Golden WARS

Just came out: US commercial oil inventories. They expected -1.7 million barrels, but got not a decline, but a record increase of +17 million barrels. The Americans got rattled and started vacuuming up all the oil from the half-open strait (it's operating…

Just came out: US commercial oil inventories. They expected -1.7 million barrels, but got not a decline, but a record increase of +17 million barrels. The Americans got rattled and started vacuuming up all the oil from the half-open strait (it's operating at 8-10% of normal). Plus Trump is pouring SPR into commercial reserves. They're doing everything to knock down the gasoline price before the midterm elections. Meanwhile, Japan, South Korea, and Europe are sitting on a starvation diet. The situation with Japan and its debt nuclear bomb is getting more interesting by the day. I think this pivot into being oil hoarders, from people who, just six months ago, wanted to become an energy superpower — says a lot about just how deep in the hole they actually are.

So: the SPR has dropped below 300 million barrels. Trump has 48 million barrels left before hitting the mark where further drawdowns would need Congressional approval. Trump will stretch it out right up to the midterms on this margin. And after that? Honestly, it's not clear what his plan is.

Iran states that the Strait of Hormuz will remain closed until 2029, the end of Trump's presidential term, unless Trump accepts all of Iran's demands, according to a senior Iranian source and Majid Shakeri, an advisor to parliament speaker Ghalibaf. Iran's demands, laid out in the US capitulation document, remain unchanged: $300 billion in compensation, the return of up to $100 billion in frozen assets, the lifting of all sanctions, the withdrawal of American troops from the entire region, and an end to the naval blockade. What impressively ahead-of-schedule progress Trump's Iran plan is making.

Musk threatened the shorts (a third of the free float is currently shorted, that's a huge amount), promising to punish everyone once the earnings dropped. Started talking up AI satellites and the friendship with Nvidia. In the end, it didn't work. Things at SpaceX are getting worse by the week. They've now reached the ballpark of the IPO price, $115 (at one point dropped as low as $105). It went out at $135 (the upper bound). The nuance with this company is that even $20 a share would be a perfectly fair price.

🇰🇷 Koreans without a future. Again Millions of young Koreans bet everything on the stock market, because it was their only shot at changing their lives. Why did an entire generation get margin-called? • Housing is unaffordable • Living paycheck to paycheck And people took out loans en masse and entered the market with leverage, buying double-leveraged ETFs on the semiconductor sector, using 3:1 margin, and holding high-risk instruments as if they were risk-free assets. But now, according to Citi's estimate: • investors have already lost $38.7 billion (₩56 trillion); • 360,000+ margin accounts were liquidated; • 62% of those who lost practically everything are investors under 35. • The market has dropped more than 40% in 2 months. ₩38.6 trillion in leverage kicked off a domino effect: liquidations triggered more and more selling. But not everyone's been shaken out yet, so the decline continues.

THE RIDDLE OF THE DECADE… Is someone manipulating the oil market? The price of oil fell 8%, despite the loss of roughly 5 million barrels a day in supply. The answer, as always, isn't clear-cut, but we can get closer to understanding it. 🇨🇳 Let's start with the fact that in June 2026 China's oil import volume came in at 7.1 million barrels a day (41% lower compared to the same period last year). This tells us that one of the main oil buyers (whether deliberately or not) decided to radically cut consumption. Sure, you can talk about the energy transition and all that other nonsense, but, as we've covered here before, the situation in China's economy is rough. And second, it's time to admit that oil futures have turned into a global casino. The world has just rolled downhill into absurdity. And because of this, the oil market has become very easy to manipulate. Especially when there are far more open contracts than the actual current volumes in real sales. Even Trump and his family can pull off this kind of stuff calmly, for the benefit of their own enrichment. It's been said more than once: when an empire is dying, it sows chaos and ruin everywhere. Everyone talks about geopolitics, but the financial market is an important part of life too, so there as well America will keep trying to knock out anyone it doesn't like. But how long will the chaos stay controlled?

As a result of the SpaceX IPO scam, into which, by the way, they even stuffed Twitter -- the company raised $85 billion through share sales and $25 billion through a bond placement right after the IPO. $110 billion in cash entered the company. For perspective, the main financial AI bubble in the form of Oracle raised $48 billion this year. In addition: Nvidia and Microsoft, +$25 billion in debt each. Meta, +$52 billion in debt. Anthropic, +$30 billion. And ChatGPT alone, +$122 billion. The seemingly eternal beef between Musk and Altman, after the latter screwed Elon over, has ended with the Elon's return to the game. Musk managed to raise, on a fairly weak set of products, the same financing as the most hyped project of the generation, the one that literally became synonymous with personal AI. All of this was obvious, all of this was transparent. I think a significant portion of retail investors understood this was gambling, but in fairness many managed to make money on it too. All the IPO flippers are in the green. Some even 2x'd. Now there's money to develop a loss-making business and no need to worry about the share price.

