Never a dull moment. On the heels of the massive price spike in the gold market, today James Turk told King World News that we are now witnessing the epic collapse of London Gold Pool II.
Huge Price Difference Between London & Comex
March 25 (King World News) – James Turk: ‘Unbelievable’ is the only word that comes to mind when we consider the present situation, Eric. We are in uncharted waters. All the markets are in turmoil, so our #1 focus should be safety, for both our health and our wealth. In that regard, I have some thoughts about the huge difference between the London spot gold price and Comex gold futures contracts…
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There have been a lot of questions and different answers offered. Clearly stopping air travel and closing precious metal refineries are obviously having a huge impact, meaning that the bullion banks are having supply problems. The physical market for gold in London has in effect been shut down, like much of the rest of the country.
Gold’s Spike Signals Epic London Gold Pool II Collapse
But the real answer explaining the huge price difference goes back to what you and I were discussing just a few weeks ago when I said that the London Gold Pool II is close to collapse. We are no longer “close to collapse.” It is collapsing.
There is no announcement from central banks like there was back in March 1968 when the first London Gold Pool collapsed. But we don’t need an announcement. The markets are telling us what is happening.
The Pool collapsed in 1968 because central bank vaults were being drained of metal. Too much money printing meant that the $35 per ounce exchange rate to the dollar was unsustainable. So central banks stopped years of price manipulation and threw in the towel. Over the next twelve years, gold soared to a peak of $850.
Gold’s 24-Fold Price Increase
That was a 24-fold increase in the price of gold. So imagine what the price potential for gold is in the months and years ahead given all the money printing happening today now that London Gold Pool II is collapsing, which brings me back to the difference in London and Comex gold prices.
The banks are very happy to purchase physical metal from you and give you fiat currency, but they aren’t going to do you any favors, which explains why the London bid price is lower than futures. They want to buy metal cheap, so their buy price is artificially low.
Bid/Ask Spread As Much As $100
It’s a different story though if you want to buy metal from them. It is only available in ‘paper’ form and only at prices at where futures and other paper markets are trading. This bid/ask spread has reportedly been as much as $100 per ounce.
This situation reminds me of a funny story I heard years ago when the Russian rouble was collapsing. There were two butcher stores across from each other on the same street, but they were selling beef at very different prices. A lady shopper walks into the more expensive store and asks why the price is so high? The butcher says if she doesn’t like the price, go across the street, to which she replies, they are sold out.
In This Environment
So in this environment to help make your wealth safe and you can actually find some physical gold and physical silver, Eric, we need to pay the price. We need gold and silver for the liquidity they offer. They are money. For that portion of your wealth that you are able to hold until we get to the other side of the valley, buy any non-perishable tangible asset.
The clear objective is to get your purchasing power – the wealth that you have earned from your hard work – out of fiat currencies and assets denominated in fiat currencies. Seek safe havens with no counterparty risk. It is the simplest way to attain safety as events unfold and while we wait to see if monetary normalcy returns.
Why Didn’t They Think About This?
***Also Released: Why Didn’t They Think About This? CLICK HERE.
***To listen to Dr. Stephen Leeb discuss the Coronavirus panic in global markets, helicopter money about to be dropped, why gold is headed way beyond the 2011 all-time high and much more CLICK HERE OR ON THE IMAGE BELOW.
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