7 ms·

Gold Is Worth More in New York

152 points by ioblomov 2y ago

ioblomov 2y ago
https://archive.ph/5DEdv https://archive.ph/5DEdv
basementcat 2y ago
Is this related to the sovereign default scheduled to happen within a month?
- AnimalMuppet 2y ago
  Um, what sovereign default scheduled to happen within a month? Without some detail (and some supporting evidence), that sounds like conspiracy theory drivel. It also, frankly, sounds unrelated to the article.
  - basementcat 2y ago
    The US Federal government reached its limit on borrowing on January 21 and is currently taking "extraordinary measures" to avoid a sovereign default. There is currently no agreement to raise the debt limit in Congress. While there is some variability in spending (e.g. natural disasters may cause the federal government to spend more money for FEMA aid), the sovereign default is expected to occur in about a month. https://www.voanews.com/a/us-treasury-to-launch-measures-tuesday-to-avoid-debt-limit-breach/7941461.html https://www.voanews.com/a/us-treasury-to-launch-measures-tue...
    - jddj 2y ago
      > Depending on who is doing the research, it is said that the US has raised its debt ceiling (in some form or other) at least 90 times in the 20th century.[1] [1] https://en.m.wikipedia.org/wiki/History_of_the_United_States_debt_ceiling https://en.m.wikipedia.org/wiki/History_of_the_United_States...
      - bwestergard 2y ago
        While I would never be so bold as to venture a prediction, the risk of a partial default seems elevated. No previous administration has voiced the opinion that partially defaulting by halting payments from the Treasury would be a legitimate exercise of executive authority. "Musk said in social media posts over the weekend that his “DOGE team” of enforcers is shutting down some payments, claiming that “corruption and waste is being rooted out in real-time.” If the Musk team veered into legally legitimate transfers, that could spark debate over whether the federal government is following through on its obligations. Former Treasury Secretary Janet Yellen said repeatedly — during debt-limit standoffs — that even prioritizing some payments ahead of others amounted to “default by another name.” Trump’s first Treasury chief, Steven Mnuchin, said in 2017 that “the government should honor all of its obligations." https://finance.yahoo.com/news/musk-moves-treasury-risk-debate-183530758.html https://finance.yahoo.com/news/musk-moves-treasury-risk-deba...
        deleted 2y ago
        [deleted]
        panarky 2y ago
        Before it happens it's conspiracy thinking to go around connecting random dots. After it happens, everyone will say it was obvious all along, if only you could have connected the dots. Dots such as famously bragging about defaulting on personal and business debts, big promises about radical reductions in debt levels with zero public plan for how it's supposed to happen, eagerness to renege on long standing treaty commitments, withdrawal from international organizations, threats of economic warfare against allies and adversaries alike, immediate seizure of the Treasury systems that execute payments for bond interest and principal, a stated desire to dramatically devalue the dollar, etc. Usually gold just sits in underground vaults and changes in ownership are recorded in a ledger. When massive quantities of physical gold are put on airplanes, something unusual is happening.
        MichaelZuo 2y ago
        This seems like a tautology. By definition people with low credibility have to fight an uphill battle to get their claims accepted.
    - arduanika 2y ago
      Ah, the debt ceiling news cycle. Is this your first time?
      - mattnewton 2y ago
        I know how many times it’s been cried before, but I am worried this time there might actually be a wolf.
        wakawaka28 2y ago
        Whatever that wolf might be, it isn't going to be that the government can't produce more dollars to spend. It always authorizes itself to spend money and it always produces enough of that money to spend.
        seanw444 2y ago
        Until it can't anymore. It will eventually fall apart. It is inevitable.
        schmidtleonard 2y ago
        Governments going into too much debt is a very old problem that has happened hundreds of times before, even in the USA, so we know with high likelihood how it ends: inflation and soft default, not hard default. The timeline is the major unknown. https://www.imf.org/external/pubs/ft/wp/2015/wp1507.pdf https://www.imf.org/external/pubs/ft/wp/2015/wp1507.pdf
