Is Gold About to Trigger the Next Financial Crisis? Industry Expert's China Theory (Mike Maloney)

Summary

This script delves into the volatile world of gold derivatives, exploring how they could become the epicenter of the next financial crisis. The discussion highlights the significant role of physical gold markets, particularly focusing on the U.S. and China, and the manipulation of gold prices by large bullion banks. The narrative also touches on global gold flows, including Swiss gold exports, and China's strategy to maintain control over the gold market while positioning itself for a potential monetary reset. The broader theme emphasizes the critical importance of gold and silver in the ongoing global currency wars.

Takeaways

• 😀 Gold derivatives may become the epicenter of the next financial crisis, with potential consequences for global markets.
• 😀 Physical gold demand is expected to spike significantly in the event of a financial crisis, causing further price increases.
• 😀 A US entity recently took possession of approximately 30 million ounces of gold, which is over 11% of the US government's reported gold reserves.
• 😀 GLD (Gold Exchange-Traded Fund) and other bullion banks may not have enough physical gold to back up their shares, allowing for price manipulation.
• 😀 Gold derivative contracts (such as GLD and SLV) may be manipulated by a handful of large banks, leading to potential price-fixing issues.
• 😀 The recent surge in gold prices could exert pressure on bullion banks, potentially leading to instability in price-fixing agreements.
• 😀 China's involvement in gold markets has become more significant, as it accumulates large quantities of gold and controls supply and demand dynamics.
• 😀 In January 2023, Switzerland exported a massive 193.5 tons of gold, primarily to the United States, highlighting geopolitical shifts in gold trade.
• 😀 China's strategy may involve stockpiling gold in order to maintain control over prices and ensure they are on a level playing field with the United States in future monetary resets.
• 😀 The global gold supply chain shows that many countries, including the US, UK, and China, play pivotal roles in both importing and exporting gold to ensure stability and prevent panic during crises.
• 😀 The current gold-to-silver ratio highlights the discrepancy in their abundance and pricing, suggesting that silver could become more valuable in the future compared to gold.

Q & A

What is the central topic discussed in the transcript?

The transcript primarily discusses the financial implications of gold derivatives, the manipulation of gold prices by large bullion banks, the current state of gold reserves, and global gold flows. It highlights how these elements could potentially lead to a financial crisis and the subsequent spike in the demand for physical gold.

What significant event is referenced regarding gold in the United States?

It is mentioned that someone in the United States recently took possession of 30 million ounces of physical gold, which is equal to over 11% of the U.S. government's reported gold reserves. This event raises questions about the stability and transparency of gold reserves.

What role does GLD (Gold Exchange Traded Fund) play in the gold market?

GLD is described as a mechanism that allows retail investors to invest in gold without actually owning the physical gold. Bullion banks borrow shares from GLD and redeem them for physical gold, which they can then use or lend out. The transcript also highlights how GLD does not always hold the required amount of physical gold to back its shares.

What is the potential problem with gold derivatives, according to the transcript?

The transcript suggests that gold derivatives may become the epicenter of the next financial crisis, much like mortgage-backed securities were during the 2008 crisis. The manipulation of gold prices by a few large banks through derivatives contracts could cause instability in the market.

How did China and the United States interact with Swiss gold refineries in 2023?

In 2023, the Swiss gold refineries were primarily exporting gold to the United States, with China notably absent from the list of suppliers. The transcript mentions that China, the largest gold producer and importer, had very low imports of gold from Switzerland during this time, which raised questions about global gold supply.

Why does China try to maintain a low price of gold?

China aims to keep the price of gold low to accumulate more reserves without facing a significant financial burden. By controlling gold prices, they avoid a scenario where the price skyrockets, which could lead to high costs and disrupt their strategy of accumulating enough gold for a potential monetary reset.

What is the impact of the shortage of gold in China?

A shortage of gold in China could lead to panic, as the Shanghai Gold Exchange operates on a same-day delivery basis. If there were no gold available, the price would spike globally, causing a worldwide panic as people rush to acquire gold.

What is the gold-to-silver ratio mentioned in the transcript, and what is its significance?

The transcript discusses a gold-to-silver ratio of 90, with gold priced 90 times higher than silver. However, in terms of physical abundance, there is only 2.5 times more silver than gold. This discrepancy between price and physical abundance is a key feature in the ongoing currency wars.

What can we infer from the increase in gold deliveries in COMEX during the COVID panic?

The increase in gold deliveries during the COVID panic indicates a surge in demand for physical gold, with deliveries peaking at 5.5 million ounces during the crisis. This spike is seen as a precursor to larger trends in the gold market, suggesting increased interest in tangible gold assets as a safe-haven investment.

What is the significance of the U.S. being the major recipient of Swiss gold exports in 2023?

The U.S. being the major recipient of Swiss gold exports in 2023 highlights the country's substantial demand for gold. This behavior contrasts with China, which, despite being the largest producer and importer of gold, significantly reduced its purchases from Swiss refineries during this period.