Transcript attached.
(Excerpt)
It comes down to one thing. They want the gold.
Who are they?
Former trade partners of the United States of America.
Countries that are in line with the BRICS ideologically and to a lesser extent…
Current Trade Partners of the United States and the West.
Why do they want the gold?
Well, they want the gold because they don't trust the United States, let alone most of the world anymore.And so they need to see it.
Why is this phrase so important?
Once upon a time, when I was trading Asian hours, TOCOM versus COMEX arbitrage using futures and dollar yen swaps and TOCOM futures to make money in gold. It was an arbitrage.
One night my arbitrage trade continued to not converge for an extended period of time in that evening. I was trading micro moves. I, of course, puked my position because I did not understand what was going on.
And I talked to the head of the Goldman Sachs Commodity Index the next day.
We'll call him Joe.
So I asked Joe, Why did that not converge more efficiently?
And he said to me, he said, they want the gold.
And I said, what the f@ck does that mean?
He said, well, they don't care about correlations.
Correlations are what everyone trades when there's no Real Material Change or News or Physical Event Going On.
Correlations are how you price things absent real information. Correlations are noise when the big boys start to play.
And the big boys were playing last night for a little bit rebalancing their portfolios
Slowly and surely, gold has been demonized and demoralized.
You don't need the gold, you were told.
(Audio only)
You wanted the money that the gold could get you.
You wanted the buying power of the gold.
You wanted the liquidity that gold could give you if you transferred it properly.
Fast forward, post-COVID, and the world, for multiple reasons, they've been thinking about this for a long time, but the world decides that:
They don't want the treasuries anymore.
They want the gold.
So staying with China, for example, when I say China, think of anyone in that sphere of influence.
China seeks to replace a portion of their US treasuries with gold as a store of value, not as a monetary currency.
You're not gonna go around using taels or gold coins to buy your dim-sum.
Why do they not want US treasuries?
Well, US treasuries are owned because they're a store of value, because of their stability, because of their stronger guarantee than anything else on earth that they will be what they say they are a year, two years, five years, 10 years from now.
Now, you may say, well, gold does that promises as well.
And you'd be correct.
However, however, gold's not as liquid as treasuries.
Gold's not as deep as treasuries.
(Audio only)
Now, how do we make treasuries even more appealing?
Well, we said to the buyers of them, not only will we back them with our economy, our military might and our stability and our rule of law, we will give you some interest rates.
We'll give you some interest to offset the inevitable debasement of the dollar slowly but surely over the years.
And we will compensate you for that.
And that will assure you that the interest you receive on the dollar, on the dollars that it is denominated in, will keep your purchasing power stable.
And that was the deal that was struck economically.
But now, again, China seeks to replace a portion of the US treasuries with gold as a store of value.
So obviously, evidently, they don't feel the rate given, the interest rate given, on the Treasuries is commensurate with the debasement risks to the dollar, the confiscation risk as evidenced during the beginning of the Ukraine war and with other sanctions, and the growing domestic instability the US is demonstrating.
In their own trade, they no longer trust promises of the gold.
They no longer trust IOUs.
They no longer trust pictures of the gold.
Proof of life doesn't work.
They want the gold in their own sphere of influence.
China's trade partners who don't trust the United States, they don't trust China either.
They trust them a little bit, but those trade partners who now want to see their own gold and see it in a country friendlier to them to trade with them, they want the gold.
So China has responded by saying, we will get the gold.
They have the gold.
They're getting more gold.
