This interview takes a trip down the rabbit hole of a crisis brewing in London as gold liquidity has dried up and one veteran warned, “No liquidity at all…whole situation extremely precarious.”
February 20 (King World News) – Eric King: “Alasdair, this has been a fascinating situation for you and I to watch because we’ve had the metals remain under continued pressure, but from a contrarian perspective we are at this ‘puke point,’ this ‘give up’ phase where all of the sentiment has moved to negative levels that we have only seen at the end of 2015 (and other major lows). And I don’t know if they are going to shake it down a little bit more or not, but there is this extreme bearishness out there in the gold and silver markets, like the next shoe is going to fall.
The reason I bring that up is because in the midst of this secular bull market where gold and silver are going much, much higher, to levels people won’t even fathom until we get there, you have no metal available in size in London or Zurich, Switzerland, and you have this uber bearish sentiment right at a puke point when the market is most likely getting ready to turn. It’s amazing how bull markets work, isn’t it?”
What Is Really Going On At The Bank Of England And LBMA
Alasdair Macleod out of London: “Yes it is. And actually, interestingly, I had a call from someone in Australia who said they had gone to the Perth Mint to try to buy some silver (laughing) and no chance. So even in the country which produces the stuff there isn’t any available. The lack of float (supply) in the gold market became apparent some time ago. Meanwhile, the LBMA keeps on producing these wonderful figures stating they’ve got 9,280 tonnes or whatever the figure is, but the fact is that it’s all spoken for. The float in London is no more than a few hundred tonnes, if that.
What we did see back when gold peaked at over $2,000, we suddenly discovered that GLD — that very, very big gold ETF — had some of its gold stored in the Bank of England (laughter). The Bank of England is not a sub-custodian. But this was obviously gold being held on behalf of a bank that was either a custodian or sub-custodian. So you need to ask the question, why was it there? Well, the answer is quite simple, that gold can only have been there as a result of it being leased from a central bank for which the Bank of England was acting as a custodian. And I wouldn’t be surprised given the current situation if the Bank of England is actively looking at the bullion bank short positions on Comex, the physical position in London, and standing ready to help with further leasing.
But this is an endgame because it’s going to get to the point where if the Bank of England taps on the shoulder of a central bank who has been cooperative in the past in letting their custodial gold — their earmarked gold — actually work for its living by leasing it, these guys are going to turn around and say, ‘Hold on a minute, I’m not really liking the way things are developing. So I don’t think I do want to lease my gold.’ Then you are going to get a (massive) squeeze in the gold market.
Over 10,000 Tonnes Of Leased Gold?
None of us have any idea how much gold is out on lease. But as a starting point if we assume that something like 1/3 of it is either leased or swapped or whatever, then you are talking about over 10,000 tonnes. And that is a starting point, it could be considerably more than that. So what I am saying is that you have gold in the market which has at least two owners.
Extremely Precarious Situation: No Liquidity In London
So this idea that there is any liquidity at all in London, even a few hundred tonnes, you can forget that because if you’ve got double ownership of actual physical gold sitting in the vaults of London, you have no liquidity at all because in time that has to be reconciled. So the whole situation is extremely precarious. But against that background we did get…to continue listening to Alasdair Macleod discuss the shortage of available physical gold and silver in London and Zurich and what to expect next in the metals markets CLICK HERE OR ON THE IMAGE BELOW.
Dire Warning For The US
Jon Case: To hear Jon Case’s dire warning for the US and also his discussion of the Gold & Silver markets CLICK HERE OR ON THE IMAGE BELOW.
KWN has just released an audio interview with legendary Pierre Lassonde and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
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