I want to wish everyone a happy

new year. Now before we begin, I want to

bring to your attention that I've

noticed that some of you are not

receiving weekly updates from my blog

posts. I've looked into this and

discovered that this is a technical

problem and hopefully I will have this

resolved by Monday. But remember, you

can always access my posts on my website

and of course whenever I have a new

post, I will tweet about it on Twitter.

Okay, so this week I actually had

initially planned to make it a

geopolitical episode since we had so

many big things happening in the world

of geopolitics the past week. Little did

I know what we would have this huge huge

event that happened this morning where

it seems like President Trump has

successfully taken out President Maduro

of Venezuela. So this is definitely an

earthquake in the world of geopolitics.

So we got to talk about uh what happened

and what it all means for the economy

and for markets. And also we have to

talk a little bit about silver as well.

So silver totally imploded uh in the

beginning of the week. There are some

concrete causes for that although it did

recover a little bit more. So first

though let's talk about what happened in

the world of geopolitics.

So I think there are four theaters in

the world and in each geopolitical

theater we had some pretty big

developments from the far east to Latin

America to Europe to the Middle East.

Starting with the Far East. So earlier

in the week, last week, we had China

make pretty big military exercises all

around Taiwan. And what they seem to be,

you know, kind of projecting is that

they could easily blockade Taiwan. And

if they were to blockade Taiwan, again,

Taiwan is an island, so it's not

self-sufficient in many things like oil.

Uh the ch the Taiwanese economy would

easily crumble and um it would be the

end of that pretty quickly. Now the

broader context of course is that not

too long ago you had Prime Minister

Tekachi of Japan make supportive

statements for Taiwan that really

angered the Chinese and you know

President Trump actually seemed to

reportedly intervene to maybe just

politely suggest the Japanese prime

minister to maybe moderate her stance a

little bit. Although by all reports uh

Japan still stands in support of Taiwan

in case of potential military conflict.

For context here, uh Taiwan was once a

Japanese colony. Many people in Taiwan

remember that period positively and look

upon Japan in a very positive light. But

of course, if you recall from the United

States's most recent national security

strategy, the US is basically viewing

the world as multipolar where every

country has your sphere of influence.

Very clearly the United States will have

a Trump correlary to the Monroal

doctrine. Latin America, North America

will be under the United States. And you

know, I think the the implication of

course is that the Far East, at least

when it comes to Taiwan, will be under

China and maybe Russia will have

Ukraine.

Now, moving on to Eastern Europe.

Earlier in the week, uh Russia loudly

complained that uh Ukraine will actually

launched a very mass-cale assassination

attempt on President Putin. Apparently,

there was a large fleet of Ukrainian

drones launched and Russia alleges that

these drones were targeted towards where

where President Putin was and it was an

assassination account. Putin actually

complained to Trump which then

complained to President Zalinski. Now,

the US it seems that reports suggest

have determined that this actually was

not an assassination attempt that maybe

they were targeting other military

installations in in Russia. But at the

end of the day, if Russia is claiming

this and perceiving this, then again,

that is an escalation in the Russia

Ukraine war and suggests that peace

talks are not going well and maybe it

could serve as a pretext for further

military escalation by the Russians.

Moving on to the Middle East, also

another very interesting development.

Now, you had Prime Minister Benjamin

Netanyahu of Israel basically just, you

know, fly down to Mara Lago, hang out

with the president the fifth time. He's

done this this year. That's kind of a

record. And what usually happens, of

course, is that after these discussions,

you have some kind of geopolitical

escalation.

Now, it's no secret what Prime Minister

Netanyahu would like is to have more

military action on Iran, but of course,

they can't do that without the support

of the United States. Last time they

attacked Iran, Iran retaliated with

missiles and a lot of those missiles

were intercepted by US um US support.

And so they really need the US to

protect them to be able to attack Iran.

Now reporting suggests that right now

what u Netanyahu is saying is that you

know Iran they have these ballistic

missiles. They can attack Israel. They

are a threat to us. We got to go and

take out that capability. Now notice now

that the goalposts are moving. initially

was that Iran could never have nuclear

weapons and so we need to take that out

and you know President Trump went and

bombed the nuclear facilities in Iran.

Now the standard is being lowered. It's

not that Iran can have nuclear weapons

is that they can't have ballistic

missiles and if uh the president agrees

with that lower standard then yes that

he's greenlighting more military attacks

in the Middle East.

But of course, the most interesting

geopolitical action we have is in Latin

America. Remember, not too long ago, the

Trump administration told the entire

world that Latin America belongs to us.

So, we are going to call the shots here.

Now, earlier in the week, uh the

president surprised the world by

revealing that the CIA actually carried

covert operations on Venezuelan soil.

Now, everyone knew that the US had a

Navy presence right outside of

Venezuela, that they had been blowing up

Venezuelan boats, but until earlier in

the week, they had not uh done anything

on Venezuelan soil. So, that was a very

clear escalation. A CIA bombing

facilities in Venezuelan ports.

