Gold Shortage Coming? (Uncut) 02-08-2025

Gold Shortage Coming? Why $82B Left London Ahead of Trump Tariffs

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It’s unfiltered insights from the experts, everyone ranging from Dr. Ron Paul, Gerald Celente, Danielle DiMartino Booth, and so many more. You can get it at dannyoutlook2025.com. Again, that’s dannyoutlook2025.com. Over 400 metric tons of gold has moved from London to New York. The Financial Times broke this story and the movement really started back in November during the election cycle with the fear of But we want to find out why is it happening? Is there more to the story that we should know? And how does it impact gold investors? Joining me today to talk about this and so much more, Adrian Day of Adrian Day Asset Management.

I’m so happy to see you, Adrian. Welcome to the Danielle Cambodian Show. Welcome back, I should say.

Well, I’m so happy to see you, Danielle. It’s good to see you again. So Adrian, look, when this story was breaking, I said, I got to bring Adrian on.

Explain to us why we’re seeing this movement of gold. I mean, we see the headlines, UK faces gold shortage as London traders divert bullion to New York amid Trump’s tariffs. What’s the reality of the situation? What are you hearing? Yeah, look, it’s an interesting story, but I think it’s been grossly overblown, to be honest.

It’s in my view, it’s not a cause for panic. It’s not. A lot of people have said to me, is this it? Is it starting? I got it.

You know, banks have been moving gold to New York, as you say, ahead of the tariffs, because obviously, if there’s tariffs on gold, no one wants to import gold from Europe or from Britain, not to get into that subject, or from Britain. If there’s going to be a 10 or 20 or 30 percent tariff on it, no one’s going to do that. So people are moving the gold to the US ahead of that.

And of course, as more assets started happening, as you said, even before the election, when it was obvious that Trump was going to win or as a precaution against him winning, you know, become self-reinforcing. And you have a premium on New York gold, which has developed as much as $30 an ounce for gold, a dollar an ounce for silver. And so that only adds to the incentive to move your gold from London over to New York, where it’s trading at a premium.

But I mean, as we saw with COVID, we saw the same thing in COVID for different reasons. People move gold to New York. And after the COVID went away and the panic subsided, it wasn’t the end of the world.

You know, not everybody in the US asked for delivery. And we found out there wasn’t enough gold to go around. And, you know, the gold went back, went back eventually to, most of it went back to London.

So I think we’re going to see much the same here, to be honest with you. So, you know, I think it’s an interesting story. And the story is about the delays in London.

Well, that’s what I want to ask you. Yeah. It just takes time.

You know, if you’ve got a lot more people asking for their gold out of the vault, it simply takes time. You’ve got to look at the allocated, non-allocated. It simply takes time to go and pull the bars out, to load them up, obviously, securely.

I think the concern is that exactly, Adrian, that should crisis hit or you want to retrieve your gold bars, you know, people don’t want to wait, right? Well, sure. But I mean, sometimes in life, you do have to wait. I mean, you know, if you go to a, I don’t know, not a very good analogy, but if you go to a clothing store and you say, I want this blue shirt, I want it in a 16 color.

And they say, well, we don’t have that. Let me go to the back room and find one. You don’t say, no, I don’t have time to wait.

I want it right now, this second. No, we have one in storage, sir. We’ll go get one.

And I think that’s what’s happening with the gold. People are having to wait a few weeks, but I don’t see that as a huge, big deal, frankly. So bigger picture, does this have a direct impact on price whatsoever? I mean, does it impact the gold investor? Well, it’s certainly, as I say, temporarily, there is a premium in New York gold as opposed to London gold.

That will subside after a while, you know, because arbitrage has come in. And so those things always subside after a while. No, I’m not sure that this, I may be wrong, but I’m not sure that this really has any kind of fundamental impact on demand or price for gold.

There’s enough drivers of gold anyway, which are all positive. Well, I want to talk about that because as we’re speaking, $3,000 gold doesn’t sound wild at all anymore. Adrian, thoughts on, like you said, there’s so many drivers right now.

If you had to narrow it down, what do you think is driving the price of gold? Well, obviously we know that for the last two years, it’s been primarily central banks from the, what, October, September, October of 2022, it’s been the central banks. Starting at the beginning of last year, we also saw Chinese, excuse me, Chinese consumers step up their buying dramatically. They faded a little bit in the summer, but apparently they’re back again now.

Both of those people, both of those, both of those groups are buying gold for completely different reasons. And also it’s important to understand completely different reasons than the typical Western investor typically buys gold. So we know why central banks are buying to diversify their reserves against dollar weaponization.

And Chinese are buying because they’re worried about the economy, the devaluation of the Yuan, and they’re nervous about the fragility of the banking system. So gold isn’t, and they’re not allowed to buy crypto. And if you’re Chinese, you don’t want to buy real estate right now.

