Here is the explosive conclusion to my “Will Russian Gold Finally Reveal that the Emperor Has No Clothes?” series. Part I was published exclusively on my substack newsletter site, so if you missed that article, please subscribe now (for free) to my substack platform, after which you may also read Part I of this series.
Why the Delay in COMEX and the LBMA Recognizing Sanctions that Made it Illegal For Them to Accept Russian Gold Bars?
After the US and the UK imposed economic sanctions that made LBMA and COMEX practices of accepting Russian manufactured gold bars illegal, it still took a few days for the LBMA and COMEX to actually issue statements to declare the acceptance of Russian gold bars as invalid. The delay in economic sanctions declaring this practice as illegal and the LBMA and COMEX finally acknowledging it through official statements was most likely based upon a need for the COMEX and the LBMA to strategically assess how banning future Russian gold and silver from their vaults would cause a problem in their gold and silver markets in the future. Furthermore, in my opinion, the declared sanctions left no choice but for the COMEX and LBMA to full in line, like ducks in a row, to the sanctions. If they truly are Emperors with No Clothes, as I’ve proposed, then by refusing to fall in line with sanctions, this would create a greater dislocation between global perception of their physical gold holdings and the reality of their holdings, which would prove to be immediately problematic. Thus, their best course of action, was to try to maintain the public’s perception that they have adequate physical gold to back gold trading in their markets (which most likely, they really don’t) rather than to issue any kind of opposition policy that would reveal they are operating without any clothes. In other words, if they were poker players holding an eight and a queen as their high cards, they just pushed all their chips in to imply they are holding a Royal Flush instead.
But the problem with this ill-advised plan of Western bankers attempting to punish Russia by making it illegal for anyone to accept delivery of Russian gold, and likely the reason the SGE has not yet fallen in line, even though they have been infiltrated by Western banking cartel members that are likely trying to convince them to do so, is that the SGE and Russia may actually be the ones holding the Royal Flush hands in this high-stakes game of financial poker.
In the past, despite obvious Western banking cartel influence upon the SGE in recent years, you can read about, in this link, how Shanghai has always pushed back against the same shenanigans carried out in their gold markets perpetrated in London and New York by Western banking members, including JP Morgan spoofing of gold for which they were fined nearly $1B and also attempted to carry out in Shanghai markets. However, since these Western bankers committing fraud in Shanghai gold markets were merely warned and fined, whereas the Chinese would subject Chinese bankers committing the same fraud to possible execution, these conciliatory “punishments” reserved only for Western bankers, illustrates the reason why I believe collusion between Chinese and Western bankers in gold markets have existed for decades, though always denied by both the Americans and the Chinese.
Since, it is of my opinion, that since the day I was born, there has never been sufficient physical gold and silver in New York and London in any Western precious metal derivative markets, and also with the launch of the first gold and silver ETFs respectively in 2004 and 2006, Russia’s retaliatory response may come in the form of trying to facilitate load-out gold requests in New York and London that may expose their physical inventories as insufficient and therefore result in a catastrophic seizure/or complete halt in the trading of gold/silver derivatives in Western markets. And though I told you that both China and Russia hold the top hands in this game of financial poker, I believe that only Russia is actually likely to play their hand while China will fold and pretend their hand was weak, even though they hold an extremely strong hand, as I will soon reveal.
All the deception that controls gold and silver prices in derivative markets, as well as the likely deception that exists in the physical inventories of the GLD and SLV ETFs are dependent upon no one discovering that the “Emperor Has No Clothes”, which is precisely why the custodians of COMEX gold and silver and the GLD, IAU and SLV have made it impossible for any independent, non-banking cartel affiliated auditor to audit the alleged “allocated” reserves that back these markets, an act that would permanently squash such speculations if the physical inventories of these ETFs were being maintained ethically and honestly. However, let me be clear in what I am implying with my “Emperor Has No Clothes” statement. I am not implying that Western gold and silver derivative markets do not possess any physical gold. Clearly, they do. I am implying that there is either less than the amount of claimed gold backing these markets, rehypothecated gold in these markets, or both, with “both” the most likely scenario.
For example, should those persons/institutions that settle their long gold contracts take delivery not in the form of paper warrants but in “load out” gold (as any intelligent person would do), then the registered inventory of COMEX gold vaults could suffer a massive decline and create a panicked exodus in “load out” gold, as has been the case with nations lining up to repatriate their gold from the Feds, the BOE and the Bank of France in recent years. If you don’t understand any of the terms I’ve been using, reference this article to get up to speed with them.
Secondly, in New York and London, as opposed to Shanghai, the majority of gold and silver derivatives trading continues to settle in paper (cash, EFP or EFS). If you don’t know what are Exchange of Futures for Physical (EFP) and Exchange of Futures for Swaps (EFS), then you can read this link to understand the shuffling of imaginary gold in international markets.
