures. King Faisal demanded secrecy. He got it for 42 years.

The diplomatic record of what was promised in private has never been fully released: The State Department’s own Foreign Relations of the United States series, the official publication of declassified diplomatic documents, shows multiple redactions in the Nixon-era Saudi files. Specific cables carry notations such as “[text not declassified]” and “[handling restriction not declassified].” Portions of what Kissinger and the Saudi royal family actually agreed to in private meetings remain classified to this day. The framework document is now public, the private record is still blacked out.

What we know about the gold:

In September 1974, the same month the Jeddah deal was being finalized, the US government held what was publicly called a “Fort Knox audit.” What actually happened: roughly 150 reporters and a handful of congressmen were allowed to crowd into one of four vault rooms for about two hours, hoist some gold bars for photographs, and leave. It was a press event. The last real audit of Fort Knox had been in 1953. Nothing of substance was verified. See my two part series on the Fort Knox gold here.

In June 1975, Treasury Secretary William Simon, the same man who had just negotiated the secret Saudi arrangement, authorized the creation of a “Committee for Continuing Audit of U.S. Government-owned Gold.” Annual audits were supposed to run from 1975 through 1986.

A researcher named Koos Jansen later submitted Freedom of Information Act requests to obtain all of those annual audit reports. The National Archives searched its records across multiple record groups including Treasury, the Mint, the Federal Reserve, and the Comptroller of the Currency and could not locate the reports for 1975, 1976, 1978, 1979, and 1981 through 1984.

Seven years of gold audit records are missing. These cover precisely the years of the petrodollar consolidation and the US Treasury’s own public gold auction program, in which the government sold millions of ounces of gold into the market between 1975 and 1979. The stated purpose of those auctions was to suppress gold prices and signal to the world that the dollar no longer needed gold backing. Whether that was the complete purpose is a question the missing records cannot answer.

The question the evidence demands:

King Faisal was deeply suspicious of paper money. This is documented. His kingdom had priced wealth in gold for centuries. The Arab world had watched Nixon’s 1971 default on gold convertibility with alarm. Any honest negotiator sitting across from Faisal in 1974 would have understood that asking him to accept paper dollars, from the same government that had just broken its gold promise to the world, required more than a weapons deal.

The Saudi riyal maintained a gold-linked valuation domestically until 1986, twelve years after the kingdom agreed to accept paper dollars for its oil.

I cannot tell you that US Treasury gold was sold to Saudi Arabia at subsidized prices as part of the petrodollar arrangement. The documents that would confirm or deny that are either still classified or missing.

As recently as early 2025, when Trump floated a Fort Knox audit and Elon Musk asked publicly whether the gold was actually there, Treasury Secretary Scott Bessent quickly assured everyone that “all the gold is present and accounted for” and the subject was promptly dropped. The Gold Reserve Transparency Act of 2025 was proposed, but it went nowhere.

The kingdom that signed the petrodollar deal did not trust paper. The government that negotiated it has never fully explained what it promised. The audit records from the years that would answer the question are gone, and the hopes of auditing Fort Knox or the Federal Reserve are less than a pipe dream.

We must draw our own conclusions.

How the Machine Works

Let me step back and describe the system clearly, because it is genuinely elegant in a cold, architectural way.

Country X, let us say Japan, needs oil to run its factories. It does not produce oil domestically. It must import it. To import oil, it must pay in dollars, because every major oil producer has agreed to price oil in dollars. To get dollars, Japan must earn them somehow, typically by selling its cars, electronics, and manufactured goods in the global market and collecting dollars. Those dollars accumulate in Japan’s central bank reserves.

At some point, Japan needs to do something with all those accumulated dollars. Holding cash earns nothing. The most natural destination for them is the US Treasury market, the world’s deepest and most liquid bond market. Japan buys Treasury bonds. This loans money to the US government, which uses it to fund its military, its entitlements, and its deficit spending.

This loop runs continuously, simultaneously, across dozens of nations. Every time a container ship full of oil crosses the ocean, it generates demand for dollars. Every time a nation accumulates dollar reserves, it becomes a buyer of American debt. The United States is therefore able to run deficits that would be impossible for any other nation, because the world’s most critical commodity creates structural, permanent demand for American paper.

French economist Valery Giscard d’Estaing called this America’s “exorbitant privilege.” He meant it as a criticism. He was not wrong about the scale of the advantage.

For the United States, the benefits are substantial and concrete: low borrowing costs, the ability to run persistent trade deficits, and the unique power to finance its military adventures with paper it prints itself. For the rest of the world, the system is a form of structural tribute. Every nation that needs energy is, in effect, lending money to Washington whether it wants to or not.

The system also gave the United States a weaponized financial tool that no previous empire had possessed: the ability to cut any nation off from the global financial system simply by denying it access to dollar transactions. The sanctions regimes applied to Iran, Russia, Venezuela, and others are all downstream of this architecture. Dollar dominance is not just an economic advantage. It is the engine of American coercive power.

The Cracks That Were Already Forming Before the Iran War

The petrodollar system has faced challenges before. Saddam Hussein announced in 2000 that Iraq would begin pricing its oil in euros. He was invaded in 2003. Shortly after the invasion, Iraqi oil was back on the market priced in dollars. Muammar Gaddafi was reportedly proposing a gold-backed African currency that would have denominated oil sales outside the dollar system. He was removed and killed in 2011.

The pattern is not subtle.

But the current challenges are different in character from those earlier disruptions, because they are not being driven by weak, isolated actors. China surpassed the United States as Saudi Arabia’s largest oil trading partner in 2013. Beijing has been quietly negotiating yuan-denominated oil contracts with Gulf producers for years. In 2018, China launched yuan-priced oil futures. Saudi Arabia has been deepening its relationship with the Shanghai Cooperation Organisation and has maintained active dialogue with BRICS.

The formal US-Saudi economic cooperation framework, renewed in five-year intervals since 1974, appears to have quietly lapsed without renewal around 2024. Saudi Arabia’s Finance Minister declared at the World Economic Forum in early 2023 that the kingdom had no objection to discussing trade settlement in euros, Saudi riyals, or other currencies. That public comment from a Saudi official would have been unthinkable in 1984.

