Gold Manipulation Ending w/ Basel III | Alasdair MacLeod
What this covers
Many suspect the gold and silver markets have been manipulated. Head of Research at Gold Money Alasdair MacLeod says new Basel III rules will put an end to price distortions in the precious metals market.
0:00 Intro 2:05 Basel III* 16:14 Manipulation ending** 22:50 How long can manipulation last? 30:13 Gold/silver price forecast 43:39 Central banks & gold
* Alasdair's Interview with Craig Hemke: https://www.tfmetalsreport.com/podcast/10903/thursday-conversation-alasdair-macleod
** Are precious metals manipulated? It's a highly debated topic. Get multiple perspectives here: https://www.youtube.com/watch?v=LRyM9MoXG9E&list=PLS4xGV0GacRYnWK9Eei4-a42gqyLncwqg ================================== Acquire SILVER & GOLD at the best price of any listed dealer and support this channel! email your name and phone number to LibertyAndFinance@Protonmail.com
Donate to Support Our Mission! https://www.Patreon.com/ReluctantPreppers or https://www.paypal.me/ReluctantPreppers ==================
Subscribe to Be Notified When We Post to YouTube (it's FREE!) ► http://bit.ly/Subscribe-Free
Liberty and Finance LLC receives financial compensation from its sponsors. The compensation is used is to fund both sponsor-specific activities and general report activities, website, and general and administrative costs. Sponsor-specific activities may include aggregating content and publishing that content on the Liberty and Finance website, creating and maintaining company landing pages, interviewing key management, posting a banner/billboard, and/or issuing press releases. The fees also cover the costs for Liberty and Finance to publish sector-specific information on our site, and also to create content by interviewing experts in the sector. Liberty and Finance LLC does accept stock for payment of sponsorship fees. Sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734. The Information presented in Liberty and Finance is provided for educational and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The Information contained in or provided from or through this forum is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice. The Information on this forum and provided from or through this forum is general in nature and is not specific to you the User or anyone else. YOU SHOULD NOT MAKE ANY DECISION, FINANCIAL, INVESTMENTS, TRADING OR OTHERWISE, BASED ON ANY OF THE INFORMATION PRESENTED ON THIS FORUM WITHOUT UNDERTAKING INDEPENDENT DUE DILIGENCE AND CONSULTATION WITH A PROFESSIONAL BROKER OR COMPETENT FINANCIAL ADVISOR. You understand that you are using any and all Information available on or through this forum AT YOUR OWN RISK. All Rights Reserved.
Source description (no synthesized summary yet).
Basel III's Net Stable Funding Ratio regulations will force banks to cease unallocated gold trading by mid-2021 (Europe) and end-2021 (UK), destroying the derivative markets that have suppressed precious metal prices through manipulation, likely driving physical gold and silver prices sharply higher and exposing the fictional nature of unallocated gold accounting.
- NSFR rules make it uneconomic for banks to finance unallocated gold positions, requiring them to withdraw from bullion desks entirely by regulatory deadline
- Removal of $340 billion in derivative positions will collapse liquidity in COMEX futures and eliminate the primary tool for price suppression
- Central banks lack sufficient physical gold to sell into the market to suppress prices given Asian accumulation (China ~20-25k tons before 2002, then 17k+ more; India and Russia similarly positioned)
This asset isn't compiled yet
You're seeing its claims, ranked. Compile it to build the argument threads, weight them, and check each claim against your library — the full view.
Basel III Net Stable Funding Ratio regulations will make it uneconomic for banks to run bullion desks because they cannot finance unallocated gold positions on one side of their balance sheet using unallocated gold obligations on the other side, and must instead use other funding sources.
“the intention is to ensure that long-term assets are financed by long-term liabilities so that you can't have a run short-term assets are financed by short-term liabilities with some exceptions your gold position can't be financed and i'm talking unallocated gold instead can't be financed by gold on the other side you have to eat up if you like the credit on um uh other aspects of your funding”
A proper gold standard would require not only a bullion standard (currency convertible into gold bullion) but also gold coins (sovereigns, half-sovereigns, quarter-sovereigns in the UK example) that circulate freely and are exchangeable at banks at a fixed rate.
“doing it properly involves not just a bullion standard but also um having gold coins so that in the case of the uk for example uh our sovereigns and half sovereigns and quarter sovereigns would then come back into circulation and be exchangeable at um any bank um for notes”
Basel III Net Stable Funding Ratio rules specifically prohibit banks from financing unallocated gold assets with unallocated gold liabilities, even though these are nominally matched positions, forcing banks to use other funding sources and creating balance sheet penalties.