This morning, it was revealed that

around 2:00 a.m., US forces basically

flew in uh to where President Maduro of

Venezuela was staying. uh basically

kidnapped him and his wife, put him on a

ship, the USS Euima, and that ship is

now on route to New York where uh

President Madura will face the US

courts. Now, throughout this operation,

uh it was it was only a few hours. There

were reportedly zero US casualties. One

US helicopter was hit, but that US

copter continued to fly when it's able

to return uh to to its uh to the ships.

So this was an amazing amazingly precise

attack and amazingly successful.

Now by orchestrating this it all by

guarantees that the Maduro regime has

collapsed and that there will be regime

change in Venezuela.

So, uh, this is definitely not in line

with the America first ethos that

President Trump often campaigned on

where the US would not, um, you know,

intervene in foreign wars, nation

building and all that. But it does fall

under the Trump coralary of having more

power over the Latin America. Now, why

does Trump doing this? I think some some

context is helpful here. So, Venezuela,

if you look on a map, is actually a

pretty large country. uh it's in uh

South America. It's the land mass is

about say 20 30% larger than Texas and

has a population of about 30 million

about the same population as the state

of Texas. Venezuela of course is most

known for having a lot of oil. According

to studies it has the most uh the

largest oil reproven oil reserves in the

entire world. So it has the potential to

be an oil superpower. However, if you

look at its output data over the past

decade, you'll notice that Venezuela is

actually outputting much less oil today

than it did a decade ago. So, that

decline in oil output largely has to do

with just the tremendous tremendous

mismanagement of the Venezuelan economy.

If you look at a chart of Venezuelan

GDP, you know, a decade ago, things were

actually going really well. Now, oil

prices were going up. uh Venezuela was

pumping a lot of oil and the country the

people were getting much wealthier. Now

that all ran into problems when the oil

price of oil collapsed and then you had

new change in regime a more left-wing

regime came to power in Caracus and they

did not do a very good job and what you

see is the complete implosion of the

Venezuelan economy. According to the

United Nations, about 20% of Venezuelans

actually fled the country. Now, that's

like 7 million people. Uh, viral videos

at the time would show that many

Venezuelans were basically starving. You

can see them throwing rocks at cows,

trying to kill the cow to eat them. It

was very much a humanitarian disaster.

Now, you had Venezuelan refugees flood

the entire world. You have Venezuelan

refugees in Chile, um, in Colombia,

Mexico, and of course in the United

States. Uh this was a tremendous

tremendous catastrophe. You had a

country that was doing on the upswing

just just totally destroyed and of

course the people Venezuelans did not

like that and ideally there would be a

mechanism for the people to change

course to have a new government. Of

course that was naturally through the

ballot box. Now Venezuela did recently a

few years ago have an election by all

accounts. President Maduro lost that

election in a big way for obvious

reasons. Um but uh you know he just

decided that he didn't want to leave and

so basically became a de facto dictator

of Venezuela. So this is a guy who did a

terrible job ruined the lives of

millions of people ruined his country

and it's just not very popular. However

though and of course he's uh not friends

with the Trump administration is friends

with Russia, Iran and China. basically

friends with people who are not uh with

team Trump, team USA.

So it seems like the motivation for this

uh move is twofold. One of course is to

strengthen US influence in uh Latin

America

and secondly of course is for oil. Now,

in his uh in his press conference after

his president is is totally blunt. You

know, it's it's not like President Bush

going into Iraq and then not so much

telling you about the oil, although a

lot of US companies having big oil

contracts. It's that the US president is

telling you today, President Trump is

telling you today that Venezuela has

lots of oil and the US is going to have

control over it and it's this uh

operation in Venezuela is not going to

cost taxpayer money because uh the US is

going to get paid through oil. So, it's

very open about it. The US would like to

have more control over Venezuelan

resources. Now, a coup attempt has

always been telegraphed. Again, you had

that military flotillaa outside of

Venezuela. You also had the US

intelligence operations smuggle out

Venezuelan opposition leader Machado

smuggled her out into um to Sweden where

she could get her, you know, Nobel Peace

Prize, have more international

legitimacy. But I think the US has

basically changed its mind on that. She

was, you know, probably a plan B or plan

A or plan C or something like that. But

maybe looking at how successful the

operation was today, the president very

openly told everyone that actually the

US will run Venezuela.

We don't want to be involved with uh

having somebody else get in and we have

the same situation that we had for the

last long period of years. So we are

going to run the country until such time

as we can do a safe, proper and

judicious

transition. Eventually,

Trump is saying that he will give

Venezuelan back, but uh you know, this

could be years or decades, and no one

knows when.