None of this means the petrodollar is dead. The dollar still accounts for roughly 60 percent of global foreign exchange reserves. Oil contracts are still predominantly dollar-denominated. The network effects of a global reserve currency are enormous and do not unwind quickly.

But the system is under more genuine pressure than at any point in its 50-year history. That pressure is about to receive a significant acceleration from events in the Persian Gulf that the mainstream financial press is not framing correctly.

What This Means (Part 2)

Most financial media treats gold and the dollar as opposing forces. When the dollar weakens, gold rises. When the dollar strengthens, gold falls. This is accurate as a short-term price relationship. But it obscures the deeper point.

The petrodollar system was not a departure from the logic of hard-money backing. It was a continuation of it, using a different commodity. Bretton Woods backed the dollar with gold. The petrodollar system backed the dollar with oil. Both were attempts to anchor a fiat currency to something the world genuinely needed and could not conjure out of thin air.

The difference is that gold is politically neutral. No government produces it, controls it, or can withhold it unilaterally. Oil is the opposite. It is geographically concentrated, politically controlled, and militarily vulnerable. When the geography shifts, when the politics shift, when the military equation in the Middle East changes, the backing itself is at risk.

The Iran conflict is not just a war. It is a stress test on the collateral underlying the world’s reserve currency.

Understanding that has massive implications for an investor. We explore this here in Part 2.

I am marking this anniversary as an opportunity to start a new phase.

I was in the military for 20 years and retired in the fall of 2020. You can definitely date my life into two different categories. The military service years, and the post military service years. During the post military service years I have spent an inordinate amount of time searching for the best sources on the financial markets, major macro current events and digging for the truth about conspiracy theories that we can now remove the word theory from.

In that second phase I invested in the markets in a way that was not zen. I used so much leverage in fact, that I told myself “well if this doesn’t work out I can always go back to work”. I put a large percentage of my investing networth into crypto and then into options contracts with the risk of losing all my premium. Long story short, I did go back to work in order to support the leverage I was using.

I am writing this post to mark the start of a third phase in my life. This phase is going to require a few rules for my vision to come to fruition. I have spent too much time monitoring the situation — phone out, leverage on, constantly braced for the next move. That chapter needs to end. I have planted the crops. I have done the reading, built the framework, and developed the conviction. I don't need to white-knuckle it anymore.

Rule #1 Consume information on a schedule, not on demand. In this phase I am deleting apps off my phone including X and discord. If I want to get a new download of information, at this point I should be using claude code to run a script to reference the latest updates from quality sources I have preselected and give me a quick brief along with any implications for my investment portfolio. This can be done once or twice a day, and I will be able to stay nearly as well informed with a fraction of the time invested once my code is running. If I succeed at using claude code for this, I will write an update article. Another option is to pay a monthly subscription to Luke Gromen’s FFTT product. Luke has been the sharpest macro mind I follow, and pays attention to many of the same sources I would want to. I can read his weekly reports instead of scrolling my feeds and likely come away with 80% of the solution for 5% of the effort and enjoy it.

Rule #2 No Leverage. The only exceptions I will allow is to purchase real assets on favorable terms, or to take a line of credit against my precious metals. Other than that, I’m going to need to see a market panic before I even consider any credit, and I will write clear rules for how I will remove that credit.

Rule #3 Stop Trying to Persuade People. I will not spend time trying to persuade others of my opinions. If the energy of a conversation is good, I will contribute. If the energy is poor, I will keep my opinions to myself. People let you know who they are and whether they are interested in being challenged or jousting for fun and in good faith. Many people would rather be “right” and stay in a tribal lane. This isn’t judgment on others. Besides, I have been the problem plenty. I have taken it as my job to persuade others. But it’s not my job to engage in conversations that will be negative sum.

I am the problem.

Even trying to debate someone of good faith who is open-minded raises my blood pressure and can become the most important priority when it shouldn’t. I once thought I enjoyed debate. Now I think I just enjoy some people and not others, and prefer to avoid debate entirely, and trying to persuade through debate and discussion is another unhealthy dopamine or adrenaline rush.

Rule #4 I schedule hobbies onto my Calendar. There is a reason golf and fishing are popular pastimes. I am ready to embrace them both. I’m going to put other things on my calendar, karaoke, music lessons, food adventures, business development.

In this 3rd phase, I intend to keep writing this substack which I consider a healthy hobby in my life. I will focus on evergreen content at the expense of short term market trading or commentary on short term market moves. For example, for the next series I would love to cover the petro dollar system, as these new events around Iran have a potential to greatly impact that system. I want to write more articles like The Bank of England and The Invention of Debt-Based Currency and Is our gold in Fort Knox? I will also publish a monthly portfolio update near the end of each month with any new market commentary and positions that seem valuable to share.

As of this month I am done with monitoring the situation on my phone. I have known for a while that this day would come, but I have not been ready to kick the dopamine addiction, or risk suboptimal investment returns. I am ready for phase 3 and I expect it to be a healthier way to live.

That memo is called A Clean Break: A New Strategy for Securing the Realm. It was written in 1996. You should read it, because of what it prescribed and what has happened.

What It Was

In the summer of 1996, a study group assembled by an Israeli-American think tank called the Institute for Advanced Strategic and Political Studies (IASPS) produced a policy paper for incoming Israeli Prime Minister Benjamin Netanyahu. The paper called for a total break from the Oslo Accords framework. The Oslo Accords were the land-for-peace diplomacy that had defined Israeli foreign policy for years. A Clean Break laid out a new, aggressive regional strategy built around military dominance, strategic alliances, and, critically, regime change across the Levant.

The authors were not Israelis. They were Americans.

The Authors

Richard Perle — Lead author. Known in Washington as ‘The Prince of Darkness.’ Former Assistant Secretary of Defense under Reagan. Later Chairman of the Defense Policy Board under George W. Bush. The intellectual godfather of American neoconservatism’s hawkish wing.

Douglas Feith — Later became Under Secretary of Defense for Policy under Donald Rumsfeld. Ran the Office of Special Plans, widely documented as the unit that stove-piped and cherry-picked pre-war intelligence to build the public case for invading Iraq, bypassing the CIA and Defense Intelligence Agency.

David Wurmser — Later became Middle East Advisor to Vice President Dick Cheney. A consistent and vocal advocate for regime change in Iraq, Syria, and Iran throughout his tenure in the Bush White House.

