Tom welcomes back Alasdair Macleod, Head of Research at GoldMoney to discuss the current trends in the gold market. The conversation covers various aspects of the gold market, including the role of the dollar, increased demand for physical gold, particularly in China, and the impact on the COMEX market.

Macleod explains that gold is hitting new highs due to the dollar’s decline rather than an increase in gold prices per se. He attributes this trend to government policies that maintain large budget deficits. A Trump second term is likely to continue weakening the dollar. Chinese households are turning to physical gold as an alternative to stocks and property, leading to increased demand and potential drainage of physical liquidity from the West.

In terms of the COMEX market, Alasdair points out that open interest has significantly increased, particularly due to neutral spread activity and arbitrage. He notes that this market could become more overbought and warns about potential mark-to-mark losses among the swaps, which may lead to further paper demand and a ‘bear squeeze’ on these institutions.

Alasdair discusses the impacts of the Comex, London, and Shanghai exchanges on metals markets. There is a drainage of physical gold from Western markets, particularly London, due to arbitrage opportunities. Chinese banks are expected to increase their gold reserves, and there’s also a resurgence in demand for Exchange-Traded Funds (ETFs).

They discuss the risks associated with credit and the potential for a crisis in the financial system, particularly regarding the clearinghouse and shares. Alasdair advises protecting oneself by holding physical assets like gold and silver and ensuring sufficient supplies during the initial stages of a potential collapse.

Lastly the effects of BRICS alliance is discussed and their plans to back their currencies with physical gold and silver. Although an attempt was made last year, it did not succeed due to opposition from China and India. Russia is expected to bring this issue up during the upcoming BRICS meeting in Astana in October, proposing that 40% of the new trade settlement currency would be backed by gold. Despite doubts about execution, having significant gold reserves and accumulating substantial quantities of gold for years could significantly impact the global economy if successful.

Time Stamp References:
0:00 – Introduction
0:49 – Gold Market Shifts
3:43 – Gold & Dollar Demand
11:37 – Comex Open Interest
16:25 – Categories at Comex
21:53 – West Vs. East Arbitrage
24:16 – ETF’s & Other Demand
28:32 – Producers & Margins
30:25 – Interest Rates & Bank Risk
37:00 – Trump Economic Implications
40:12 – Political Solution Unlikely
44:26 – G7 Nations & Debt Problems
46:42 – Ownership & Debt Systems
54:20 – BRICS Progression
1:01:54 – Lessons & Wrap Up

Talking Points From This Episode

• 
  
• Gold prices are hitting new highs due to the dollar’s decline, leading to increased demand for physical gold, particularly in China.
  
• The COMEX market is experiencing significant increase in open interest due to neutral spread activity and arbitrage opportunities, potentially leading to overbought conditions and mark-to-mark losses for swaps.
  
• Gold markets are witnessing a drainage of physical gold from Western markets, primarily London, as well as increased demand from Chinese banks and Exchange-Traded Funds (ETFs).
  
• Russia’s may proposed in the BRICS alliance to back new trade settlement currencies with 40% gold.
  

Guest Links:
Twitter: https://twitter.com/MacleodFinance
Website: https://goldmoney.com
Research: https://www.goldmoney.com/research/

Alasdair Macleod is Head of Research for GoldMoney. He is an educator and advocates for sound money thru demystifying finance and economics. His background includes being a stockbroker, banker, and economist.

Alasdair Macleod started his career as a stockbroker in 1970 on the London Stock Exchange. Within nine years, he had risen to become senior partner of his firm.

Subsequently, he held positions at the director level in investment management and worked as a mutual fund manager. Mr. Macleod also worked at a bank in Guernsey as an executive director.

For most of his 40 years in the finance industry, he has been demystifying macro-economic events for his investing clients. The accumulation of this experience has convinced him that unsound monetary policies are the most destructive weapon governments use against the common man. Accordingly, his mission is to educate and inform the public in layman’s terms what governments do with money and how to protect themselves from the consequences.