Eric Yeung: The LBMA Crisis – Delays, Borrowing, and the Race to Secure Physical Gold
we live in a fantasy world now reality has been destroyed this is the time that we really need to pay attention the probabilities are overwhelmingly on Gold’s side that is the best environment to see gold increase its value welcome to Palisades Gold radio I’m your host Tom bodrick joining me today is Eric Young he was a contract manufacturer in China and now a gold investor Eric thanks for joining me today how are you I’m doing good Tom thank you it’s a pleasure to be on your show well I’m looking forward to this
conversation and it’s a pleasure to to speak with you as well and of course we have this let’s say this this giant development that we really need to break down and take some time to explain and to lay out for listeners and that being this explosion let’s say within the efp premiums and all of this noise around the lbma why don’t we start by laying out what the actual problem is and I can stop you in the middle and ask for some definitions and stuff like that because this is at this point it’s it’s a lot of
noise and I think as always what I try to do is is take a step back and look at these all of these systems let’s say in a a longer term view to to get this longer term perspective obviously again this is making a lot of noise right now and this is seeming to be a catalyst for a higher gold price right now so why is that ER okay so Tom as you probably know right now the lbma has a situation with their physical go delivery the Ft which is the financial times have has reported on January 29th that the the lbma delivery time for
physical gold has went from T plus2 or t plus4 to t plus 30 or t plus 60 instead of two to two to four days of delivering your gold now it takes 30 days or maybe 60 days that’s from the financial times and then since then the lbma came out and they did a webinar they Tred to explain that the delays are du to bar size differences markings Etc that’s the explanation now we’re going to put that aside for a second we’re going to look at the comx the Comax and this is reported by Bob keens and from comx data in the month of
December and January the amount of physical gold that stood for physical delivery was 498 metric tons now that represents 15 times of normal volumes so somebody really want their physical goal now we know that most of that is probably intended for withdraw because of the situation at the lbma because of the t+ 30 or P plus 60 now back to the comx in the month of February Rob has re reported this is a week and a half ago that there’s 200 metric Hons of phys coo standing for delivery by the time that delivery time
comes I I’m thinking that is that number is going to get to 250 metric tons so do you have any questions at this point basically the the biggest change I think is that these parties obviously there’s more demand and they’re also specifically standing for delivery what does this mechanism or or this this market usually what is it usually used for all of a sudden there’s 15 times physical delivery but normally how does it work when it wasn’t 15 times physical delivery normally most of the of the contracts at the comx are settled by bfp
mechanism that’s a mechanism the exchange for physical exchange for physical yeah don’t let the name bece you because a lot of it is just basically cash settlement from what we call a Comax lbma trading pair and that’s what the experts talk about all the time like Bob Coleman the efp trading so what people would do what Boolean Banks would do is that they would short the Comax and they will long the lbma and then they make an arbitr right so let’s say I’m just using an artificial kind of price okay let’s
say the gold at commax is $99 and the gold at lbma at their cash promis not Market is $ 9950 so if you’re short at the CarMax and long at the lbma you have a 550 cents uper front so that’s how they make their money I know that it’s not exactly how it works but I’m trying to simplify it for your viewers so that they understand right like you know approximately what is happening and that is that is what it is the efp trading perir but in this scenario right now this 15 times physical delivery demand
at the kmax what what happens what it means is that a lot of players are insisting that they want the physical metal they do not want to cash settle they want the physical metal so the physical metal demand naturally a lot of it is being fulfilled by the lbma for physical delivery and then they ship it off to the comx to physically deliver to the buyer but that creates a problem because of the t plus 60 because there’s more demand than Supply essentially that’s what it is I mean the lbma says that they have 8,000 metric tons of
physical gold in their vault at at the bank of England Vault but that’s probably not allocated go that they have access to right that’s why right now is t plus 30 or t plus 60 for their physical go delivery and and what that just just explain what t+ means at the time when the request delivery when the contract allows the you know customer to request delivery it takes an additional 30 or 60 days for the seller to produce that physical metal delivered to the buyer so and normally it’s like it’s like two days and now it’s gone to
30 if not 60 yeah it’s not 60 and Andrew Maguire actually said it’s 90 from his Insider contacts at the lbma but let’s let’s just take the Ft number and say it’s 30 and 60 so right now it’s 30 30 60 so what happens what’s happening and this is public knowledge what’s happening to the promiser not at the lbma it’s trading at a discount because you’re not getting the physcal Met it’s a forward contract now it’s not spot it’s not a spot contract anymore you’re not getting the metal right away you’re