All three of these men — who wrote strategic doctrine for a foreign government in 1996 — held senior positions in the United States government when the 2003 Iraq War was planned and launched. That is not a conspiracy theory. It is a matter of public record.

What It Said

The memo’s core recommendations are worth reading closely, because they map almost precisely onto the last 25 years of American foreign policy:

Remove Saddam Hussein from power — described explicitly as destabilizing Syria’s position and rolling back pan-Arab nationalism.

Weaken Syria — by supporting internal opposition, rolling back Syrian influence in Lebanon, and pressuring the Assad regime’s strategic base.

Destroy Hezbollah’s logistics — described as attacking its Syrian supply lines and ‘drug-dealing infrastructure in Lebanon.’

Abandon Oslo and land-for-peace — reframe the Palestinian conflict in civilizational terms rather than diplomatic ones. No Palestinian state.

Build a Sunni Arab coalition — use Jordan and eventually Gulf states to form a regional bloc counterbalancing Iran, Iraq, and Syrian influence.

Iran is not the paper’s primary target, but part of the logical sequential end. Remove Iraq. Destabilize Syria. Destroy Hezbollah. Then Iran, stripped of its entire forward deterrence arc, stands alone.

The authors called this architecture ‘a new strategy for securing the realm.’

Whose realm? Ostensibly Israel’s. But the people who wrote it went on to run American foreign policy.

The 25-Year Checklist

2003 — Iraq. Saddam Hussein removed. Perle, Feith, and Wurmser all in senior administration positions. The Office of Special Plans, run by Feith, is later documented as having manipulated pre-war intelligence. The Iraq War costs the United States an estimated $2–3 trillion, kills over 4,500 American soldiers, and eliminates the primary counterweight to Iranian power in the region — an outcome that strategically benefited Iran far more than anyone in Washington publicly acknowledged at the time.

2011–2023 — Syria. U.S. and allied support for Syrian opposition groups, repeated attempts to topple Assad, sustained pressure on Hezbollah’s supply lines — all consistent with the Clean Break framework written 15 years earlier. By late 2024, the Assad regime collapsed entirely.

2024 — Hezbollah. Israel’s military campaign killed senior leadership including Secretary-General Hassan Nasrallah and systematically degraded Hezbollah’s missile arsenal and command structure. Iran’s primary forward deterrent — the force that had held Israeli northern cities hostage for two decades — was broken.

2020–2024 — The Abraham Accords and Saudi normalization. The construction of a Sunni Arab coalition with Israel, bypassing Palestinian statehood entirely, is the precise geopolitical architecture the Clean Break memo described. The Palestinian question was not resolved. It was removed from the equation.

Late 2025 — Iran’s internal collapse. The story of Iran’s collapse in late 2025 begins with a Treasury Secretary at a Wall Street podium.

In March 2025, Scott Bessent addressed the Economic Club of New York and outlined the Trump administration’s strategy toward Iran with unusual candor: “Our maximum pressure campaign is designed to collapse its already buckling economy. If I were an Iranian, I would get all of my money out of the rial, now.” A sitting US Treasury Secretary was publicly calling the Iranian currency a short sell, and telling the world why.

He delivered on the promise. By cutting off Iran's oil export revenue and blocking its banks from the international financial system simultaneously, Treasury ensured that dollars stopped flowing into the country. Without dollars, Iran couldn't pay for imports or stabilize its currency. The June 2025 US-Israeli strikes accelerated capital flight. UN snapback sanctions in September froze Iranian assets abroad. By December, a major Iranian bank had collapsed, the central bank was printing money, and the rial had fallen from 32,000 to the dollar in 2015 to 1.5 million. Food prices were up 72% year over year. For BRICS nations watching from the outside, Iran's collapse was less a geopolitical cautionary tale than a technical one: build dollar-independent trade and settlement infrastructure, or remain permanently vulnerable to this exact playbook. Expect that lesson to accelerate everything they are already working on.

When Bessent testified before the Senate Banking Committee in February 2026, he was direct: “It came to a swift and grand culmination in December. The Iranian currency went into freefall, inflation exploded, and hence we have seen the Iranian people out on the street.” He called this “economic statecraft, no shots fired.” He said nothing about the thousands who died in the crackdown that followed.

The protests that erupted on December 28th began exactly where you’d expect, with shopkeepers in Tehran’s Grand Bazaar who could no longer conduct business.

What happened next is harder to assess clearly. Iran imposed the longest internet blackout in its history and cut foreign media access. Into that information vacuum, every actor projected its own narrative. Former CIA Director Mike Pompeo posted a New Year’s greeting on social media to “every Iranian in the streets, and every Mossad agent walking beside them.” Taunt, boast, or an admission is unclear.

Iran’s police chief stated that legitimate economic protests “later turned into riots” as organized groups attacked security forces, government buildings, and mosques, with some detainees found carrying weapons and admitting to foreign funding. Western outlets reported indiscriminate live fire on crowds. Both accounts may contain truth. The death toll estimates range from 3,117 per the Iranian government to 43,000 per the International Centre for Human Rights, a 14-fold discrepancy that tells you everything about the epistemic conditions under which these events unfolded.

What is not in dispute: the Iranian regime ordered live fire on its own population. Thousands died. And the economic conditions that put those people in the streets were, by Washington’s own admission, engineered.

February 28, 2026 — Iran. The United States and Israel launched coordinated strikes, killing Supreme Leader Ali Khamenei and senior IRGC leadership. The last box on the Clean Break checklist.

The Question No One in Legacy Media Will Ask

Reasonable people can debate whether these outcomes were good or bad for American interests. That debate is worth having.

But there is a prior question that almost never gets asked: Did American foreign policy in the Middle East for the last 25 years serve American interests or did it execute a strategic blueprint written for a foreign government?

The documented record does not resolve that question. But it demands it be asked.

What we know for certain: The same people who wrote A Clean Break for Netanyahu in 1996 were running the Pentagon and the Vice President’s office when the Iraq War was planned in 2002 and 2003. The intelligence that justified that war was processed through a unit one of those men ran. The war they launched removed Saddam Hussein which was explicitly recommended in the 1996 memo. The subsequent dominoes have fallen in exactly the sequence the memo prescribed.

