The recent extreme volatility in the gold market was caused by counter-intuitive, paper-centric action from the cartel. CTAs, or speculators, manage money for clients and are completely blinkered to real supply and demand fundamentals, existing in the silo of the COMEX casino. Post-FOMC, there was a race into safe-haven paper and physical gold that broke out some important resistance levels, which triggered a lot of bearish bets. However, the influx of naked short CTAs provided the cell ignition fuel for the cartel. While there may be more attacks, this is building up a huge long position for insiders in the house, and gold is coiling for a large move higher. As for silver, insiders have been short covering, but the bets against $24 are still embedded, and the changing option structure indicates a sweet spot of $23.80 at this time. While wholesalers are largely sitting on the sidelines, waiting for options to expire, there is extremely strong physical and retail demand that will reignite global wholesale physical demand.
An update on the current state of the gold and silver markets reveals that the selling is momentum-based and naked short, while insiders are positioned long against them. This indicates that there may be more attacks, but building up a long position for insiders. The lbma CME cartel is wrong-footed in the bigger picture as physical settlements are increasingly being squared outside of the lbma CME siloed spot ring fence. The option structure indicates insiders have been short-covering but bets against 24 are still embedded. Both gold and silver are coiling for a large move higher which is building up physical demand. It is predicted that silver will outperform in 2023. An important bullish update regarding the bis was revealed, indicating that the bis has squared all of their gold liabilities and no longer has any outstanding swaps. The article also draws attention to a recent article by Sergey Glaznev in a Russian newspaper indicating settlement of trade balances between a wide range of members of the Shanghai Cooperation Organization using physical gold as a benchmark currency.
The Shanghai Cooperation Organization (SEO) is a loose economic and security union involving Russia, China, and other countries in Central Asia. A major goal of the SEO is to reduce dependence on the US dollar, which Russia and China see as weaponized. They aim to establish a new trade settlement currency that involves participating currencies, commodities, and gold. Gold is viewed as a way to protect against the collapse of Western currencies. Russian and Chinese gold output has increased. The Russian government led by Putin has been advocating for gold as a reserve asset, instead of the US dollar or euro, which are rapidly losing purchasing power. Saudi Arabia has shifted towards closer ties with Russia, in part to counteract declining demand for fossil fuels.
The speaker discusses the importance of gold reserves in the current global economic situation, where the shift in power is moving towards Asia and away from the West. He discusses the recent trade deals between Saudi Arabia and China, where China agreed to take Saudi oil and invest back into the country in yuan and gold, creating a balance of payments in favor of Saudi Arabia, and how this signals a move towards a gold-backed global monetary system. He predicts a potential collapse of the US dollar and the EU, and discusses Germany’s potential alignment with the Asian economies rather than the West.
The Shanghai Corporation Organization is a producer of high technology, machinery, and civil engineering products, and is an entity with a production-based economy. Germany and France are in a position of power regarding the current situation with Russia and Ukraine, as they are in a position to ally with the Shanghai Cooperation Organization. The Americans are determined to prevent this and are being roped in to defend Western European interests. The central bank of central banks, the BIS, is going net long gold, signaling that they do not want to be short of it, and more gold is being bought by central banks than since Nixon closed the gold window 50 years ago. The size and velocity of this issues are accelerating, and it is likely that western central banks do not have as much physical gold as they claim to have. Gold is becoming an increasingly important currency as it can be used to price commodities, and physical ownership is crucial rather than relying on paper.