The recent rise in gold prices isn’t simply due to tariffs. That’s retail-level propaganda designed to keep us off the scent.
Vince Lanci explained to me that while tariffs might have initially caused some movement, they don’t account for the sustained increase we’re seeing now.
Instead, it seems like a larger, more systemic issue is at play. Is the long-running “fractional reserve gold lending” scheme finally breaking down? Is it financial elephants pre-positioning for Basel III’s new treatment of gold as a tier I asset, meaning it occupies the same level of security as cash and high quality government bonds? Or is it signaling something more sinister and systemic?
Vince says that the key players in the market, like the LBMA and major banks, don’t really care if gold’s prices goes higher. But they do care if it rises too quickly. They spend a lot of time and attention on keeping the price of gold well-contained.
To avoid rapid price increases they have a gigantic paper pump they use to dump virtually unlimited quantities of ‘paper gold’ on the markets are key times to drive prices down.
Okay, fine. That’s the game, know the rules.
But rarely, from time to time, things get out of whack and there’s a mad dash for physical gold to cover the bets, and that’s where we find ourselves now.
The way that shows up is in something called the gold lease rate. If you need physical gold, but don’t want to buy it outright for whatever complicated set of reasons, you can lease it. When lease rates rise, it means gold is in tight supply and getting harder to find.
Like it is now:
The pace and height of the explosive rise in gold lease rates indicate that something has snapped in the market.
If we’re lucky, it’s just a simple unwinding of trades where too many traders and bullion banks got caught on the wrong side of things. Hey, it happens.
But not like this, and not to this extent. Which means it could be that there’s a much bigger problem brewing. If so, gold is indicating that it will be larger and more muscular than even the Great Financial Crisis of 2008.
Is this happening? And how would we know? More importantly, how can you protect yourself from the fallout?
Tune in to hear Vince Lanci and I discuss the topic. And be sure to keep a close eye on the price of gold and silver…
Show notes:
Repatriation and Global Trust
Vince highlighted a significant trend: countries are repatriating their gold. This isn’t just about tariffs; it’s about a shift in global trust. Nations like China and India are buying and repatriating gold at unprecedented rates, possibly in anticipation of using gold as a monetary unit or as a hedge against geopolitical instability. This movement suggests a lack of trust in traditional financial systems and a pivot towards tangible assets.
Silver’s Unique Position
Silver is experiencing backwardation, a situation where the current price is higher than future prices, indicating immediate demand. This is unusual for silver, which typically doesn’t see such market behavior. Vince shared insights into how industrial demand, particularly from countries like China, is driving this trend. The backwardation in silver suggests a potential squeeze, where demand outstrips available supply, leading to price volatility.
Key Data
- 500 tons of gold have been delivered to COMEX vaults in the past two months.
- Silver lease rates have spiked to 8%.
- India imported 2,600 tons of silver from the UAE, a significant portion of global output.
Predictions
- Gold prices could quietly rise to $3,500.
- Silver may become unobtainable as an investment asset once gold is exhausted.
