An Absolutely Massive Fraud (Uncut) 03-01-2025

“An Absolutely Massive Fraud That Has Been Perpetrated for Decades”, says David Jensen

The people involved in these paper contracts having to cover their shorts and go out and scouring the planet for physical and that will mean a lot higher price or they could basically default and that would be the end of the London bullion market I would say. I’d say, we’ll go one step further Mario and say it would be the end of London. The city of London itself, yeah.

As a financial center. Monaco 64, home of alternative economics and contrarian views. So today is the 28th of February.

It’s Friday but you’re going to see this interview tomorrow, 1st of March. Just wanted to let you know that and I’ve got David Jensen and his sub stack is Jensen’s economic precious metals and markets newsletter and I’ve had him on a couple of times. The last time was the beginning of January and he was warning about the physical shortage of silver in London.

So David, a lot has happened since we last spoken and yeah, it’s nice to have you back. Thank you. Thank you, Mario.

Great to be back with you. Yeah, a lot has happened. It’s kind of blown out into the open as opposed to been, you know, discussions in the back corners as it were.

Yeah, I agree. And it’s been almost one month to the day, 29th of January, when I saw this article in the FT and I was surprised that they put this in the FT, that there was a four to eight week wait to deliver spot contracts from the Bank of England or LBMA mechanism. And I thought that was really serious.

I thought that was the most important news in the gold market, probably since Gordon Brown announced the sales like in 1999. So, yeah, gold since then went almost to 3000 at the time, it was 2760, I think. And we’ve seen, though, in the last few days of this past week that gold has corrected down quite a bit.

And we know that markets don’t go up in a straight line. And the first question I wanted to ask you, and this comes a little bit from Eric Young or King Kong, who I’ve had, and he’s been covering this quite a lot. He says there’s like a EFP doom loop that there’s no, you know, they can’t really deliver the physical in London.

And he wanted to ask you what you think of the fact that the price, the promissory note price of the spot LBMA contract has actually gone to a slight premium now to the COMEX price. And he’s wondering if that’s got to do with them trying to stop the flow. But I’ll let you answer that and tell us what you think.

Yeah, I think it’s not surprising that while there is gold to be had in London, and I don’t think that’s going to persist forever, that the price for the physical in London should go to a premium, given the circumstances of the demand in the market. You know, I’ve been watching closely for backwardation, where the spot price surges above the futures price on the COMEX. And I’m going to try to suss out and find the spot price in London versus the forward price that they trade there on a daily basis, because that is the ultimate sign of physical shortage when you start seeing that sustained inversion of these prices.

Now, as far as the London price moving to a premium over the last five trading days, like today’s Friday, February 28th, but the previous five days, we can see in the CME COMEX data that for each of the prior five days, there’s been between 200,000 ounces and 415,000 ounces of EFP contracts that have been traded. So the EFP contracts, as you know, are a substitute of a COMEX contract for a London cash contract for immediate delivery. So each day, let’s say in round numbers, between 200,000 and 400,000 ounces have been traded and they would be converted and stand for delivery in London.

So it doesn’t surprise me that the London spot price should go to a premium, especially I view it as a moratorium that the Bank of England has put on gold, because it came out of nowhere that all of a sudden there was an eight week delay. And I view that as basically an attempt to pause the run on the physical while they sort stuff out. So we’ll know more with time, but that’s certainly what it appears to be to me.

Yeah, this is here, the CME data on gold and exchange for physical is EFP. And this number here, 3,560, you have to multiply by 100 because each COMEX contract is 100 ounces. So it’s 356,000 and that’s, is this quite a lot in historical terms, you would say, would you say? Well, I’d say it’s quite a lot given the context of what’s going on in London right now.

So they’re actually, it’s actually probably making the problem even worse for London, because it looks like the Americans or New York, they still want the physical. They want bars, yeah. Yeah, they want bars.

And the other thing that I wanted to talk to you about, David, is this, the recent piece you wrote on your substack, and I recommend the viewers to go to David’s substack, it’s Jensen David substack. You say it was yesterday you wrote this, let’s scrutinize the Bank of England’s claim that mere logistics are delaying gold bar deliveries by 60 days. And it’s interesting as well, David, because that delay was already in place at the end of January, because that article in the FT was in the 29th of January, right? Right.

Yeah, because it was so sudden, I view it as more of a moratorium than kind of a developing market artifact, because we didn’t hear about it. And then all of a sudden, oh, this is a fact. Yeah.

And what do you mean by moratorium in this? Well, that they’re basically holding, I think the Bank of England is holding back on release of metal, because they’re at the wall. Yeah. So they’re at the wall, they’ve got very little left.

And they’re saying, oh, this is going to be eight weeks because of, you know, bars are heavy. Yeah. You know, Dave Ramston, right, the deputy governor of the Bank of England, I put the quote in the article, gold is a physical asset.