“they can't use let's say um uh obligations to to customers in in in unallocated gold to offset the other side of that balance sheet in gold so and then there's a haircut of 15 percent in effect um it's basically you know the intention is to ensure that long-term assets are financed by long-term liabilities”
Unallocated gold is not actually gold but rather a bank credit marked to the gold price—currency created out of thin air that appears on balance sheets as a fictional asset, which is fundamentally dishonest accounting.
“the lbma in their letter actually i think were um marginally dishonest in their approach they described unallocated gold as gold it's not gold at all the way it works is very very simple you can create a credit to give to your as a bank to give to your dealing desk to trade in gold... this is currency credit currency created out of thin air which just happens to mark to market to the gold price that's all it is it's not gold and it's fundamentally dishonest”
Central bank gold leasing and swapping into the market was a deliberate carry trade where bullion banks would lease physical gold from central banks at sub-2% rates, sell it, purchase US Treasuries at 6%+ yields, and pocket the spread—a profitable strategy that has ended now that Treasury yields have collapsed.
“a bullion bank would lease some gold off a central bank through the bank of england's auspices as it were and sell it into the market buy u.s treasuries um and ride the treasuries for six months and reverse the transaction uh or roll it uh subsequently and uh basically the cost of leasing the gold was less than two percent and the return you're getting on us treasuries was six percent plus so this was a lovely carry trade”
India and Russia have also accumulated large quantities of gold and shifted from dollar-denominated reserves to gold-backed reserves, concentrating monetary gold in non-Western hands and reducing Western central bank leverage to suppress prices.
“you've got the indians as well you've got the russians who are major producers and they stopped using the dollar basically as their as a sheet anchor to their foreign reserves quite some time ago um gold is now their sheet anchor as it were”
Any currency pegged to the US dollar will collapse simultaneously if the dollar enters hyperinflation, making gold reserves the only hedge for countries tied to dollar-based reserves.
“currencies like the canadian dollar are actually tied to the u.s dollar if the u.s dollar fails the canadian dollar will fail with it”
Countries with zero or depleted gold reserves have no options if fiat currencies collapse, as their currencies are pegged to the US dollar and will fall together with it, leaving them without monetary anchor or value.
“the problem you know what do they do the problem is that at the at the heart of a fiat collapse is the dollar it's as simple as that now we don't know how much gold um uh the the us treasury has... currencies like the canadian dollar are actually tied to the u.s dollar if the u.s dollar fails the canadian dollar will fail with it”
London has only a few hundred tons of physical gold liquidity; the vast bulk of unallocated gold trading creates the appearance of trading volume that does not rest on physical supply.
“if that was the case where are they storing this unallocated gold it doesn't exist i can tell you that the gold liquidity in london is just a few hundred tons no more than that”
China has accumulated approximately 20,000-25,000 tons of gold before officially authorizing citizens to buy bullion in 2002, and Chinese citizens have subsequently accumulated an additional 17,000+ tons, concentrating the world's monetary gold in Asia.
“i have admittedly assessed that they have acquired something in the region of 20 to 25 000 tons before they authorized their own citizens to enable them to to buy gold and silver bullion and that was in 2002. since then i think it's commonly estimated that uh the chinese population as opposed to their governments have accumulated over 17 000 tons of gold”
Banks have incentive to dissuade customers from allocated gold accounts (where the bank acts as custodian) and encourage unallocated accounts (where customers are creditors of the bank and the bank can use the gold) because banks prefer to own the gold liability rather than merely custodialize it.
“they will dissuade you from having an allocated account where the bank actually acts as custodian and they'll dissuade you by saying well you know the costs of ra running this account you're going to find it actually quite uneconomic... the main thing is they would rather you're a creditor of the bank rather than you a depositor of something in custody because the moment you're a depositor you are a creditor of the bank you don't earn that gold anymore and the bank is free to do what it wants with it”
The G20 agreed to shift from 'bail-out' models (where governments absorb bank failure costs) to 'bail-in' models (where bondholders, depositors above the insurance limit, and creditors absorb losses), which increases systemic fragility because bondholders will immediately flee any troubled bank.
“the g20 agreed to change in the basic rules that instead of bailing out banks they were going to bail in banks now the difference between the two is a bail in basically people like bondholders and all the rest of it they take the pain the governments aren't meant to take the pain”
The only end-game for fiat currency collapse is for countries to make their currencies convertible into gold at some exchange rate, backed by their actual gold reserves, though states are reluctant to surrender the monetary control that fiat currencies provide.