Whether that is visionary strategic planning, catastrophic imperial overreach, or something more troubling about whose interests American foreign policy actually serves I will allow you to judge for yourself.

But you should make it with information our media will never tell you. If you decide you want to learn more about the Israel Lobby, you should consider starting with a book of that title by John J. Mearsheimer and Stephen M. Walt

Here is a link to the Clean Break Memo

Stay safe, find quality information, protect your investments from the madness, and help others along the way. Good luck.

Copper and silver aren’t separate stories, and in some ways are chapters in the same book. Some of the same forces driving silver like decades of capital underinvestment, declining ore grades, rising industrial demand, and an over-financialized debt-ridden world are playing out in copper on an even larger scale. As silver prices rise, copper demand increases as substitution happens.

I did not invent this thesis. Some of the sharpest minds in commodities have been building this case for years, and I want to introduce you to their work. What I will do in subsequent articles is provide informed speculation and analysis on more specific events happening in the copper market along with a healthy skepticism of the idea central planners can engineer their way out of physical scarcity.

This is copper 101 for the precious metals investor. Let’s get into it.

The Voices Worth Listening To

Let’s highlight some of the people whose research and experience are shaping my thinking on this. If you’re serious about copper, these are a few of the names to follow for updates and quality information.

Jeff Currie spent 27 years at Goldman Sachs, the last 15 as Global Head of Commodities Research.He’s now Chief Strategist of Energy Pathways at Carlyle Group. Currie has been calling for a commodity supercycle since late 2020 and has publicly stated that copper is his “highest conviction trade ever.” His framework is straightforward: we are in a capital expenditure cycle driven by electrification, defense spending, and deglobalization, and the commodity complex. Copper in particular, is woefully undersupplied for what’s coming. His January 2026 appearance on Bloomberg’s Odd Lots podcast is an excellent starting point, he compared the coming copper inventory depletion to what already happened in cocoa markets. A “knife edge equilibrium” where prices spike violently once buffer stocks are exhausted.

Rick Rule is a legend in the natural resource investment space, having spent decades at Sprott and now running Rule Investment Media. He frames the copper story not through the energy transition hype cycle but through basic math: there are a billion people on Earth with no access to primary electricity, and another two billion with only intermittent or unaffordable power. Copper demand isn’t about Teslas — it’s about the fundamental modernization of the developing world. At the 2026 Vancouver Resource Investment Conference (VRIC), Rule laid out a number that should stop every investor in their tracks: maintaining current copper production — not growing it, just maintaining it — requires $250 billion in investment over the next decade, which is $150 billion more than the industry currently has committed. And that’s just to stay in place while demand grows at 2% compounded annually.

Famously, Rick will grade your natural resource portfolio at no charge and provide feedback, and he provides an assortment of educational and networking opportunities many subscription based. ruleclassroom.com

Lobo Tiggre runs IndependentSpeculator.com and is one of the most disciplined due-diligence minds in the junior mining space. He’s named copper his highest-confidence trade for 2026 after doing the same in 2025 but he’s not a cheerleader. His approach is ruthlessly practical: the supply deficit is real, but “crap is crap, and crap at higher prices is still crap.” If a copper project has been sitting in the ground for decades and isn’t held up by permitting, it’s probably not economic. His voice will help you stay level-headed on the copper market.

The Demand Picture: Everything Runs on Copper

Global refined copper demand hit nearly 27 million tonnes in 2024. The International Energy Agency (IEA) projects that number will grow to 33 million tonnes by 2035 and 37 million tonnes by 2050. That’s roughly 37% growth over the next quarter century — and those are the conservative estimates under current stated policies, not aspirational net-zero targets.

What’s driving this? The same forces you’re already watching.

Grid infrastructure and power generation account for the largest share of projected copper demand growth at over 60% of the increase through 2030, according to Goldman Sachs Research. Every mile of transmission line, every transformer, every substation requires copper. The US alone expects 333 additional terawatt-hours of new electricity demand by 2030. That power has to get from the source to the end user, and it travels on copper.

This is where Rule’s framing matters. Forget the green energy debate for a moment. Whether the new generation capacity is solar, nuclear, natural gas, or some combination — it all requires copper to transmit and distribute. The grid is the bottleneck, and copper is the grid.

Electric vehicles represent the fastest-growing demand segment. The IEA projects EV copper consumption will increase sevenfold, growing from roughly 2% of global demand today to 10% by 2050. An EV uses three to four times more copper than a conventional vehicle due to wiring, motors, battery connections, charging infrastructure. But as Tiggre correctly emphasizes, if every EV mandate were repealed tomorrow, copper demand would still be rising.

AI and data centers are the new wildcard. JPMorgan estimates data center copper demand alone could reach 475,000 tonnes in 2026, up from 110,000 tonnes in 2025. AI-powered data centers are particularly copper-intensive, requiring robust power distribution systems and advanced cooling infrastructure. A key insight from Wood Mackenzie: data center developers acquire copper with little concern for price. When you need it, you need it. That’s inelastic demand, not the type of demand that responds to higher prices the way economists model in textbooks.

Defense spending adds another layer. The Department of Defense calls copper its second-most used material. Aircraft, ships, submarines, missiles, ammunition, radar systems, and hypersonic weapons are all copper-intensive. As Currie put it in testimony to the US Chamber of Commerce: “Wars are won with supply chains and capital.” With defense budgets expanding globally, this isn’t a demand source that’s going away.

BHP, the world's largest mining company, expects global copper demand to increase 70% by 2050 to reach 50 million tonnes annually.

Add it all up, and you have a demand picture where major global priorities converge on the same metal. The demand will grow, but can supply possibly keep up?

The Supply Problem: You Can’t Print Copper

Global mined copper supply reached 22 million tonnes in 2024. Under current projections, it peaks in the late 2020s at just over 24 million tonnes — then declines below 19 million tonnes by 2035 as mines deplete and ore grades continue falling.

Read that again. Demand is projected to hit 33 million tonnes by 2035. Supply is projected to fall to 19 million tonnes. Even the most optimistic IEA scenario shows a 20% supply shortfall. Under their stated policies scenario, the gap is 30%. Under net-zero assumptions, it exceeds 40%.

