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speculator101

11,803 Posts.

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16/05/21

23:14

Post #: 53209591
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Originally posted by Pointyfigures: ↑

An article explaining the likely outcome of the BASEL lll impact on the bullion markets is explained quite well in this article.
https://www.goldmoney.com/research/goldmoney-insights/the-end-of-the-lbma-is-nigh
Please take the time to read as there is a very good description of how the gold pool works in allocated and unallocated gold.
The numbers involved are quite staggering and as unallocated gold accounts are nothing more than credit creation to participating banks, the potential for systemic risk applies to this market, typical of normal banking practices. In this respect the gold itself is almost irrelevant.
I have a sneaking suspicion there could be a few holes in accounting methodology that may be exposed as the unallocated accounts wind down.
In spite of the title, what it essentially implies is that the LBMA will return to its original purpose - to act as a clearing house for physical and option for producer hedging.
.
It will take time but what will become apparent is the amount of physical gold available to the market.
A simple return of leased gold to unencumbered could evaporate the amount of available gold but as accounting is murky, remains to be seen. All sovereign held gold better be there or there could be fireworks.
I believe this will see a rush to shift unallocated to allocated, reducing physical availability and push up prices - or at least premiums in the short term.
ETF's will likely fill the gap for paper bets on the price of gold with very few offering exchange for physical - the same as PMGOLD has done since being taken over by Goldman Sacs, ripping off Australian investors expecting to exchange for physical.
The Europeans are not stupid. They will see how the rules will impact the gold market and I suspect there will be a significant increase in European demand for physical - an early warning system and something to watch out for.
JPM hoarding in their house account is going to pay huge dividends.
My opinion only.

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Hey PF, you have been posting so quickly today (excellent analysis as always, and I genuinely appreciate your sharing your thoughts so often on HC), that I simply cannot even do them the respect they are due and reply to each. Instead, if you have the time, I watched a recent interview which might interest you:

The US Dollar Time Bomb" LUKE GROMEN

I rate Luke Gromen as arguably the best orator on finance right now (yes, there are many amazing people, but... none are quite as succinct as Luke).

I am still a little amazed that whilst last year was one for the history books, 2021 finance/economics might just pip it at the post, due to all the tricks the CB's are pulling out of their hats.
5 Upvote

0 Great analysis

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