So there are real logistical constraints and security constraints. It takes time. And the stuff is also quite heavy, as you know.

And that was his comment here a couple of weeks ago. Yeah, it is heavy. It’s 28 pounds a bar.

But that’s not prohibitive, right? People are hired to carry 28-pound bars and put them on dollies and move the metal around. So that was kind of sad to hear him say that, in a way, because it’s so silly. But it is what it is.

Yeah, so what I did with the article, Mario, is I tried to take a worst case analysis and say, you know, OK, Dave Ramston, if it is logistics, let’s see how bad the logistics are. And so, you know, the CEO of Stonex, Philip Smith, he came out and said a couple of weeks ago that 2,000 tons of gold had really been moved to the U.S., 2,000 imperial tons, so 56 million ounces had been moved. So very difficult to say.

There’s about a four- to five-week delay by the LBMA of the vault data in London. But I said, OK, well, let’s just assume that 1,000 tons came out of London. And let’s assume that that entire 1,000 tons came out of the Bank of England vaults.

Like, how bad would the logistics be? And so when you reduce it down, it came down to the fact that about 97 bars every 24 hours would have to be moved per employee in the vaults, assuming there’s 12 employees in the vaults moving metal around. And so that’s, I mean, that’s not too terrible, right? Ninety-seven bars. So that’s what we’re supposed to believe is causing this suddenly, and I’d argue it’s an imposed 60-day pause to get delivery of the bars.

I think there’s another story going on that there’s a desperate arm-bending and discussions between the Bank of England and other central banks for which it holds metal to allow further metal to be leased into the market, because not all of the metal which is held by the Bank of England is available for lease into the market. Yeah, and would you, as a central banker, seeing what’s going on, and I’m sure the central bankers keep abreast of all the developments we’ve seen in the gold market in the last month, would you be comfortable in leasing your gold? I wouldn’t. I wouldn’t, because, you know, the discussion in the market is that somehow this leasing of metal is a solution, but it’s only a temporary solution, right? The lease rates, sorry, the lease period would be anywhere from a couple months to a year.

So that metal has to be bought back in the end as well, right? It’s a temporary salve to a chronic problem that we’re seeing arise now in London and New York and in other markets. So, okay, all of a sudden we’re to believe 60 days pause is the norm because they can’t move 95 bars, and that’s assuming, of course, as I said, that the entire thousand tons that have come out of London in a two month period all came from the Bank of England, which we know it hasn’t. So it doesn’t stand up.

It doesn’t stand up and, you know, concerned citizens are asking questions, if you want to put it that way. Yeah, and one thing you noted that’s really interesting in this article is that it’s here, it says, but then if 28 million ounces of gold have already been shipped from London since December, why the 60 day hold up for further delivery? So you’re basically saying if they could do it for the first thousand tons or so, why can’t they do it now? And David, I’ve got here some, this data here, I don’t know if you’ve ever seen this, the gold statistics from the Bank of England. And I’m not sure, they don’t differentiate what kind of gold they have in the vaults if it’s for central banks, if it’s allocated and allocated for lease.

But I’ve noticed that it’s gone down from 174.3 million ounces at the end of October to 169.2 at the end of January. So that’s 5 million. But we haven’t gotten the February data yet.

Right. Right. So there are many aspects to this that don’t really add up.

And then the final point is the fact that the metal, you know, it’s FOB on the shipping dock at the Bank of England. And the refiners are saying, hey, we can’t get enough metal. So it’s not the fact that the miners can’t handle the metal that they get.

They don’t, they aren’t getting enough. So we know that the metal shortage is before the refiners. It’s not shortage coming out of the refiners.

And there was a Swiss newspaper article out where they were interviewing the head of the Swiss Metal Refinery Association. And that much was stated. And they said that they were operating with no overtime at the time and that they were able to process the metal that they were receiving.

So the shortage is before the refiners in Switzerland. They’re not getting adequate feed. And we’re told by the Bank of England that, you know, you better be ready to wait for up to 60 days.

Ever since that announcement that you noted there in the FT there four weeks ago. Yeah. Do you, and you say here, Swiss gold refineries state that they are currently unable to obtain adequate gold feed to meet demand.

The holdup appears to be in shipping gold on trucks, FOB, London vaults to airports onwards to Switzerland, so and so. And so you say it appears that the vaunted London gold market has been tapped out of gold bars available for immediate delivery from its vaults over the past two months. Well, it’s been for the last month, at least, since that article.

It says the global market is left gasping for physical gold and the holders of 370 million of London gold spot cash promissory note contracts have some questions. One thing I wanted to touch upon, yeah, and I know a lot of people are saying this is because of the Trump tariffs. And I think that’s just an excuse.

