Silver Report Uncut: LBMA and Basel III, Bullion Banks Being Forced out

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Silver Report Uncut
May 17, 2021

There may be some major changes coming for precious metals prices due to the fact the largest short positions may be forced to close out. In recent months there has been some limited commentary concerning the introduction of Basel 3 regulations and the implications for precious metals trading. These new regulations are scheduled to be introduced for European banks at the end of June — only seven weeks’ time — and in the UK from 1 January next, affecting all LBMA member banks. Most bullion bank trading desks will cease to exist if not altered from its current form. The only supply to buy-side speculators of gold and silver contracts will be producer hedging.

Basel 3 regulations are scheduled to be introduced into the UK at the year-end all banks in the London gold market can be expected to wind down their exposure well ahead of the deadline.

The unallocated forward settlement market will effectively be shut down.

Hedging into Comex futures from this source will also cease.

As it is unwound, the withdrawal of synthetic supply has enormous implications for future precious metals prices by transferring pricing power to physical markets. The implications for the price of physical silver and gold could be enormous but the consequences of doing nothing could be much worse than higher gold prices.

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