Today whistleblower and London metals trader Andrew Maguire spoke with King World News about corruption, gold’s surge, and an absolutely shocking admission by the LBMA as well as what has them so terrified right now.
Andrew Maguire: “If you recall, the subject of our last interview on December 18 was the game-changing liquidity drain out of London, and how the massive divergences we were witnessing between the physical markets and the synthetic highly-leveraged gold markets were about to lead to a price reset…
Andrew Maguire continues: “In a liquid marketplace, divergences just cannot exist as they are going to be arbitraged. And with that in mind, let’s illustrate just how broken the illiquid Western physical gold markets have become.
A Trip Down The Rabbit Hole Of Corrupt Banks & Markets
The action into the December 2015 lows was counterintuitive to the physical market footprints we were tracking, which was large sovereign and central bank buying as well as Chinese investors scrambling to convert rapidly depreciating cash into gold. (KWN note: All of this astonishing activity was covered in Maguire’s December KWN interview)
We were reporting these facts back then and it has now been confirmed in recently reported data. Bearing in mind that even back in December, it was well reported that just India and China alone had consumed almost all of the 2015 global gold production, and that’s not even accounting for the 300 tonnes of Indian smuggled gold. Concurrently, we saw evidence of large cash market backwardations, and a cobasis, back then, pointing to a fair value of $1,300, which was $150 higher than the futures price, and I remember us commenting about it.
Now, with such a disconnect between tight immediately deliverable (gold) supply in the $1,150s, this condition revealed a non-arbitraged divergence between the real physical markets and the paper markets. This condition simply should not exist in an interconnected marketplace. What we were witnessing was a broken physical (gold) market.
The LBMA’s Shocking Admission
This was recently admitted in a lead article published in the LBMA’s Alchemist publication. There was an admission about what we’ve been saying for a long time — yes, the markets are broken. Here is what the LBMA’s Alchemist publication admitted:
“Wholesale physical markets are broken.”
This was a shocking admission that the physical markets are broken. So what we were witnessing was liquidity flowing out of London, into the physical Asian and Middle Eastern exchanges.
In these tight physical market conditions, fundamentals have seen prices rise into the very strong demand. But the sheer weight of the paper market supply hid the fact that under the radar the divergences were in fact being arbitraged, but (it was being done) outside of London in those (competing) physical markets.
It Was All About Protecting Corrupt Bullion Banks
This didn’t immediately translate into a rising gold price because of the protection of massive over-the-counter and related Comex derivative bets, which was eliciting the large synthetic short selling paper gold and silver supply into the end of last year — to protect these billions of dollars worth of derivatives bets.
The resulting poor gold market performance also drew in hot money (shorts), enabling the market making banks to start to take the long side of this wrong-footed (short) hot money.
LBMA Bullion Banks In Disarray – Exit Gold Market
But the migration of the physical markets out of London, into Asia, and the launch of the competing non-LBMA controlled conduits outside of London has put the LBMA bullion banks into unforeseen disarray as critical liquidity evaporates.
The growing split between the bullion banks speaks volumes, notably the exit of two major market making insiders, which are Deutsche Bank and Barclays. They have now exited the gold business. This foreshadowed the demise of the LBMA Cartel as we knew it. Over the last two years we have also seen the exit of Credit Suisse and Mitsui. So all the signs are there that the LBMA unallocated fractional reserve (gold) model is now broken.
This Is What Has The LBMA So Terrified
This is where it gets really interesting. A major threat is now on the LBMA’s radar. For those who have been following my KWN interviews, they will know that I have been…telegraphing the launch of this game-changing physical exchange. I’m pleased to announce that just two days ago, it finally launched its first phase rollout and is now fully functional.
This is the biggest news to hit the gold market that I can ever recall and it will change the way precious metal price discovery is established.
This…is a disrupter to existing physical methods of bullion trading. The LBMA is now scrambling to…
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