        wakawaka28 2y ago
        Inflation is not exactly preferable to hard defaults, although it really depends on who is being defaulted on. Defaulting on pensioners would be pretty awful. Defaulting on foreign-owned bonds would be less awful.
      - marcosdumay 2y ago
    - analog31 2y ago
      The same party controls both houses of Congress, the executive branch, and the Supreme Court. Surely they'll work this out.
      - deleted 2y ago
        [deleted]
      - dkjaudyeqooe 2y ago
        Have you per chance looked at the people that make up this party?
        zdw 2y ago
        The Republicans, for all their whinging over the debt when they're not in power and using it to give the Democrats temporary black eyes, are highly unlikely to do anything that directly endangers big business profits or the stock market going up. Defaulting on the debt has no upside for them now, so probably won't happen.
        dkjaudyeqooe 2y ago
        Seriously, have a look at some of the people involved. They are waaaay out there. The GOP don't have a majority that support either the budget or extending the debt ceiling. Dems should let them stew and make various demands in exchange for their vote, as the GOP has done to them.
        analog31 2y ago
        I think the D's are justified in saying that there's too much uncertainty right now to allow funding to be passed through the continuing resolution process. The R's remain welcome to articulate their plans in the form of a budget, that is debated via the regular appropriations process.
        JumpCrisscross 2y ago
    - asdf6969 2y ago
      Nothing ever happens
      - toss1 2y ago
        YET. Nothing has happened YET. It has not yet happened because of the presence of at least a minimum of responsible players who both understand the consequences and care about the consequences (at least more than their particular political goals). But there is no structure that prevents it from happening, no part of the machine that prevents a mistake. There are also forces pushing it to happen. The past performance of your advice is no guarantee of future performance, and it is particularly bad today. I sincerely hope you turn out to be right, but if so, it will only be by chance.
        asdf6969 2y ago
        It’s not going to happen. Nothing ever does
    - Guthur 2y ago
      Considering that at any moment the US can conjure into existence as many dollars as it needs how can it possibly default?
      - lovich 2y ago
        By actively choosing to? The current administration appears to view funds as being permanently capable of getting clawed back, based on their current whims as to whether the payments are "fraudulent" or not. When they talked about upending the current order, the banking system and debt in general being sacrosanct are pretty foundational to said order
        Guthur 2y ago
        Government debt that is denominated in a currency that the government can create at any time is hardly the same as the debt you or I have. Governments do not actually borrow from anyone if they can create their own money. They provide a facility for the rich to park some of their immense wealth but that is not where the money comes from, those individuals accumulate they do not create money.
        lovich 2y ago
        You are ignoring the part where I said they would actively chose to not pay the debt. I understand how nation states who print their own currency have a different set of rules than any agent working with currency that they do not control the monetary supply of. None of that changes the fact that they can _choose_ to default
    - JumpCrisscross 2y ago
      > US Federal government reached its limit on borrowing on January 21 and is currently taking "extraordinary measures" to avoid a sovereign default Based on the current MO at the Treasury, it would seem that--possibly to the greatest degree in generations--whether Treasuries keep paying is almost entirely unlinked from what the Congress does.
    - suraci 2y ago
      No, the sovereign default will never happen, or, it's always avoidable However, unrestricted fiscal deficits and debt could lead to a reversal of the low positions of the US dollar and gold, shifting from "the US dollar pricing gold" to "gold pricing the US dollar."
  - DANmode 2y ago
    Another year passes, another year of AnimalMuppet using "conspiracy theory" as a slur.
- IAmGraydon 2y ago
  Not sure why you're getting downvoted. I observed the same thing.
epistasis 2y ago