getting it 30 to 60 days down the road so that’s taking a haircut that contract let’s just say it’s $96 in our little model here so that’s a big problem because before you were making 50 cents now you’re losing $ so what happens all the people who are trapped in this efp trading pair they don’t want to cover the shorts at the comx because covering the short is expensive more expensive than if they force or if they persuade their seller at the lbma to deliver them the physical metal so there’s a scramble
everybody want physical metal at the lbma to deliver to the Comax so that it can be the the contract can be fulfilled without having to Cash cover the shot position at the comx that that is what’s happening let’s say this situation aggates it doesn’t resolve itself and only certain people or no let’s just say 70% of the people get the physical metal so that they can go to the commax and deliver what happens to the 30% of the people who can’t get the physical metal they forced to cover the shots at the comic and then
what happens the price of gold will Spike up from that shot covering because they there’s a recognition that they can’t actually get what they’ve because they can yeah because short covering papers more it would impact the price more than physically delivering the metal under the contract that’s what happens right that’s just how the Comax works so they cover the price goes up it’s like a short squeeze that’s what’s happening so Eric do we know who is standing for delivery and who’s still short so I
believe James Anderson is kind enough to give me a chart of the load out of all the parties that are involved at the carax in the last 16 working days so shall I read who the deliverers and the receivers are I’m going to do that top deliverer at the Comax for these go contracts is HS HSBC so they’re the are they the seller data sell 15577 contracts JP Morgan second biggest seller 14,850 Morgan stany third biggest seller 1,354 HSBC is doing it on behalf of customer JP Morgan and Morgan stany doing it with
the house accounts now who are the receivers who’s the biggest receiver JP Morgan 20,000 contracts they’re doing it on behalf of a customer bar 10,234 contracts they’re doing it behalf of a customer Bank of America 7,234 contracts house contract so do you see a pattern Tom what’s happening seems like they’re they’re all doing it for somebody else yes and based on all the evidence I mean 15 times pH physical delivery at the at the comx if it’s just a random bullan bank or a hash fund or a family office you think that
either the seller or the exchange I’m talking about the CME comx do you think that they will stand for that or do you think they would fce cash settlement if it’s just a random player trying to disrupt The Exchange that’s the question to you yeah they they clearly somebody wants physical yes I think in my my thesis is that a lot of these Budan Banks who taking huge physical deliveries at the Comax US government proxies or fed Federal Reserve proxies they’re doing it on behalf of the US government or the or the Federal Reserve
the reason is because Donald Trump told you today they’re going to audit F KNX and a lot of people have been wondering if the gold is all all there at F KNX all these years M correct I mean I’m sure you get people asking you on your ex X account you know on your CH as well right is the gold there well the gold probably is not all there so they are racing against the clock to repatriate repatriate the gold from overseas that is what is in my belief that is what is happening to be fair if you are a Budan
Bank working on behalf of the US government as a proxy aren’t you going to import some gold for your own books if you know what’s going on yeah because if you have yeah let’s say if you’re working as a proxy for I guess it would be the treasury to repatriate this gold and you have this information you’re going to say hey this is there’s obviously money to be made here because of this this premium and this this disparity in the values between these two markets as you say you have this Insider Insider information so you’re
going to try to to get in on that as well well if you are a booing bank and you know the US government is going to audit for knock and potentially revalue the physical gold in US Government possession to Mark to market prices and and that’s what I believe is going to happen by the way they if they if they’re going to revalue it’s going to be revalued to a mark to market price okay if they believe that and that’s a very strong signal by the way if they revalue it to a market market price I think gold is going to go up from that
point on and if you’re buing Bank you know that you want some gold on your own books so that you make on at least on paper you make money you make profit on your books of the of the gold gold that you’re holding right and of course there’s another aspect to this as well that we haven’t talked about ble 3 is going to be implemented in the middle of the year I think it is July first in the US what does that mean basle free all the gold in physical gold in the US under these Banks would become tier one
Capital but paper gold is going to take a haircut on the Basel free rules I believe it’s going to be something like 15% but physical gold that is allocated is going to be basically deemed as tier one Capital this also may be a reason why all the bullan banks are joining their own mission as US Government proxy to in physical gold back to the US right because of that difference what is gold physical gold being a tier one asset mean and there has been let’s say bosel 3 let’s say regulation has been implemented but they