“the only alternative is to accelerate the rate of monetary production the printing of money we are in the realms of hyperinflation as far as the world's reserve currency is concerned and any currency which is tied to it will go down with it there is obviously a way out of this and that is at some stage other countries will abandon the dollar is their number one reserve currency and instead make their currencies convertible into gold”
European banking authorities will enforce Basel III NSFR rules on all EU-regulated banks and their subsidiaries by end of Q2 2021 (approximately 5-6 weeks from the May 24, 2021 interview date), forcing immediate withdrawal from unallocated gold trading.
“the european banking association is imposing these regulations on the banks it regulates and their subsidiaries wherever they might be... from the end of this current quarter and um that is literally what six weeks away five weeks away so that's very very soon”
The US Treasury's reported gold holdings (valued at $42.22/oz on the Fed balance sheet) are a fiction; the actual quantity is unknown and likely partially sold into markets, making it impossible to verify US gold reserves without an audit.
“we don't know how much gold um uh the the us treasury has i mean at the moment it's there's a figure on the fed's balance sheet uh which basically is valued at 42.22 dollars an ounce um it's a myth um we don't know how much is there we don't know how much has been sold into the market already i think probably quite a lot but it's a state secret so we're not allowed to know”
European bank regulators are already corrupt on a local basis, using the TARGET2 settlement system to hide non-performing loans by reclassifying them as performing assets and using them as collateral for central bank borrowing.
“local bank regulators in europe um are great ones at kicking the can down the road and trying to remove a problem from their patch as it were and they've been using target 2 the target 2 settlement system to do this do that you know so what they do is they turn around and they say okay these non-performing loans will say they're performing so that you can use them as collateral to borrow money from the central bank that's the way the bank of d'italia and the bank of the spanish central bank have been feeding money into their banking system taking basically um you know bust collateral in exchange and so it pushes it into the target two system”
The US is experiencing monetary hyperinflation driven by unprecedented money printing under COVID spending and Biden administration policies, evidenced by purchasing power collapse rather than by consumer price inflation metrics.
“currencies like the canadian dollar are actually tied to the u.s dollar if the u.s dollar fails the canadian dollar will fail with it and i think the situation we're looking at is that with um a a monetary hyperinflation in the dollar i mean i reckon you're already hyper inflating you've only got to look at president biden's plans and all the rest of it on top of um of the cobid and stuff”
Bad debts are mounting significantly in European banks following COVID disruption, and in the US, the situation is understated in official data, with approximately 25% of small businesses permanently wiped out, though this is being masked as all zombie companies are being kept alive by banks.
“the bad debts i mean particularly in europe the bad debts are mounting hugely the bad debt situation in america is understated uh from all the information i have um you know with with small businesses smaller sized businesses throughout the nation uh what 25 of them wiped out i would think is probably a conservative guess um it's only really the big businesses who've you know had sort of lots and lovely subsidies and kept going by the banks because the banks don't want them to go bust in other words all the zombies are still there but the real productive side of the economy has you know been decimated”
Frank Veneroso's research (circa 2002) estimated that 10,000-16,000 tons of central bank monetary gold was leased or swapped into the market at any given time—roughly 50% of all reported central bank holdings—and the current amount on lease is unknown.
“venorosa came up with was he reckoned um that at that time anything between 10 and 16 000 tons of central bank gold was out on lease or swap now that 16 000 figure was roughly half the total central bank gold um reported as monetary gold um part of national gold reserves um around the world”
COMEX gold and silver futures will become illiquid and effectively close because 74% of non-speculative liquidity comes from bank swap positions, which will be closed as banks exit the market due to NSFR compliance, leaving only producer hedging.
“roughly 74 of the liquidity on that side actually comes from the swaps and the balance is coming from the producers so this market is i mean the comex market is just going to contract into an illiquid um waste of time i mean it really is”
Removing approximately $340 billion in outstanding derivative positions (unallocated gold and COMEX futures) will either cause that demand to disappear or shift to physical gold markets, but physical markets lack sufficient liquidity to absorb the demand without sharp price increases.
“you've got about 340 billion which um uh you know the supply for that is going to go so um given that that absorbs demand uh where's this demand going to go i mean the bond is going to presumably some of it will just disappear but some of it is going to go into the physical market because some of it think thought that it had exposure to the gold price it will no longer have exposure to the gold players price”
Central bank gold leasing operations have likely shifted from physical movement to book-entry accounting systems, where gold is recorded as leased but remains in vaults, reducing the physical gold available for sale into the market.
