First it was Deutsch Bank resigning their seat at the London gold 'fix' last May as a result of regulator scrutiny and comments out of Germany that possible manipulation of precious metals "is worse than the Libor-rigging scandal." Now HSBC is to close all 7 of its bullion vaults in London, incl the storage for the $60 billion GLD ETF that is the subject of likely fraud.
So the rats are beginning to leave the sinking ship ....
Before Andrew Maguire's piece on KWN yesterday (please see below) I thought it unlikely that Bullion Capital's online platform would launch in March as suggested. This was because there is likely to be a fair bit of press coverage leading up to the LBMA launch of their new gold online system 'ICE' on 20/3 to replace the long standing London gold 'fix'.
So for tactical reasons it would be best to be ready to jump in if 'ICE' launch should be pulled or delayed but if it goes ahead then delay Bullion Capital launch for a few weeks when it will likely receive a certain amount of press coverage in its own right. Bullion Capital launch is now said to be after the next NFP release on 2nd April - the Thursday before Easter. So a likely start date would be the following week or the week beginning 13/4.
This take down of the PM's yesterday to within touching distance of their lows would appear to acknowledge that time is running out for the cartel and the manipulation of the prices of gold and silver. As with most previous pushes to apply maximum damage to the gold price by registering new medium term lows, these have come at or near quarter, half year, or year ends. In this case we are very near the end for the LBMA, hopefully beginning in 2 weeks time!
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Today's Gold Smash Is Western Government Intervention
Andrew Maguire: “Eric, here we are again after another heavily gamed Non-Farm Payrolls (NFP) report week that evidences just how ‘managed’ the paper markets are. Given the strong Indian and Chinese demand above $1,200 and the currency crosses related to gold that were net-positive all week, there was no reason to paint gold down ahead of today's NFP. Given that the physical market is strong, the Comex-centric selling has all the hallmarks of ‘official’ selling.
Bullion Banks' 100/1 Leveraged Paper Positions
Eric, last week we talked about a membership-based physical exchange that has stealthily been built over the last 3.5 years and is now bullet-proof from LBMA interference. In our interview last week we talked about how this physical trading platform provides a real alternative to the closed-loop LBMA system.
It all boils down to the fact that providing direct access to the wholesale market, without going through a bullion bank, empowers the end user. Up until now, the end user hasn’t been able to directly access the wholesale market.
LBMA Killer
The next exciting step is the announcement of a full-fledged institutional global exchange to compete with the existing archaic LBMA/London Precious Metals Clearing Limited unallocated market. All the institutional trading, clearing, settlement and technological facilities to do so have effectively now been built. There has been a slight delay with the launch but I will have a hard date for you as well as the name of the exchange by next week.
Within a few weeks this will change the way gold is traded as we witness large migrations of unallocated LBMA position holders unwind from high counterparty risk unallocated positions and then allocate into secure vaulted kilobar accounts outside of the LBMA bullion banking system.
In other words, real allocated bullion will have to take the place of fractional reserve holdings. This leverage unwind will wrench the reins out of the bullion banks' hands and force a cash settlement. We also have a treat for the bullion banks. As this deleveraging forces the buying of bullion, the soon to be announced exchange will introduce a new ‘pairs trade,’ short paper gold, long physical gold XAU/AAU. This will represent a low-risk trade and a nail in the coffin for the LBMA.
Eric just think, only one more NFP gaming to endure before things start to change! I will have more to share with you next week about this exciting game-changing news.
HSBC Just Shocked Clients By Announcing Closure Of All London Gold Vaults!
The other big news this week was HSBC giving only 2 months’ notice to clients that they are closing down all 7 of their London gold vaults! This is an unprecedented move. Why do you think this is? It is because transparency is coming. There is no profit in plain, vanilla bullion banking any longer.
I also suspect given the lack of warning and lack of any press release that the majority of these clients will be unable to make other vaulting arrangements in time. HSBC will no doubt make it easy for these clients to sell the bullion back to HSBC, who will then use this bullion inflow to repay some underwater positions. So something is brewing behind the scenes, Eric, and this is one more sign major changes are coming.”
by registering new medium term lows, these have come at or near quarter, half year, or year ends. In this case we are very near the end for the LBMA, hopefully beginning in 2 weeks time!