had time to actually adhere to these regulations right yes so what does it mean US Dollar Cash is tier one Capital us treasuries is tier one Capital now gold is tier one capital in the US so it just means it’s pristine collateral that’s what it is M you know what it’s just in time for the US to potentially take their physical gold after they revalue it and use it in their US Treasury bonds to create US Treasury gold bonds right long derion right this is something that Judy Shelton has proposed did Judy come on the show Tom I think
she she did right and she explained all this right so you know what’s interesting I read Judy’s Book and I understand what she’s trying to do what she’s proposing and then Jim biano came out last week with this Theory because Jim has DC connections and he’s saying that in order for the US government to control the of control debt the Trump Administration potentially will I I’m going to use this word in quotation marks okay Force us us allies to convert a large part of their us treasury bond Holdings to a sereral
coupon Perpetual Bond that’s what Jim Bano said okay you see the utility in that if they do that then the us right now the US government pays more in debt servicing in interest rate payments than what they’re spending on defense on the military so if they do that though they force allies to switch to these long duration US Treasury bonds well he said Perpetual BS with zero coupon then you’re cutting down the interest rate payments significantly so I talked to Jim and I said hey you know you can’t do
Perpetual it’s not going to work because that that’s essentially saying you give me the principle you never get it back so I yeah and and what does that do to the value of US debt like that completely destroys it exactly right so what is what is it that makes sense what Judy is say instead of doing a Perpetual Bond you do goldback us treasury bond 50 years zero coupons you decrease your interest rate payments significantly but at the same time your ally is not completely destroyed by inflation because that bond is banked by gold as
Judy Shelton has suggested so see how everything fits together that’s what I think they’re going to do that’s why I think they’re going to order the gold and revalue gold one big main reason is because I just explained because of Judy Shelton’s proposal of this physical gold US Treasury B Eric this is this is such a let’s say a fast moving situation right now now and this morning I saw two different stories about bessent coming out and saying look REM monetizing the balance sheet when he said that the the
assets held on the balance sheet he has now clarified that he didn’t specifically mean gold why would he why would he come out and say that specifically as well okay so if you’re Scott desent and you have instructed Jamie Diamond of JP Morgan and other buan Banks to help you repatriate I’m putting that in quotation marks physical gold back to the us so you are a big buyer that’s a fact 250 tons this month and 498 in the last two months through the Comax and by the way Ronin Manny posted something saying that in the last two
months the total gold that actually that the US actually imported is approximately 2,000 tons so 2,000 tons think about that that’s a lot so if you are importing 2,000 tons of gold and you’re still doing it right now do you want to excite the market by confirming that you’re going to revalue Gold because that will be out super bullish for gold everybody like the cat is off the back if you miss it so if I’m Scott Beth I will neither confirm or deny these rumors so that the price of gold remain stable below $3,000 which is
guess what exactly what happened so Eric where do you think the ETFs fall into this picture and how what has been happening with the demand for GLD and and inside the ETFs it’s very good question Tom for These Guys these buing Banks to get go they are essentially two huge piggy banks where they draw the physical goal from number one is the lbma and we talked about that number two is GLD GLD is the secret piggy bank so what’s happening I’m sure you see this the borrowing ratees of GLD shares have
shot up like a hockey stick Tom you you see that right like everybody talks about it it’s the same chart as the efp premiums okay exactly but we’ll talk about efp premiums after this okay M the boring rate went up why because a lot of bullan banks are borrowing shares of GLD so that they can sell it and withdraw the physical gold that’s what’s happening the physical gold is being sucked out of GLD now the last time I checked which was two two weeks ago G went down from 800 metric tons to approximately
I believe 660 metric tons so went down 160 160 metric tons of physical gold has been withdrawn from the GLD and I believe that physical gold is being held right now probably either like a lot of it a large portion of it probably being held on behalf of the US government and some of it probably you know the buling bank like I said before want to put it on their own books to enjoy what is going to come so that’s the that’s the part of the ETF okay it’s it’s piggy bank it’s a piggy physical gold piggy bank for these
us p in Banks and the US government now let’s talk about the ufp premiums why is the ufp premium shooting up normally my friend Bob Coleman said this recently on a post normally if you have a lot of deliveries of physical go that the comx shouldn’t efp premiums come down because it’s one big pie right if a lot of people are taking physical deliveries of the gold at the Comax you don’t you don’t need to use use the FP mechanism to cash settle right so normally the premiums from the EF should come down