“my guess is and from what i've been told by other sources is that the gold doesn't actually leave the bank of england so much anymore i don't know that it stays there entirely i don't know whether it's just part of it stays in the bank of england but basically they work more off a book entry system”
The 'perfect storm' for gold prices is now forming due to simultaneous occurrence of unprecedented monetary expansion, pent-up commodity demand post-COVID, production disruption causing supply shortages, and Basel III forcing derivative market collapse.
“you've got unprecedented debasement of the of the monetary supply in in the us at least in other western countries uh trillions per year etc and then you've got commodities reflecting that or because of pent up demand following the lockdown whatever you've got commodities bursting out into what the aidan sisters are calling a commodity super cycle that sort of thing and at the same time you you've got regulations that were written five six years ago basically seven years ago shutting down the the manipulative futures operations of some of these major players that sounds like potentially you know fuel and ignition source”
States will strongly resist moving to gold-backed currencies because it requires surrendering the monetary creation power that fiat systems provide, and the US in particular will face pressure from its 'deep state' against any shift that would reduce American geopolitical leverage.
“it's difficult to see any bank any central bank actually giving up on fiat currency um you know sort of throwing in the towel and saying we got this wrong um we've got to get out of this and the only way we're going to get out of this basically is to make our currency convertible into gold and of course you've got this huge reluctance in america to do it not just because i mean everybody's a keynesian now in term in in in the system but think of the power you're handing to china i mean you know this is really this this i can just see every objection from the deep state about such a move”
The Basel Committee understands that unallocated gold is a fictional derivative construct and not actual gold, but they are not forcing the issue by demanding explicit reclassification because doing so would expose the entire fictional nature of the LBMA's operations.
“to get the lbma to agree that this is a derivative and not gold that opens a huge can of worms about the whole the whole process what actually is the lbma doing what are the members doing what are they trading in”
UK regulators cannot provide relief to the LBMA on Basel III NSFR compliance because the European Banking Authority is moving first, making it politically and regulatorily untenable for the UK to backtrack given the need to maintain regulatory credibility.
“the prudential regulatory authority... i don't think they can come and come to the rescue of the lbma on this either because i mean european regulations are coming in within four or five weeks um it is inconceivable really that the british regulator would fail to follow the european regulator on this”
The London Precious Metals Clearing Limited (LPMCL), owned and operated by four major banks, will likely collapse because member banks will face balance sheet penalties on imbalanced positions that are inevitable in the clearing process.
“the london precious metals clearing limited which is basically um owned and operated by four banks four of the largest banks because they always end up with imbalances and those imbalances will show on their balance sheet and um they are likely to withdraw from the lp lpmcl because um who would want to do it you know with under this new regime”
Central banks will attempt to bypass traditional banking systems by implementing Central Bank Digital Currencies (CBDCs) rather than adopting gold standards, as CBDCs preserve monetary control while appearing to modernize.
“it will hope that it can do central bank digital currencies and bypass the banks who have undoubtedly made life more difficult for central banks because they pursue their own agenda”
Banks will close customer unallocated gold accounts by ceasing to offer the service entirely or by forcing cash settlement instead of physical gold delivery, leaving customers who thought they had gold exposure with either cash or nothing.
“a lot of these guys think they have got gold exposure by having an unallocated gold account now when these banks stop offering unallocated gold accounts which they will they will just withdraw from the market they will say you know we're no longer offering this service”
The collapse of unallocated gold trading will extend to all commodities derivative markets (energy, copper, etc.) that are subject to the same NSFR rules, creating a multi-commodity crunch that will drive prices higher across the board during a period of already high inflation.
“the same treatment is extended to banks dealing in um other commodities uh you know derivative positions in other commodities particularly energy and things like that copper and uh you know what a time for this to happen because that you know in so far as it drives up the prices of these things uh you know we have got an inflation problem”
Western central banks (US, ECB) would like to organize a coordinated gold selling cartel to suppress prices as demand surges, but cannot do so because German, French, and Italian central banks are unlikely to willingly participate in sales that would deplete their reserves.
“what we would normally expect is we'd expect uh perhaps um the central banks to come together i'm talking about the western central banks of course to come together to form a new um uh sort of if you like selling cartel to try and sell um a physical gold into the market to satisfy demand to keep the price down if you like um i'm sure that's what the americans would like um i think the ecb would like that but i really don't see um the germans the french the italians who are the big holders in europe um willingly going along with that”
The US government will likely pursue a messaging strategy claiming 'gold was yesterday's story' and 'pet rocks' rather than attempting physical sales, as it cannot compete with Asian gold hoarding on physical supply.