S&P Global’s landmark study The Future of Copper is the definitive source on this supply crisis. Their data tells the story in numbers that are hard to argue with:

Ore grade decline. Average copper ore grades have fallen approximately 40% since 1991. The world’s largest copper mine, Escondida in Chile, started production in 1990 with head grades of 2.5-3% copper. Today, the reserve grade sits around 0.5% which is roughly a fifth of where it began. This isn’t unique to Escondida; it’s a pattern repeated across most major copper operations globally. Lower grades mean you have to move dramatically more earth to produce the same amount of metal. That means more energy, more water, more capital, and more time.

At VRIC 2026, Rule made this point viscerally: BHP’s Escondida is considered a young mine at 45 years old, compared to Chuquicamata and Bingham Canyon, which are over a century old. These are the world’s biggest producers, and they’re aging, depleting, and declining in grade. We haven’t started building their replacements. Rule argues that process should have begun 25 years ago.

Development timelines. According to S&P Global, the average timeline from discovery to production for a copper mine is now 24.1 years globally. In the United States, it’s 31.8 years. Only 14 new copper deposits have been discovered in the past decade, compared to 225 in the previous 23 years. We are not finding enough copper, and when we do find it, it takes a generation to bring it to market. Since 2002, only three copper mines have come online in the US and none on federal land. Many of the best prospects are on federal land. This is directly impacting Resolution Copper (BHP/Rio Tinto, Arizona) a deposit of 1.787 billion tonnes at 1.5% copper grade that Resolution estimates could supply 25% of projected US copper demand for several decades, as well as Pebble (Northern Dynasty, Alaska) to name a couple.

Tiggre drives this point home: “Buying isn’t building, so this isn’t bringing any more copper into the world. The discoveries have to happen. This is not an ‘if’ question, it’s a ‘when’ question. And the low-hanging fruit has already been picked.”

Geographic concentration. Chile produces roughly 25% of global copper, with the DRC overtaking Peru for the number-two spot in 2024. On the refining side, the picture is even more concerning: China controls 45% of global copper refining capacity and is projected to increase that share to 50% by 2040. Copper refining is a strategic chokepoint.

Capital underinvestment. Chile’s copper commission, Cochilco, recently downgraded its 2034 domestic supply forecast by approximately 900,000 tonnes, nearly the annual production of Escondida. The copper industry needs an estimated $1.1 trillion in investment over the next 25 years to meet demand. That capital hasn’t been deployed yet. As Rule puts it, the $250 billion needed just to maintain current production over the next decade is $150 billion more than the industry has — and maintaining current production means staying in deficit.

The mining industry spent the 2010s in capital discipline mode — returning cash to shareholders instead of investing in discovery and development. Unlike silver, where artificially suppressed prices made new investment uneconomic, copper's underinvestment was driven by a shareholder revolt against the capital destruction of the previous boom. Wall Street rewarded mining companies for buybacks and dividends, not for building the next generation of mines. The result was the same: a supply hole that no amount of money can fill quickly, because geology and permitting don't care about your capex budget.

The Substitution Cascade: Silver → Copper → Aluminum

Here’s a dynamic that most analysts discuss in isolation but that I think deserves attention as an interconnected system. This is where my silver work and the copper thesis converge.

As one metal gets expensive, demand cascades down to the next viable substitute — creating reinforcing pressure across the entire base and precious metals complex.

Silver to Copper. Silver’s exceptional conductivity has made it the standard metallization material for solar cells. But silver’s price surged so dramatically above prior all-time highs these past several months that the solar industry has already started planning for copper substitution. According to BNEF, silver now represents about 14% of total solar panel production costs, up from just 5% in 2023. That kind of cost pressure in a razor-thin-margin industry is disruptive.

The response has been a structural shift. Chinese manufacturer AIKO has already scaled 10 GW of silver-free back-contact modules using copper electroplating. LONGi Green Energy, the world’s largest solar company, has announced mass production of copper-metallized cells starting in mid-2026. German researchers at Forschungszentrum Jülich have demonstrated that copper-metallized heterojunction cells can achieve efficiency levels comparable to silver-based counterparts, with some configurations showing improved mechanical strength and durability.

This is happening now. The Silver Institute reported that industrial silver demand from solar actually declined approximately 5% in 2025, even as global solar installations continued growing. The solar industry is actively migrating to copper. That’s new demand for copper that didn’t exist five years ago, arriving precisely when the supply picture is tightening.

Copper to Aluminum. Meanwhile, copper prices surging to between $5 and $6 this year have caused substitution pressure to build in the other direction. Aluminum offers about 60% of copper’s conductivity but costs roughly half as much and weighs significantly less. The copper-to-aluminum price ratio has reached approximately 4.5:1, up from a historical average of 3.8:1, according to Goldman Sachs.

Aluminum is already the standard for overhead high-voltage transmission lines. But the substitution is expanding. Automotive manufacturers are increasingly switching to aluminum wiring harnesses. The US Department of Energy is funding research at Pacific Northwest National Laboratory to develop ultra-conductive aluminum that could further expand substitution possibilities. Wind turbine manufacturers are exploring aluminum windings as a mature alternative.

Aluminum, however, cannot replace copper everywhere. Residential wiring, precision electronics, certain military applications, compact urban grid distribution, and subsea cabling all require copper’s superior conductivity and reliability. The applications where copper is irreplaceable tend to be the fastest-growing demand segments.

What you end up with is a cascading substitution dynamic: rising silver prices push solar manufacturers toward copper, increasing copper demand; rising copper prices push some applications toward aluminum, but not enough to offset the new demand arriving from silver substitution and electrification. The net effect is persistent upward pressure on copper.

Where This Leaves the Investor

Copper is bullish.

The setup rhymes with many other commodities right now: when demand grows faster than supply can respond, and when the lead time to bring new supply is measured in decades, the math doesn’t work without structurally higher prices.

Currie frames this as a supercycle. Not a single price spike but a series of them, playing out over years, driven by the structural mismatch between demand growth and the physical inability to bring supply online fast enough. If he’s right, we’re in the early innings, and as I shared here in my last article I have allocated 10% of my portfolio and shared the names I am in so far.

Coming Next

In Part 2, I’ll dig into US copper policy — Section 232 tariffs, the Defense Production Act, and whether the United States is effectively building a strategic copper reserve through the back door. If you think the supply picture looks tight globally, wait until you see what happens when the world’s largest consumer starts hoarding.