For those interested in broader NYC gold discussion, this recent Bloomberg podcast interviews a gold dealer in the NYC Diamond District: https://www.bloomberg.com/news/articles/2025-02-14/gold-price-nears-new-record-highs-why-metal-remains-so-popular https://www.bloomberg.com/news/articles/2025-02-14/gold-pric...
- deleted 2y ago
  [deleted]
hiisukun 2y ago
I clicked this by accident, but then read the full thing after noticing the author was Matt Levine! I'm sure there are other readers here who might appreciate his knowledge and writing style, so I mention it. [ To those who post opinion pieces: Is it against the site rules to have the author listed after the actual title? It would help me in this case and others ]
- lmm 2y ago
  > To those who post opinion pieces: Is it against the site rules to have the author listed after the actual title? It would help me in this case and others It's not "against the rules" as such, but moderators (at least those in my timezone) will consistently reverse any change in the title like that.
roenxi 2y ago
Ah, gold. Some things in the gold market worth being aware of: 1) China opened up a new gold exchange [0, 1] recently [2] and started a push to get more active in the market. 2) Central banks have been net buyers of gold since around 2007. 3) As part of the Ukraine war effort the US confiscated a bunch of money off Russia. It isn't entirely clear [2] what impact that will have on gold but it is conceivable that the risk of holding US dollars is high enough to make something interesting happen. There is a tipping point here somewhere and the US has been looking for it. The basic trend in the gold market is it is in flux and there is a definite question of how the BRICS are interacting with it. I'm interpreting the situation as a revolt against US and British influence over the gold market as the productive capital moves to Asia. [0] https://en.sge.com.cn/eng_about_Overview https://en.sge.com.cn/eng_about_Overview [1] https://www.gold.org/gold-market-structure/global-gold-market https://www.gold.org/gold-market-structure/global-gold-marke... [2] Gold is a sedate commodity.
- jazzyjackson 2y ago
  My favorite fact I learned just the other day is that gold held by the federal reserve is "on the books" at a value of $42.22 per troy ounce and would represent a sizable sum if valued at market rates. But since we'll never sell it I guess it doesn't matter much what we value it at. https://www.federalreserve.gov/data/intlsumm/current.htm https://www.federalreserve.gov/data/intlsumm/current.htm
  - roenxi 2y ago
    It'd be a hilarious (though unlikely) situation if it turns out they lied about how much gold they had, but do have the value of gold that was claimed in the books.
    - wmf 2y ago
      FTX bankruptcy accounting.
    - rapsey 2y ago
      Not sure it is that unlikely. They refuse to do an audit of the gold and have not done one in decades.
fuoqi 2y ago
The article has failed to address the most interesting question: why this spread exists. The most interesting theory is that it's effectively a "bank rank" on "paper gold" issued by London, i.e. traders may fear that there are significantly more claims on gold than physically exists in London vaults. If this market blows up, it would be the most spectacular failure with very significant consequences for global financial markets.
- secondcoming 2y ago
  This theory came up years ago when sites such as ZeroHedge were claiming JP Morgan controls a precious metals international scam and there isn’t enough physical gold or silver to cover everything. People were told to buy as much physical gold and silver as possible because it was all about to burst. Silver went to $50 and then collapsed and it was never mentioned again. Is this theory back doing the rounds?
  - zoklet-enjoyer 2y ago
    Never mentioned again? You haven't been on the right parts of the Internet. It's still a common belief. Probably true too
  - fuoqi 2y ago
    The difference now is that professional market participants act on this "theory" by physically moving a significant amount of gold from UK to US. And "weeks-long" withdrawal queues certainly do not look great and confidence inspiring. And there is the example of Poland which has repatriated all of its gold from UK years prior and stories like this: https://x.com/SenatorRennick/status/1891051795159429514 https://x.com/SenatorRennick/status/1891051795159429514
    - secondcoming 2y ago
      And yet this physical transfer of gold has had largely zero impact on the price of gold. Nobody was fretting about 'where will we source Poland's gold?'
