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The Nuclear Option


 -- Published: Monday, 22 May 2017 | Print  | Disqus 

As explained by Paul Craig Roberts, and unbeknownst to most, prior to the French election, and before Trump fired Comey, US neoconsevatives (neocons) in Washington threatened a pre-emptive nuclear strike on Russia – and apparently they are serious. Serious – no way right? They can’t be that crazy. Apparently such an assumption would be wrong – because they are – where they believe they can go overseas – nuke Russia (North Korea -- anybody?) – and nothing will happen to them coddled comfortably in North America. What’s more, apparently they believe they can do anything they want to get ahead financially / power-wise – with no negative implications for themselves – for reals.

Now, Comey’s firing might slow things down in this regard in the near future, as the globalists / leftist / neocons will be setback somewhat, however if Trump does not maintain momentum in terms of ‘draining the swamp’, the crazed bureaucrats who have now been put on guard with Comey’s demise, will right back at it pushing their agendas (it’s already happening – see here, here, and here) – including moving America closer to war – because again – apparently these crazies think they can engineer any war untouched – in the promotion of ‘empire’ – just like all the others. Americans have never fought a war with foreigners at home, unlike just about everybody else, so they have never had to live with the lasting effects when the action subsides – so they don’t know any better – assuming such concerns are even on the radar screen.


All one can say to these idiots is – try and tell that to a Russian nuke sub captain after Moscow is leveled. Something tells me New York and Washington won’t be too far behind.

But even if they are not that crazy, and all the war mongering is simply ruse to raise the price / business of defense stocks, make no mistake there’s still a ‘nuclear option’ that can be played in the super-power game (of chess) that is not Kabuki – not by a long shot. What I am talking about here is not military, but economic, and is part of the natural progression in the geopolitical game that has been unfolding ever since China started accumulating gold (and now silver) aggressively, over 10-years ago now. What if at some point in the not too distant future China plays the silver card? This would hit the Western banking system like a ton of bricks. Let me explain.


Silver, not gold, is the status quo’s ultimate kryptonite, evidenced in their efforts to keep it suppressed, which in turn keeps everything else in line (low inflation) via inter-market relationships, which are determined by the machines (algos), which in turn is a function of speculator betting practices (true sentiment) in the derivatives markets. And this situation is set to continue until the hedgers / speculators have a change of heart, and global precious metals pricing is still set in US paper markets. This is the mechanism that has kept precious metal prices suppressed for many years now, with the silver market at center (of the manipulation) because it’s a small and localized market, meaning it’s been easy to manage.


That said, if the hedgers / speculators were to ever have a lasting change in sentiment, which would alter betting practices in favor of the bulls (because they would be betting bearish in the derivatives market), things could quickly go against them via the machines – sending prices much higher in a dramatic catch-up move that could finally capture fundamentals. And sure enough, in a surprise move over the last few weeks, as can be seen here in the latest COMEX Silver COT reading, the speculators finally snapped by going short in a big way, where if this trend were to continue, a lasting bottom might be witnessed as early as this summer / fall. (i.e. in coordination with the initial stages of a financial crash / deleveraging.) 


What does this mean? It means even if open interest keeps rising, if it’s a result of dumb spec money going short against the Commercials (banks), and epic move to the upside would be assured via a short squeeze. What’s more, and circling back up to China’s nuclear option, if they were to continue scooping up all the available physical, well, things could get out of the control of Western bankers. For perspective, it’s important to realize American Empire is actually slipping out of control these days, with strategic military might not what it used to be. Factor in peak silver (production) into the larger equation, and it would not be a stretch to characterize what is happening right now as a defacto (and developing) nuclear meltdown for the US. (See Figure 1)

Figure 1


Because if they can’t keep silver contained – it’s all over (interest rates will rise popping all the bubbles) – you can take that to the bank. The picture in Figure 1 tells the whole story. The status quo has kept silver suppressed all these years so that they could prop up their precious stock market – removing the ‘barometer effect’ both it and gold have in the financial system. Again, unlike gold, silver is a small and localized market (think COMEX) and is easy to manipulate as long as the speculators are cooperating, which they generally do – consistently betting long to the point of insanity. (i.e. considering the pounding they have taken over the past five-years.) Of course, as alluded to above, this might be changing now, as it appears the spec longs are turning bearish – perhaps due to deflationary visions. (See Figure 2)

Figure 2


Why would they be thinking deflation now? Well, for one thing, not only are commodities and macro-indicators signaling a growing risk of economic slowdown, which equates as deflationary for many, traders are also seeing signs of a stock market top approaching, with market concentration levels now at year 2000 levels once again. (i.e. see here and here.) All we need to see this as a legitimate concern is for the NASDAQ / Dow Ratio to fall below indicated Fibonacci related support on the monthly plot below, and we would have a signal one should expect to hear a rather profound sucking sound coming from the economy in the future. And the future is what speculators and long-term investors alike worry about. (See Figure 3)

Figure 3


So as long as the crazies in charge don’t blow us all up over the next few years, it appears we may be finally approaching a lasting bottom in precious metals in coming months, given this time frame is a little earlier than I had originally envisioned. Of course it would not be surprising to see the metals bottom prior to the shares (which could come this fall), where the derivatives speculators remain firmly planted in the bullish camp (see here). Here, it might take an initial hit in the record high margin debt levels before a bottom in the shares should be expected if history is a good guide, as was the case in both 2000 and 2008. What’s more, as can be seen in Figure 2 above, although silver could hold here at important Fibonacci based support, it would not be surprising to see it vex lower as well.


That’s all for today folks. If you want to see more charts, observations, and conclusions that go along with them from this and other commentaries, please visit our site at and subscribe.


You will not regret it.


Captain Hook


The above was an excerpt from commentary that originally appeared at Treasure Chests for the benefit of subscribers on Monday, May 15, 2017.

Treasure Chests is a market timing service specializing in value based position trading in the precious metals and equity markets, with an orientation primarily geared to identifying intermediate-term swing trading opportunities, which is an investing style proven to yield successful outcomes in the longer term. Specific opportunities are identified utilizing a combination of fundamental, technical, and inter-market analysis. This style of investing has proven to be very successful for wealthy and sophisticated investors, as it reduces risk and enhances returns when the methodology is applied effectively. Those interested in discovering more about how the strategies described above can enhance your wealth should visit our web site at

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions.

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