So gold is the obvious place to protect your assets. Now, those are completely, completely separate and independent of the normal drivers of gold in the West, which are, you know, negative real interest rates, lower dollar, you know, weaker economy, lower, lower interest rates and high inflation and so on. We’re beginning to see those factors or many of those factors.

We’re beginning to see those factors come into the market. But I think it’s fair to say that six months ago, you saw a high dollar, low and declining inflation, a strong economy. I say, I should say apparently or seemingly, a strong economy and a strong stock market.

That is precisely the macroeconomic environment in which you don’t look at gold. Why do you want gold when everything’s going so well? And then, of course, the election of Trump, I think, gave a little bit of optimism about the economy, about, you know, cutting regulation, cutting spending, and that would help the economy and help the stock market. We’ll see how that plays out.

But that’s a different issue. But I’m just saying there was some optimism. And so, again, people were not looking at gold.

And just to finish on that, just the staggering thing, Daniela, which the staggering thing is you look at January. You’ve only had three days of inflows to the GLD in January, but you had no inflows to the GDX or the GDXJ at all. People in the U.S. are still selling gold, even at these prices.

Sorry. No, it’s interesting. Why? Because they want to be in crypto? They want to be in the S&P? I may be wrong, but I think crypto is definitely a negative, but personally, I think it’s marginal.

Because to me, in my experience, anyway, the sort of person that’s buying crypto would not be buying gold if they weren’t buying crypto. They’d be buying the Nasdaq. They’d be buying NVIDIA if they weren’t buying crypto.

I think that in my experience, the overlap is pretty low. So, yes, it’s a negative. I think it’s just the fact that the stock market is doing well.

Forget about the breadth being the worst in history, but the stock market is doing well and crypto is doing well. Why look at gold? That’s, I think, the main factor. But clearly, someone is buying gold stocks.

You look at the gold stocks. People don’t know this. It’s a stealth rally.

I mean, we know about it today and yesterday, but in the last 12 months, the XAU is up 47 percent. That is almost twice what the S&P has done. I bet you could ask a hundred investors and not one in a hundred would know that.

They would have no clue. It is absolutely, it’s absolutely, it’s the sleeping giant that’s just been, it’s incredible. And this is without U.S. retail investors buying.

So, the U.S. retail investor hasn’t showed up yet, but talk to me about a safe haven bid. Because we know how Trump has made it clear he doesn’t want America involved in wars, which should temper geopolitical concerns. But yet we have statements such as, we’re going to take over Gaza, right? Right.

So, how does that play into the gold price rally, if anything for you, Adrian? Yeah, I’ll try to avoid politics because that always gets, look, if you look back at history, the truth is that geopolitical events and crises have typically only had very short-lived impact on the price of gold. Unless gold is already in a very, very dramatic move up, as we saw in 1980 with the Iran hostage situation, geopolitical events, even 9-11, or the similar events in London and Spain in 2021, the tube bombing and the Madrid, well, the Madrid underground bombing as well, the invasion of Iraq. These events have very, very short-lived events on gold.

We only have to think back to the Russian invasion of Ukraine. Gold was moving up fairly nicely in the six weeks ahead of the invasion as the troops were massing and all the speculation was there. If you look at the day they went in, I think it was February the 21st, but don’t quote me on that, but the day that the Russians invaded, six weeks after that, gold was back to where it was before the move up.

So, they tend to be very short-lived. And so, remove those geopolitical events. And yes, it’s a negative of a price of gold, but in my view, a very, very minor negative.

I think people are holding gold as protection against monetary chaos rather than geopolitics. Well, let’s talk about that a second or a minute. We’ve seen Trump’s threats there, right? Especially to the BRICS.

If you even think about moving away from the almighty dollar, 100% tariffs. Do you think he’ll win that battle? Will the US dollar reign supreme? Two different questions, if I may. So, look, first of all, look, if you’re a BRIC, look, when the US has acted like a bully for the last 30 years, this isn’t just Trump and it’s not just Republicans.

You think back to the US, and maybe bully is a strong word, some people will object to it. But you think of when the US told the Swiss how they were supposed to run their banking system and run it the way we think it should be run, not the way you have done it historically. So, when the US acts like that towards not just his enemies, but towards his friends, remember at the time, the Swiss embassy was taking care of US interests in all the countries where the US didn’t have consular embassies, like in Iran and North Korea.

The Swiss were doing that for the US. So, when the US acts like that towards their friends, it causes resentment. Now, this is the background because it’s been going on for a long, long, long, long time.

