Transcription
Ladies and gentlemen, gold broke $4,000 this week, not up through it, down through it. As I record this, an ounce of gold is trading at roughly $3,983, and it is on track to finish this week down more than 3%. If you own gold, you watched a psychological floor that has held for months give way in the last 48 hours.
That is not the story. The story is a blank box. Somewhere in Washington, in a government document that was released to the public this month, there's a chart. It is one of the most closely studied charts in all of global finance. 18 of the most powerful economic officials in the United States each wrote down privately where they believe interest rates are going before the end of this year. 18 people, 18 answers. And every institution on Earth reads that chart to know what is coming.
Here's what those 18 people said. Nine of them projected at least one interest rate increase before the year is out. Eight of them projected no change at all, and one projected a cut, nine to eight, one vote apart, the most divided reading anyone can remember.
But that is still not the story. Because there was one more man who was entitled to write a number in that chart, the most powerful of all of them, the chairman of the Federal Reserve himself, Kevin Warsh, and he did not submit one. He left the box blank.
Now, I need you to understand what that means because 99% of the people who own gold and silver tonight have no idea it happened, and it is, in my judgment, the single most important signal of this entire year. The chairman's projection is the anchor of that entire chart. It is the one number the markets look for first. It is how the most powerful central banker on Earth communicates his intention to the world without having to say it out loud. And this year, when it came time to write down where he thinks the price of money is going, the man who decides it declined to answer. He did not say hike. He did not say hold. He He not say cut. He left it empty. And by the end of this briefing, you are going to understand exactly why he left it empty. And I promise you the reason is not what you think. It is not cowardice, and it is not politics. It is something far more unsettling. And once you see it, you will understand why gold fell below $4,000 this week, even as bombs were falling in the Middle East, which by every conventional rule should have sent it in the opposite direction.
Stay with me, because I am also going to show you the deadline. There is a date, 11 days from now, when that blank box has to be filled in. It cannot stay empty. And what fills it will decide what happens to every ounce you own.
Let me start with what happened this week, because the week itself is the answer. This week, the United States launched multiple military strikes against Iran. Iran responded by attacking American bases in neighboring countries. And the President of the United States publicly warned that America could begin targeting Iran's infrastructure next week if diplomacy does not produce a breakthrough. Next week, that is the phrase I want you to hold. Not eventually, not if tensions escalate next week. And oil responded exactly as oil responds. It climbed, because roughly a fifth of the world's energy passes through a single waterway on Iran's doorstep, the Strait of Hormuz. And every strike, every counterstrike, every threat re-prices the risk to that passage from scratch.
Now, here is where most people get confused, and where I need you to think very carefully, because this is the mechanism that explains everything you are seeing on your screen. Every instinct you have says that bombs falling should send gold up. War is fear. Fear is gold. That is the rule you've been taught your entire life. But watch what actually happens step-by-step, because this is a chain, and every link is mechanical. War drives oil higher. Higher oil feeds directly into inflation, because energy touches the price of everything that must be moved, manufactured, or heated. Rising inflation makes it impossible for the Federal Reserve to cut interest rates and forces it to consider raising them. And higher interest rates are gravity on gold because gold pays no yield. When a government bond pays you handsomely to do nothing and gold pays you nothing to do nothing, capital does the arithmetic and rotates. So, follow the chain to its conclusion. The war is not making gold rise. The war is making oil rise, which is making inflation rise, which is forcing the Fed to stay hawkish, which is pressing gold down. The bombs are bearish for gold, right? Now, today, through that specific chain, that is why your gold is under $4,000 in the middle of a shooting war. And if nobody has ever explained that to you, it is because most of the people talking about this market do not understand it themselves.
And now, with that chain in your hand, go back and look at the blank box, because now you can read it. Ask yourself what the chairman of the Federal Reserve is actually being asked to do when he fills in that projection. He is being asked to predict where interest rates will be in 6 months, but interest rates depend on inflation. And inflation right now depends almost entirely on the price of oil. And the price of oil depends on whether a president follows through on a threat to bomb a country's infrastructure next week and on whether a waterway on the other side of the planet stays open. Do you see it now? The chairman of the Federal Reserve cannot tell you where interest rates are going because interest rates are no longer being decided in Washington. They are being decided in the Strait of Hormuz. He is not the author of the story anymore. He is downstream of it. He is a man being asked to forecast the weather while standing inside the storm. That blank box is not weakness. It is the most honest thing anyone in Washington has done this year. It is the most powerful central banker on Earth admitting in the only language his office permits him to use, which is silence, that he does not know. Because he cannot know, because it is not up to him.
Now, let me tell you why that should matter to you more than any price target you will ever hear. When the Federal Reserve is confident, markets can price, assets find their level, uh volatility compresses, and everyone gets on with their lives. But when the chairman himself will not commit, that uncertainty does not disappear. It gets distributed, it gets pushed out into every asset on Earth, including yours. 9:00 to 8:00 with no anchor from the chair means the market has to price two completely different futures simultaneously, and it cannot So, it does the only thing it can do, it sells the asset with no yield and waits for clarity. That is what you are watching, gold below 4,000, silver at roughly $57, more than half its value gone from the record it set in January of $121.62. The gold-to-silver ratio stretched out to 70:1. All of it is the price of a blank box.
