gold news

 I mean basically what's happened in silver is that all liquidity is gone and uh this um is [clears throat] in large part because um the supply of silver has been less than the demand for silver for at least the last four years. I mean basically what's happening silver is that all liquidity is gone and uh this um is in [clears throat] large uh part because um the supply of silver has been less than the demand for silver for at least the last four years. Uh the difference has been made up basically by

drawing down on silver stocks of various sorts. the silver institute puts it in its um table if you like as investment silver. Um so that gets drawn down and then they can say that you know at the bottom if you take everything into account we've got um exactly the same figure for supply as we do for demand. But the reality is that um it's in deficit and has been in deficit for the last five or six years. um a lot of the uh supply if you like the excess supply hasn't been investment so much but has been dishing by uh China

they've been prepared to try and um put a lid on the silver price by ensuring that um manufacturers of you know things that use silver like photovoltaic cells and things um you know do have access uh even though China is the uh largest producer of of photovoltaics sells itself. Um, China has always had um a very firm control over. Well, now what's happened is that silver China first of all has withdrawn from supplying the west. That's the first thing. And the second thing is that from January the

1st, the export of silver is banned from China. So you can see that this is creating a huge great problem in the markets. Now history of uh the derivative um system. It was originally brought in and sanctioned by uh the US Treasury as a means of um suppressing uh prices of commodities particularly gold and silver particularly gold by diverting demand away from uh bullion into paper bullion if you like bits of paper. And um this sort of fitted in quite well with the regulatory situation which evolved in the early 1980s whereby um uh

uh investments regulated investments were defined as stocks, shares, bonds, so on and so forth. But unregulated investments included gold, silver and copper and other commodities. because they were not regulated. It basically means that the compliance officers will limit what an investment manager can do in terms of investing in physical gold, physical silver and and so on and so forth. So um what this meant was that there was a if you like um a control on the price particularly of gold and also silver and copper and oil and

things like that by um the expansion of these derivatives soaking up uh demand for them without people actually bothering to get the underlying metal. >> [clears throat] >> And so consequently the prices of underlying metal didn't rise. What we're seeing in the silver market now however is the complete loss of liquidity. That is massive dealing going on in silver derivatives. But of course you know rather like a tire hitting the road. [laughter] There comes a point if you like where

people actually want the physical and that is beginning to happen. Consequently, um, in London, there's nothing to deliver even though they've been dealing in huge quantities. And the squeeze on COMX has been, um, evidenced, if you like, by the fact that silver's shooting into new high ground while at the same time open interest is declining. What the decline in open interest tells us is that the speculators are not buying it. They're not going for it at all. The price is rising not because of

speculation or investors if you like buying it. It is rising because the system itself is close to default. The silver market is facing a major liquidity collapse because global supply has remained below demand for the past 4 to 6 years. Industry tables only appear balanced because above ground stocks classified as investment silver have been steadily drawn down to cover the deficit. A key factor was China. For years, China quietly supplied the excess silver needed to keep prices from rising, ensuring manufacturers,

especially solar panel producers, had enough metal. But now, China has withdrawn from supplying the West and has introduced an outright ban on silver exports starting January 1st, creating a significant shock to the global market. He also explains that the modern derivative system was originally encouraged by the US Treasury to suppress commodity prices by diverting demand from physical metals into paper contracts. Regulatory changes in the 1980s restricted fund managers from buying physical gold and silver,

allowing derivatives to expand and dampen price signals. Today, that system is breaking down. Physical silver liquidity in London has nearly disappeared despite heavy trading in paper silver. On COMX, prices are hitting new highs even as open interest declines, showing speculators are not driving the rally. Instead, the price is rising because the market is nearing a physical default with increasing demand for real metal that the system can no longer deliver. There is also a shortage in uh Shanghai

and looking at the combined uh stocks of the Shanghai gold exchange and also the Shanghai futures exchange that's fallen to around about 570 tons which is seen as close to crisis level 600 being you know you don't want to see the stocks less than 600 about 570 there's a little bit creeping back in I saw overnight there's about 14 tons came in or was recorded as having come into the uh underlying bullion stocks. Um but it's still a very very difficult situation. Now the point about this is that the use

of um commodities sorry uh of derivatives to soak up demand for commodities that story now come to an end and it's beginning to go into reverse. Now just imagine you have got um a large number of bullion banks, hedge funds and all the rest of it who have positions one way or the other in derivatives and these are now questioned as to their value. As that unwinds then the demand is going to go into the physical. So you can see that as that contract on comx and also forwards in uh London uh begin to collapse and you know

it looks like that we're we're in the early days of that then uh this in itself [clears throat] purely in terms of substitution is going to push up the silver price very very substantially from here. >> So this is the importance of what we're seeing in silver. Now, if it's true in silver, it's not far behind being true in gold because again, if you look at open interest on COMX, that's collapsed while gold has been trading at close to high the highest levels ever. This is an

extraordinary situation. They're both becoming what um have been described as given goods. In other words, the normal laws of uh supply, demand, and price have been completely suspended. Instead, what happens is that as the price rises, it creates buyers and reduces supply, which pushes the price up even further. >> Yeah. >> Yeah. And that's what we're seeing. And this is actually undermining. Subscribe for more sharp insights and real market analysis delivered straight to