I think you think the same way. But politically, though, we’ve seen how the EU countries and the EU leaders have been really put down quite a bit, I would say by President Trump or even your leader in Canada. But yesterday we had the prime minister of the UK, Keir Starmer, go over to the White House, and I was quite surprised how well he was treated by Trump, him and Lammy, the foreign secretary who called Trump some names I can’t really mention here on YouTube.

And it makes me wonder whether the reason why Trump is treating them so well is because of the Bank of England is basically holding the gold so that the Americans can get it, because maybe it’s for the Treasury and maybe they need to repatriate the gold. Maybe the Fort Knox gold was leased out many times over or whatever. I don’t know.

I’m just speculating. I’ve also speculated on a chat with Clive Thompson yesterday or earlier today, I guess, that maybe Warren Buffett wants physical gold, seeing that he’s got $334 billion in cash. And in his latest, let’s say, letter to the shareholders of Berkshire Hathaway, he actually said that paper money has no future and he doesn’t trust government bonds either.

So what do you think is happening, David? And could you also explain to the viewers, because many people don’t know how the LBMA operates, you’ve been here before and you told us how they create an endless supply of paper and whether that game or that jig could be up. Yeah, so I mean, there’s been almost 100 million ounces of silver that’s been moved into New York vaults as well in this period. It’s not just a gold phenomenon.

And so I don’t think it’s one entity that is acting in the market. I think that the market is composed of many players. And that many players are acting now coherently in the same direction in terms of securing physical metal.

And I don’t know what the tipping point was. I don’t know. It was, you know, roughly the beginning of December, end of November, when this shift happened.

Now, Trump had been elected but was not in power. We know Scott Besant is cognizant and positive about the future of gold itself. So everything that is being said is basically conjecture, because there is no known source.

And I really object to this narrative about Trump, Trump, Trump, because it’s, show us proof, right? My view on the matter is that we don’t know and we’ll have to see. And we may never know. But all we can see is that both of these metals, the same coherent activity is occurring.

And physical metal is being withdrawn and shipped. And by the way, the silver data, you know, we can anticipate roughly a four to six week pause before it shows up in New York. So there’s, you know, because of the ocean shipping that is being used to move the silver so, but so far it’s 100 million ounces plus or minus has been moved into New York vaults from various locations globally.

So we’ll have to see what the vault data shows here in the next couple of weeks out of London. But there is some question about completeness in terms of the availability of the data. But I’m expecting a massive increase in the trading volume that is occurring.

Sorry, what was the second element to your question? That was the first part. What was the second part of your question? And I wanted to add a little bit to that second part. It’s about, you spoke about this in an early interview we did, how the LBMA has the wherewithal or had up until recently to just create an endless supply of paper, silver and gold.

And yeah, so maybe you could explain that. And the other thing I wanted to ask you is how do you think the LBMA and the Bank of England, how do you think they will extricate themselves from this corner that they’re in? Yeah, so the endless creation was while there was faith in these magic beams, which were the spot contracts, right? So you’re holding a contract for immediate delivery in the spot market in London. And that for many decades, investment funds and sovereign wealth funds and hedge funds, etc., etc., had been happy holding these contracts, which were basically, you know, the local London delivery was two days plus one, right? It used to be one day plus one, but then it’s two days plus one for three total days.

And that faith has been fractured. And we see that faith in holding these magic beams has been fractured by visibly seeing the physical flows of metal, that a decision has been made by multiple entities that will take the metal. And then immediately, sorry, 60 days for delivery because the bars are heavy and logistics, right? So how do they extricate themselves, the second element? I don’t know.

How do you extricate yourself from a morass, from a fraudulent, an exposed fraudulent system? And, you know, using the LBMA’s own data, where they did a survey of the local London liquidity survey in 2011. And they said that, you know, with about 64% of the traders responding to our survey, we estimate that the daily turnover is 10 times the net settled data that we post. And they never said if the big traders responded or not.

So if 64% of your traders respond, the trading houses respond, but the JP Morgans and the HSBCs, etc. don’t respond, it could be a heck of a lot more than 10x. So, you know, we see these daily trading volumes of, you know, 200 million ounces of gold and 3 billion ounces of silver trading in these magic bean contracts.

And it speaks of a massive open interest in those markets. So what do we do now? So 5 billion ounces open interest minus 100 million ounces moved to New York. Let’s assume it all came from London.

And now there’s roughly 370 million ounces, assuming that 28 million ounces came out of London, which we don’t know because the LBMA is so slow in publishing its vault data. But now, what do you do now? Like, you’ve got all these contracts that are saying, we want metal or an increasing number of contracts saying, contract holders saying we want metal. And we’ve got the Bank of England saying logistics.

We don’t know what is being said about the silver market, but it’s a horrendous situation there as well. So I don’t know. I don’t know, Mario.

