Posted on 02/02/2025 10:43:10 AM PST by delta7
A Comex exchange-for-physical crisis is in progress, repeating the disruption during covid. The media story blames Trump’s potential tariffs. But is this the real reason gold is hitting new highs?
Gold and silver rose further this week, driven by continuing premiums on Comex futures over London spot. In European trading this morning, spot gold was $2794, up a further $24 from last Friday’s close. And silver was $31.60, up $1.25. The gold/silver ratio fell from 91.7 on Monday morning to 88.4. While silver is still well below recent highs, it has outperformed gold since the New Year as our headline chart shows.
The premiums on Comex futures are dragging the spot price higher and have generated a massive arbitrage, whereby gold futures are being sold through the exchange-for-physical facility. Bullion to settle is being airfreighted to New York from London. Since 1 January, Comex warehouse gold stocks have risen over 282 tonnes, and in addition it is certain that there have been inflows into JPMorgan’s and HSBC’s private vaults in New York.
Naturally, these flows have drained LBMA vaults of their liquidity, even forcing withdrawals from the Bank of England’s Threadneedle Street vault leading to a wait for delivery of up to eight weeks, according to a Financial Times article on Thursday. The last time a dislocation of this sort occurred was during the covid crisis, when gold rose from $1460 to $2073, then an all-time high, a rise of 42%.
So what’s driving this new exchange-for-physical crisis? Are stories that Trump might bring in tariffs on gold and silver really credible?
Let’s deal with the tariff story first. Trump has never said he would implement tariffs on imported commodities, let alone precious metals. His tariff policies are protectionism aimed at protecting US manufacturers from foreign competition and to encourage onshoring. Threats of high tariffs against Mexico and Canada, large exporters of silver and gold respectively, are always in that context.
If the tariff story has an involvement, it will have simply triggered an inherently unstable situation to destabilise. That was almost certainly going to happen at some time anyway.
Increasingly, mine and scrap supplies are bypassing western markets and going to central banks, sovereign wealth funds, and savings-driven Asians leaving western bullion markets short.
To understand the scale of the problem one has to step back from current markets and put it in a longer-term context. Since the end of Bretton Woods in 1971, the US Treasury embarked on a policy of anti-gold propaganda and price suppression to enable the dollar to be regarded as money instead of credit in gold’s place. Because so few people actually understand the difference between money and credit — and that includes the entire macroeconomic establishment of highly qualified economists — the mighty US Treasury convinced everyone. It is that story which is now unravelling with dramatic consequences.
It started with ex-communist states accumulating gold (China and Russia in particular) who were never exposed to Keynesian economics, helping to drive prices up from under $300 per ounce in 2002, particularly when Chinese nationals were permitted to own gold from then onwards. More recently, Asian central banks in the Sino-Russian sphere of influence began to accumulate bullion for economic or geopolitical reasons. This has now spread to central banks in the western sphere of influence, notably Poland’s. What we don’t see is the extent to which associated sovereign wealth funds have and continue to accumulate bullion, but the figures are likely to be significant.
What it all amounts to is a growing global disillusionment with the US Treasury’s long-standing anti-gold propaganda and increasing concerns over mounting credit risks. Whether they fully realise it or not, these sophisticated buyers of gold are turning their back on credit, which includes currencies.
The result is that in the last 25 years, currency values have progressively fallen measured in real money, which despite US Treasury propaganda remains legal money without counterparty risk in everyone’s common law. The log-scale chart below shows the extent of divergence between the value of real money and fiat currencies over just this quarter century:
The yen has lost 93% of its 2000-value, the dollar and euro about 90%, and sterling 92% with the users of these currencies, including savers, unaware of what’s happening to their medium of exchange. And now this collapse is accelerating, with an average loss of over 25% in 2024 alone.
We can talk about bulls and bears in financial markets for ever. But to focus entirely upon the relationship between nose and grindstone blinds us to the true and massive forces driving the relationship between money and credit, condemning the latter towards oblivion.
PM’s will go to the moon IF the Comex or LBMA has just one failure to deliver event. Many have predicted a Comex failure to deliver event, but now it could be an LBMA failure to deliver event. Good, they both have been guilty of manipulation for decades….” Unequal weights and measures”.