“if america wants to try and hit the gold market again with another series of sales she knows that she's on a hiding to nothing so what can they do oh yeah i can't see they can do anything other than try and push out um the story that well you know gold was yesterday's story pet rocks you know i don't know why you bother we're not interested we don't care and i think that's probably the line they're going to have to take”
Banks will stop offering unallocated gold accounts to retail and institutional customers, either by withdrawing the service entirely or forcing settlement in cash equivalents instead of physical gold, causing an estimated $300-400 billion in account balances to seek alternatives.
“when these banks stop offering unallocated gold accounts which they will they will just withdraw from the market they will say you know we're no longer offering this service... or the other way in which they do it is they've turned around and said we can't pay you out in gold we will only pay you out in the cash equivalent”
The London Gold Market Association explicitly signaled to regulators (in a May 3, 2021 letter to the Prudential Regulatory Authority) that unallocated gold business would become unviable under NSFR rules, nearly pleading for regulatory relief.
“the lbma wrote a letter which basically said with the support of the world gold council that you know unless you do something about this we're going to be out of business i mean it was almost as blunt as that you didn't have to read between the lines for goodness sake um so you know this was this was absolutely clear”
The Basel Committee understands the 'shenanigans' (spoofing, market manipulation) that occur in commodity derivatives markets and views them as systemic risk that must be cleaned out, regardless of industry lobbying.
“you will be aware perhaps more aware than general members of the public of the shenanigans that go on in the derivatives markets and if you are aware of what's going on in derivative markets and the crookedness and the spoofing and all the rest of it then surely that is a source of enormous risk to the international banking system and it has to be cleaned out”
Bank swap dealers on COMEX are currently net short approximately $28-29 billion of gold and are desperately trying to close these positions by suppressing the gold price, which is why they are actively manipulating prices downward.
“if you look at comex now this is the visible side of it but if you look at comex the swaps which is the bullion bank trading desks are net short of around about 28 29 billion dollars worth of gold um and they're desperately trying to close it i mean look at the way the gold price is behaving today they want to bang it they want to get it down”
The manipulation of precious metals prices has been a sustained campaign by Western authorities to suppress gold and discredit it as an alternative to fiat currencies, but this manipulation is now impossible to maintain due to regulatory enforcement and Asian gold accumulation.
“manipulation of the market is going to come to an end and they know it and they're desperate”
The gold lease carry trade (leasing gold at <2% to buy Treasuries at 6%+) was a profitable but finite strategy that ended when interest rates fell, fundamentally changing the economics of central bank gold leasing.
“that carry trade can still continue but of course um it's gone the other way i mean you know uh you you you can't really get any yield pick up by um say um you know leasing gold in order to to uh put it on deposit or to buy us um t-bills for example”
The Basel Committee designed Basel III specifically to address systemic risk and counterparty contagion concerns that emerged from the 2008 Lehman Brothers crisis, when failures at major banks threatened to cascade through the global financial system.
“basel iii was designed if you like in the wake of of the lehman crisis to try and ensure that counterparty risk didn't spread amongst banks because obviously this is a huge issue”
The Net Stable Funding Ratio, first proposed by the Basel Committee in spring 2014 and finalized in October 2014, has been 'known' for seven years, but only recently became urgent as implementation deadlines approached.
“in the spring of 2014 when the the committee... put out a paper for consultation and that was this new net stable funding ratio and rate yup and um comments were invited and presumably they were offered and the following october out came the definitive paper this is the net stable funding ratio and this is the way it works so you know we've known since 2014 seven years ago that this is going to be introduced”
Alistair Macleod is head of research at Goldmoney.com and publishes market reports on precious metals every Thursday on the Goldmoney research section and a market report published on Fridays.
“alastair macleod he's the head of research at goldmoney.com... i write a market report on precious metals which is published at about the same time but only friday so those are the two main writing activities i do”
Dunagan Kaiser is founder of Liberty and Finance and is a licensed gold and silver broker for Miles Franklin.
“this is dunagan kaiser founder of liberty and finance i'm now a licensed gold and silver broker for miles franklin call me directly for the physical gold and silver that you need at the best price with personalized private service from one of the oldest and best companies in the business”
Banks are currently desperately trying to close their net short gold positions on COMEX by suppressing prices, using option expiry games and technical trading to drive prices lower, indicating the market is already under stress.
“they want to bang it they want to get it down you know um because uh the active contract is running out it's rolling out um this is the june contract um and there are lots and lots of option positions they want to expire worthless i mean this is what they do”