that’s what happened in the past before the 15 times blow up of physical demand at the comx why is that let me answer that question and and I actually asked everybody nobody said anything so I’m assuming I’m correct here I think it’s because the players who know what’s going on the booty in Banks who knows what’s going on they jacking up the efp premiums to discourage the small players like the family office the hash fund me you whatever to take physical delivery so they give you a premium they say hey Tom
don’t don’t take the physical goal I’ll give you a premium of the efp take the cash take the efp premium cash settlement M everything points to one thing Tom it points to the fact that the big gold buyer or the big old buyers at the comx a lot of them are working on behalf of the US government because of this price insensitivity in my humble opinion so why do you think they have price in sensitivity it’s because they’re just trying to get that physical product that they they just want to get a go the US government just want to get
the gold that’s it there is price sensitivity in the sense that they don’t want gold to be at $3500 tomorrow because they still accumulating but they don’t mind $510 premium yeah that’s my point that’s it so Eric hypothetically if the gold that the lbma claims is there if it isn’t there or it’s encumbered in some other way how long would it take their suppliers to be able to come up with that amount of physical gold this is an excellent question Tom let’s say that scenario happens right what is happening right now that
we know of Bloomberg has reported that the lbma is urging its members to ask foreign central banks to borrow gold how does that work like I mean a lot of people ask me and I’m sure you see a lot of these questions on X right who in the right mind in this scenario would L that go out to the lbma well let me tell you who like Tom do you know what the IMF the amount of dollars that the IMF have land out to Emerging Market countries on average last year I have no idea 14 billion okay okay so so you are
let’s say let’s use Argentina as a as an example you borrow IMF money let’s I don’t know exactly how much may they borrow but let’s say $0 billion that’s that’s a place placeholder let’s say he borrow $3 billion and the terms and conditions of that borrowing of funds is that you send your physical gold to the bank of England so that the bank of England is the custodian of your gold and your goal is the collateral for your Fiat dollar borrowing at the IMF or whatever Western Bank I’m just using the IMF as example
so all of a sudden you’re a Emerging Market small country you Argentina you are beholden to the uh not only beholden you you owe Western Bank or the IMF and then this but you have your goal there right you have your goal being custodian by the bank of England fine it might be allocated right now but this crisis comes about at the lbma what happens you get a phone call from the bank of England and then you get a phone call from the lbma participant who has connections with whoever lend you that money and they say we need you to switch
that gold or or maybe that gold is already unallocated that gold will be shipped to the US and then you Argentina will be left with a promisory no saying that in 10 years or whatever you will get not exactly the same gold bars with the same serial numbers and markings Etc but you get the same weight and the same same qualtity of gold back from the borrower right that’s what happens Eric I was gonna ask like you brought this idea up that there has been a change here who do you think is this a us
change that that has brought about this Market action is this because of China’s gold buying and all of a sudden this has come to a head what do you think this this change was sparked by I think the Trump Administration looked at what is going on and they realize that they cannot kick the can down the road they really have to head on try to resolve this outc control debt situation and this is part of their solution of resolving that basically is to first order the gold at for nox revalue the gold and then to target US Treasury
bonds using the gold and maybe of course like I was talking to my colleagues and we are even bouncing the idea of the US government revaluing the gold every year mark the market as the price of gold goes up which means their tier one Capital collateral is going up in value so that’s going to be good good for the US B and sheet so that’s another possibility as well there you have it so overall I think I think they’re looking at it as a prudent solution like bessent was saying right I know he denies it
right but we discussed that this is what they have on the asset side of their bondage is the physical gold and they they’re going to utilize it that’s what I think it’s going on yeah Eric what do you think is China’s gold strategy here so that’s a very good question Tom China’s gold strategy right now is that is preparing for high gold price you ask me what is China doing to prepare for a high gold price the sge which is the Shanghai Gold Exchange delivered on average for the last two years each year
1,450 metric tons of physical gold a lot of that over 60% of that consumed by the gold jewelry jewelry market so as both me and you both know gold jewelry is a discretionary spending which means that if the price of gold goes up it’s possible that the amount of physical goal not in doll dollar terms right but I’m talking about weight will go down for the jewelry market because it’s more expensive for the end consumer so what what China did in 2025 is ingenious it did two two things number one is it launched a program at its