Trump and Iran have resumed the war. Brent = $80. But the picture is such that Iran is already anticipating the expulsion of the US from the region, along with the eventual destruction of Israel sooner or later. They're seriously talking about an assassination attempt on Trump, as revenge for Khamenei. The US, meanwhile, is in the classic situation of a falling empire. Winning isn't happening, but you also can't just up and surrender. There are still missiles, infantrymen, aircraft carriers, and other states still buy your currency for now. So the meat grinder will go on for a long time. They'll definitely still try a ground operation. Otherwise, why are 20k to 60k infantrymen languishing in the region? Along the way they'll of course blow apart all those Bahrains, Qatars, and UAEs.

THE DARK SIDE OF CHINA 🇨🇳 The main economic struggle in the world, as it's pleasant to think, is the fight between the US and China, two different financial systems each with its own style of governance. However, it's not all that simple! For example, the chart above shows us May's dynamics across different sectors. And honestly, when it comes to consumer sovereignty, things are very bad for the Middle Kingdom… In detail, we see growth of almost 20% in exports, less than 10% in electronics production, and <5% in industrial output. By the way, the +5% dotted line is China's GDP growth target. 🚩 But beyond that it's really lousy: investment in infrastructure and construction, car sales, retail. The Chinese are saving money and not spending it as much as is needed for the figures to grow. 🔍 But let's dig further. While exports are still a working option, China is involuntarily dependent on whom it exports goods to. And if you dive into the stats, it becomes clear that the US and Western countries make up 37.5% of all Chinese exports (taking into account that part of the Chinese goods go to another country for additional processing and export to the West). So it turns out that China is supposedly fighting Western hegemony, but does so with great reluctance, because the current state of affairs keeps it afloat at least somehow. A small conclusion can be drawn: on key issues China has no way to turn away from the West and the US. Of course, to certain other matters they'll react in their own way, but their exports still feed them.

THE US IS OFFLOADING ONTO PRIVATE INVESTORS 💵 US foreign debt is now held more by private investors than by central banks. And that’s because central banks aren’t fools, and they’re not going to buy Treasuries like there’s no tomorrow. You can even see that…

The aggregate volume of US government bonds on the balance sheets of the world's central banks and other non-resident organizations, as a percentage of the total outstanding debt. There are practically no fools left. Trump forced Japan and the Gulf monarchies to sell too. Only the poor Europeans are left. But globally, US government debt is increasingly passing from foreigners into the ownership of the Fed.

THE US IS OFFLOADING ONTO PRIVATE INVESTORS 💵 US foreign debt is now held more by private investors than by central banks. And that’s because central banks aren’t fools, and they’re not going to buy Treasuries like there’s no tomorrow. You can even see that they’re holding roughly the same amount, around $4 trillion, while the private sector is loading up on this debt. 🥇 And now the second chart: central banks are buying gold, an absolute record since the start of the century. From which you can understand what kind of vision of the future they have: hard times ahead, no “safe harbor” anywhere, and US debt is unreliable. 💵 There’s your whole concept of the future. The US understands that “smart money” is turning away from its Treasuries, so a transfer of risk is happening from the big players to the retail crowd. And the States understand they need to package their debt nicely so it’s easy to sell, which is why digital assets are being popularized. What’s more, any crypto guy buying USDT is indirectly buying Treasuries, because Tether uses his money to buy exactly those Treasuries. So it turns out that popularizing crypto now actually plays into the hands of the US. And let’s not forget the story about how Tether and Circle ban anyone the US government demands 🙃 Well, as we’ve touched on before, a reshaping of global finance is underway. The hegemon versus the regions. Right now the regions are winning, but the hegemon shouldn’t be underestimated, it knows what else to do. The only thing is, as always, the private investor in the US will suffer badly.

The most interesting thing right now is Japan’s SPR. They hide it and publish figures very rarely. The last publication was May 9. At that point they had roughly 214 days left at approximately 1 million barrels per day. Some tankers headed to Japan this week, so they probably still have something like 160-170 days of reserve left. When it all approaches the minimum residual level around 50 days, the financial sector will simply explode and yet another pillar of the petrodollar (on the side of the oil buyer and donor to the dollar system) will collapse. Japan is already getting hit VERY hard. The yen collapsing, inflation rising, a record rate hike, debt at 240% of GDP which will blow apart if they keep raising rates. To save itself Japan has been selling off US government debt since March, which is undermining the dollar. US bond yields are rising. The market is convinced the Fed will actually raise rates this year, which will finish off the AI bubble.

