If You Might Go Down The Drain, Don’t Pull The Plug

Silver prices have gone nuts! Last year, silver prices jumped 144%, closing at $70.13/oz. On January 28, 2026, it closed at $114.09. In less than a month, it has jumped almost 63%. Two days later, it dropped 26%.

We recently explained how the Chinese government has changed the rules of the market.

Charlie Garcia, founder of the exclusive R360 club suggests pundits are missing the point:

“Wall Street hyperventilated about margin hikes on silver traders. CNBC trotted out the usual suspects warning about ‘speculative excess.’ The X platform was full of people who couldn’t spell backwardation six months ago suddenly explaining why silver is overvalued.

They’re all missing the story. China just weaponized silver.”

There’s more to the story….

GATA provides ShadowStats commentary from Jay Morse:

“The salient consequence of both Silver Gates closing is that China decides who gets silver and why. …. When Beijing does permit the export of silver it decides the currency of payment. …. Beijing has canceled the loading of scheduled shipments which, until now, had been paid for with US Treasury Notes.”

Readers are concerned, “Is the dollar about to collapse?”

I contacted friend and expert Chuck Butler to help us look behind the curtain.

DENNIS: Chuck, thanks again for your time for our reader’s benefit.

Let’s start with some history. Since Nixon closed the gold window, many pundits predicted the dollar will collapse. For decades the government borrowed money to cover trillions in deficit spending.

The 2008 bank bailouts made things worse. The government couldn’t borrow all the money it needed at an interest rate it was willing to pay.

To cover the shortfall, the Fed clicked a mouse, and created money out of nothing – called “monetizing the debt”. In the old days, governments like Zimbabwe just printed more pieces of paper they called money.

The Fed calls this magic money an asset; supporting the illusion they bought Treasury Bills from the government. For years they held under $1 trillion; by mid-2022 their magic mouse clicked the number to $9 trillion.

It’s now approximately $6.5 trillion, meaning they eventually found someone else to lend us $2.5 trillion to cover previous spending. Their “catch up” game still has a long way to go.

Total US debt is approaching $39 trillion. Not only do politicians make no attempt to curtail spending, many also take great exception when billions of wasted dollars are reported to the public.

You and I have warned readers this is what causes inflation, inevitably the currency will become worthless paper. We urged readers to buy gold and silver. Readers have been conditioned to believe the recent price jumps are likely inflation related.

Chuck, in your opinion, is the collapse here? Are we at the point where the world is frantically dumping dollars because they fear current rates do not cover the risk of the dollar losing value quickly?

CHUCK: I used to tell my audiences the dollar would eventually reach its intrinsic value (Zero). I feel we are a long way from that happening.

I’d present a graph of the dollar’s trends since being taken off the Gold Standard in 1971. It showed a weak trend followed by a strong trend. This would still be going on today – if they had not created the Exchange Stabilization Fund after the stock market collapse in 1987. That enabled the Plunge Protection Team (PPT) to intervene every time the dollar enters a weak trend. Eventually their funds have to run out.

Today I see a new weak dollar trend. This should continue for at least 7 years, until the fundamental problems that plague the dollar are reversing. So, no – I don’t see the total collapse for a number of years.

DENNIS: The Peter G. Peterson Foundation breaks down the US Debt holders. Approximately 20% is “intergovernmental debt,” primarily social security, government pensions, etc.

The remaining 80% is “held by the public;” not only in the US, but throughout the world:

Should hyperinflation fears come true, insurance companies, investors and all pensions would suffer greatly; beyond anything most of us could imagine.

Chuck, you recently explained Basel III:

“Basil III calls for an end to selling metals that you don’t have; if you sell them, you must be able to deliver quickly. This would be a dagger in the heart of the short paper traders who manipulate the metals almost daily…”

Basel III and China licensing silver exports, now controlling 70% of the market are two major changes, quickly impacting prices.

While China is slowing unloading US treasuries, and could possibly trigger a sudden collapse of the USD, they have much to lose. I suspect they would have more to gain from their new power play in trade negotiations with the US. They want our markets, and we want their silver.

Foreign debt holders would also lose billions in buying power if the dollar collapses quickly.

Chuck, am I missing something?

CHUCK: Dennis, remember the old saying, “If you owe the bank $1million and can’t pay it, you are in trouble. If you owe the bank $100 million and can’t pay it, the bank is in trouble.”

No, you’re not missing anything Dennis.

The US depends on the kindness of strangers to finance our debt by buying and holding U.S. Treasuries… A total collapse of the dollar now would do major harm to the finances of these strangers… China and Japan would suffer billions in losses …. along with many others….

If the dollar collapsed, we would have no choice but to ratchet up the yield we pay on the bonds to astronomical levels – dramatically hurting our debt driven economy!

I’ve urged investors to diversify their investment portfolios into asset classes that protect against the dollar collapsing and/or veering on your stocks and bonds or mutual funds.

In our Daily Pfennig I try to educate our readers about Gov’t finances worldwide….

China and Japan benefit from the dollar decline by making their exports cheaper, however, it has a negative effect on the debt they are holding. So far, they have allowed the US to make terrible financial mistakes while selling their goods and financing our debt.