People in my experience around the world, they like, they respect America, they like and admire America, but they also resent the fact that America wants to tell them what to do. So, to the current situation, if you’re South Africa, or Brazil, or Indonesia, and you’re concerned about the weaponization of the US dollar, and you’re also concerned that frankly, you’ve got too many dollars in your reserves, the average now for foreign reserves among central banks globally is 55%. So, a majority of your reserves in the US dollar, as way down from 75, 80% at the beginning of the century, you know, 1999, 2000, you’re worried about the weaponization of the dollar.

If the US comes to you and says, you carry on with this and we’re going to put 100% tariffs on you, does Brazil, South Africa, Indonesia, etc., do they say, oh my gosh, so sorry, we didn’t mean it. Forget about it. Or do they say, boy, we better step up our defenses? I think the latter.

I think they say we better step up our defenses. And so, I hate to say, well, I think it’s going to backfire, frankly. Backfire on Trump, on the US.

Yeah, or on Trump, whichever you want. Yeah, yeah. So, I think we’re going, I don’t think, I don’t think for a second that we’ve seen the end of a move to set up, and of course, to set up alternatives to the US dollar.

And remember, we’re talking about a payment system, we’re talking about reserves, and they’re two separate things, right? But the US is the dominant payment system, it is the dominant reserve currency. But we’re moving away from that. And that’s inevitable.

Now, what’s slowing it down? Two things are slowing it down. One is, you’ve probably heard that saying, Adam Smith, in fact, there’s a good deal of ruin in a nation. Things can go on a long, long time.

In 1945, when the British pound was a reserve currency, and the US took over that role, it was very, very obvious to everybody, including Brits, that day in the sun had ended, that America was taking over, and that America was the dominant political, military and economic power in the world. And it was an ally. So, it was an easy transition.

In 1815, it was pretty clear with the defeat of Napoleon that the French were over, and that Britain was the top dog. Where we are right now, is there is no obvious single alternative to the US. You know, China’s economy is close to the US, militarily, it’s catching up.

Politically, it doesn’t, well, politically, it has influence in a lot of the world, but not, you know, not to the extent to say the US did in 1945. And most importantly of all, the US is not going to see that power, because having a world’s reserve currency is an incredible power. You can basically print as many pieces of welfare’s paper as you want, and other people will take them.

I mean, it’s a huge benefit, until it isn’t. So, the US, what I’m saying is the US is not going to cede that willingly. They’re certainly not going to cede it to someone like China, that they perceive as an enemy, willingly.

So, I think it’s going to be a while before something replaces the US. But as Hemingway wrote about, was it divorce or was it bankruptcy? As Hemingway wrote about bankruptcy, you know, gradually at first and then suddenly. And I think that’s what we’re going to see.

It may be 10 years, it may be 20 years, it may be five years, but you’ll reach a momentum where, you know, when a majority or close to a majority of countries use other currencies for trade, it will roll over quickly, in my view. You use the word resentment, and I want to pick up on that a second. Because that’s exactly how many Canadians are feeling right now, towards the US and Trump.

Now, you can easily make the argument on the other side that Canada has done this to itself. We’ve had bad policies, and I say this as a Canadian, in place, not just under Trudeau, but for decades, that has put us in this position of having no leverage versus the United States right now. Side note, even if the tariffs doesn’t go through, right, we have a 30 day pause right now with Mexico, Canada.

The question I have for you is, Adrian, how do you think that relationship can be repaired? I mean, the US and Canada have been friendly since forever. No, that’s an excellent question. And I was talking to some friends the other day, and no, I made exactly the same point.

Even if the tariffs are not imposed, that resentment in both Mexico and Canada is going to remain, because you don’t threaten a friend that way. Now, again, I really don’t want to get too political. We’re trying not to, trying just to look at it factually, analysis factually, and how it affects markets.

I know all, I mean, I don’t like tariffs, number one, let’s start there. I know the arguments for tariffs, France charges higher import duties on California wine, the US charges on French wine. That’s unfair.

Why does that happen? And you can look at examples like that. And I understand all of that. I think at the moment, there’s a bit of a mixed message on tariffs.

Are they meant to, number one, punish specific people specifically, like China for national security, you know, we’re going to ban or put high tariffs on things that could be used against us in a national security system. Are they meant to be, you know, just generally to punish bricks? Or are they meant to sort of replace other forms of taxation and be a way of raising money? And we’ve heard all sorts of messages from the US administration. And frankly, I think if they were a lot clearer, it will be a little more palatable.

I mean, if you said, look, we’re going to put 10% or, look, let’s face it, Cayman, Cayman Islands, a bastion of free markets and blah, blah, blah. And yet, they raise most of their money from customs duties, import duties. Now, are import duties any different from tariffs? Tariffs sound nasty, import duties just sound like something countries do.

But are they any different? Bahamas, the same thing. You know, most of their money comes from real estate taxes and import duties. And they have no income tax.