commercial Banks called the gold accumulate program it basically allowed an individual to open a what they call a go accumulate savings account so that you can you can put money in there on a monthly basis and it’s just like like a savings account there’s the balance but then you can at any time convert that out B dollar amount in that what they call Gold accumulate account into physical gold and withdraw so that’s a game changer because I have been on other shows in the past and I said to the host that Chinese
citizens generally have not yet viewed physical gold as an investment vehicle but with this gold accumulate program I see a sea change in the attitude of Chinese citizens they are now looking at physical gold as a as an investment vehicle because it’s easy to use it’s easy to withdraw physical gold from the gold inum account so my estimation is that in the first year of this program running the amount of physical go that people going to withdraw from the program low Bing by the way probably going to be 300 metric tons okay so to
look back to the go jewelry situation if that if the gold jewelry weight of physical gold goes down because the price goes up or like per ARS physical gold what’s going to happen is that the gold accumulate Accounts at least Chinese commercial Banks is going to make up that difference and maybe even more because jewry consumers are price sensitive but investors or physical gold is a completely different story not only that they are not price sensitive meaning that if the price goes up they buy less they might buy more physical
gold when the price goes up so that’s very ingenious and then the other thing that the Chinese government did was just beginning of this month it announced that it it’s going to allow Chinese insurance companies which are the biggest institutional investors in China to invest in physical gold now that’s a game changer because that’s structural demand and the bank of Bank of America research Department came out with an estimate saying that just with the 1% pilot program that the Chinese government is
launching with these Chinese insurance companies the fisical gold demand from these insurance companies Chinese insurance companies will be 300 metric tons so think about that H that’s 600 metric tons right there and that’s only the beginning of the go accumulate program on the retail side and then on the insurance company side it’s only 1% of all the assets under management imagine if that number goes to 5% of assets under management that will be 1,500 tons per year they’ll almost double what the SG
go withraw amounts per year just by that is isn’t that amazing so China is preparing my friend for a high gold price and I believe gold is going to be institutionalized in China as and as a institutional investing V investment vehicle you know it it just seems like everybody not everybody but many of these different entities are all starting to recognize the value of gold and really you know wanting to take physical delivery of it you know this idea that now insurance companies are moving into the space is an an interesting and big
development as well and it makes me wonder why or or let’s say what the difference is in Attitude between the west and the East I think sentiment is other than in even within the gold Community let’s say in the West I’ve I’ve talked to many dealers and they say they’ve they’re having to buy back a lot more metal than they’re selling right now so why do you think there’s this difference this cultural difference or this East versus West difference in attitudes towards gold very good question Tom so just like
I I think to answer that question first of all the Western ex I should say the US US North American retail gold and silver market is dislocated it’s not it doesn’t it doesn’t go step in step with the greater gold and silver market so like you said at the kmax and the lbma maybe there’s a huge demand for physical gold and silver but you you might see and in reality we saw that in in the last month or two that especially in the US there are more sellers than buyers are physical gold and silver in the retail in the US
why why is that because I think if you ask my true feeling on this I think in the US especially the US I think crypto and Bitcoin has really done its job in diverting retail interest elsewhere because a lot of people who buy precious medals you know there’s the same group of people a lot a lot I’m not saying all of them but a lot of them worried about Fiat US Dollars Fiat money they’re worried about Fiat money if you have this crypto and Bitcoin as a selection for them a lot of them will select
Bitcoin and cryptos because that’s faster money like they believe these things move faster gold and silver are too slow so we’re seeing the results of that of years of you know these cryptos and Bitcoin going up in value in fat US Dollars attracting people to them versus the golden silver whereas in the East especially China and Hong mainly China and I hear people from from Japan tell me the same thing and Korea people especially the older generation or the middle-aged guys like me We Trust physical gold and silver more than
anything else more than cryptos we believe believe that cryptos may be a or or Bitcoin may be a good speculative vehicle but it they are in no way a stable asset for putting our savings in so I think that’s the difference so Eric when we think about this stepping back again as as I was saying ignoring not ignoring the noise but stepping back from the current noise where do you think this puts us let’s say within the next let’s say the the short term within let’s say the next six months to the medium term term