So, it looks like overnight it's not

just it was regime change of Venezuela,

but the US has a new territory. It will

be run by um you know, who knows, new

governor, new prime minister, protector

of Venezuela. I'm not sure. But for the

foreseeable future, uh, Venezuela will

be under US control and eventually it

looks like there's going to be more

investment into Venezuela and there's

going to be more oil flowing out. So,

this this is a big big big geopolitical

move and it has some winners and losers.

The clear winners of course are the US

oil companies. They're going to be able

to go in and uh operate on those

resources. Chevron was already there.

Uh, it looks like other people are going

to come in as well. So that's very good

for the US oil industry. It's going to

be very good for inflation and the

global consumer. If you have Venezuela

there with all this oil, but just kind

of not having the infrastructure to be

able to extract it. Now the supply of

oil is going to go up. That's going to

mean down pressure on oil prices. Not

immediately, of course. It's going to

take time to be able to have the

facility set up, but you know, in a few

years, you can easily see the supply of

oil go up, oil prices uh go down. So

this is u good for again the war on

inflation. If you remember in January of

2025, Trump actually openly said that

his plan to get inflation lower is to

get more oil and you have OPEC pump more

oil. You have oil prices down a lot and

now it looks like this is um this is

maybe another part of that.

You do have clear losers as well. Now,

of course, aside from President Moduro,

who is now, it seems, on a ship, uh,

you know, it seems like if you look at a

chart where Venezuela was selling its

oil, a lot of was going to China. Now,

Venezuela was a staunch ally of China,

of Russia, and of Iran. And so now that

team is losing a big ally. Now, China is

still going to be able to get oil from

Venezuela. Now, the president was very

clear that, you know, we're going to

pump more oil and we're going to sell it

to everyone. So, China is still going to

get more oil, but they probably won't

get it at the same discounted price.

Venezuelan oil was sanctioned. It really

couldn't go to the global market. And

so, they had to sell it at a discount to

other people, similar to what Russia

does, right? Russia oil was sanctioned.

They sell it at a discount to other

countries. And so, uh, China was getting

discounted oil. Now, they're not getting

discounted oil anymore. China was

friends with Venezuela. In fact, reports

suggest that they had a Chinese

delegation being sent to Venezuela just

in a few hours before the operation.

Now, it looks like they've lost a key

ally in Latin America.

Um, this of course could also point to

trouble for uh allies of uh President

Maduro, say Cuba, for example, longtime

thorn in the side of the US. You know,

doesn't have any oil but uh not friends

with the US. And of course, um,

Secretary of State Marco Rubio is of

Cuban descent. And of course, uh, the

Cuban community in the US really doesn't

like what's happening in Cuba. And so I

think he should be a little bit worried.

If you are Iran, you could probably be

upset as well. You're losing another

ally. But it also tells you very clearly

that the president is a man of action.

He says many things, but he also has

done many things as well. um many things

other presidents would not have done

right directly strike Iran bombs huge

huge clampdown on illegal immigration

everywhere in the country of course

strikes on Venezuela but he's also said

other things that he hasn't done yet so

let's say that you are the prime

minister of Denmark who of course

controls Greenland president has said

that you know Greenland is very very

important to us from a national security

standpoint so does that increase the

probability that you know maybe one day

Greenland will have to change hands as

well. Of course, the president also made

comments about Canada and we we don't

know what will happen there. One thing

to note though is that strategically

speaking, the oil that Venezuela pumps

is heavy crude. That's the same stuff

that Canada pumps to as well. And right

now, Canada has one captain consumer,

the United States. And the United States

is relying upon Canadian heavy crude as

well. That's what the refiners are

optimized for. If you have another

source of heavy crude come online from

Venezuela, that really really decreases

the bargaining power that Canadian oil

companies have. And of course, that is a

big problem from a geostrategic

way for for Canada and maybe why Prime

Minister Mark Carney is eager to

greenlight another pipeline so that they

have other outlets for Canadian oil.

So, one other thing, of course, we have

to think about is that what other thing

has Trump um kind of obsessed about over

and over again, um that's lower interest

rates. And as I wrote last week, my

blog, the market is really not pricing

in that Trump will get his way. I the

market really doesn't seem to think

that, you know, prices interest rates

the same way they did months ago. So

they don't really place probability on

President Trump actually getting his way

and able to lower interest rates even

though the president has you know done a

lot of really obvious moves to try to do

that. So I think that continues to be a

significant mispricing of the market. So

uh president has a track record of uh

acting on things that he cares a lot

about. So markets will be exciting this

next week. Guessing that you know I

since it was so effortless. Maybe not

even that big of an impact, but you

know, if you have lower oil prices in

the future, maybe that's a little bit

downward pressure on inflation.

Okay, the second thing that I want to

talk about, of course, is silver. Now,

last week we talked about how silver was

absolutely surging, was up 10% a week.

Last Friday, when you do something like

that, it looks like an obvious obvious

blowoff top. And earlier in the week, we

did see silver totally, totally implode.