Further Reading and Resources

Research & Reports

S&P Global, The Future of Copper —Updated 2026 version (Copper in the Age of AI): https://www.spglobal.com/en/research-insights/special-reports/copper-in-the-age-of-ai

IEA, Global Critical Minerals Outlook 2025: https://www.iea.org/reports/global-critical-minerals-outlook-2025

BHP, How Copper Will Shape Our Future: https://www.bhp.com/news/bhp-insights/2024/09/how-copper-will-shape-our-future

Wood Mackenzie, High-Wire Act: Is Soaring Copper Demand an Obstacle to Future Growth? (October 2025): https://www.woodmac.com/horizons/soaring-copper-demand-obstacle-to-future-growth/ Note: WoodMac is paywalled, but the press release with key data points is free at: https://www.woodmac.com/press-releases/soaring-copper-demand-an-obstacle-to-future-growth/

Books

• Gianni Kovacevic, My Electrician Drives a Porsche — the accessible case for copper through the electrification lens

Ongoing Coverage

• Lobo Tiggre, IndependentSpeculator.com — disciplined due diligence on copper equities and junior miners

• Investing News Network investingnews.com/copper — daily copper news, CEO interviews, and stock analysis

• Rick Rule, ruleclassroom.com Resource equities education

40% Silver Miners including SIL, SILJ, and individual silver miners and royalties
20% Nuclear Power Renaissance
10% Gold Miners including GDX, GDXJ, individual miners and royalties
10% Copper Miners including COPX, COPJ, individual miners and royalties
10% EM (BRICS)
10% Energy oil and gas services and royalties

The biggest changes of the last 3-4 months is this inclusion of copper into my brokerage and subtraction of BTC from my “hard money” reserves. That category now consists of physical gold, physical silver, XMR, and ZEC. I explained why I no longer consider BTC to be “hard money” here. The short version: my investment framework is built around sound money principles and assets outside of institutional control, and BTC no longer fits that thesis the way I once believed and hoped for.

Copper Equities, Not Copper Price Exposure

I don’t expect copper prices to be explosive the way I do for silver, or even uranium or platinum. Since I don’t expect that, I don’t want pure exposure to the copper price. I want copper equities that will greatly increase profitability as copper prices grind higher over the next several years.

The easy button is to just buy an index of the copper miners. COPX and COPJ are two I am familiar with. COPX in particular has long call options available, so it is a better vehicle for my investment style. I have substantial positions in both.

On the other hand, there will be huge winners in the individual miner names, and I would like to find some of them as well. I have starter positions in the names listed below, organized by category. I have not done a deep dive on any of them — buyer always beware. They did have technical charts that I like. Over the next month or two I will try to shrink this list down to a smaller group, with higher conviction.

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This past week, another trove of Jeffrey Epstein emails was released. These documents add critical context to the Bitcoin story. I clearly need to make a couple edits to previous articles in this series to reflect what we now know.

It is time for a reassessment of what BTC is and where it’s headed. If you want to understand the implications quickly, Aaron Day is all over this story. He was just on Coffee and a Mike podcast episode 1310 discussing his Brownstone Institute article “The Hijacking of Bitcoin.” I strongly recommend listening if you want to catch up.

What the Epstein Files Reveal

The new emails further confirm what many suspected: Jeffrey Epstein directly funded the capture of Bitcoin Core development at the exact moment the “block size wars” determined Bitcoin’s future.

Here’s what we now know from the April 25, 2015 emails between Joi Ito (MIT Media Lab Director) and Epstein:

Ito to Epstein: “Used gift funds to underwrite this which allowed us to move quickly and win this round. Thanks”

Epstein’s reply: “gavin is clever”

Ito was referring to securing Gavin Andresen, Wladimir van der Laan, and Cory Fields — Bitcoin’s core developers — after the Bitcoin Foundation collapsed. Epstein’s money, flowing through MIT’s Digital Currency Initiative, paid the salaries of the developers who implemented the small-block path that deliberately constrained Bitcoin’s ability to function as peer-to-peer cash.

But it gets worse. Epstein also:

• Invested $500,000 in Blockstream (the company that benefited from small blocks)

• Funded all three U.S. CBDC pilot programs through the same MIT Media Lab

• Connected to Brock Pierce, who ran the Bitcoin Foundation into the ground, co-founded Tether, and brokered Epstein’s Coinbase investment

Then there’s Tether itself. A University of Texas study published in the Journal of Finance found that Tether purchases accounted for approximately 50% of Bitcoin’s 2017 bull run. The CFTC later fined Tether $41 million for lying about reserves. It was only fully backed 27.6% of the time during a 26-month period.

The same network now controls the legislative framework. Howard Lutnick, who lied about cutting ties with Epstein, now runs Cantor Fitzgerald, which manages Tether’s $130+ billion Treasury reserves. After joining the Trump transition, Lutnick installed Bo Hines as White House crypto advisor. Hines pushed through the GENIUS Act (the stablecoin law), then 120 days later quit the White House to become CEO of USAT — Tether’s U.S. subsidiary.

The Investment Implications

This information has serious implications for where BTC belongs in a portfolio.

I have to say: the long term investment case for BTC has been completely removed for me.

BTC is not currently acting as hard money. More importantly, it is unlikely to act as hard money in the medium-term future. The network that deliberately crippled Bitcoin’s ability to function as peer-to-peer cash is the same network now building the programmable dollar surveillance infrastructure on top of it.

Bitcoin was supposed to be the answer to fiscal dominance (uncensorable, peer-to-peer electronic cash that couldn’t be printed, frozen, or controlled). Instead, it’s been captured and redirected into becoming exactly what Michael Saylor describes: “digital property” for institutions to custody and trade, with transactions happening on second layers controlled by middlemen.

From a price perspective, BTC continues to behave as tech beta, not hard money. When risk-off sentiment hits, Bitcoin sells off with the Nasdaq. When the dollar strengthens, Bitcoin weakens. When gold rallies on monetary instability, Bitcoin… doesn’t necessarily follow. That’s not the behavior of monetary refuge. That’s the behavior of a speculative technology asset.