Keep in mind the entire world’s Central Banks have been buying physical Gold by the tonnage, ( not Bitcoin), we are soon to find out why. The world’s BIG money is all in.
A major milestone last week, ALL the world’s currencies just hit an all time high in to buy Gold….it is now taking a record high amount of any currency to buy Gold……which says a lot about paper currencies.
BTC is up 200 percent the past 18 months.
SOL is up 1000 percent.
AVAX 600..
Do you read or only what you want to?
“””The media story blames Trump’s potential tariffs.”””
The media, along with the Brokerage Houses, always have reason why a market went up or down. In most cases the reason has nothing to do with the price change.
If there is a large short position in gold, that will force the short sellers to buy gold to limit their potential losses.
Of course, most folks do not understand anything about markets being long or short.
How do you sell your bitcoin, SOL and avax?
The U.S. Dollar is Worth-Less.
All have counter party risk.
according to chatgpt
how much gold and silver do average us households own
Great question! The average U.S. household doesn’t typically hold large amounts of gold or silver
Gold: It’s estimated that about 10.8% of Americans own gold, with the average amount being around 6.4 ounces per household
On average, an Indian household owns about 12 ounces of gold.
___________
I really do not think there are 10% of US households who have even an oz of Gold. But I am guessing that many of these households that do also have a few pounds of lead and brass.
I might have 6.4 oz of gold, but I don’t know for sure.
I made sure my kids have gold in their mouth instead of ceramic though.
(it actually cost less than getting ceramic believe it or not, and their really old dentist was enthusiastic about doing it)
he retired at almost 90 and now to get decent gold done you have to go to Vancouver Canada cause there are lots of Chinese who demand it
The only stuff the government knows about is what’s been bought from the US mint. I bet more than 10 percent of Americans hold gold. The smart ones, anyway. I don’t own any gold or silver.
People own physical gold/silver are usually smart enough not to talk about it.
People who...
according to chatgpt…
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A small detour you may be interested in.
“What happens when you ask two Western AI programs and the new Chinese DeepSeek a politically sensitive question? We decided to find out, as Cathy Vogan reports...
https://consortiumnews.com/2025/02/01/what-deepseek-says-about-nulands-role-in-ukraine-war/
Over the past 41 years gold has more than doubled in price, in then and now current dollars. ($1200.46 - $2426.60, from January 1984 to January 2025). In that period the S&P 500 has only gone up by slightly more than 6.1% a year, from $506.08 to $5881.63. The rate of return on gold in that period was slightly more than 1.7%, not nearly keeping up with inflation. Thank your luck stars that you didn’t grab gold in February 1980, for a mere $2657.20. Sell that for $2800 in 2025, and you make a cool 0.12% a year. (Not counting the expense of storage and safeguarding.)
Huh? Gold in 1980 reached a peak of approx. $700. I bought some then.
https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart
The chart “deflates” for the CPI using today’s price as baseline. My bad. But the same is true for the S&P 500. What got me going was that I knew the S&P was a better investment. I knew a lot of gold bugs in ‘83, which is why I chose that year to start. Not cherry picking.
https://www.macrotrends.net/2324/sp-500-historical-chart-data
At least over the past 40 years, an index based mutual fund is a better investment that gold. People who bought gold for $800 in 1980 got killed.
I see your point. Buying and holding a good stock index fund at the right time may have beaten the gold return.
I began my “serious” gold investing in 2008 (also near $800 per ounce). Since then it’s done fairly well. I never considered it an investment, rather an insurance policy against an eroding currency. In that regard it has performed its job well.
Wait until the morning. We will hit $3k this week.
People are getting nervous.
People are getting nervous.
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A few others are getting very excited, especially those that believe in Constitutional money, Wealth and Equal Weights and Measures….some have been waiting patiently since 2001 when Gold was $250 t/oz.
Sad fact is most have no idea what $3k, $5K, $10K Gold really means, they are about to learn a history lesson. Paper currencies are dying all across the board.
J.P. Morgan stated in his testimony before Congress in 1912, “Gold is money. Everything else is credit.” Very, very true.
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