Now, there are two concrete drivers of

this. One of course uh is that well

actually one concrete driver of this and

another thing we'll talk about and that

is of course higher margins from the

CME. So professional speculators in

silver usually trade through futures and

when you trade through silver futures

you're operating on an regulated

exchange. Your counterparty is the

exchange. So a standard future futures

contract for silver gives you control

over 5,000 ounces of silver. So that's,

you know, about 30 uh $350,000 worth of

silver.

Now, in order to have control over a

silver contract, you have to put up a

little bit of margin with the w with the

exchange. The reason for this is that

the exchange wants to make sure that you

have money uh to pay in case the

contract goes against you. So let's say

that you bought one silver contract and

then suddenly the price declines. How

does the exchange know that you are able

to uh um you you are able to pay the

exchange uh in the case in case that uh

you know you continue to lose money or

you're underwater in your contract. So

the exchange collects a little bit of

margin uh just to make sure that uh you

don't default. Now the amount of margin

the exchange has to connect collect is

in proportion uh to the size of the

market value of the contract and also to

the volatility of the contract. as

silver prices went from say50 to $75 in

a very volatile way. You know there you

need to put down more margin uh because

from an exchange standpoint there's a

higher probability that you could have

big big volatile moves suddenly leaving

the exchange exposed to counterparty

risk. That is to say you could default

if silver were to suddenly implode.

So exchange very naturally raises

margins and what that means that you

have to put up more money to be able to

have control over a silver contract. Now

if you look at the margin hikes it looks

like it went from you know 20ome,000 to

30 some thousand. Uh when you raise the

margin some people say you're a DGEN who

has been levered up uh with silver

futures will have to put up more money

to be able to maintain their position.

Sometimes they don't have that much

money and so when that happens they get

liquidated and when they get liquidated

you know the price of the contract goes

down maybe that also compels other

people to get liquidated as well. So

ultimately it's kind of a mechanical

thing where you have u basically a

liquidity squeeze where the really

really big dens are squeezed out and

this happens a lot if you look at any

type of um speculation in the 1980s when

you have the Hunts brothers squeezing

silver to dizzying heights the exchanges

also continue to raise their margin

again this is not necessarily some sort

of conspiracy or anything like that it's

just totally mechanical the exchange you

is dealing with a more volatile

commodity. It's trying to protect itself

from defaults and so it obviously has to

raise margins. There's nothing uh

nefarious about it. Sometimes there is

back in the 1980s uh they try to um they

changed the rules so that you can not

buy silver, you could only sell. And so

of course that's putting that put a lot

of downward pressure on silver prices

and did ultimately precipitate a huge

implosion. They're not doing that today.

So far by all accounts it's just normal

functioning of how an exchange works.

And obviously when you have an exchange

hiking margins that's going to put

downward pressure on the prices. How

much is going to depend on how levered

it was. And obviously if you're going up

10% a day that's a lot of leverage. And

so you also imploded 10% a day.

The second big news came out of China

and that China is going to more exercise

more control over how it exports silver.

Now, China has already been doing this

with all sorts of commodities. Remember,

they have their, you know, control over

rare earth and so forth. Now, it seems

like they're extending this export

control regime to silver. I don't think

this should be a surprise, because China

is the largest manufacturing power in

the world. and silver, it's not just for

speculation, it's also a key industrial

input. And so if you have all these

speculators in the west kind of making

silver prices really high, that has a

real impact on the Chinese economy,

Chinese businesses and so forth, it

makes uh it makes basically things like

solar panels more expensive. And so if

there is a potential shortage or some

kind of weird speculation, of course,

the Chinese are going to be a bit more

careful since this is um maybe even a

national security issue. Now, China is

the second largest uh minor of silver,

the largest is Mexico. So when they put

on these expert controls on silver, so

what that means is that in order to sell

expert silver, you're going to have to

have a license from the Chinese

authorities. They're going to have more

control over this. What that means is

very clearly that outside of China maybe

the supply of silver is going to be a

little bit less uh because the Chinese

export of silver is going to be more

controlled. Now the immediate impact of

this should be to have a wedge in silver

prices where Chinese silver prices are

going to be a little bit lower and

global price of silver a little bit

higher since you have less Chinese

supply. So this is a a bullish

development for silver prices but was

not able to overcome of course the uh

implosion you had from higher margin

rates. Now there is always a question

whether or not the US or maybe other

countries will also declare silver to be

uh you know commodity of national

importance and then also put on their

own bears. So that's something to watch

out as well. So if you look at silver

prices, they classically follow this

formation where they kind of surge to uh

comically high levels and then just

implode. There is a possibility that

this is what's happening right now. We

could just totally implode. Uh but my

gut says that, you know, and I hate

saying this, that maybe there's

something about different this time. And

so I I personally think that the highs

for silver are not yet in for the year.

