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Read the transcript of Precious Metal Market Report with Franklin Sanders here (PDF)
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The Solari Report 2016-05-26
Precious Metals Charts
“Properly understood, good money is good, not because of the motives of its owners, but because of its own intrinsic character. Truly good money will produce far more social benefits than any amount of bad money spent with good intentions.”
~ Reg Howe
By Catherine Austin Fitts
This week on the Solari Report, Franklin Sanders of The Moneychanger joins me to take a look at precious metals markets.
Franklin and I will review the likelihood that the primary trend in gold and silver is returning. Franklin has more confidence in the outlook for 2016. I am concerned that the number of plausible and unpredictable scenarios are growing across all asset classes. So expect a lively discussion!
We will discuss signs around the globe that the build-out of the gold trading system continues, including the Chinese purchase of a London depository and the State of Texas moving forward with plans for a state depository available to citizens.
We will post Franklin’s charts in the subscriber area in this post on Thursday. Please make sure you login to access them as you listen to the interview audio. They will be posted in the final transcript.
I will also invite Franklin’s comments on what I learned on my trip to Australia.
In Lets Go to the Movies, I recommend Will Smith’s latest film, Concussion, that tells the story of Dr. Bennet Omalu, the forensic pathologist who fought efforts to suppress his research on brain degeneration suffered by professional football players
No Money & Markets. Catherine will answer your questions for the Ask Catherine section next week.
If you’re not a subscriber yet, you can learn more about becoming one here.
This was an excellent discussion. Thank you!
Why is it so difficult to understand what the dollar is doing? Because all of the arguments put forward by both Catherine and Franklin reveal conflicting objectives
1)Academics jaw bone the dollar up – geopolitics or economics?
2)The US has allowed EMs to borrow large numbers of dollars and is now withdrawing supply thus making them scarce and putting EMs in distress – geopolitical or collateral damage to US domestic imperatives?
3)Pension funds will not survive ZIRP: Grand theft of the middle class or unintended consequences?
4)Strong dollar versus weak dollar: Corporates want a weaker dollar, the state department/MIC want a stronger dollar. who’s in charge?
For what it’s worth, some clarifications on China gold.
China and India import the most gold of any nation. Combined, they import 3000-4000 tonnes per year. This is physical gold, and accomplished via wholesale hubs around the world off loco-London. The only use NY/London have to the global wholesalers is the derivative price set by Comex/LBMA. There are between 1-5 tonnes a day coming out of the LBMA in actual deliveries compared to about 500 tonnes of derivative paper trading daily in the Comex.
On the wholesale hubs, there is no way any wholesaler is able to pay as little as the Comex price for the tonnage involved in their transactions. The Comex is the de facto price,but it is the price of the derivative of gold, ie certificates and non-backed futures. Two different “gold” markets here.
It is true China’s gold is not exportable but that is just the gold imported for domestic consumption. The new SGE exchange which handles 1 kg gold bars with a Chinese fix and incorporates futures trading accompanied by equivalent bar deposited, is conducted out of a free trade zone, so that part of it is exportable. The purpose is to allow foreign banks to participate in their market under chinese rules. PBOC has leverage on foreign banks because it can restrict their business in China if they play Comex games on their exchange.
In my opinion…
China has no intention to overthrow US hegemony, and yet they could do it rather quicker than people think. All they have to do is raise the recommended gold holdings in Chinese savings accounts. This would create overwhelming demand for bullion and short-circuit the naked shorting in the Comex that caps the gold price. It could even potentially catch out some of the banks with long term embedded short positions, although the Fed would surely cash settle their losses.
Clearly China is unwilling to do this today because it is on a long term accumulation strategy the purpose of which we foreigners would have trouble fully understanding..
All the best
Costas
Thanks. Excellent comments.
I don’t see how China has the capacity to overthrown US hegemony. China is economically dependent on exports to the G-7 and US has superiority of satellites, Navy and, likely, space weapons. China is clearly building to overcome its dependencies. However, that will take years and, I suspect, as you say, the accumulation of far more gold.
Yes I agree with you. I should have said they could no more than disrupt US hegemony and cause the US to attack them in a bigger way than they plan to do today with the pivot.