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.
I’ve liquidated a couple tens of thousands and bought gold and silver. They’re going to have to print, and the rest of the world buying so much means they see the writing on the wall.
It occurred to me a while back. Admittedly a bit of a long shot bit one has to wonder. The 300 billion of Russian reserves. Surely one of Putin’s requirements to end the war would be the return of this money or unfreezing. And since it already got taken once, maybe he says he wants it back in gold. That would explain the movements, it would be a lot of gold. 3000+ tones I think. If this was even a tint bit true I could see a lot of other countries buying more also so as not to be at a disadvantage to Russia, including USA. And even if this is not true at all… if Russia got their reserves back, what do you think they are going to do with it… after all they don’t need it they have survived a number of years without it now.
Just a thought I had.
This was a fabulously educational conversation that was responsible for my understanding of the gold markets making a quantum leap forward. David is an extremely knowledgeable, but most importantly, an extremely principled person. His position is seemingly not modulated one iota by his consideration of his business profits. Very measured and nuanced, stating the facts as he sees them, not as he would want people believe to get them to patronize his business. Solid episode of Finance U!
It would be great, if indeed the gold in Fort Knox is low or not there, that everyone is scrambling to fill it up because of all the announcements, and then those in charge show up at another or all the other reserve(s) unannounced to check. It is too much that they are announcing the audit of Fort Knox to this degree and with so much time for things to be moved around.
For Bars produced from January 2019 onwards, the year and month of manufacture (see additional comments in Section 2.1.5 above).
*Since January 2018, gold and silver Bars can be marked with up to five significant figures, if required by national standards. However, it must have a point or comma delimiter to avoid confusion and potential ambiguous additions. The weight list would only include four significant figures.
Michael and Alisdair, Momentum and Money/Credit analysis.
Oliver explains the technical position of Markets and Sectors due to momentum, and vulnerability to significant and rapid declines in currencies and sectors.
Alisdair explains that (physical)gold money, is not credit and Keysean’s monetary policy in a world where sovereign debt is “the problem” is doomed to failure.
The fact that we are already in the “Doom Loop” and collapse is going to probably start in the edges and quickly infect the middle, is going to catch everyone flat footed.
Webb’s "great taking’ can strike out of the blue.
All the interest-money from all the bank loans ever made since the Federal Reserve started has never been paid. None of the interest-money is ever created, only the principle debt is loaned in to existence. Think about that for a while.
That’s clever concept I didnt think about. It is totally plausible now. Russia would need it with or against china… that works as banking guarantee, whatever bilateral deal they have. Kinda like nuclear arms treaties if they dont fully trust each other(could go and inspect other guys vault they are not broke). These big gold movements could mean nukes are secondary issue in world and bank account bouncing in country level is way bigger measure of trust and worry.
I think since russia has all the minerals they need, p.us our uranium, plus reserves of pil and natural gas…if they dont get their gold back, they will sell to the west only in gold.
China is continuing the disengagement from the US as it starts to enable transfer of Chinese securities from the Euro Clear. to a Hong Kong.
equivalent entity.
This interview Tucker Carlson did is very interesting. At about the 49 minute mark, the conversation turns toward the idea that, for the US, the dollar has become a resource curse. For example, if Saudi Arabia is the largest producer of the cheapest oil, then over time the economy centers on oil production and all other aspects of the economy wither away- this is a resource curse. The point made is that, for the US, the dollar has become a resource curse, with the US economy focusing only on financial markets.
That is Dutch disease (resource curse). Then US has another one caused by dollar: Triffin’s dilemma. All hegemonic countries in world suffer from Triffin’s. So far nobody has solved that problem.
To me looks all financial hubs in world suffer from that resource curse: prices go up but other industries, eg services(lunch, cleaning, housing) cant keep up with everything getting more expensive by that “abundance” of money.
I was trying to get started with Goldcore for my next purchase(s) of gold and silver. I have had a very disappointing experience with the process thus far. Thought it might be worth sharing considering how it is promoted here.
I should note my situation is unusual. I am currently nomadic, without a home address. I also do as little as possible on my phone - no banking, no money transfering apps, no trading, etc. This is for security purposes. It seems foolish to me to create an additional vulnerability simply to have access to my accounts around the clock. I am patient enough to wait until I have the time/access to use my computer.
The identification process used by goldcore is through an app. There is apparently no computer/laptop version of this app. Considering I don’t use my phone for any of the documentation, nor do I have an address, it is not possible for me to provide certain documents through my phone. Trying to communicate with their “team” I was connected to someone who struck me as a virtual assistant and who was pretty unhelpful. Our conversation ended abruptly with her terminating the chat saying they don’t have options for me. It seems very strange to me that the company essentially requires users to have all their documents accessible through their phone, but cest la vie. It seems I am going to have to an alternative company for my gold/silver needs.
My thought is that if you are taking posession of small amounts you are better off using a local coin shop and paying in cash. The farther off the record you are the better.
Here I go so far as to travel a couple hours to a shop located in an office building with a bank. Many people coming and going, the vast majority doing regular type business. The nearer one has its own street access, much easier to monitor coming and goings. We each have to optomize for our own circumstances.