Although when you have all this

technical damage, you do usually need to

digest a while. Not necessarily a long

time. Remember when gold had that big

blowoff blowoff, it came down a little

bit, steadied, steadied, and then just

recently made new all-time highs. All

right, so that's all I prepared for

today. Again, this is just year one in

the Trump administration. We have three

more years. Maybe the map, the global

map in a few years will be different

than the one today. All right, talk to

you guys next week.

the world and in each geopolitical

theater we had some pretty big

developments from the far east to Latin

America to Europe to the Middle East.

Starting with the Far East. So earlier

in the week, last week, we had China

make pretty big military exercises all

around Taiwan. And what they seem to be,

you know, kind of projecting is that

they could easily blockade Taiwan. And

if they were to blockade Taiwan, again,

Taiwan is an island, so it's not

self-sufficient in many things like oil.

Uh the ch the Taiwanese economy would

easily crumble and um it would be the

end of that pretty quickly. Now the

broader context of course is that not

too long ago you had Prime Minister

Tekachi of Japan make supportive

statements for Taiwan that really

angered the Chinese and you know

President Trump actually seemed to

reportedly intervene to maybe just

politely suggest the Japanese prime

minister to maybe moderate her stance a

little bit. Although by all reports uh

Japan still stands in support of Taiwan

in case of potential military conflict.

For context here, uh Taiwan was once a

Japanese colony. Many people in Taiwan

remember that period positively and look

upon Japan in a very positive light. But

of course, if you recall from the United

States's most recent national security

strategy, the US is basically viewing

the world as multipolar where every

country has your sphere of influence.

Very clearly the United States will have

a Trump correlary to the Monroal

doctrine. Latin America, North America

will be under the United States. And you

know, I think the the implication of

course is that the Far East, at least

when it comes to Taiwan, will be under

China and maybe Russia will have

Ukraine.

Now, moving on to Eastern Europe.

Earlier in the week, uh Russia loudly

complained that uh Ukraine will actually

launched a very mass-cale assassination

attempt on President Putin. Apparently,

there was a large fleet of Ukrainian

drones launched and Russia alleges that

these drones were targeted towards where

where President Putin was and it was an

assassination account. Putin actually

complained to Trump which then

complained to President Zalinski. Now,

the US it seems that reports suggest

have determined that this actually was

not an assassination attempt that maybe

they were targeting other military

installations in in Russia. But at the

end of the day, if Russia is claiming

this and perceiving this, then again,

that is an escalation in the Russia

Ukraine war and suggests that peace

talks are not going well and maybe it

could serve as a pretext for further

military escalation by the Russians.

Moving on to the Middle East, also

another very interesting development.

Now, you had Prime Minister Benjamin

Netanyahu of Israel basically just, you

know, fly down to Mara Lago, hang out

with the president the fifth time. He's

done this this year. That's kind of a

record. And what usually happens, of

course, is that after these discussions,

you have some kind of geopolitical

escalation.

Now, it's no secret what Prime Minister

Netanyahu would like is to have more

military action on Iran, but of course,

they can't do that without the support

of the United States. Last time they

attacked Iran, Iran retaliated with

missiles and a lot of those missiles

were intercepted by US um US support.

And so they really need the US to

protect them to be able to attack Iran.

Now reporting suggests that right now

what u Netanyahu is saying is that you

know Iran they have these ballistic

missiles. They can attack Israel. They

are a threat to us. We got to go and

take out that capability. Now notice now

that the goalposts are moving. initially

was that Iran could never have nuclear

weapons and so we need to take that out

and you know President Trump went and

bombed the nuclear facilities in Iran.

Now the standard is being lowered. It's

not that Iran can have nuclear weapons

is that they can't have ballistic

missiles and if uh the president agrees

with that lower standard then yes that

he's greenlighting more military attacks

in the Middle East.

and what it all means for the economy

and for markets. And also we have to

talk a little bit about silver as well.

So silver totally imploded uh in the

beginning of the week. There are some

concrete causes for that although it did

recover a little bit more. So first

though let's talk about what happened in

the world of geopolitics.

Okay, the second thing that I want to

talk about, of course, is silver. Now,

last week we talked about how silver was

absolutely surging, was up 10% a week.

Last Friday, when you do something like

that, it looks like an obvious obvious

blowoff top. And earlier in the week, we

did see silver totally, totally implode.

Now, there are two concrete drivers of

this. One of course uh is that well

actually one concrete driver of this and

another thing we'll talk about and that

is of course higher margins from the

CME. So professional speculators in

silver usually trade through futures and

when you trade through silver futures

you're operating on an regulated

exchange. Your counterparty is the

exchange. So a standard future futures

contract for silver gives you control

over 5,000 ounces of silver. So that's,

you know, about 30 uh $350,000 worth of

silver.