deleted 2y ago
[deleted]
mikhailfranco 2y ago
COMEX is usually just a paper market, with almost all positions closed out before settlement. London has paper transactions, but is also a delivery market, where large quantities of real gold change hands. The gold may not actually leave the vaulting system: the transfer can often be accomplished with a warehouse receipt. However, since November last year, clients of the COMEX (often acting through JPMorgan bullion bank) have been standing for delivery, e.g. 62 tonnes in the 2 weeks after Thanksgiving 2024: https://www.goldmoney.com/research/massive-comex-deliveries-since-thanksgiving https://www.goldmoney.com/research/massive-comex-deliveries-... Now JPMorgan is standing for delivery of 93 tonnes in February 2025 (3m troy oz, $4bn): https://finance.yahoo.com/news/jpmorgan-plans-4-billion-gold-181226432.html https://finance.yahoo.com/news/jpmorgan-plans-4-billion-gold... COMEX has had to scramble to find the physical gold to deliver. The US price went up, creating a spread with London and an arbitrage opportunity. Physical deliveries from the LBMA vaults in London were flown to the COMEX vaulting system in and around New York. If the deliveries cannot be made in New York, there is a rather murky process called Exchange For Physical (EFP), where the client is given a paper promise for gold delivery in London. Not sure if there is client discretion, or if they can be forced to accept EFP by the COMEX T&Cs. I think that COMEX does have the right to cash settle delivery requests, but that would be seen as a soft default, and seriously damage its reputation as a physical market grounded in delivery.
- __turbobrew__ 2y ago
  So the COMEX is selling metals which they do not possess now? I thought the whole point is that COMEX coupons were backed by physical goods which you could actually cash out if you wanted? Otherwise you are just betting on paper.
  - mikhailfranco 2y ago
    They (bullion banks) assume everyone will close out contracts on COMEX. Yes, paper promise. Sometimes promises can be kept, but not always.
  - bitmasher9 2y ago
    The gold to paper ratio in Comex is 300 to 1. The truth is accepting delivery is expensive. You cannot get a small amount of gold on comex. You’ll need a vault to put it in, insurance, armored truck service, etc. Most people buy gold futures as a hedge or speculation, and don’t want to actually go through the cost of accepting delivery. The concern has always been a run on Comex if physical demand suddenly increases. In some ways that would be good, as the paper market is artificially keeping the price of gold down. If you don’t settle in gold you sell more contracts, and the supply is artificially inflated. In short term it will be awful for Comex, which does a very large amount of commodity futures.
yieldcrv 2y ago
So the gold refiner is the real arbitrageur Because that dont actually have to refine the gold for the differing contracts, they just need to exchange it in London
adolph 2y ago
As this recent gold market perturbation was kicking off, gCaptain laid out a conjecture that follows Cryptonomicon: Can we talk about how, before WWII, nearly every village in China had a gold Buddha filled with gems, serving as the local bank? Can we talk about how the Japanese looted them all and launched a massive sealift operation to stash them in the Philippines? [...] Or how at least one of the CIA’s secret ship registries was accidentally exposed in the USAID data dump? https://x.com/johnkonrad/status/1887856186231263285 https://x.com/johnkonrad/status/1887856186231263285
- Workaccount2 2y ago
  Getting news from people who wear "blacklisted from Wikipedia" as a badge of honor is probably not a good idea.
  - adolph 2y ago
    I had no idea. There doesn't seem to be a way to verify that claim either. Strings "gcaptain" and "konrad" to not appear in the depreciated sources. https://en.wikipedia.org/wiki/Wikipedia:Deprecated_sources https://en.wikipedia.org/wiki/Wikipedia:Deprecated_sources
- csomar 2y ago
  > Or how most of that gold is STILL buried in the Philippines— And how Taiwan is a distraction while China builds a massive Navy to take it back? That's enough X for me today.
  - basementcat 2y ago
    Wasn’t that part of the plot of Neal Stephenson's Cryptonomicon?
kittikitti 2y ago
This was a misleading headline on an opinion piece which required a few minutes of reading political opinion before getting to anything it's really about. This is typical for Bloomberg.

