London Good Delivery bars are being delivered to Eastern buyers. Instead of being vaulted inside the LBMA system, these bars are being sent directly to refiners. The bars are then being melted and recast in 1 kilogram sizes. The new bars are then being stamped with official, government insignia and sent on to vaults outside of the LBMA system and points east, never to return again.
What does this mean and why is this important? Quite clearly this information, if accurate, has several significant ramifications:
- The Chinese and others are preparing for a new system. Whether it’s simply a new gold pricing and delivery system to replace the LBMA/Comex or whether it’s a new global trade settlement system that is guaranteed with gold is impossible to say, at this point.
- The physical gold supply of the LBMA and secondarily the Comex, much of which has been acquired/supplied through leasing, is being rapidly depleted and will not be coming back.
- The bullion banks, which have profited for years from leasing, trading, vaulting and the like, are about to feel the rather dramatic effects of this supply depletion.
Ask yourself these questions:
- If you vault gold within the current system, do you really own it?
- If the banks begin to scramble for physical metal, will paper price trade higher or lower?
- If the Chinese and others are planning for a new, international trade settlement system to supplant the U.S. dollar as reserve currency, what does that mean for the future value of the dollar? What would that mean for the future value of all fiat currency? What would that mean for the future value of gold and silver?