In a recent interview on Palisades Gold Radio, host Tom welcomed back Alasdair Macleod, Head of Research at GoldMoney, to discuss the latest trends in the gold market. The conversation offered valuable insights into the role of the U.S. dollar, increased demand for physical gold in China, and the impact on the COMEX market.
According to Macleod, gold is reaching new highs due to the decline of the U.S. dollar rather than an increase in gold prices per se. This trend can be attributed to government policies that maintain large budget deficits. A second term for Trump is likely to continue weakening the dollar, further boosting gold prices.
In China, households are turning to physical gold as an alternative to stocks and property, leading to increased demand and potential drainage of physical liquidity from the West. This shift in demand has implications for the COMEX market, where open interest has significantly increased due to neutral spread activity and arbitrage. Macleod warns about potential mark-to-market losses among the swaps, which may lead to further paper demand and a “bear squeeze” on these institutions.
The interview also touched on the impacts of the Comex, London, and Shanghai exchanges on metals markets. There is a drainage of physical gold from Western markets, particularly London, due to arbitrage opportunities. Chinese banks are expected to increase their gold reserves, and there’s also a resurgence in demand for Exchange-Traded Funds (ETFs).
Macleod and Tom also discussed the risks associated with credit and the potential for a crisis in the financial system, particularly regarding the clearinghouse and shares. Alasdair advises protecting oneself by holding physical assets like gold and silver and ensuring sufficient supplies during the initial stages of a potential collapse.
Lastly, they discussed the effects of the BRICS alliance and their plans to back their currencies with physical gold and silver. Despite doubts about e-------n, having significant gold reserves and accumulating substantial quantities of gold for years could significantly impact the global economy if successful.
In summary, the current trends in the gold market indicate a shift in demand towards physical gold, particularly in China, and a decline in the U.S. dollar’s value. The COMEX market could become more overbought, leading to potential mark-to-market losses and further paper demand. The risks associated with credit and the potential for a crisis in the financial system highlight the importance of holding physical assets like gold and silver. The BRICS alliance’s plans to back their currencies with physical gold and silver could have far-reaching implications for the global economy.
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