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“Death Of The Gold Market” – Why This Expert Thinks A Run On London Gold Vaults Is IMMINENT

by Paul Mylchreest, Silver Doctors:

We’ve argued for many years that a breakdown and bifurcation in the gold market between physical and paper gold substitutes would be necessary for accurate price discovery of physical gold bullion. The lead article in the January 2016 edition of the LBMA’s quarterly magazine was titled “Wholesale Physical Markets are Broken”, which might be confirmation that this process is reaching an advanced stage…

When it comes to tracking the nuances at the all important margin of the gold market, few are as observant as ADMISI’s Paul Mylchreest, whose December 2014 analysis showed the stunning role gold holds in the new normal as a funding “currency” for BOJ interventions in the form of a long Nikkei/short gold (and vice versa) pair trade, indicating that central banks directly intervene in gold pricing (by selling, of course) when seeking to push paper asset prices higher.

In his latest report he follows up with an even more disturbing analysis on the state of the gold market. Specifically, he looks at what historically has been the hub of gold trading, the London bullion market, and finds that it “is running into a problem and is facing the biggest challenge since it collapsed from an insufficient supply of physical gold in March 1968.”

We suggest readers set aside at least an hour, and two coffees for this “must read” report. For those pressed for time, the executive summary is as follows: using data from the LBMA and Bank of England on gold stored in London vaults and net UK gold export data from HM Revenue & Customs, Mylchreest calculates that the “float” of physical gold in London (excluding gold owned by ETFs and central banks) has recently declined to +/- zero.

Summarizing the data in the report.

The full details of how Mylchreest gets to this number are broken out in detail in the attached report; fast-forwarding to his troubling summary we read the following conclusion, one we have observed numerous times when analyzing the troubling trends within the gold vaults of none other than the Comex itself: “if we are correct, the London Bullion Market is running into a problem and is facing the biggest challenge since it collapsed from an insufficient supply of physical gold in March 1968.”

Some more of the report’s core findings, most of which should come as no surprise to regulatr readers:

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1 comment to “Death Of The Gold Market” – Why This Expert Thinks A Run On London Gold Vaults Is IMMINENT

  • rich

    China’s Anonymous Economic Oracle Signals Shift From Debt Binge

    Monday’s page-one takeaway: Excessive debt was China’s “original sin” and the country can’t borrow its way to long-term economic health. The message contrasts with what investors have been presented in recent months: a record jump in credit that had helped stabilize the economy and led some to forecast a return to old-fashioned, leverage-based stimulus.
    Signal Shift

    “It is very significant and may signal a shift in China’s policies,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong. “Each time they publish this, it is normally a warning.”

    The benchmark Shanghai Composite Index fell 2.8 percent Monday, led by commodity producers and industrial companies, and reached its lowest level since March 11. Prices of the raw materials of investment-based growth — iron ore traded in Dalian and steel reinforcement-bar in Shanghai — slumped by the exchange-set limit for a day.

    The People’s Daily article, which ran more than 11,000 words, quoted the authority as saying that “contradictions” in the economy didn’t ease in the first three months of the year, even as new problems emerged. Because of that, it was hard to describe the quarter as a “good start” or a “warm spring,” the person said.

    “A tree cannot grow up to the sky — high leverage will definitely lead to high risks,” the person said. “Any mishandling will lead to systemic financial risks, negative economic growth, or even have households’ savings evaporate. That’s deadly.”
    Oracle Speaks

    For excerpts, read: China’s ‘Authoritative’ Warning on Debt.

    http://www.bloomberg.com/news/articles/2016-05-09/china-s-anonymous-economic-oracle-signals-shift-from-debt-binge

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