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Gold market trends are moving against bullion banks, London trader Maguire says

Section: Daily Dispatches

10a ET Friday, December 18, 2020

Dear Friend of GATA and Gold:

In his weekly interview with Shane Morand for Kinesis Money, London metals trader Andrew Maguire says gold futures longs continue to be offered substantial per-ounce premiums for taking cash settlement of their contracts instead of insisting on delivery.

But, Maguire adds, word of this racket is getting out and so "sharks" are buying contracts so they too can claim the premiums instead of taking delivery, thereby broadcasting that metal is in tight supply and the nominal futures price is as much as $40 per ounce lower than the price of real metal.

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Meanwhile the shortage of real metal also is causing more futures buyers to take delivery, Maguire says.

These circumstances, Maguire believes, are building toward a potential revaluation of gold in March, when the "Basel III" financial regulations of the Bank for International Settlements will take effect, elevating physical gold in hand to a "Tier 1" asset on bank balance sheets, as asset equivalent to cash, and thereby devaluing gold derivatives. This, Maguire says, is giving banks a strong incentive to get physical gold in hand in advance.

Many governments and central banks with substantial gold reserves, Maguire says, actually want a higher gold price, since a higher gold price will help them offset or repay their exploding sovereign debts.

The eventual advantage to central banks of a higher gold price has been noted in recent years by expert observers, among them:

-- A former member of the Federal Reserve's Board of Governors, Lyle Gramley, who spoke in an interview with Business News Network in Canada in 2008, about which GATA reported here:

The video has been removed from the internet but the quotation of Gramley is precise.

-- The Scottish economist Peter Millar in a study published in 2006:

-- And the U.S. economists Paul Brodsky and Lee Quaintance in a study published in 2012:

Maguire says many elements of the monetary metals industry, from producers to refiners to retailers, want an end to control of prices by bullion banks using derivatives because of the volatility the banks inject into prices so they can profit at the expense of everyone else.

Maguire's interview is 40 minutes long and can be seen at YouTube here:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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