within the next five years let’s say does this appetite for physical demand keep growing does it burn out what do you think about how this ends up developing so if we go if we go my fees and believe that a lot of these bulling B buyer comx are acting on behalf of the US government and of course they also do doing some for themselves some buying or physical gold for themselves if we believe that then I think they they really have crossed the point of no return Ronan Manny said it in one of his posts and it makes total sense he said
if the US government or or any entity is doing this not with the intent of breaking the lbma at heart okay if that’s not the intent they could have done this in many ways that are more discreet because we me and you both know there are many OTC markets all over the world they don’t need to go through the carax and squeeze the efp mechanism and break the lbma this way really this is the most ugly spect spectacle that have ever seen in the in the precious metals space in the last six years to honestly question I
think how this is going to end is that the lbma will if the demand is sustained at the comx in the US and in China I think what’s going to happen is eventually the lbma is going to break what I mean by Brick is that I think the paper promisory noes of gold at the lbma is going to be tra like they they going to be trading at a significant discount in the sometime future and when they start trading and a significant discount to the comx and the SG that really means that the lbma as a place of settlement of physical gold is coming to
an end so that is one of the outcomes of you know your question sustainable if the if the demand or physical goal is sustained in the new future and the other outcome is what I said earlier in an interview which is the short covering is going to start happening at the Comax which means that we’ll see prices at the Comax for physical for gold Gap up so that’s a potential outcome that we need to be aware of right it might not happen but if there there’s not enough physical gold to be delivered at the Comax then
somebody some people will have to paper cover their shs so those are those are the two possible outcomes from a price P perspective okay that’s it Eric do you think that this demand also as this recognition or let’s say if this recognition of a lack for physical becomes broader do you think that this ends up bleeding into demand for the miners by the let’s say the the market as well okay well you say a lack of physical right and I use that term as well but there really is no lack of physical if
the price is right of course you know Supply is a function of price that ties into your question because if the price goes up then what happens to the miners the minor underlying asset is the physical gold and silver right so if the underlying asset physical gold and silver is going up in price then the miners are going to have bigger margins providing that their ASAC their all sustained inclusive cost is under control and I think it might be under control because we are seeing potentially an end to the Ukraine war
right and Donald Trump has also invited Russia and Saudi Arabia to a conference in the Middle East to talk about oil because those are the three biggest oil producing countries Russia the US and Saudi Arabia M so if the oil price is contained let’s say within 2025 and 26 and the price of gold goes up because of all the factors that we talked about during this interview then I think the miners with have a much better much higher you know profit margin and therefore their stock prices will eventually reflect that because of this
expansion of their margins correct so but we’ve had record high gold prices we’ve had an expanding margin setup like this why do you think that there has not been more demand for the miners at this point the cost went up Tom at the same time yeah but their their margins are still bigger than ever yeah that’s true too that’s I think I think that part is psychology you know like they’re bigger yes they can be even bigger you know you know why I mean because like the cost went up like I said right but you’re right even
with the cost going up the margins did go up you know comparatively speaking but then now we talk about sentiment and as you know like I said just now sentiment for precious metals in North America and min especially it’s not very good because every people are in everything else basically they want to buy Nvidia they want to buy the next greatest quantum computer stock they want to buy the next meme coin right but they are not really looking at minus yet so what we need is we need a major breakout in my opinion
of gold and silver prices especially silver by the way okay the silver is still way below it’s 1980 high on of $50 right so I think one silver breaks 50 and gold breaks maybe 3200 or 3500 then the miners will get a bid but it takes time my friend that’s that’s my true feelings I think eventually the miners will get a bit but it looks like it’ll take much more than what I envisioned originally yeah yeah it’s crazy to think that constantly charging through all-time highs over the last let’s say six months
especially hasn’t garnered the miners more demand than it has but I agree like with this hyperf financialization and so many other avenues for people to invest in this is in some ways an archaic business that isn’t on the generalists radar another thing Tom you have chart on your show before I know that because I watch it m and there are you know Analyst at the big Banks what are they doing what how are they valuing valuing the miners they are predicting a lower gold price that’s the base model they
are predicting a lower silver price right so not lower not lower but but far lower than it has or than it is right now so they’re they’re basing projections and valuations of these miners off of like a $2600 gold price right exactly right and we at 2900 at the Futures so what is a stock price you’re buying future performance and these guys are saying the future performance of these miners are crap so the stock prices of the miners are reflecting that that’s that’s that’s what’s happening but eventually that’s