DENNIS: If you fear going down the drain, don’t pull the plug, a slow leak is much safer???

CHUCK: You bet your sweet bippie it is!

In China and Japan’s eyes, this death by a thousand cuts is better than a beheading! They’ll have plenty of time to unload their billions in Treasuries and U.S. stocks!

Some countries have not been showing up at the Auction window for Treasuries, or selling their Treasury reserves and buying Gold to replace their reserves. As we urge readers to diversify, they are slowly doing the same.

DENNIS: I’ve been concerned since the bailouts about how the central banks of the world colluded, dropping rates in unison to maintain parity between countries. This allowed many governments to live beyond their means.

Goldprice.com provides graphs comparing gold & silver prices in other currencies. Japan is the #1 foreign holder in treasuries and they are seeing the same price jumps:

(Click on image to enlarge)

When a currency like Venezuela or Zimbabwe collapses it doesn’t devastate the rest of the world. If a biggie goes down the drain….

Chuck, a two-part question. If the dollar takes a huge inflation hit, or collapses, will it be like the Christmas tree lights analogy? If one goes out, they all go out?

What do you see as the effect on the rest of the world?

CHUCK: A couple years ago I scared the bejeebers out of some readers by saying the dollar would eventually circle the drain – all it took was for 1 country to default, then more would follow because these countries are all intertwined…

Eventually the defaults will come to our shores… A snowflake looks harmless when it falls on a mountainside, but the accumulated flakes can easily cause an avalanche.

The defaults will be like that one snowflake that accumulates and the avalanche will affect everyone unless they don’t have debt… And that would be…

Well, it used to be Russia and Singapore that didn’t carry debt… War debts knocked Rusia off that list… And 2020 caused Singapore to mask over major problems with debt… So… no one!

DENNIS: One final question. While I am on high alert, I’m not ready to hole up in a bunker. I expect some big price swings in metals. I am not buying because I feel my holdings are where they need to be. How about you?

And thanks again for your time….

CHUCK: Dennis, thanks again for the opportunity to address your readers. As always, it’s my pleasure to opine…

I’m going to sit here and wait for this all to unfold …. And I’ll leave you with this… Got Gold? (or Silver?)

I would look to enter new positions in Gold & Silver when we see pull backs, which are normal and healthy for the asset class, before moving to higher levels…

Dennis here. There you have it. Turbulent times for sure, and likely will get worse. This should be a wake-up call to those who need to build their core holdings. Buy on dips if you need more. I hope things never get so bad that I have to sell!

On The Lighter Side…

Congratulations to Seattle on winning the Super Bowl. They certainly reinforced the belief that defense wins championships.

The Super Bowl is the game that changed America. Newsfeed 1440.com provides some cool details:

“Created as part of the 1966 merger between the American Football League and the National Football League, it has become the most-watched sporting event in the US each year.

While the Super Bowl has produced some of the most famous moments in American sports history, its influence extends far beyond the field. As the most-watched television broadcast of the year, it has transformed advertising into a cultural spectacle, with 30-second commercial spots now selling for roughly $8M. The halftime show has evolved from modest marching band performances into one of the year’s major music and artist events. Meanwhile, Americans spend more than $500M annually on snacks and drinks as millions gather for watch parties.

Today, the Super Bowl is a global cultural event, with the game broadcast in more than 180 countries in dozens of languages. In the United States, Super Bowl Sunday is considered an unofficial national holiday, blending entertainment, commerce, gambling, food, and sports into one shared cultural moment.”

Our weather here in Florida is starting to warm. The grass is brown and we are now in extreme drought conditions. We have water restrictions until July. Unlike much of the country, it takes a couple of hurricanes and the water table returns to normal. You hope they are slow Category I hurricanes with a lot of rain so the damage is minimal.

Baseball players are reporting to Spring Training and soon the games will start. I’ve always enjoyed that because the start of spring seems to energize much of the world.

The Olympics are in full swing so the National Hockey League takes a two-week breather to allow their stars to represent their respective country. The NHL has certainly become an international game with players from all over the world.

Quote of the Week…

“Inflation is not caused by the actions of private citizens, but by the government: by an artificial expansion of the money supply required to support deficit spending. No private embezzlers or bank robbers in history have ever plundered people’s savings on a scale comparable to the plunder perpetrated by fiscal policies of statist governments.” —Ayn Rand

And Finally…

My wife Jo shares some Facebook wisdom:

When one door closes and another opens, you are probably in prison.
Age 60 might be the new 40, but 9:00 is the new midnight.
The older I get, the earlier it gets late.
I remember getting up in the morning without making sound effects.
I had my patience tested, I’m negative.
If you’re sitting on a park bench and a stranger sits next to you, stare straight ahead and ask, “Did you bring the money?”
I hate when a couple argues in public and I miss the beginning. I don’t know whose side I’m on.
I don’t mean to interrupt people. I just randomly remember things and get really excited.
When I ask for directions, don’t use words like “east.”
Sometimes, someone unexpected comes into your life out of nowhere, makes your heart race and changes you forever. We call those people cops!

And my favorite: