Executive Summary
In this episode, I had the pleasure of speaking with David Russell, CEO of GoldCore, about the fascinating dynamics in the gold and silver markets. We delved into the complexities of gold flows, the potential for a new monetary system, and the intriguing role of central banks. David shared insights on the massive movement of gold into the U.S., the potential for gold-backed Treasury bonds, and the importance of understanding the true state of gold reserves. As always, the conversation was rich with insights and left me pondering the future of our financial systems.
Gold Flows and Arbitrage
David explained that we’re seeing massive flows of gold into the U.S., particularly into the COMEX, with eligible and registered bars levels going through the roof. This movement is partly driven by an arbitrage opportunity, where gold is moved from London to the U.S. to take advantage of price differences between the COMEX and LBMA markets. This isn’t just a simple market fluctuation; there’s something big behind it, possibly involving large players or even governments.
Gold-Backed Treasury Bonds
We discussed the idea of the U.S. Treasury issuing gold-backed Treasury bonds, a concept championed by Judy Shelton. This could potentially create a parallel currency system, offering a more stable alternative to fiat currency. The notion of revaluing gold to support such a system is intriguing, but it raises questions about the practical implications and potential impact on the dollar.
Central Banks and Gold Reserves
David highlighted the importance of understanding the true state of gold reserves, particularly in places like Fort Knox. The calls for audits and inspections are not just about counting bars but ensuring the gold is unencumbered and of the right quality. The historical context of gold leasing by central banks, as mentioned by Alan Greenspan, adds another layer of complexity to the current situation.
Key Data
- The U.S. holds 8,100 tons of gold, valued at $42 per ounce on the balance sheet.
- Massive gold flows into the U.S. are driven by arbitrage opportunities between COMEX and LBMA prices.
- Central banks globally are increasing their gold reserves, indicating a shift in monetary policy.
Implications
- Retail investors may face supply chain issues with smaller gold bars due to refiners focusing on larger bars for COMEX delivery.
- The potential for a new monetary system could impact the value and stability of fiat currencies.
- Increased central bank gold buying suggests a lack of confidence in the current credit system.
Recommendations
- Consider diversifying your wealth by holding some assets outside the traditional credit system, such as physical gold or silver.
- Be aware of the potential for supply chain issues in the retail gold market and plan accordingly.
- Stay informed about changes in monetary policy and their potential impact on your investments.
by thomas5139