WE ARE SEEING NO
SELLING OF PHYSICAL GOLD OR SILVER by Egon von Greyerz
| May 12, 2017
Time and time again we are
seeing fraud taking place in the precious metals’ market.
Thousands of tonnes of paper silver and paper gold are being
dumped over just a few hours or days. For anyone who doesn’t
understand what is happening, let me categorically state
that this has nothing to do with the real physical market
in gold and silver. No, this is blatant manipulation by
governments and bullion banks as well as speculators. And
since governments are involved, it is sanctioned by them
with no consequences for the traders who are rigging the
BULLION BANKS FEAR
THE DAY THEY MUST TURN PAPER GOLD INTO PHYSICAL
What is happening has nothing
to do with real markets or real supply and demand. What
we are seeing is governments trying to obfuscate their total
mismanagement of the economy and the currency. So far, the
bullion banks have been fortunate that gold and silver paper
holders haven’t called their bluff and asked for physical
delivery. Because we know and the banks know that the day
they will need to come up with the real gold and silver
bars, it is game over. Because they haven’t got physical
gold or silver to cover even a fraction of their paper shorts.
Between futures exchanges, bullion banks, including precious
metals derivates contracts, there are hundreds of ounces
of paper gold and silver outstanding for every ounce of
The problem is that it is not only the bankers
that are the culprits in this game. No, governments are
just as culpable. Western banks officially hold 30,000 tonnes
of gold. Virtually no Western central bank has ever had
a physical audit of their gold. The US had their last audit
during Eisenhower’s reign in 1953?
central banks have in the last few decades been liquidating
a major part of their gold holdings. For example, he UK
sold half of their gold holdings at the end of the 1990s
and Switzerland sold over half. Norway sold ALL their holdings
in the early 2000s.
What the central banks didn’t sell, they
lent or leased to the market. They did this to earn a return
on their gold. Most of the lending took place through LBMA
(London Bullion Market Association) banks in London and
some in New York. So a central bank would lend part of its
gold to the market and the gold would stay within the London
or New York pool. But that changed in the 2000s. The big
buyers of gold are now China and India. Neither of these
countries is interested in keeping their gold in London
or New York. Instead they want physical delivery. The normal
pattern is for the 400 oz bars to be sent from primarily
London to the Swiss refiners to be broken down into 1 kg
bars. The kilo bars are then exported from Switzerland to
the buyers in China and India plus other major buyers like
Russia. This is why the UK appears as a major exporter of
ACCUMULATE PHYSICAL GOLD BEFORE
THE MARKET RUNS OUT
The consequences of these transactions are
very serious for Western central banks. Their gold which
was leased to the market doesn’t exist anymore. It has been
broken down into new 1 kilo bars and gone to Silk Road buyers.
Western central banks will of course never get their physical
gold back. All they have is an IOU from a bullion bank.
And since the gold has left the West, the bullion bank will
never be able to deliver physical gold against their paper
Since there have never been any audits,
nobody knows how much unencumbered physical gold is still
left in Western central banks. It is very unlikely to be
even 50% of the 30,000 tonnes that they officially hold.
The people and nations that understand that this Ponzi scheme
is going on are not panicking. Because they know that the
ones who hold the physical gold also have the power. But
it is not only a question of power but also confidence that
physical gold will protect the people who understand the
significance of holding it.
At times like we are seeing now in the precious
metals markets, the weak hands are shaken out. Weak hands
are speculators who buy gold on margin. Let me make it very
clear. You must never buy a wealth preservation asset to
leverage it or borrow against it. When you borrow against
your gold and silver, it doesn’t belong to you anymore.
Instead it belongs to the bank or the lender. Buying physical
gold and pledging it serves no purpose. That is pure speculation.
In that case, it makes no sense to go via physical gold.
You might as well just buy gold futures which of course
has nothing to do with wealth protection.
Speculators are weak hands. They buy gold
when it goes up and sells when it goes down. This has nothing
to do with wealth preservation. Gold and silver is bought
as insurance to protect against all the major risks in the
world economy and financial system. It is bought for wealth
protection purposes and should form the bottom of your wealth
In an era when governments print unlimited
amounts of money and expand credit ad infinitum, precious
metals is the only asset that will maintain purchasing power
and preserve wealth. But is must of course be stored in
a politically safe country and outside the banking system.
We now hear about major liquidations of
gold and silver, especially in the retail market. The people
who sell do not understand the purpose of holding gold and
silver. They are in it for a quick buck and will have nothing
left when the real crisis starts. And it is absolutely guaranteed
that we will have the biggest financial crisis in history
in the next few years.
CONTINUED STRONG DEMAND FROM ASIA
our company is very close to the real physical gold market,
let us report that we are seeing no selling of physical
gold or silver. Our investors understand precious metals
and they know why they are holding physical gold and silver.
They are not fickle or nervous because manipulators
are trying to frighten them into selling their gold and
They know that in the next few years their
precious metals will not just maintain purchasing power.
They also know that, as most assets crash
including paper money, gold and silver will vastly outperform
We also speak to our friends the Swiss refiners
who produce 60-70% of all the gold bars in the world.
They are seeing continued strong demand
from Asia and particularly China and India. The West has
been selling physical gold for a few decades whilst the
East has continued to buy massive quantities.
FOLLOW THE WISDOM
OF THE EAST
started accumulating gold seriously in 2008, during the
Great Financial Crisis. They knew what was coming and they
knew that the Western financial system would not survive
the massive money printing that the West had embarked on
in their futile attempts to save the system. The Chinese
also know that the 2006-9 crisis was just a rehearsal. This
is why they have increased their gold holdings substantially
Of the Silk Road countries, only India and
Turkey had substantial holdings at the beginning of the
crisis in 2006 of just below 2,000 tonnes in total. China
started buying gold on a bigger scale in 2008. Since then
China has accumulated a substantial 15,000 tonnes. The total
purchases of the four Silk Road countries, China, India,
Russia and Turkey since 2005 has been 27,400 tonnes. This
means that 4 countries have in the last 12 years absorbed
all the gold mine production in the world. These countries
totally understand the uncontrollable risks in the global
financial system and they also know that gold is the best
protection against these risks.
Investors should follow the wisdom of the
East and continue to accumulate gold and silver at the current
very advantageous prices. There is no doubt in my mind that
in the next few years, gold and silver will be multiples
of today’s price.
Egon von Greyerz
Founder and Managing Partner
Matterhorn Asset Management AG