I wrote an article about portfolio construction in an age of fiscal dominance about 6 months ago. One of the pillars was “hard money.” It’s time for me to update that article and remove BTC from that pillar. For now, hard money is only silver and gold IMO, and privacy coins like XMR and ZEC are more likely to earn a place in than BTC getting back in. It’s probably also time to take energy, copper, uranium, and emerging markets more seriously anyway, so I’ll do a full rewrite.

My Position

I have a specific metric I’m using, where I’m prepared to pivot and give BTC a place back in the portfolio. For that to happen, I want to see BTC outperform gold substantially on at least one full monthly candle, or outperform slightly for three consecutive monthly candles.

At that point, I’ll reconsider a place for BTC. But you won’t hear me call BTC “hard money” anymore. That is not just because the core development was captured, it also doesn’t have the properties hard money needs. It is digital surveillance money/ digital property. BTC is a speculative trading asset that will perform very well in certain circumstances.

In the meantime, I recommend seriously reconsidering why you hold BTC. I have. I’ve sold my BTC position for privacy coins like ZEC and XMR — assets that actually do what Bitcoin was supposed to do: provide peer-to-peer electronic cash with real privacy.

If you’re holding BTC as “hard money” or as a protection against currency debasement, it’s time to re-examine that thesis in light of what we know.

The story matters. And the story just changed.

What unfolded on January 30 wasn’t a spontaneous market panic or a fundamental shift in supply and demand. It was a precisely orchestrated mechanical liquidation involving margin requirements, trapped Chinese capital, leveraged ETF rebalancing, clearinghouse protection protocols, and a stark divergence between paper contracts and physical metal. The evidence, drawn from official exchange data, market microstructure analysis, and real-time trader observations, reveals a system under extreme stress executing a coordinated purge.

This is the anatomy of what may prove to be one of the most significant precious metals market events since the Hunt Brothers silver corner collapsed in 1980, and you will not be able to read what happened in the financial publications. So I present you with the evidence, informed speculation and analysis of what happened below.

Part 1: Timeline of Events

The Setup: October 2025 - January 12, 2026

Silver’s parabolic rally began in earnest in late 2025, driven by multiple converging forces: structural supply deficits estimated at over 200 million ounces for the year, surging industrial demand from AI infrastructure and green energy sectors, and China’s January 1, 2026 implementation of strict export licensing that effectively ring-fenced 60-70% of global refined silver supply.

More significantly, silver entered deep backwardation (steepest since January 1980) in October 2025. Backwardation occurs when spot prices trade above futures prices, signaling that market participants value immediate physical delivery more than future promises. It's the market screaming: "I don't trust you'll deliver later, or can’t wait, I need metal NOW”. This is the hallmark of supply scarcity and typically precedes explosive price moves.

By January 2026, silver was trading above $80, having more than doubled in just weeks. Physical premiums began diverging dramatically from paper prices. Tokyo dealers reported physical silver trading at $120-130 per ounce in early January, while Dubai and other Asian markets showed similar 40-80% premiums over COMEX spot prices. The Shanghai silver market, correcting for VAT has consistently commanded a premium to COMEX silver price. Why is the price setting mechanism for silver getting so dysfunctional?

January 13: The Margin Architecture Changes

The CME implemented a fundamental shift in how precious metals margins are calculated. Instead of fixed dollar amounts, margins became percentage-based—9% for silver futures. This meant margin requirements would automatically scale with price increases, creating a self-reinforcing mechanism: as silver rose, margin requirements rose proportionally, forcing traders to post more capital or reduce positions.

Market analyst and trader Serenity (@aleabitoreddit on X) identified this as a critical structural change that “created an environment where even minor price drops would trigger massive margin calls.” The shift from fixed to percentage-based margins meant leveraged positions would face automatic deleveraging pressure at precisely the wrong moment.

January 28: The Pressure Builds

The CME raised silver margins again, from 9% to 11%—the second increase in two weeks. Silver continued climbing, reaching $121.67 on January 29. But the margin increases had set a trap: highly leveraged long positions were now vulnerable to any downdraft in prices.

January 30: The Cascade

The crash unfolded across multiple time zones and market structures, creating a cascade effect that would ultimately see silver fall over 35% from its high.

Asian Session: The Chinese Trap

The Shenzhen Stock Exchange suspended trading in the UBS SDIC Silver Futures Fund LOF for the entire day. This is China’s primary retail silver trading vehicle and the only pure-play silver fund in the market. The fund had been trading at 36-64% premiums over Shanghai Futures Exchange contracts and had issued 15 risk warnings since early January.

According to Serenity, this created a “liquidity trap” for Chinese institutional and retail traders. Unable to liquidate domestic holdings, they were forced to dump SLV shares and COMEX futures to raise cash or hedge exposure. This was structural forced liquidation by participants with no other exit available.

U.S. Session: Three Mechanical Forces Converge

As Western markets opened, three separate mechanical selling pressures converged:

1. Margin Call Liquidations: Leveraged long positions that had ridden silver from $60 to $120 were now facing mounting margin requirements. As prices began falling, these positions triggered automatic liquidation.

2. AGQ Leveraged ETF Rebalancing (1:25 PM): The ProShares Ultra Silver ETF (AGQ), a 2x leveraged silver fund, calculates its NAV daily at 1:25 PM Eastern. Quantitative trader Andy Constan (@dampedspring on X) noted this “caused a local low” as AGQ fell 60% in value.

The mechanics are brutal. Leveraged ETFs have what’s called “negative gamma” and must always trade in the direction of the move. Using the standard rebalancing formula X(X-1)(ΔS), where X is the leverage factor, AGQ was forced to sell an amount equal to roughly 60% of its NAV at the exact low. This wasn’t discretionary panic. This was mechanical, programmed selling at the worst possible moment.

3. Clearinghouse Protection Protocols: While markets were crashing, the CME announced a third margin increase in three days, this time a 36% hike effective Monday, February 2. Current maintenance margins would increase from 11% to 15%.

The Day’s Close: Two Markets, Two Realities

By the U.S. close, silver settled around $84 (down more than 28% on the day). The Shanghai market, which had opened after the worst of the U.S. selling, closed near $122 (CNY converted to USD). This created a historic 44% gap between the two venues.

These weren't isolated events. They were pieces of a coordinated mechanism that becomes clear only when examining the evidence systematically.

