Market Commentary: Game Over.

GoldFix ZH Edit

[Slide Deck at bottom]

The BW 3 Process likely involves some combination of the following 2 scenarios:

Scenario 1: The decision to monetize gold on a global basis has already been made.

Every nation that’s in a position to, and every institution with a stake in the future of finance is setting the table for a big coming out party for some sort of official announcement. (pics)

They’re all doing it in different ways suitable to their culture, regulatory environment or business model. But everyone’s doing it. (pics)

The announcement will come after everyone’s in place. And it will probably rock the world if not the price of gold.

The second scenario is less exciting but equally possible:

The brics have an announcement of some sort coming out, and when that announcement comes out, it creates a whole new market for financial companies to participate in.

Banks are creating “new product” to accommodate new demand in the reopened market. (pics)

To the extent the west does not join in this , they will be missing out on a “new product“ to sell its own customers.

Major western banks have already joined this. Their governments will follow passively if not publicly.

(HSBC left comex recently while JPM increased its footprint in GLD while it drains. Don’t be surprised if JPM has a product soon too)

In this scenario, there is no “big announcement” that the west joins. Merely a quiet adoption of the new rules and serial releases of new products to accommodate growing unlocked demand.

Some variation of the 2 above scenarios is happening.

To continue:

Governance and application will be along ideological and cultural business lines for each region.

The playbook for gold in the west will be similar to the playbook for bitcoin becoming a spot ETF here.

(They had to get btc under control before this global gold thing started)

That is: make sure the public does not view it as a monetary replacement for the dollar. Do not label Gold or silver as money. Market them as a TiPS alternative, or tie them to TiPs bonds somehow.

Then they can encourage demand as long as they can control most of the flows into it as an asset class with qualities that hedge the dollar.

(products like Gold bonds, tokens, etc etc )

That’s what’s happening to gold in the western public. Consistent with the ideology (Keynesian fiat overall) and business practices. Gold-flows out of the country will be inhibited/controlled by products created by banks.

The western governments will use gold for international trade in a Mercantile system with their eastern counterparts, likely some basket that mirrors the BRICS mTrade. (pics) The global market will be come a platform of systems like SWift, m-Trade etc…. but the west’s people will still get dollars. They can buy gold with those dollars.

Gold will not be the currency in the legal sense, gold will be an asset class to be invested in. The dollar remains a weakened king currency, but not king SOV. UST and Gold share that throne until China's bond market grows up.

In the east , variations of the above will occur, but gold will be viewed as more than an asset class to be invested in. But, that gold will be state controlled at the border.

And if this all works. Silver will be next.. but only after the gold one is tested and works. All Conjecture of course. Good luck

Vault Drainage Comment:

Who is taking all this gold and silver that’s coming out of the exchanges? countries are. (pics)

Central banks are. Sovereign wealth Funds are. And companies that are increasing their inventory before releasing new product.

For example, who owns the biggest vaults in China? A company controlled by the CCP that is key in the industrial applications of Silver, as well as offering investment products to clients. (pics)

It’s the product they make with the metal that they care about not the metal itself.

About the Dollar Milkshake Concept:

In the west, the dollar remains King but a castrated one; subject to growing strengths in eastern currencies. Bond vigilantes will return as Gold vigilantes.

To the extent that things go bad for the west, gold goes up and eastern currencies do better. To the extent the west innovates and gets its act together, gold goes down and Eastern countries that do not go off the gold standard suffer.

The gold/ dollar correlation comes back with a vengeance, but only after the reset is complete at a new much higher level. Treasuries lose global market-share that they can never get back until the US earns it.

The US must finance its own deficits, and may use Gold and silver as an enticement to get domestic demand higher.

And that’s why mercantilism is the only path forward from here. As trust returns, trade protection will decline again and mercantilism will recede. Years from now. But if it does not, world war.

In the end, whether you like them or not, Russia is the wildcard behaviorally. The US will seek to disrupt the China/Russia relationship over the coming decades by regaining trust through commerce.

Good Luck

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