🛢 A perfect illustration that global oil prices are completely paper-based and have lost touch with reality. American oil reserves are at a 10-year low, and on top of that the price keeps falling. This doesn’t line up with economic theory or basic common sense. From which you can conclude that the entire pricing system is inflated and every year has less and less connection with what’s actually happening. Although wait — oil at -$37 in 2020 was already signaling exactly this to us 🙂

Trump Is Being Rushed Into Capitulation Today the Korean KOSPI index dropped -9% in intraday trading. Two companies make up half that index: Samsung and SK Hynix. Both are chip companies, and all chip demand right now comes from AI. So something's wrong…

The terms of America's capitulation are just hilarious. Vance is sitting there not knowing what to come up with to somehow smooth over this catastrophe. Now he's saying the reparations to Iran will only go toward purchasing food from the US. Sure. Fine. They'll go there. The US will simply be shipping hundreds of thousands of tons of food to Iran for free, paying for it out of their money printer with ever-rapidly declining demand for the dollar. Meanwhile the money saved will go toward buying everything Iran actually needs from China and Russia, with whom Iran trades outside the dollar. Especially since everything useful you can buy from the US is made in China anyway. That said, I'm sure neither the Americans nor the Israelis are planning to pay anything, the low-grade skirmishes will continue, and the strait will be more closed than open. Like an old BMW that spends more time in the shop than on the road.

Trump, finding himself in such a catastrophic situation, doesn't even know what to do with this deal anymore. Under it he surrenders absolutely everything and on top of that pays massive reparations, reparations that are even larger than the damage he inflicted through his bombings in his second term.

Trump Is Being Rushed Into Capitulation Today the Korean KOSPI index dropped -9% in intraday trading. Two companies make up half that index: Samsung and SK Hynix. Both are chip companies, and all chip demand right now comes from AI. So something's wrong with AI? Turns out, yes. Since yesterday, American AI giants have been collapsing. The biggest drop is SpaceX. Whatever you might think, it's an AI company and was sold as one. The reason is simple: the human versus chip balance. In AI there's a concept called a token, the basic unit for reading and generating text. The more tokens you have available and the cheaper they are, the faster you can fire the meat bags and replace them with a computer. For now the balance still favors humans. For a huge number of tasks it's still easier to hire a person armed with AI rather than just AI with a prompt saying "figure it out yourself." An enormous number of tests show the following logic: a person does a task in 100 hours, a person with AI does it in 10 hours, AI alone does it in maybe 2 hours. The whole question is tokens and the final cost of execution. That is, cost of production. The shift from human to human-with-AI has become extremely economically efficient. But the shift from human-with-AI to just AI — not yet. For that you need insane amounts of computing power, energy, and fresh water for cooling. For now the entire "wow effect" of smart machines is sustained exclusively by American and Chinese investment pouring into those data centers. It works through a positive feedback loop: you put money in and a couple of years later you get explosive productivity growth. Over time, investment in anything else looks pale by comparison. AI delivers super-returns, but only because every possible dollar goes into AI. What matters is the dynamic itself — the speed at which computing capacity appears. If that breaks, the wow effect disappears, the entire over-subsidized AI token economy collapses, and people will go back to thinking AI can't outweigh a human with AI. Trump broke this beautiful cycle. First, the money for AI came largely from the Gulf monarchies, because someone poured into their ears the idea that they'd become the world's new tech hub and could escape oil dependency. And second, Trump destroyed the petrodollar. And absolutely all of American IT isn't just successful — it exists at all exclusively because of the money printer. Internally it's an incredibly inefficient structure. On top of all that, Trump replaced the "brakes" — his words — of Powell with the handsome Warsh, who in his very first public appearance hinted that he plans to make inflation great again. Meaning: if you're targeting 2% inflation, it should actually be 2%, not 4-6% like it's been for five years running. In short, Warsh is for preserving the dollar, not the American economy, which now holds together only on the AI bubble. And this same Trump has damaged dollar dominance so badly that now someone has to pay for it: through more expensive credit servicing. Which means dramatically less money for the stock market and the ultra-fragile AI bubble. Every lost war has to be paid for. First and foremost with your stock market. (Any resemblance to current events is purely coincidental.) And Trump is only buying time: 1-2 years — until the complete capitulation of the petrodollar and its link to China's Consumer Goods Dollar, which only ever worked in tandem. After this capitulation, the US will have to cede geopolitical positions in the Middle East, Israel will be dramatically weakened, and the populations of the Gulf monarchies might start asking: why do we need a government that bet on the wrong horse, screwed everything up, and lost all the money? The US meanwhile is dreaming that AI will replace everything. That there'll be an AI-crypto-dollar. But with these fundamentals, the bubble doesn't have long to live.