I don’t see a good ending to this. I don’t see it just going away as so many of the people in the financial sector want it to happen. Yeah, of course, they would want to see it go away very quickly because I think the whole banking, the banking system is under threat from this.

One way I see it resolving itself is the LBMA, Bank of England, Axis, the people involved in these paper contracts having to cover their shorts and go out and scouring the planet for physical and that will mean a lot higher price or they could basically default. And that would be the end of the London bullion market, I would say. I’d say, we’ll go one step further, Mario, and say it would be the end of London.

The city of London itself, yeah. As a financial center. Yeah, that would be huge.

And I believe it’s roughly half the GDP of the UK, right? Plus or minus. Probably, yeah. I saw a survey recently that of all the citizens living outside of metropolitan London, that their average salaries, their average income was less than Missouri, which is the poorest state in the US.

Yeah, I think it was Mississippi, actually. Yeah. Well, neither one of those is a hub of activity.

People live hand to mouth there. Yeah, so, yeah, I mean, from what you say, we, the whole of the UK, then even London could end up like Mississippi. And that’s why I think if you’re in the UK and you have physical gold, keep a hold of it.

That might help you stay above the poverty level. And yeah, so you don’t think this is over by any stretch of the imagination, do you, David? No, it’ll come in waves, right? This is typically how natural systems work. Waves, that’s right.

I mean, Eric Young as well, our friend, King Kong, thinks the same thing. Because a lot of people are saying, oh, this happened in 2020, 21, and then it normalized. But back then, the reason it happened is because they stopped all the shipping because of that crisis.

I don’t want to mention too much that name on YouTube. But now there is no crisis. But ultimately, I think, David, people, investors, big investors, they’re now concerned.

They don’t trust the banks anymore. And there’s too much. Maybe they’re waking up to what the Western financial system has done to Putin and Russia with their reserves.

If they can do that to a sovereign nation that has nuclear weapons, they could very well do it to an investor. Yeah, the bloom is off the rose, as it were. And I don’t think that the Bank of England did itself any favors with these hand-waving arguments that we’ve seen from the governor and the deputy governor in the last couple of weeks.

They’ve only compounded the problem. Yeah, sorry, go ahead. Yeah, and a final note here is the scale of the problem.

If we look at an estimated 5 billion ounce open interest in the silver market, when metal is substituted for promissory note claims, demand for metal is substituted for promissory note claims, you could easily have, like, just assume a $100 move in the price of silver to start with. It’s trading at 60% of its 1980 high price. But let’s just say $100, just to choose a number for argument’s sake.

If you’ve got a 5 billion ounce open interest, we’re talking about a $500 billion liability on the balance sheet of these trading entities. And we don’t know exactly who they are, but let’s say that they’re bullion banks. But you’re basically going to erase the existence of these financial entities.

And that’s the problem that we’re talking about. It’s an absolutely massive fraud that has been perpetrated for decades. And it was intimately involved in the blowing of the biggest credit bubble and asset bubbles actually, I should use the plural in history, because this is what started with Greenspan in August 1987 was he said, we have a new policy now we’re going to, you know, liquefy the markets here whenever we have a disruption.

And in the vernacular, it means that you’re going to blow a series of bigger and bigger bubbles each time one of your bubbles collapses. And that only ends one way and that ends in final collapse. Yeah, yeah.

And well, that’s great. And just one quick question, because I learned about the fact that there was a four to eight week delay by reading the FT 29th. Where can we find out what the delay is? Do they update it somewhere? You said right now it’s T plus 60 or two months.

So I’m going to start making calls to bullion bankers. It’s the only source that I think is going to be reliable. And you think they will help? We’ll find out.

Yeah. So right now, this T plus 60, where did that come from? That has come from the financial media in general, like Bloomberg. Yeah.

Yeah. It could even be worse if it’s coming from them. It could be more than 60 days.

That’s it. Yeah. Yeah.

60 days is the number that I’m seeing now repeatedly referred in the press. But this will be a series of waves, ebb and flow. Yeah.

And these types of things don’t resolve themselves in a week. No. But I certainly find it interesting that all of a sudden there’s you know, multi, multi week delay that’s being advertised to us.

And we’re just supposed to say, OK, well, that’s the new normal. Right. And the question is, why is this the new normal? Why can you not? Why can you not deliver? You know, why can your employees not move 95 bars a day? Yeah.

And they were able to do it from like the end of last year to the beginning of this year. Yeah. Yeah.

Yeah. So it’s all of a sudden they’ve got back problems. I don’t know.

Yeah. Great, David. I’d like to thank you for coming on.

And we’re going to keep an eye on things. And hopefully we’ll do an update soon. And I wish you a great weekend.

Great. Thanks for your time, Mario. And yeah, I do enjoy these discussions.

So let’s chat again. Great. Thank you.

Take care.