Now, in order to have control over a

silver contract, you have to put up a

little bit of margin with the w with the

exchange. The reason for this is that

the exchange wants to make sure that you

have money uh to pay in case the

contract goes against you. So let's say

that you bought one silver contract and

then suddenly the price declines. How

does the exchange know that you are able

to uh um you you are able to pay the

exchange uh in the case in case that uh

you know you continue to lose money or

you're underwater in your contract. So

the exchange collects a little bit of

margin uh just to make sure that uh you

don't default. Now the amount of margin

the exchange has to connect collect is

in proportion uh to the size of the

market value of the contract and also to

the volatility of the contract. as

silver prices went from say50 to $75 in

a very volatile way. You know there you

need to put down more margin uh because

from an exchange standpoint there's a

higher probability that you could have

big big volatile moves suddenly leaving

the exchange exposed to counterparty

risk. That is to say you could default

if silver were to suddenly implode.

So exchange very naturally raises

margins and what that means that you

have to put up more money to be able to

have control over a silver contract. Now

if you look at the margin hikes it looks

like it went from you know 20ome,000 to

30 some thousand. Uh when you raise the

margin some people say you're a DGEN who

has been levered up uh with silver

futures will have to put up more money

to be able to maintain their position.

Sometimes they don't have that much

money and so when that happens they get

liquidated and when they get liquidated

you know the price of the contract goes

down maybe that also compels other

people to get liquidated as well. So

ultimately it's kind of a mechanical

thing where you have u basically a

liquidity squeeze where the really

really big dens are squeezed out and

this happens a lot if you look at any

type of um speculation in the 1980s when

you have the Hunts brothers squeezing

silver to dizzying heights the exchanges

also continue to raise their margin

again this is not necessarily some sort

of conspiracy or anything like that it's

just totally mechanical the exchange you

is dealing with a more volatile

commodity. It's trying to protect itself

from defaults and so it obviously has to

raise margins. There's nothing uh

nefarious about it. Sometimes there is

back in the 1980s uh they try to um they

changed the rules so that you can not

buy silver, you could only sell. And so

of course that's putting that put a lot

of downward pressure on silver prices

and did ultimately precipitate a huge

implosion. They're not doing that today.

So far by all accounts it's just normal

functioning of how an exchange works.

And obviously when you have an exchange

hiking margins that's going to put

downward pressure on the prices. How

much is going to depend on how levered

it was. And obviously if you're going up

10% a day that's a lot of leverage. And

so you also imploded 10% a day.

The second big news came out of China

and that China is going to more exercise

more control over how it exports silver.

Now, China has already been doing this

with all sorts of commodities. Remember,

they have their, you know, control over

rare earth and so forth. Now, it seems

like they're extending this export

control regime to silver. I don't think

this should be a surprise, because China

is the largest manufacturing power in

the world. and silver, it's not just for

speculation, it's also a key industrial

input. And so if you have all these

speculators in the west kind of making

silver prices really high, that has a

real impact on the Chinese economy,

Chinese businesses and so forth, it

makes uh it makes basically things like

solar panels more expensive. And so if

there is a potential shortage or some

kind of weird speculation, of course,

the Chinese are going to be a bit more

careful since this is um maybe even a

national security issue. Now, China is

the second largest uh minor of silver,

the largest is Mexico. So when they put

on these expert controls on silver, so

what that means is that in order to sell

expert silver, you're going to have to

have a license from the Chinese

authorities. They're going to have more

control over this. What that means is

very clearly that outside of China maybe

the supply of silver is going to be a

little bit less uh because the Chinese

export of silver is going to be more

controlled. Now the immediate impact of

this should be to have a wedge in silver

prices where Chinese silver prices are

going to be a little bit lower and

global price of silver a little bit

higher since you have less Chinese

supply. So this is a a bullish

development for silver prices but was

not able to overcome of course the uh

implosion you had from higher margin

rates. Now there is always a question

whether or not the US or maybe other

countries will also declare silver to be

uh you know commodity of national

importance and then also put on their

own bears. So that's something to watch

out as well. So if you look at silver

prices, they classically follow this

formation where they kind of surge to uh

comically high levels and then just

implode. There is a possibility that

this is what's happening right now. We

could just totally implode. Uh but my

gut says that, you know, and I hate

saying this, that maybe there's

something about different this time. And

so I I personally think that the highs

for silver are not yet in for the year.

Although when you have all this

technical damage, you do usually need to

digest a while. Not necessarily a long

time. Remember when gold had that big

blowoff blowoff, it came down a little

bit, steadied, steadied, and then just

recently made new all-time highs. All

right, so that's all I prepared for

today. Again, this is just year one in

the Trump administration. We have three

more years. Maybe the map, the global

map in a few years will be different

than the one today. All right, talk to

you guys next week.

world that Latin America belongs to us.

So, we are going to call the shots here.

