Commodity Culture Interview with David Jensen - February 10th, 2026: A Deep Dive into Silver, Gold, and the Emerging Alternate Economy
Key Concepts:
- Supply Deficit (Silver): A consistent shortfall in silver production relative to demand, driving price increases.
- Physical Silver Demand: Increasing demand for physical silver, particularly from Shanghai and New York, exceeding available supply.
- Price Suppression: Allegations of deliberate manipulation of precious metal prices by bullion banks and other entities.
- Circuit Breakers (CME Comex): Automated trading halts designed to prevent extreme price volatility, questioned for non-activation during the January 30th silver price drop.
- Velocity Logics (CME Comex): A system used by CME Comex to temporarily halt trading based on rapid price movements, potentially resetting circuit breakers.
- Fiat Currency Crisis: The potential collapse of government-issued currencies due to unsustainable debt levels and monetary policy.
- Parallel Monetary System: The emergence of an alternative economic system utilizing gold and silver as currency, driven by distrust in traditional finance.
- Sound Money: Currency possessing intrinsic value, like gold and silver, as opposed to fiat currency.
I. The Silver Market: A Looming Supply Crisis
The core of the discussion revolves around the silver market, currently experiencing its sixth consecutive year of a supply deficit, estimated at 300 million ounces this year (according to UBS) within a 1.04 billion ounce annual market. This deficit is exacerbated by the fact that silver is primarily a byproduct of mining other metals, making rapid production increases impossible. David Jensen argues this deficit, coupled with increasing physical demand from London, New York, and especially Shanghai, will inevitably drive silver prices “to multiples of the current price” (currently around $80/ounce).
The recent price surge to triple digits and subsequent correction were attributed to this physical shortage and subsequent shorting activity by New York futures markets after international markets closed. Specifically, the January 30th price drop of 26% (18% within an hour) is highlighted as anomalous, given the expected activation of CME Comex circuit breakers.
II. CME Comex Circuit Breakers and Market Manipulation
The failure of CME Comex circuit breakers to activate during the January 30th silver price plunge is a central point of contention. These circuit breakers are designed to halt trading when prices move beyond a 10% band based on a reference price. Jensen explains that the exchange cited “velocity logics” (VLs) as the reason for the lack of a traditional pause.
- Velocity Logic Narrow: A price movement of 20 cents in a single millisecond.
- Velocity Logic Wide: A price movement of 60 cents in a one-second window.
These VLs trigger a 5-second, unannounced halt and reset the circuit breakers. Jensen argues this system allows high-frequency traders to continually reset the protective measures, effectively rendering them ineffective and enabling potential price manipulation. He suggests the circuit breakers are “circuit breakers in name only” and can be “turned off at will” by large players.
III. Vault Drawdowns and the Shift to Physical Demand
Jensen emphasizes the significant drawdown of silver from major vaults, particularly in New York and Shanghai, as evidence of the growing physical demand.
- New York Vaults: Currently holding approximately 102 million ounces, down 25% in the last 30 days.
- Shanghai Vaults: Holding approximately 25 million ounces, with an 8% drawdown in a single day recently.
This rapid depletion of available silver is driving the need for a “reset” to a much higher price to incentivize supply and provide necessary liquidity. He notes the transparency of vault data from New York and Shanghai contrasts with the “opaque” reporting from London.
IV. China’s Role and the Emerging Parallel Economy
The discussion highlights China’s increasing influence in the silver market. A significant premium currently exists between the silver price in Shanghai and Western markets (approximately 7% currently, but reaching 29% after the January 30th crash, equating to roughly $15/ounce). This premium incentivizes the movement of silver into China, despite transportation costs of around $2/ounce.
Jensen also notes recent actions by Chinese authorities, suspending traders on the Shanghai Futures Exchange, but questions the true motivation behind these actions, suggesting it may be an attempt to control the outflow of silver. He believes China recognizes the importance of silver and is preparing for a shift towards a parallel monetary system.
V. The Rise of Private Money and the Failure of Fiat Currency
Jensen predicts a move towards a “parallel monetary system” utilizing gold and silver as currency, driven by a loss of trust in fiat currencies and government institutions. He cites Alan Greenspan’s observation that extremist fiat currency always leads to rejection and a return to gold. He emphasizes that gold and silver possess intrinsic value and a 4,000-year history as money, making them inherently stable.
He anticipates increased use of silver and gold for direct transactions, particularly in times of economic crisis, and believes it’s inevitable that one could eventually purchase a house with a small amount of gold (potentially 5 ounces). He frames this as a return to “sound money” rather than “barter.”
VI. The Inevitability of a Currency Crisis and Precious Metal Implications
Jensen argues that the current monetary system is fundamentally unstable due to excessive debt and unsustainable monetary policy. He believes the bond market, not central bankers, sets interest rates, and the current crisis in bond markets signals a loss of confidence in fiat currencies. He predicts a rapid decline in the purchasing power of fiat currencies and a corresponding increase in the value of real assets, including gold, silver, and commodities. He anticipates a potential hyperinflationary scenario, defined as a 50% increase in prices within a year.
VII. On Selling Precious Metals: A Sound Money Perspective
Addressing the debate between holding and selling precious metals, Jensen aligns with the “sound money” perspective, advocating for using money rather than selling it. He believes gold and silver are not merely investments but a store of value and a medium of exchange. He anticipates their increasing use in everyday transactions as fiat currencies fail.
VIII. The Root of the Problem: Malice vs. Incompetence
Jensen expresses a strong belief that the current monetary system’s problems are not due to incompetence but deliberate design. He points to the creation of the London Bullion Market Association by the Bank of England in 1987 as a key moment, granting currency printers control over the gold and silver markets. He suggests a long-term plan to extract wealth through credit bubbles and monetary manipulation.
Notable Quote:
- “You don’t sell money, you use money.” – David Jensen, emphasizing the role of gold and silver as currency.
- “If something happens in politics you can bet it was planned that way.” – Attributed to FDR, used to illustrate the deliberate nature of the current monetary system.
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