Sprott.com Notes We May See Physical Gold Market Liquidity Issues as Gold Bars Disappear From London Vaults

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In the Sprott Q2 Precious Metals Report published on July 17, 2024, Paul Wong, Market Strategist for Sprott makes the following statement regarding the draw-down of gold bar stock from London vaults:

Excerpt from Sprott Q2 Precious Metals Report: Gold’s Record-Setting Quarter and Silver’s Resurgence - Sprott.com

Wong notes that the physical gold bars that he terms “free trading mobile gold” may become less available as central banks and sovereign wealth funds secure gold as a closely-held, strategic asset.

First, it is interesting that central bank central planners have been sweeping record amounts of gold out of the market as the serial bubbles, goods price price inflation, and Quantitative Easing (QE) asset price distortions that they have generated are coalescing into the next financial, banking, and currency crisis.

Gold and silver have been roundly scorned by these same central bankers as inferior to the debt currency that they create and fiat denominated bonds. And yet now fiat currency central bankers are participating in a physical gold rush effectively giving them the appearance of nervously whistling past the central planning grave yard.

Second, the Bank of England (BoE) has intervened in the world’s largest gold and silver market in London since the BoE was given oversight of the London precious metals market in 1986 establishing the London Bullion Market Association (LBMA) that has set global physical silver and gold prices with promissory note trading replacing the trading of segregated and allocated metal bars. (see: https://jensendavid.substack.com/p/the-bank-of-englands-role-in-the )

The subsequent fictitious pricing of physical gold and silver that has persisted for decades, giving false market price input signals for interest rates and allowing interest rates to be run down to zero, now results in clearly increasing physical shortages of gold and silver globally.

Market price manipulation always results in and ends with physical shortage.

The potential for gold market disruption from physical shortage is manifold greater for silver where bullion banks have relentlessly shorted the cash market in London by issuing an estimated 5B to 8B oz. of London cash market promissory notes for silver resulting in an artificially low price, suppressed silver production growth, and resulting in a growing physical global market supply deficit over the past six years.

Best regards,

David Jensen