Panic in the Gold Markets

I once heard a funny story about the famous painter Pablo Picasso.

Apparently, when it was his turn to foot the bill at the Café de La Rotonde or another of his usual haunts in Paris, he’d get out his chequebook, write out the amount owed, sign it, then turn the cheque around and draw a little doodle on the back.

This last part was crucial…

The café owner, knowing Picasso’s reputation, would never cash in the cheque. It was worth more as an original piece of art from the great man!

Picasso essentially had his own money printer.

And like all people with access to such a thing, he couldn’t resist the temptation to use it.

In his case, at least, it was a win-win outcome for all.

Unfortunately, this isn’t usually the case.

As I’ll explain, the current central planners who wield immense power over today’s money have abused this power badly.

They’re writing cheques for themselves but at the expense of all of us.

And they were getting away with it…until last week.

Elon Musk’s D.O.G.E. (department of government efficiency) is finding an unbelievable amount of dodginess. And he’s live tweeting his findings in real-time.

Over the coming months, we could witness revelations that might shake the fabric of our social construct.

Trust in the current system — already shaky at best — could come shattering down.

In a way, this isn’t a surprise…

As I pointed out last week, we’re at the pointy end of the cycle where big changes tend to occur.

The old order unravels, and the messy process of renewal begins.

What does that mean for you and your wealth?

Let’s dig in…

A monumental fraud

Startling revelations of mass fraud are coming to light in the US last week.

It seems a whole host of bureaucrats, politicians, administrators, charities, and even media organisations have created a gravy train of monumental proportions out of the US Aid Department.

Some reports state that over 93% of all US Aid funding appears fraudulent.

There’s a Twitter thread here that shows just part of what’s been found so far, if you’re interested in diving deeper.

But the scary part is that this mass fraud has gone on for decades without anyone knowing (or caring enough to investigate).

This is a symptom of our fiat money system.

A world where money can be created at will by a small group of powerful people will always be abused.

Our ancestors knew this all too well…

In a 1787 letter to a Superior Court Judge, George Washington once commented on the impact of paper money in Rhode Island:

‘Paper money has had the effect in your State that it ever will have, to ruin commerce – oppress the honest, and open a door to every species of fraud and injustice.’

This is why, for a long time, the world ran on money that was independent of political control.

Namely, gold.

Unlike fiat money, gold’s limited supply kept the greedy politicians mostly honest.

Or at least it made it harder to cheat.

With gold, any spending has to be accounted for; mistakes paid for, wars need to be fully costed.

In the gold era, it would be nigh-on impossible for a multi-billion multi-decade fraud like US Aid to be hidden from view for so long.

With fiat it was too easy.

But a fraudulent economy can only last so long.

In fact, there are some startling signs that we are entering the end days for fiat money…at least in its current form.

The current run on gold

For decades, gold bugs have complained that paper markets have manipulated the price of gold.

How?

In short, the same bar of gold can be bought and sold a thousand different times over without ever leaving the same vault.

This allows the fiat cartel to use paper money to suppress the price of physical gold.

The only way to combat this ‘attack’ is for everyone to have custody of their own gold, which, until recently, no one could be bothered doing.

But all of a sudden that seems to have changed…and fast!

Funnily enough, the rush to repatriate gold appears to be happening as an indirect consequence of Donald Trump’s tariff policy.

But what started as a way to avoid a new tax is quickly turning into a huge run on gold.

The problem?

Rumours are flying that the London gold markets don’t have enough gold bullion to satisfy claims.

Precious Metals analyst Ronan Manly wrote on Friday:

‘The gold clearing banks of London Precious Metals Clearing Ltd (LPMCL) have exhausted the metal they had available for delivery in their own vaults… so they are trying to borrow as much gold as possible via the gold lending market at the Bank of England. But this looks exhausted too.

‘These clearing banks (JP Morgan, HSBC, UBS and ICBC Standard) need to keep gold in their vaults for their own loco London liquidity. But it looks like they don’t have any more gold to do this.

‘Counterparty risk has therefore risen between all the LBMA bullion banks which trade unallocated “gold credit” between each other. The clearers, the market makers and all the other LBMA bullion banks and brokers and traders. About 50+ entities. basically they trade paper “claims” on gold (or the electronic equivalent).

‘These claims are now trading at a discount to reflect the fact that they can’t be converted at will into physical due to a lack of availability of sufficient loco London physical gold.’

Liquidity in the gold markets is drying up fast and the price of both gold and silver is shooting higher:

So, what happens next?

Is this the beginning of a new era of money? A return to a gold standard? Or is it a temporary panic that will subside once enough gold is found?

To be honest, I don’t know.

What I do know is that fiat money is in its death throes.

While I personally prefer Bitcoin as my escape hatch, I can definitely see the huge investment potential in gold, too.

That’s why I will be eagerly tuning in to an upcoming presentation from my colleague Brian Chu.

Brian runs his own private family gold fund and has been trading gold for a long time. He thinks he knows how you can potentially capitalise on this gold rush right now.

Anyway, keep your eye out for Brian’s latest report which comes out Wednesday.

Speak soon…

Regards,

Ryan Dinse,
Editor, Crypto Capital and Alpha Tech Trader