Central Banks Grab the Gold as Hedge Funds Crumble

This past week, the Central Bank of Hungary announced that it tripled its gold holdings in March 2021, from 31.5 tonnes to 94.5 tonnes.

You may recall on this channel, we covered in late 2019, how the central bank of Poland had then pulled 100 metric tonnes of gold bullion from the Bank of England in various secure logistics assisted overnight flights from London to Warsaw.

Throughout the 2010s, mainly eastern nations such as Russia and China were large net buyers of official and unofficial gold bullion bars.

This week too, the Polish central bank governor stated their intention to perhaps buy another 100 tonnes of gold in the coming years to further demonstrate the country's economic strength.

In case you are wondering, a metric tonne of gold is 32,150.7 troy ounces, valued at just over $56 million fiat Fed Notes currently.

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The London Bullion Market Association made news today, publishing a new record high volume of supposed silver underlying all the various silver ETFs and unclaimed silver bullion float with various commercial banks and secure logistics custodians in London.

The claim made is that London increased its silver fractional reserve pile by over 124 million ounces in March 2021.

So just over 431 of this roughly 288,000 ounces of silver bullion supposedly flowed into London in the last 31 days.

For further perspective, imagine as if the entire COMEX registered supposedly deliverable silver pile equivalent poured into London vaults last month alone.

For another analogy on how unbelievable this claim is, this is akin to just under the entire underlying PSLV silver bullion pile in just one month, moving supposedly into these individual and or collective London six silver vaults.

It was not but a few months ago when estimates were that London only had about 100 million ounces of silver bullion floating unclaimed by ETFs in the system.

Ronan Manly reported this in middle February 2021 about shrinking London silver bullion float inventories here on ZeroHedge.

Silver Bullion London Supplies Almost Gone - Feb 12, 2021

Turning our attention to some of the latest hedge fund implosions and building tremors from the highly leveraged US stock market.

Three different hedge funds have been destroyed in the last three months: Archegos, Greensill, and Melvin Capital.

Remember, this is happening with very low volatility and near new record nominal price highs for the S&P500.

The common denominator between all three of these hedge fund failures was the use of insane leverage employed to maximize private gain, provided by commercial Global Systematically Important Banks that can socialize losses if the bets go really wrong. 

Big leverage providing losers in the Archegos bankruptcy was Credit Suisse.

That bank is apparently looking at a nearly $5 billion fiat Fed note loss on this trade gone wrong. Compare that loss sum to the bank's entire net income of $2.8 billion in 2020. This is not a small hit.

Perhaps we all take a lesson from the actions of Hungarian, Serbian, Russian, Chinese, and Polish central banks.

Holding some prudent positions in bullion as a bedrock financial asset as we await the transition to the next monetary and more multipolar financial system, less dominated by the fiat Federal Reserve note.

That is all for this week's SD Bullion market update.

As always out there, take great care of yourselves and those you love.

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James Anderson
James Anderson
Content Director

A bullion buyer years before the 2008 Global Financial Crisis, James Anderson is a grounded precious metals researcher, content creator, and physical investment grade bullion professional. He has authored several Gold & Silver Guides and has been featured on the History Channel, Zero Hedge, Gold-Eagle, Silver Seek, Value Walk and many more. You can pick up Jame's most recent, comprehensive 200+ Page book here at SD Bullion.

Given that repressed commodity values are now near 100-year low level valuations versus large US stocks, James remains convinced investors and savers should buy and maintain a prudent physical bullion position now, before more unfunded promises debase away in the coming decades.