Now, earlier in the week, uh the

president surprised the world by

revealing that the CIA actually carried

covert operations on Venezuelan soil.

Now, everyone knew that the US had a

Navy presence right outside of

Venezuela, that they had been blowing up

Venezuelan boats, but until earlier in

the week, they had not uh done anything

on Venezuelan soil. So, that was a very

clear escalation. A CIA bombing

facilities in Venezuelan ports.

This morning, it was revealed that

around 2:00 a.m., US forces basically

flew in uh to where President Maduro of

Venezuela was staying. uh basically

kidnapped him and his wife, put him on a

ship, the USS Euima, and that ship is

now on route to New York where uh

President Madura will face the US

courts. Now, throughout this operation,

uh it was it was only a few hours. There

were reportedly zero US casualties. One

US helicopter was hit, but that US

copter continued to fly when it's able

to return uh to to its uh to the ships.

So this was an amazing amazingly precise

attack and amazingly successful.

Now by orchestrating this it all by

guarantees that the Maduro regime has

collapsed and that there will be regime

change in Venezuela.

So, uh, this is definitely not in line

with the America first ethos that

President Trump often campaigned on

where the US would not, um, you know,

intervene in foreign wars, nation

building and all that. But it does fall

under the Trump coralary of having more

power over the Latin America. Now, why

does Trump doing this? I think some some

context is helpful here. So, Venezuela,

if you look on a map, is actually a

pretty large country. uh it's in uh

South America. It's the land mass is

about say 20 30% larger than Texas and

has a population of about 30 million

about the same population as the state

of Texas. Venezuela of course is most

known for having a lot of oil. According

to studies it has the most uh the

largest oil reproven oil reserves in the

entire world. So it has the potential to

be an oil superpower. However, if you

look at its output data over the past

decade, you'll notice that Venezuela is

actually outputting much less oil today

than it did a decade ago. So, that

decline in oil output largely has to do

with just the tremendous tremendous

mismanagement of the Venezuelan economy.

If you look at a chart of Venezuelan

GDP, you know, a decade ago, things were

actually going really well. Now, oil

prices were going up. uh Venezuela was

pumping a lot of oil and the country the

people were getting much wealthier. Now

that all ran into problems when the oil

price of oil collapsed and then you had

new change in regime a more left-wing

regime came to power in Caracus and they

did not do a very good job and what you

see is the complete implosion of the

Venezuelan economy. According to the

United Nations, about 20% of Venezuelans

actually fled the country. Now, that's

like 7 million people. Uh, viral videos

at the time would show that many

Venezuelans were basically starving. You

can see them throwing rocks at cows,

trying to kill the cow to eat them. It

was very much a humanitarian disaster.

Now, you had Venezuelan refugees flood

the entire world. You have Venezuelan

refugees in Chile, um, in Colombia,

Mexico, and of course in the United

States. Uh this was a tremendous

tremendous catastrophe. You had a

country that was doing on the upswing

just just totally destroyed and of

course the people Venezuelans did not

like that and ideally there would be a

mechanism for the people to change

course to have a new government. Of

course that was naturally through the

ballot box. Now Venezuela did recently a

few years ago have an election by all

accounts. President Maduro lost that

election in a big way for obvious

reasons. Um but uh you know he just

decided that he didn't want to leave and

so basically became a de facto dictator

of Venezuela. So this is a guy who did a

terrible job ruined the lives of

millions of people ruined his country

and it's just not very popular. However

though and of course he's uh not friends

with the Trump administration is friends

with Russia, Iran and China. basically

friends with people who are not uh with

team Trump, team USA.

So it seems like the motivation for this

uh move is twofold. One of course is to

strengthen US influence in uh Latin

America

and secondly of course is for oil. Now,

in his uh in his press conference after

his president is is totally blunt. You

know, it's it's not like President Bush

going into Iraq and then not so much

telling you about the oil, although a

lot of US companies having big oil

contracts. It's that the US president is

telling you today, President Trump is

telling you today that Venezuela has

lots of oil and the US is going to have

control over it and it's this uh

operation in Venezuela is not going to

cost taxpayer money because uh the US is

going to get paid through oil. So, it's

very open about it. The US would like to

have more control over Venezuelan

resources. Now, a coup attempt has

always been telegraphed. Again, you had

that military flotillaa outside of

Venezuela. You also had the US

intelligence operations smuggle out

Venezuelan opposition leader Machado

smuggled her out into um to Sweden where

she could get her, you know, Nobel Peace

Prize, have more international

legitimacy. But I think the US has

basically changed its mind on that. She

was, you know, probably a plan B or plan

A or plan C or something like that. But

maybe looking at how successful the

operation was today, the president very

openly told everyone that actually the

US will run Venezuela.

We don't want to be involved with uh

having somebody else get in and we have

the same situation that we had for the

last long period of years. So we are

going to run the country until such time

as we can do a safe, proper and

judicious

transition. Eventually,

Trump is saying that he will give

Venezuelan back, but uh you know, this

could be years or decades, and no one

knows when.