152 points by ioblomov 2y ago

ioblomov 2y ago

https://archive.ph/5DEdv https://archive.ph/5DEdv

basementcat 2y ago

Is this related to the sovereign default scheduled to happen within a month?

AnimalMuppet 2y ago
Um, what sovereign default scheduled to happen within a month? Without some detail (and some supporting evidence), that sounds like conspiracy theory drivel. It also, frankly, sounds unrelated to the article.
- basementcat 2y ago
  The US Federal government reached its limit on borrowing on January 21 and is currently taking "extraordinary measures" to avoid a sovereign default. There is currently no agreement to raise the debt limit in Congress. While there is some variability in spending (e.g. natural disasters may cause the federal government to spend more money for FEMA aid), the sovereign default is expected to occur in about a month. https://www.voanews.com/a/us-treasury-to-launch-measures-tuesday-to-avoid-debt-limit-breach/7941461.html https://www.voanews.com/a/us-treasury-to-launch-measures-tue...
  - jddj 2y ago
    > Depending on who is doing the research, it is said that the US has raised its debt ceiling (in some form or other) at least 90 times in the 20th century.[1] [1] https://en.m.wikipedia.org/wiki/History_of_the_United_States_debt_ceiling https://en.m.wikipedia.org/wiki/History_of_the_United_States...
    - bwestergard 2y ago
      While I would never be so bold as to venture a prediction, the risk of a partial default seems elevated. No previous administration has voiced the opinion that partially defaulting by halting payments from the Treasury would be a legitimate exercise of executive authority. "Musk said in social media posts over the weekend that his “DOGE team” of enforcers is shutting down some payments, claiming that “corruption and waste is being rooted out in real-time.” If the Musk team veered into legally legitimate transfers, that could spark debate over whether the federal government is following through on its obligations. Former Treasury Secretary Janet Yellen said repeatedly — during debt-limit standoffs — that even prioritizing some payments ahead of others amounted to “default by another name.” Trump’s first Treasury chief, Steven Mnuchin, said in 2017 that “the government should honor all of its obligations." https://finance.yahoo.com/news/musk-moves-treasury-risk-debate-183530758.html https://finance.yahoo.com/news/musk-moves-treasury-risk-deba...
      - deleted 2y ago
        [deleted]
      - panarky 2y ago
        Before it happens it's conspiracy thinking to go around connecting random dots. After it happens, everyone will say it was obvious all along, if only you could have connected the dots. Dots such as famously bragging about defaulting on personal and business debts, big promises about radical reductions in debt levels with zero public plan for how it's supposed to happen, eagerness to renege on long standing treaty commitments, withdrawal from international organizations, threats of economic warfare against allies and adversaries alike, immediate seizure of the Treasury systems that execute payments for bond interest and principal, a stated desire to dramatically devalue the dollar, etc. Usually gold just sits in underground vaults and changes in ownership are recorded in a ledger. When massive quantities of physical gold are put on airplanes, something unusual is happening.
        MichaelZuo 2y ago
        This seems like a tautology. By definition people with low credibility have to fight an uphill battle to get their claims accepted.
  - arduanika 2y ago
    Ah, the debt ceiling news cycle. Is this your first time?
    - mattnewton 2y ago
      I know how many times it’s been cried before, but I am worried this time there might actually be a wolf.
      - wakawaka28 2y ago
        Whatever that wolf might be, it isn't going to be that the government can't produce more dollars to spend. It always authorizes itself to spend money and it always produces enough of that money to spend.
        seanw444 2y ago
        Until it can't anymore. It will eventually fall apart. It is inevitable.
        schmidtleonard 2y ago
        Governments going into too much debt is a very old problem that has happened hundreds of times before, even in the USA, so we know with high likelihood how it ends: inflation and soft default, not hard default. The timeline is the major unknown. https://www.imf.org/external/pubs/ft/wp/2015/wp1507.pdf https://www.imf.org/external/pubs/ft/wp/2015/wp1507.pdf
