GOLD’S BULL MARKET ISN’T OVER 159up, drive it down the street, drop it off with VIA MAT, and get
a receipt. It’s the same four thousand ounces, but I’ve now
reduced the floating supply because VIA MAT is not doing any-
thing with it. They’re not a bank and don’t lease the gold out
like UBS might.
VIA MAT just watches the gold for you. UBS, on the other
hand, is taking my gold and selling it ten times over as unal-
located gold on an LBMA forward contract.
How does this end? It ends sooner rather than later when
someone goes to a bank like UBS and says, “I want my gold,
please,” the bank is unable to give it to them. They’re not going
to be able to get their hands on it. This is happening a lot now
in small ways.
There are stories are out there including from pretty well-
known people, like Kyle Bass and others, where the bank tells
them, “We’re sorry, you have to come back in a few weeks. ” Then
you go back in a few weeks, and they say, “There’s your gold. ”
Obviously it took them a few weeks to get the gold; other-
wise they would have let you in in the first place. So, there’s
a lot of that going on behind the scenes, but none of it has
really broken the system. The quantities of gold haven’t been
particularly large.
People don’t find it in their interest to talk much about this,
but it is happening. But what if a there was a failure to deliver
gold by a major dealer like HSBC or JPMorgan? That would
be a shockwave.
Then I think it would set off panic buying in gold, inflation
expectations would get out of control. That could be a catalyst
for the next crisis.
There are linkages you must consider too. I talked to a top
employee at Goldman Sachs last time I was in China, and he’s
anticipating what he calls a demand shock in China. He’s an-
ticipating a situation where 200 million people run out to buy
all the gold they can.