So, it looks like overnight it's not

just it was regime change of Venezuela,

but the US has a new territory. It will

be run by um you know, who knows, new

governor, new prime minister, protector

of Venezuela. I'm not sure. But for the

foreseeable future, uh, Venezuela will

be under US control and eventually it

looks like there's going to be more

investment into Venezuela and there's

going to be more oil flowing out. So,

this this is a big big big geopolitical

move and it has some winners and losers.

The clear winners of course are the US

oil companies. They're going to be able

to go in and uh operate on those

resources. Chevron was already there.

Uh, it looks like other people are going

to come in as well. So that's very good

for the US oil industry. It's going to

be very good for inflation and the

global consumer. If you have Venezuela

there with all this oil, but just kind

of not having the infrastructure to be

able to extract it. Now the supply of

oil is going to go up. That's going to

mean down pressure on oil prices. Not

immediately, of course. It's going to

take time to be able to have the

facility set up, but you know, in a few

years, you can easily see the supply of

oil go up, oil prices uh go down. So

this is u good for again the war on

inflation. If you remember in January of

2025, Trump actually openly said that

his plan to get inflation lower is to

get more oil and you have OPEC pump more

oil. You have oil prices down a lot and

now it looks like this is um this is

maybe another part of that.

You do have clear losers as well. Now,

of course, aside from President Moduro,

who is now, it seems, on a ship, uh,

you know, it seems like if you look at a

chart where Venezuela was selling its

oil, a lot of was going to China. Now,

Venezuela was a staunch ally of China,

of Russia, and of Iran. And so now that

team is losing a big ally. Now, China is

still going to be able to get oil from

Venezuela. Now, the president was very

clear that, you know, we're going to

pump more oil and we're going to sell it

to everyone. So, China is still going to

get more oil, but they probably won't

get it at the same discounted price.

Venezuelan oil was sanctioned. It really

couldn't go to the global market. And

so, they had to sell it at a discount to

other people, similar to what Russia

does, right? Russia oil was sanctioned.

They sell it at a discount to other

countries. And so, uh, China was getting

discounted oil. Now, they're not getting

discounted oil anymore. China was

friends with Venezuela. In fact, reports

suggest that they had a Chinese

delegation being sent to Venezuela just

in a few hours before the operation.

Now, it looks like they've lost a key

ally in Latin America.

Um, this of course could also point to

trouble for uh allies of uh President

Maduro, say Cuba, for example, longtime

thorn in the side of the US. You know,

doesn't have any oil but uh not friends

with the US. And of course, um,

Secretary of State Marco Rubio is of

Cuban descent. And of course, uh, the

Cuban community in the US really doesn't

like what's happening in Cuba. And so I

think he should be a little bit worried.

If you are Iran, you could probably be

upset as well. You're losing another

ally. But it also tells you very clearly

that the president is a man of action.

He says many things, but he also has

done many things as well. um many things

other presidents would not have done

right directly strike Iran bombs huge

huge clampdown on illegal immigration

everywhere in the country of course

strikes on Venezuela but he's also said

other things that he hasn't done yet so

let's say that you are the prime

minister of Denmark who of course

controls Greenland president has said

that you know Greenland is very very

important to us from a national security

standpoint so does that increase the

probability that you know maybe one day

Greenland will have to change hands as

well. Of course, the president also made

comments about Canada and we we don't

know what will happen there. One thing

to note though is that strategically

speaking, the oil that Venezuela pumps

is heavy crude. That's the same stuff

that Canada pumps to as well. And right

now, Canada has one captain consumer,

the United States. And the United States

is relying upon Canadian heavy crude as

well. That's what the refiners are

optimized for. If you have another

source of heavy crude come online from

Venezuela, that really really decreases

the bargaining power that Canadian oil

companies have. And of course, that is a

big problem from a geostrategic

way for for Canada and maybe why Prime

Minister Mark Carney is eager to

greenlight another pipeline so that they

have other outlets for Canadian oil.

So, one other thing, of course, we have

to think about is that what other thing

has Trump um kind of obsessed about over

and over again, um that's lower interest

rates. And as I wrote last week, my

blog, the market is really not pricing

in that Trump will get his way. I the

market really doesn't seem to think

that, you know, prices interest rates

the same way they did months ago. So

they don't really place probability on

President Trump actually getting his way

and able to lower interest rates even

though the president has you know done a

lot of really obvious moves to try to do

that. So I think that continues to be a

significant mispricing of the market. So

uh president has a track record of uh

acting on things that he cares a lot

about. So markets will be exciting this

next week. Guessing that you know I

since it was so effortless. Maybe not

even that big of an impact, but you

know, if you have lower oil prices in

the future, maybe that's a little bit

downward pressure on inflation.