        wakawaka28 2y ago
        Inflation is not exactly preferable to hard defaults, although it really depends on who is being defaulted on. Defaulting on pensioners would be pretty awful. Defaulting on foreign-owned bonds would be less awful.
    - marcosdumay 2y ago
  - analog31 2y ago
    The same party controls both houses of Congress, the executive branch, and the Supreme Court. Surely they'll work this out.
    - deleted 2y ago
      [deleted]
    - dkjaudyeqooe 2y ago
      Have you per chance looked at the people that make up this party?
      - zdw 2y ago
        The Republicans, for all their whinging over the debt when they're not in power and using it to give the Democrats temporary black eyes, are highly unlikely to do anything that directly endangers big business profits or the stock market going up. Defaulting on the debt has no upside for them now, so probably won't happen.
        dkjaudyeqooe 2y ago
        Seriously, have a look at some of the people involved. They are waaaay out there. The GOP don't have a majority that support either the budget or extending the debt ceiling. Dems should let them stew and make various demands in exchange for their vote, as the GOP has done to them.
        analog31 2y ago
        I think the D's are justified in saying that there's too much uncertainty right now to allow funding to be passed through the continuing resolution process. The R's remain welcome to articulate their plans in the form of a budget, that is debated via the regular appropriations process.
        JumpCrisscross 2y ago
  - asdf6969 2y ago
    Nothing ever happens
    - toss1 2y ago
      YET. Nothing has happened YET. It has not yet happened because of the presence of at least a minimum of responsible players who both understand the consequences and care about the consequences (at least more than their particular political goals). But there is no structure that prevents it from happening, no part of the machine that prevents a mistake. There are also forces pushing it to happen. The past performance of your advice is no guarantee of future performance, and it is particularly bad today. I sincerely hope you turn out to be right, but if so, it will only be by chance.
      - asdf6969 2y ago
        It’s not going to happen. Nothing ever does
  - Guthur 2y ago
    Considering that at any moment the US can conjure into existence as many dollars as it needs how can it possibly default?
    - lovich 2y ago
      By actively choosing to? The current administration appears to view funds as being permanently capable of getting clawed back, based on their current whims as to whether the payments are "fraudulent" or not. When they talked about upending the current order, the banking system and debt in general being sacrosanct are pretty foundational to said order
      - Guthur 2y ago
        Government debt that is denominated in a currency that the government can create at any time is hardly the same as the debt you or I have. Governments do not actually borrow from anyone if they can create their own money. They provide a facility for the rich to park some of their immense wealth but that is not where the money comes from, those individuals accumulate they do not create money.
        lovich 2y ago
        You are ignoring the part where I said they would actively chose to not pay the debt. I understand how nation states who print their own currency have a different set of rules than any agent working with currency that they do not control the monetary supply of. None of that changes the fact that they can _choose_ to default
  - JumpCrisscross 2y ago
    > US Federal government reached its limit on borrowing on January 21 and is currently taking "extraordinary measures" to avoid a sovereign default Based on the current MO at the Treasury, it would seem that--possibly to the greatest degree in generations--whether Treasuries keep paying is almost entirely unlinked from what the Congress does.
  - suraci 2y ago
    No, the sovereign default will never happen, or, it's always avoidable However, unrestricted fiscal deficits and debt could lead to a reversal of the low positions of the US dollar and gold, shifting from "the US dollar pricing gold" to "gold pricing the US dollar."
- DANmode 2y ago
  Another year passes, another year of AnimalMuppet using "conspiracy theory" as a slur.
IAmGraydon 2y ago
Not sure why you're getting downvoted. I observed the same thing.

