With news hitting the wires about the central banks’ gold holdings being questioned, the pressure for transparency is increasing. GoldMoney published a podcast in which Jim Willie is being interviewed about the situation in the physical gold market, especially triggered by the latest stories of central banks’ gold. Jim Willie is known for the inside information he gets from various sources deep into the gold market, apart from his “ultra-direct” style. Some of the statements he made are well worth reflecting. We collected some highlights which you can find below.
The situation in the physical gold market can be summarized as being incredibly tight. Both Jim Willie and the host Alasdair Macleod agree on that. Apart from the zero percent interest rates and the unlimited bond monetization, Jim Willie believes that the physical tightness will be a major driver of the gold price. He takes it even a step further: he believes that we are moving into a global gold war which will be driven by the physical market. It will probably become the next financial scandal and it will be much bigger than LIBOR.
Interesting insights from the interview
Central banks are holding gold in considerably less quantities than they claim. Germany is just one of them. However that’s only part of the story. There is a raid on physical gold to such a degree that the underowned gold holdings by the banks will be exposed.
The flows of gold trade between Europe and Asia are huge and under reported. For example, in the spring of this year, 6.000 metric tons have been shipped out of London to China. An important entity that is stimulating the usage of gold is the Shanghai Coop Org (SCO). They have been encouraging Iran to ask gold payments for the oil exports and Venezuela to repatriate their nation’s gold.
Germany is building a network with large trading partners like Russia. Apart from a new infrastructure (with high speed railways) it is also working on an alternative payment system. Jim Willie says is remains unreported in the media. The payment system should be used in trade settlements and is fundamentally different than the one that is globally used now. Today’s globally accepted payment system is based on the dollar and the SWIFT system, while the alternative one would be based on gold and won’t be centrally managed. It will come into play as soon as the dollar shows signs of a collapse.As a cherish on the cake: big London and New York investment bank executives are loading their private accounts with (long) gold and silver investments while the firms they are running are largely short.
We are not in the position to check the sources of the information. Jim Willie is for years in the gold market and we trust his work and words. We can only repeat that physical gold and silver are the only safe havens in a world that’s full of counterparty risk. Readers that want more details can listen to the full interview (below). Readers interested in owning physical gold and silver, can go to our new investment directory with trusted services from all over the world.