Now, if the US was saying, we’re going to put a 20% import duty on everything that comes into the country, but we’re going to, that’s the way we’re going to raise our money. And we’re going to cut the income tax by 30%. People may not like it.

From an economic point of view, it’d be better. It’s always better to tax consumption than to tax productivity, always. So from an economics point of view, I would appreciate and support that.

But we’re hearing these mixed messages. That’s the problem. But anyway, to answer your question, no, I think the resentment stays.

People remember. Final point. Could we see the end of income tax? Do you think that’s? I would love to see that, but we’re a long way from that right now.

You know, if I looked at, I did look at, you look at the amount of imports that come into the US. And of course, assuming nothing changes, if you put import duties on, then your imports go down. They may not go down much, but they go down.

But assuming nothing changes, you could put a 20% tax on all imports coming into the country. And I, don’t quote me on this, but it was a small, it was a minority. It would replace a minority of income tax.

You couldn’t replace all of the income tax right now with import duties. Let’s just put it that way. You couldn’t do it.

Now, could you have import duties replace some? Could you cut out tax waste spending, you know, wasted spending? And that would help. But we’re a long way from being able to replace income tax with import duties, unfortunately. Final point, as we wrap, we covered a lot here today.

If I had to ask you one thing Adrian is watching for this year, a wild card, a major threat, something, is there something that you’re really paying attention to closely watching here that could rattle everything? Everything really. It has been an amazing two weeks. I mean, I think we can all agree on that, whether you’re a Trump fan or you hate Trump, it certainly kept us on our toes.

And I think we’re going to see that for the rest of the year. I suppose one might say that if all of the quote good things that Trump is trying to do, like cut taxes, cut red tape, cut spending, frankly, bring peace to Russia, Ukraine and to the Middle East. Because that’s what the Gaza thing is really about.

Sorry, I don’t want to get political. If all of the good things that he’s trying to do actually happen, then that would be something that would really cause us to think. But I don’t think that’s going to happen.

Certainly not in a short time frame. So I think the thing to watch right now is when the U.S. stock market rolls over. We’ve already seen a peak.

What was the peak? Two months ago. And we’ve seen the video. But more importantly, we’ve seen Apple, we’ve seen Microsoft.

They’ve had big drops. The U.S. stock market, to me, is in a very, very dangerous situation with the worst breadth in its history. And lots of other indicators that indicate not that a top is near, but that when the market drops, it could drop fairly significantly.

The valuations of the top stocks are grossly, grossly overdone. So I think a decline in the stock market would be something that would really be something to watch. You wouldn’t be surprised by what kind of a decline, if you had to fill in the blank.

Well, I tend to be an optimist, believe it or not. Do I? I’m not sure. I tend not to be an extremist.

Let’s say that. So I’m thinking of what we could see, what we, quote, should see, and markets never do what they should. What we should see is a rotation from the grossly overpriced stocks that have led the market for the last several years into the stocks that have lagged.

Remember, there’s an awful lot of U.S. stocks or groups, not just individual stocks and groups, but are good value. You know, the small cap growth, the small cap value, value generally, defensive stocks, income stocks, all of those groups and commodity stocks, all of those stocks are really still good value. And so what we should be seeing is a rotation from the overpriced leaders, erstwhile leaders, into these laggards.

Whether that will come peacefully, as it were, smoothly, smoothly, or whether we’ll see a sharp downturn first, I’m not quite sure. But there’s certainly a lot of value, both in the U.S. and around the world, frankly. I mean, look at British stocks, look at Hong Kong stocks, look at Singapore stocks, Brazilian stocks.

They’re all very cheap. And maybe gold is still cheap, Adrian. I think gold is remarkably cheap right now, but even cheaper or more.

My mother always said to me, don’t say cheap. It sounds tacky. Say undervalued.

More undervalued of the gold stocks. I mean, we’ve had a good run in the last couple of days. Always.

Yeah. But if you look at their valuations relative on Friday, as of Friday, the XAU was selling in the lowest decile of its price to cash flow in 40 years. That doesn’t make sense when gold is at all-time highs.

Adrian Day, Adrian Day Asset Management, thank you for your outlook. And if I can just share this, we’ve just put out a Danny Outlook 2025. We’ll fire in the link here.

It’s a free report. We’ve compiled multiple outlooks from various experts of what to watch for in 2025. I urge everyone to get this free report and sign up to our channel at danielakombodian.com. Subscribe to our YouTube channel.

It just helps support us. And I thank my incredible guests like Adrian Day. Come back soon, Adrian.

I’d love to. I’d love to. Thank you for having me again.

I love this conversation. And thank you for giving us the lowdown on everything. And thank you for watching.

We’ll see you real soon.