epistasis 2y ago

For those interested in broader NYC gold discussion, this recent Bloomberg podcast interviews a gold dealer in the NYC Diamond District: https://www.bloomberg.com/news/articles/2025-02-14/gold-price-nears-new-record-highs-why-metal-remains-so-popular https://www.bloomberg.com/news/articles/2025-02-14/gold-pric...

deleted 2y ago
[deleted]

hiisukun 2y ago

I clicked this by accident, but then read the full thing after noticing the author was Matt Levine! I'm sure there are other readers here who might appreciate his knowledge and writing style, so I mention it. [ To those who post opinion pieces: Is it against the site rules to have the author listed after the actual title? It would help me in this case and others ]

lmm 2y ago
> To those who post opinion pieces: Is it against the site rules to have the author listed after the actual title? It would help me in this case and others It's not "against the rules" as such, but moderators (at least those in my timezone) will consistently reverse any change in the title like that.

roenxi 2y ago

Ah, gold. Some things in the gold market worth being aware of: 1) China opened up a new gold exchange [0, 1] recently [2] and started a push to get more active in the market. 2) Central banks have been net buyers of gold since around 2007. 3) As part of the Ukraine war effort the US confiscated a bunch of money off Russia. It isn't entirely clear [2] what impact that will have on gold but it is conceivable that the risk of holding US dollars is high enough to make something interesting happen. There is a tipping point here somewhere and the US has been looking for it. The basic trend in the gold market is it is in flux and there is a definite question of how the BRICS are interacting with it. I'm interpreting the situation as a revolt against US and British influence over the gold market as the productive capital moves to Asia. [0] https://en.sge.com.cn/eng_about_Overview https://en.sge.com.cn/eng_about_Overview [1] https://www.gold.org/gold-market-structure/global-gold-market https://www.gold.org/gold-market-structure/global-gold-marke... [2] Gold is a sedate commodity.

jazzyjackson 2y ago
My favorite fact I learned just the other day is that gold held by the federal reserve is "on the books" at a value of $42.22 per troy ounce and would represent a sizable sum if valued at market rates. But since we'll never sell it I guess it doesn't matter much what we value it at. https://www.federalreserve.gov/data/intlsumm/current.htm https://www.federalreserve.gov/data/intlsumm/current.htm
- roenxi 2y ago
  It'd be a hilarious (though unlikely) situation if it turns out they lied about how much gold they had, but do have the value of gold that was claimed in the books.
  - wmf 2y ago
    FTX bankruptcy accounting.
  - rapsey 2y ago
    Not sure it is that unlikely. They refuse to do an audit of the gold and have not done one in decades.

fuoqi 2y ago

The article has failed to address the most interesting question: why this spread exists. The most interesting theory is that it's effectively a "bank rank" on "paper gold" issued by London, i.e. traders may fear that there are significantly more claims on gold than physically exists in London vaults. If this market blows up, it would be the most spectacular failure with very significant consequences for global financial markets.

secondcoming 2y ago
This theory came up years ago when sites such as ZeroHedge were claiming JP Morgan controls a precious metals international scam and there isn’t enough physical gold or silver to cover everything. People were told to buy as much physical gold and silver as possible because it was all about to burst. Silver went to $50 and then collapsed and it was never mentioned again. Is this theory back doing the rounds?
- zoklet-enjoyer 2y ago
  Never mentioned again? You haven't been on the right parts of the Internet. It's still a common belief. Probably true too
- fuoqi 2y ago
  The difference now is that professional market participants act on this "theory" by physically moving a significant amount of gold from UK to US. And "weeks-long" withdrawal queues certainly do not look great and confidence inspiring. And there is the example of Poland which has repatriated all of its gold from UK years prior and stories like this: https://x.com/SenatorRennick/status/1891051795159429514 https://x.com/SenatorRennick/status/1891051795159429514
  - secondcoming 2y ago
    And yet this physical transfer of gold has had largely zero impact on the price of gold. Nobody was fretting about 'where will we source Poland's gold?'