Unfortunately, in the above chart, the Cash Settlement and Physical Settlement categories are commingled because the CME does not separate these two categories for obvious reasons of maintaining non-transparency in these transactions (and transparency would not be an issue if physical settlement in this category was not growing in size). Still, ten years ago, this category would comprise less than 1% of all transactions. The fact that this year, for the month of March, this same category now comprises respectively for gold and silver, about 10% and 28% of all transactions versus less than 1% ten years ago likely indicates that much more physical settlement is taking place today, simply because of the likely inadequate physical gold and silver supply backing London and New York derivative precious metals trading. In addition, we can clearly observe that paper settlement still dominates all settlement in New York, as EFP settlement for gold and silver respectively constitute 90% and 72% of all settlement.
Furthermore, in EFP transactions, if you followed the above link, you discovered that the CME rules stated –“The Related Position [Physical] being exchanged need not be the same as the underlying of the Futures transaction being exchanged, but the Related Position [Physical] must have a high degree of price correlation to the underlying of the Futures transaction so that the Futures transaction would serve as an appropriate hedge for the Related Position [Physical]” – a patently absurd law that gave a green light for massive banker fraud to be executed.
At least in Shanghai, as stated in Article 50 of SGE delivery rules, the blatant fraud allowed in EFP transactions in New York is disallowed: “Inventory swap refers to the exchange among members and customers of their bullion placed under the custody of the Exchange. Bullion exchanged in an inventory swap must be of the same metal type, e.g., gold, platinum, or silver. Bullion of different metal types cannot be swapped.” If, after reading the above delivery rules in New York that deliberately and clearly allow different metals to be substituted for gold and silver, if you still believe that the GLD, SLV and gold and silver futures trading are all 100% backed by physical gold in gold derivative markets and physical silver in silver derivative markets, well, you are simply the type of person that would sign a contractual delivery of ten 400-ounce gold bars without requiring any proof that the bars are 99.99% pure gold simply because they look and feel like gold bars.
Did you Know SGE Members Can CREATE Gold ETF Shares?
If the answer to this question is no, don’t worry, the overwhelming majority of people didn’t know this either. But SGE broker members, which include JP Morgan and United Bank of Switzerland, per the SGE’s “Measures for the Administration of the Subscription, Creation and Redemption of Gold ETF Shares of Shanghai Gold Exchange”, can create and redeem gold ETF shares using gold held in SGE vaults. However, it is near impossible for fraud in these processes to take place as all physical gold, whether load-in gold in creating gold ETF shares, or load-out gold in redeeming gold ETF shares, is accounted for at the time of creation and redemption.
However, the reason this highly unknown facet of SGE eligible transactions is important is the fact that JP Morgan, as an SGE broker dealer, as I understand the allowable transactions, may be using SGE gold to create more GLD ETF shares, which then can be swapped in EFP transactions for settlement of gold futures contracts in New York. And if my understanding of this situation is correct (and I believe it is), then obviously the Chinese also know this, and simply by disallowing these transactions, could create real problems for GLD gold inventory if custodian JP Morgan is using SGE vaulted gold as a significant source to back GLD ETF shares.
This is why I stated earlier that not just Russia, but China, also is likely holding a Royal Flush while the US and UK are holding a pair of fives in this poker game of gold sanctions.
The Coming Blowback
In order to force the world to accept that the emperor has no clothes in derivative gold and silver markets, Russian agents (since Russian bankers themselves are banned from participation in London and New York precious metal derivative markets) can show the world that the Emperor Has No Clothes in the international gold markets by forcing the percentages of gold and silver derivative contracts that settle in not just physical, but settle with load-out requests, much higher from current levels.
At a time when gold bar bans on Russia will place even more stress on likely inadequately supplied inventories that back Western gold derivative market trading, the custodians running these potential Ponzi schemes desire the exact opposite of the above – higher percentages of derivative contract settlements in EFP and cash transactions. Paper being swapped and exchanged for more paper in physical derivative commodity markets is necessary to keep the fraud alive and if shrinking physical inventories keep shrinking, there eventually will be a line that is crossed that will either necessitate laws being changed by the LBMA and CME that make it illegal to load-out gold (and silver) in order to protect their paper shell game. And if this happens, well you can own your gold and silver in LBMA and CME markets, but simply never legally take possession of it.
In any event, since increasing economic sanctions against Russia are likely to spark retaliatory actions, the BOE, the Feds and the Bank of France may want to tread very carefully in forcing further gold sanctions against Russia as to not force a surprise attack on likely illegitimate Western gold and silver derivative markets that would, once and for all, prove that the Emperor Has No Clothes.
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