going to change eventually the analyst they have to face the truth which is the US is remonetized gold at the federal level and putting it back into the system and then gold and silver it’s going to be re revalue higher I mean silver is a different story you want to talk little bit about silver I can talk about it do you want to talk silver why the West want yeah so my theory is that JP Morgan and the Western buing Banks actually helped China to suppress the price of silver because it has always
been in China’s interest to suppress the price of most Commodities because China is a manufacturing Mega manufacturing Hub in the world the biggest right and it uses Commodities China want cheap silver in the past using so tempos as model the West they wanted that too why because the West like the us or the European countries they would contract manufacturer through China and China would get a a small cut of the manufacturing value chain you know proceed but the biggest cut of that profit goes to the West goes to the US
so JP Morgan help China to suppress silver price it’s good for everybody but what’s happening recently in the last five years China no longer need the West China is manufacturing high-end products like you know High lowend everything from to end from design to manufacturing to marketing to shipo okay without the West involvement without the US involvement so in my opinion it’s no no longer profitable for the West for the US to assist China in suppressing the price of silver so I think that game is
over and the us is going to let the price of silver go go up so that it can help its own domestic silver mining companies because to to reindustrialize and to resore all these industries it the West the US really need miners that are not constantly at the brink of bankruptcy you know that’s that’s the joke part me and you both know what’s happening with the miners right so I think I think that’s it basically that’s what’s going to happen there’s not much domestic silver production Eric but do you mean
let’s say Mexican silver for example or South American silver yes those are us companies though huh they owned by Americans they owned by Canadians right that that’s what I’m talking about they like even even mines in Africa a lot of them owned by American companies so anyway the whole point is those companies need to thrive in order for Donald Trump’s make America great again reust realized restoring to work and it’s no longer in the interest to suppress silver at a sh of joke of a price $322 is ridiculous and to help China
doesn’t make any sense especially now that we in a mining deficit of around 8,000 metric tons per year 8,000 tons per year is the deficit it’s the def mining deficit okay and the lbma claims that they have 27,000 metric tons in the V do you believe that I mean they pretty much lied about the gold figure right or offis skated it I I don’t trust them 27,000 tons because the SG and the sh which are the two you know the Shanghai go exchange and the Shanghai Futures exchange the silver VES there combined
only have around on a continual basis only around 3,000 metric tons so the lbma is claiming that they have 10 times the amount of physical silver versus the Chinese I’m sorry it’s it’s not believable at this point in my opinion I just I just don’t know how that number of 8,000 tons metric tons deficit per year seems high to me but I I can’t think of that off the top of my head here that’s from the silver Institute okay that number so I just simply converted I know it’s confusing because the sil Institute
they report that number in Troy answers and I converted it to metric tons because China uses metric tons M so I converted in metric T so I can compare right yeah the two the two numbers yeah so 8,000 is what the the world mining Supply is 20 2,700 sorry 27,000 27,000 metric tons is the world mining Supply off physical silver yeah but the deficit is 8,000 okay okay and lbme claims that they have 27,000 approximately or 28,000 in the both well I guess we can only speculate on if it’s there or not correct and
again taking this this step back I think this has been an important Catalyst to bring attention back to the gold market and probably sort some of these ways of this this OB obfuscation and this opacity within the gold market to to settle some of that yes I hope that my explanation of the efp mechanism and how it normally works and how it is blowing up in the current environment will help your listeners today thank you for giving me this opportunity Tom well I appreciate it as well Eric and I hope this this does help
this explanation does help a lot of people will you’re going to have a thread on your Twitter to help explain a lot of this as well that you’re going to have within have up within the next day or two here we’ll we’re recording this on Thursday the 20th but we’ll have it out on the on the 21st here and yes you’ll you’ll have that thread available at on Twitter King Kong 9888 and if anybody has any other questions they can ask you questions there as well yes thank you to perfect thank you Eric really appreciate your
time today and um look forward to seeing how this develops have a nice day Tom this podcast is for General informational purposes only nothing on this podcast should be taken as investment advice guests on this show are not compensated for their appearance listeners are urged to educate themselves and make their own decisions do not base any investment decisions on the information contained to view our full disclaimer please visit our website
