Summary
- The Bank of England is currently dealing with significant gold withdrawal issues, reminiscent of the historical London Gold Pool that collapsed in 1968.
- Gold prices have dramatically increased from $35 per ounce to $2,860 per ounce in January 2025, representing a massive valuation shift.
- Approximately 800,000 four-hundred-ounce gold bars are being withdrawn from London, with many being refined in Switzerland before being transported to US COMEX gold futures warehouses.
- The London Bullion Market Association (LBMA) reported a substantial withdrawal of 4.8 million ounces of gold and a record 71 million ounces of silver in January 2025.
- Short interest and borrowing fees for gold and silver ETFs like SLV have spiked, suggesting potential market manipulations to manage physical demand.
- Central banks have consistently purchased over 1,000 tons of gold bullion annually for the past three years.
- The current Trump administration is speculating about using gold reserves as a policy tool to potentially stabilize the US dollar and global economic dynamics.
- The spot gold-to-silver ratio remains historically high at 90, indicating silver might be undervalued compared to gold.
- Recent geopolitical tensions include the Trump administration applying 10% tariffs on Chinese goods after previously threatening tariffs on Canada and Mexico.
- The global gold market remains largely opaque, with significant movements occurring in London, Switzerland, and US warehouses that are difficult to fully track or understand.
We begin this week with an archival photo from the Bank of England in 1968.
The then gold price rigging London Gold Pool, which operated from 1961 to 1968, saw an overabundance of market forces and gold bullion withdrawals that ultimately led to its collapse that same year.
The spot price of gold proceed to to multiple 24 times its once $35 oz price rig by Jan 1980.
Cut to now in January 2025. The global gold trading jurisdiction, the City of London and the Bank of England had to again address the media yesterday, regarding the gold withdrawal delay story ongoing in financial news headlines.
So we've gone from BoE Governor downplaying the story basically stating gold is now unimportant, yet also London is a key leader of the global gold market still.
To now, we're managing it. It's orderly. The BoE bullion yard was jammed with an armored lorry this morning, and gold bullion is heavy (nervous laughter).
So last week's threats of Trump 25% tariffs were called off earlier this week against Canada and Mexico, but they were applied now 10% tariffs on imported Chinese goods.
Reportedly 800,000 four hundred ounce gold bars are being pulled. Hard to say how much of a percentage of the available guesstimated turquoise colored float stash that represents some entity owns those gold bars and is not likely in the mood to sell at the moment.
This rush for pulling available 400 oz gold bars from London, to then refine them into smaller 100 oz and 1 kilo gold bars often in Switzerland (piling on more time delays and bottlenecks), then getting them to US COMEX gold futures warehouses slowly moves forward under spiking lease and forward rates.
Pooling other onlookers, we majority feel it hard to say given the opacity of the London gold market and the global gold market at large.
The reported flow of gold into COMEX warehouses continues on, The largest warehouse in the gold COMEX system is now Brink's New York having added something close to 9 million oz of gold into its depository of late. Even with supposedly adding around 4 million oz recently, no longer is JP Morgan the largest gold COMEX warehouse (we'll touch on them along with other unsecured gold and silver ETF APs shortly).
Raw US import data showed potentially just over $13 billion of gold and precious metals dore inflowed recently.
The LBMA updated their gold and silver inventory figures for last month January 2025.
Close to -4.8 million oz of gold was pulled. That's like 12,000 of these 400 oz gold bars.
For silver bulls, the most shocking figure was the reported -71 million oz silver bullion pull from London in just last month alone. The largest monthly pull on record since 2016 when the LBMA dipped a toe nail out of the opaque waters of their collective non-transparent market following the London Gold Silver price fixing scandal of the early 2010s.
Quick aside slide, rolling price data shows London Gold AM & PM price fixing crimes painted on the rolling 24 hour gold price chart here, this one from 2006 into 2012. If you're late to this ongoing saga, take a look at how average gold prices would tumble on average daily at both the AM and PM price fix. The gold price has been suppressed for decades.
Back to this record -71 million ounce silver pull from London last month Jan 2025.
That's like 157 of these nearly each 1 metric ton silver pallets of 1,000 industrial sized bars whisked away in one month.
This week, former Sprott trader Kevin Bambrough published an article on Twitter recounting the 2005-2007 period when they took delivery of a significant position via top tier commercial bank certificates and what promised to be a 5 day delivery turned into a 9 month saga of myriad excuse making before final delivery was completed.
Long time precious metal desk trader Robert Gottlieb stated today.
Actually I beg to differ, and so did too Jeff Currie former head of Goldman Sachs commodity desk back in Q1 2021 silver squeeze interviews.
The still largest unsecured silver slush fund called SLV. An underperforming price proxy to silver bullion custodianed by JP Morgan with a few handfuls of APs who are the only shareholders allowed to redeem the alleged underlying silver bullion bars for their privy from time to time.
The short interest in SLV exploded higher this week.
So too did borrowing fees spike in both GLD and SLV to extremely high levels. My bet is the APs of these respected poor gold and silver spot price proxies are pulling out bullion bars to help TAMP down exploding physical demand.
If we back out on the SLV borrowing fee chart we can see the last time borrowing rates spiked so high was in September of 2022. The same year India was importing then record high tonnage of silver.
Just after the then SLV borrowing fee spike, just under 1,000 tons or close to 30,000,000 oz of silver left London (likely much of it out of SLV back then... and likely similar SLV raids for bullion headed to India are behind and further to come now.
Cup meet handle, silver appears to be rounding up for the eventual run to and then eventually beyond ancient nominal price high $50 oz. It's almost there up north in Canada already.
Net asset values of ETF market shares in unsecured ETFs are currently now near only 1/10th versus where they were in the last run to $50 nominally.
Yet as recently as last year, we got BRICS nations like India yanking 100 tons of gold reserves out from the former faded colonial power's Bank of England basement. And now we have a run on London gold and silver bullion holdings by myriad parties to begin the year.
Central banks now confirmed three years in a row buying official gold bullion at an over 1,000 ton per year clip.
After this short break, we'll get into building speculation that the current Trump administration is considering using the spot gold price release valve to "Make America Great Again" and bring about a so-called return to our former Golden Age.
More on that after this...
The spot silver and gold markets traded up again this week.
The spot price of silver in fiat USD ended at $31.80 oz bid.
The spot gold price closed at $2860 oz bid.
The spot gold silver ratio ended this week basically flat at a still historically stubbornly high level of 90.
Speculation that the USA may be moving policy towards release valving the nation's gold reserves marking them more to market as gold prices climb higher in value to better balance deficits and create a more multipolar world in which the fiat US dollar remains reserve currency with allies buying our debt in more of a long term duration to sustain the system for longer.
The article's author Gillian Tett, back linked various think tank pieces parsing out ideas for how to go about doing so.
Starting with threatening any and every ally with tariffs and using the current fiat US dollar debt system as a weapon to gain compliance akin to what we saw from our neighbors both north and south last week.
The gist of the article which I will backlink in the show notes below is yes we want to weaken the US dollar over time, perhaps in a Mar-A-Lago multilateral accord but particularly to gold. But that doesn't mean our powerful seat at the world table fades akin to the purchasing power of still dominant currency.
That will be all for our weekly SD Bullion Market Update.
And, as always, to you out there.
Take great care of yourselves and those you love out there.
