The Gold Panic at the LBMA

If you ask mainstream economists, they will tell you that there is plenty of gold in London vaults, that the delivery delays we are currently witnessing are due to nothing more than logistical issues and that any talk of default at the LBMA is pure sensationalism and fearmongering. But the situation appears to be more serious than that. The sudden increase in demand for physical gold in New York, which has drained the liquidity from London, is probably not a one-off event, spurred by the threat of tariffs from the Trump administration. Rather, it is a symptom of a much deeper problem.
After decades of easy money policies, financial markets are in a state of complete imbalance. On one side we have assets such as stocks and bonds, which through rampant speculation have been bid up to unimaginable heights, and on the other - commodities, which have been neglected and forsaken by Wall Street investors. Like a powerful force of nature, this imbalance is striving to correct itself. Every day, more and more dollars are leaving the overvalued stock market, seeking refuge in under-valued commodities. And as it has been for millennia, the ultimate commodity to own is gold.
Rare and durable, useful and everlasting, gold is finally beginning to reassert itself as the ideal store of value. And as it turns out, there simply isn’t enough of it to go round. With an estimated 400 million ounces of gold contracts issued at the London bullion market, there are far more claims on gold than physical ounces to deliver. The LBMA is at risk of triggering the greatest bank run in history. Thousands of desperate investors who used to own paper gold, will scramble to put their hands on the actual metal. This is the story of the gold panic.

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Music: Grieg, Peer Gynt Suite no. 1, Op. 46 - IV. In the Hall Of The Mountain King
From: https://musopen.org/music/777-peer-gynt-suite-no-1-op-46/
Creative commons license: https://creativecommons.org/publicdomain/mark/1.0/

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