Part 2: What We Know - Evidence-Based Analysis

Shanghai Exchange Data

Official Shanghai Gold Exchange daily reports for January 30 tell a revealing story: 531,280 kg of Ag(T+D) derivative contracts traded, marked “Short to Long” —representing paper position transfers, not physical delivery. Meanwhile, only 3,000 kg of physical Ag99.99 traded (0.6% of derivative volume). No significant vault withdrawals occurred. This wasn’t physical liquidation or loss of confidence in metal. This was shorts covering and longs accumulating paper contracts while physical metal stayed exactly where it was.

Standing Repo Correlation

The Federal Reserve's Standing Repo Facility saw record borrowing of $74.6 billion on December 31, 2025—a day that also saw a ~15% silver crash. The previous record was $50.35 billion on October 31, another month-end crash.

Pattern recognition: Major silver price suppressions at month-end coinciding with peak bank liquidity stress.

Whether the pattern repeated on January 31, 2026 will be confirmed when the Fed releases its data in the coming days. The Standing Repo provides emergency overnight liquidity to banks and primary dealers to meet balance sheet requirements—the same institutions holding major short positions in silver futures (CFTC data confirms banks collectively held over 200 million ounces net short as of early December 2025).

As drprofit noted: "There is a strong relationship between end-of-month lending for balance-sheet purposes and the ability to enter large-sized price suppressions at month-end."

Why Now? The Delivery Crisis Theory

The evidence points to a coordinated intervention to protect institutions facing a delivery crisis. Banks heavily short paper silver while physical metal was unavailable at paper prices (80% premiums in Asia). With March delivery month approaching (first notice February 27), and COMEX registered stocks at only ~30 million ounces against much higher open interest, the mathematics became untenable. The solution: crash the paper price to force liquidation of leveraged longs, reduce open interest before delivery, and create opportunities for shorts to cover or acquire physical at lower prices (via SLV arbitrage and COMEX deliveries at the bottom). The Hunt Brothers parallel is exact roles reversed: In 1980, longs demanding delivery forced COMEX to change rules to save shorts. In 2026, shorts unable to deliver forced liquidation of leveraged longs. Same outcome: exchange intervention protecting politically connected participants.

Comex Delivery Data

COMEX delivery reports for February 2026 silver futures show JP Morgan Securities stood for delivery of 633 contracts (3,165,000 ounces) at a settlement price of $78.29 on January 30, at the exact bottom of the crash. Combined with earlier reports showing JPM “standing for maximum delivery” throughout January, this suggests a strategic pivot from paper short positions to physical accumulation. The bank that paid a record $920 million fine in 2020 for manipulating precious metals futures markets was taking delivery at the exact moment of maximum dislocation, is par for the course.

Options Market Signal

Silver’s implied volatility index (SIVL) fell 10.6% on January 30… during a 20%+ crash! This is highly unusual. In normal market panics, implied volatility explodes as traders rush to buy protection. Falling IV during a crash signals coordinated position unwinding rather than organic fear.

When large players close short volatility positions, they buy back options, reducing open interest and demand. The volatility collapse during maximum chaos revealed this wasn’t a new bearish development, but systematic buying and selling according to plan.

The SLV ETF Arbitrage: How Banks Turned Panic Into 1.5 Billion in Profits

While some investors were getting force liquidated in their silver futures and the leveraged silver ETF (AGQ) was getting annihilated, something extraordinary was happening behind the scenes which I alluded to in my article about JPMorgan and the fox guarding the henhouse silver article.

The Authorized Participant (AP) mechanism is supposed to keep ETF prices aligned with their Net Asset Value (NAV). When an ETF trades at a discount, APs buy shares in the open market and redeem them for the underlying assets at NAV, capturing the spread and closing the gap. When an ETF trades at a premium, APs create new shares by depositing assets, again capturing the spread.

This arbitrage mechanism typically keeps ETF prices within pennies of their NAV.

On January 30, that mechanism didn’t keep prices aligned. It was weaponized.

Here’s what happened:

• 7:00 AM EST: LBMA silver benchmark settled at $103.19

• 1:24-1:25 PM EST: COMEX silver settled at $78.29

• Throughout the day: SLV (the largest silver ETF) continued trading, eventually creating a ~20% discount to NAV

That NAV discount should not exist for more than minutes. But it did. And JPMorgan and its other banking partners had a front-row seat to exploit it.

The Arbitrage

The mechanics are brutally simple:

1. Buy SLV shares in the open market at the discounted price from panicking retail sellers

2. Tender those shares to iShares (the ETF issuer) for redemption

3. Receive physical silver bars valued at $103.19 (the LBMA settlement price)

4. Pocket the difference—up to 20% per share

If you had to settle physical delivery contracts at the LBMA price ($103.19) but didn’t have the metal, this was a gift. You could buy SLV shares at a 20% discount, redeem them for physical bars at full NAV, and deliver those bars to satisfy your contracts.

Free money. Extracted from the market dysfunction that you helped engineer.

The Smoking Gun

iShares data shows SLV shares outstanding INCREASED by 51 million shares from Thursday to Friday.

Read that again. During a 20% crash, when retail investors were panic-selling, the ETF didn’t shrink—it grew.

This is backwards. In a normal crash, redemptions exceed creations. Shares outstanding should decrease as investors flee and APs redeem shares to capture discounts.

But on January 30, shares outstanding increased by 51 million shares. This means one or both of two things happened: 1. Banks bought shares in the open market at the discount, then tendered them for redemption to claim physical bars at NAV 2. Banks created new shares by depositing physical silver (possibly from COMEX deliveries taken at $78.29) to then sell at higher prices Either way, banks were extracting maximum profit from the NAV dislocation while accumulating physical metal at wholesale prices.

The SLV share creation data proves banks weren't running FROM silver on January 30. They were running TO it—accumulating physical metal at a 20% discount funded by retail investors' panic. All while the official narrative claimed silver was "crashing" due to margin calls and systematic deleveraging. The fox didn't just guard the henhouse. It engineered the panic, bought the eggs at a discount, and sold them back at full price—all in the same day.

Part 3: The Physical Silver Market

While paper markets executed their coordinated cascade, the physical silver market told a completely different story. These real-world observations confirm the paper-physical divergence wasn't theoretical. It was becoming visible to anyone trying to actually buy metal.

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