And now the deadline, that box has to be filled. On the 28th and 29th of this month, 11 days from now, the Federal Reserve meets and must render an actual decision, not a projection, uh a decision hold or hike. There's no blank option on that ballot. Markets currently put the probability of a hike at that specific meeting at around 20%, but the probability of at least one hike by September at roughly 60%. So, the near-term expectation is a hold, and the fight is over what comes after, which means the meeting itself matters less than what the chairman says in the room afterward. In 11 days, the man who refused to write a number is going to stand at a podium and take questions, and every word will be scraped for the answer he would not put in the box.
Between now and then watch three things in this order. First, the president's threat he named next week if those strikes on infrastructure happen. Oil moves, inflation expectations move, and the hawkish case builds itself without the Fed doing anything at all. Second, the Strait of Hormuz. Not the headlines about the war, the shipping because that waterway is currently writing American monetary policy more directly than any economist in Washington. Third, the meeting itself on the 28th and 29th. That is the whole map. Everything else in the next 11 days is noise.
Now, I owe you the honest bear case because I will not stand here and only tell you the half that comforts you. Gold under 4,000 is a real technical breakdown and the levels below it are real. This can go lower. The hawkish lean is genuine, not manufactured, and it is documented in the Fed's own projections. If oil keeps climbing, inflation stays hot. The Fed stays hawkish and metals stay under pressure for months longer. And every month of that is a month of real pain for anyone holding. Silver's situation is worse than gold's and for a mechanical reason worth understanding, roughly 58% of silver demand is industrial, which ties it to economic growth. So, when the market fears rate hikes, it simultaneously fears a slowdown those hikes cause and silver gets hit twice once as a monetary metal and once as an industrial one. Gold takes one blow, silver takes two. That is why the ratio is at 70 and it can widen further before it narrows. That is the honest downside.
Now, let me show you the other side of the ledger. And I want you to notice that not one item on it moved this week. The physical shortage of silver did not improve while the price collapsed. It got worse. The Silver Institute confirmed the sixth consecutive annual supply deficit at 46.3 million ounces and that figure is wider than the year before. And since 2021, the cumulative drawdown from above ground stockpiles has reached 762 million ounces. Let me put that in terms you can feel. That is roughly 9 months of the entire planet's silver mine production consumed out of existing inventories. Gone. 9 months of global supply drained from the vaults while the price was cut in half. That metal is not coming back. It is on rooftops and inside circuit boards. It has left the market permanently. And the institutions did not blink. JPMorgan's base case for silver remains $81 an ounce. Uh the London Bullion Market Association's analyst consensus for this year stands at $79.57. Both of those numbers were set by people staring at the exact same crash you are staring at. And here is the sentence that matters most in this entire briefing. The analysts revised the path. They did not revise the destination.
And the central banks did not blink either. The Central Bank of China bought gold for its 20th consecutive month. It's largest single monthly purchase in nearly 3 years executed during gold's worst quarter in over a decade. They bought the crash, and the World Gold Council survey this year found that 89% of the world's central banks expect global official gold reserves to rise over the next 12 months.
So, put the whole picture together exactly as it stands tonight. The chairman of the Federal Reserve will not tell you where rates are going because a war he does not control is writing the inflation that decides it. His committee is split 9 to 8 with no anchor. The president has threatened new strikes next week. Oil is climbing. Gold has broken 4,000. Silver is down more than half from its high. And underneath all of it, 762 million ounces of silver are simply gone. 20 months of Chinese gold buying have not paused for a single month and the largest banks on Wall Street have left their targets exactly where they were. Everything in that first list is about the next 11 days. Everything in that second list is about the next 10 years. And that ladies and gentlemen is the entire decision in front of you. Not a price, not a target. The time frame, the blank box is a statement about 11 days. It is not a statement about the metal.
Here's what I want you to take away. And it is the only thing I will ask of you tonight. The most powerful man in finance was handed a form and asked where the price of money is going. And he left it empty because he genuinely does not know because it depends on a waterway 8,000 miles from his desk. Sit with that. Um If he does not know, then nobody on television knows either. And nobody making confident predictions to you this week knows. And I do not know. But here is the thing about not knowing. Not knowing is precisely the condition that the oldest asset in human history was designed for. Gold is not a bet on a forecast. It never was. It is what you hold when the forecast cannot be made. And when the chairman of the Federal Reserve tells you by leaving a box blank that the forecast cannot be made, he is describing the exact environment that gold exists to survive. The people who understand that best are the ones who bought 20 months in a row straight through the worst quarter in 13 years without a press conference and without an explanation.
Before I go, I want to hear from you. Because I know this audience has seen this movie. If you were in the markets during the 1970s, you watched the Federal Reserve lose control of a story that oil was writing. Tell me in the comments what that felt like at the time and what you wish someone had told you before it resolved. Because there are people watching tonight staring at gold under 4,000 for the first time who need to hear it from someone who has actually been in this exact spot before. I read every one of them and if this briefing explained something the headlines did not, subscribe before you leave because in 11 days that blank box gets filled in. The Federal Reserve meets on the 28th and 29th and the chairman will stand at a podium and take questions. And I will be here that day to take his words apart line by line. Exactly the way we took apart that empty box tonight, you now know what he refused to say. Next we find out what he cannot avoid saying.
Gold broke 4,000 this week. A president threatened strikes for next week and the most powerful central banker on Earth was asked one question, one number and he left it blank. 11 days, that is the whole story and now you are one of the few people watching who knows what it actually means.