deleted 2y ago

[deleted]

mikhailfranco 2y ago

COMEX is usually just a paper market, with almost all positions closed out before settlement. London has paper transactions, but is also a delivery market, where large quantities of real gold change hands. The gold may not actually leave the vaulting system: the transfer can often be accomplished with a warehouse receipt. However, since November last year, clients of the COMEX (often acting through JPMorgan bullion bank) have been standing for delivery, e.g. 62 tonnes in the 2 weeks after Thanksgiving 2024: https://www.goldmoney.com/research/massive-comex-deliveries-since-thanksgiving https://www.goldmoney.com/research/massive-comex-deliveries-... Now JPMorgan is standing for delivery of 93 tonnes in February 2025 (3m troy oz, $4bn): https://finance.yahoo.com/news/jpmorgan-plans-4-billion-gold-181226432.html https://finance.yahoo.com/news/jpmorgan-plans-4-billion-gold... COMEX has had to scramble to find the physical gold to deliver. The US price went up, creating a spread with London and an arbitrage opportunity. Physical deliveries from the LBMA vaults in London were flown to the COMEX vaulting system in and around New York. If the deliveries cannot be made in New York, there is a rather murky process called Exchange For Physical (EFP), where the client is given a paper promise for gold delivery in London. Not sure if there is client discretion, or if they can be forced to accept EFP by the COMEX T&Cs. I think that COMEX does have the right to cash settle delivery requests, but that would be seen as a soft default, and seriously damage its reputation as a physical market grounded in delivery.

__turbobrew__ 2y ago
So the COMEX is selling metals which they do not possess now? I thought the whole point is that COMEX coupons were backed by physical goods which you could actually cash out if you wanted? Otherwise you are just betting on paper.
- mikhailfranco 2y ago
  They (bullion banks) assume everyone will close out contracts on COMEX. Yes, paper promise. Sometimes promises can be kept, but not always.
- bitmasher9 2y ago
  The gold to paper ratio in Comex is 300 to 1. The truth is accepting delivery is expensive. You cannot get a small amount of gold on comex. You’ll need a vault to put it in, insurance, armored truck service, etc. Most people buy gold futures as a hedge or speculation, and don’t want to actually go through the cost of accepting delivery. The concern has always been a run on Comex if physical demand suddenly increases. In some ways that would be good, as the paper market is artificially keeping the price of gold down. If you don’t settle in gold you sell more contracts, and the supply is artificially inflated. In short term it will be awful for Comex, which does a very large amount of commodity futures.

yieldcrv 2y ago

So the gold refiner is the real arbitrageur Because that dont actually have to refine the gold for the differing contracts, they just need to exchange it in London

adolph 2y ago

As this recent gold market perturbation was kicking off, gCaptain laid out a conjecture that follows Cryptonomicon: Can we talk about how, before WWII, nearly every village in China had a gold Buddha filled with gems, serving as the local bank? Can we talk about how the Japanese looted them all and launched a massive sealift operation to stash them in the Philippines? [...] Or how at least one of the CIA’s secret ship registries was accidentally exposed in the USAID data dump? https://x.com/johnkonrad/status/1887856186231263285 https://x.com/johnkonrad/status/1887856186231263285

Workaccount2 2y ago
Getting news from people who wear "blacklisted from Wikipedia" as a badge of honor is probably not a good idea.
- adolph 2y ago
  I had no idea. There doesn't seem to be a way to verify that claim either. Strings "gcaptain" and "konrad" to not appear in the depreciated sources. https://en.wikipedia.org/wiki/Wikipedia:Deprecated_sources https://en.wikipedia.org/wiki/Wikipedia:Deprecated_sources
csomar 2y ago
> Or how most of that gold is STILL buried in the Philippines— And how Taiwan is a distraction while China builds a massive Navy to take it back? That's enough X for me today.
- basementcat 2y ago
  Wasn’t that part of the plot of Neal Stephenson's Cryptonomicon?

kittikitti 2y ago

This was a misleading headline on an opinion piece which required a few minutes of reading political opinion before getting to anything it's really about. This is typical for Bloomberg.