Latest / Kinesis Money / Bessent’s Bullion Bubble Backfires - LFTV Ep 297

Transcript

Bessent’s Bullion Bubble Backfires - LFTV Ep 297 · Kinesis Money

• 0:00
  SPEAKER_00: Don't be surprised if gold gets repriced, front-running the Chinese sanctioned dollar-based Hong Kong gold exchange launch.
• 0:11
  SPEAKER_00: We've got this ticket time on talking gold with the one and only Andrew McGuire.
• 0:18
  SPEAKER_00: Welcome to Life from the Balls.
• 0:24
  SPEAKER_00: Well, welcome everybody yet again.
• 0:26
  SPEAKER_00: I mean, I can't believe it.
• 0:28
  SPEAKER_00: It's two weeks, and I just cannot believe how much has happened.
• 0:31
  SPEAKER_00: Now, look, we'll have a really good look at uh we're gonna have an overview um of everything that's happened since our last episode.
• 0:40
  SPEAKER_00: I mean that I can't believe it.
• 0:42
  SPEAKER_00: 21st of October is only two weeks ago, but it's a wholly different situation.
• 0:49
  SPEAKER_00: And bear in mind that gold was trading at 4100, uh, silver was trading around 58 bucks.
• 0:55
  SPEAKER_00: So, you know, there's a lot of questions here that we need to answer.
• 1:00
  SPEAKER_00: And thanks for all the questions because just keep bringing them in, because obviously what we'll do is we can't answer all the questions, but really what we're trying to do is make take the most appropriate ones for what we're seeing at the moment and and really what to expect, especially as we're heading into gold season uh pretty soon.
• 1:20
  SPEAKER_00: So, what we're gonna look at is there's the two-week overshoot really of massive central bank support at 4,000 bucks and$50 institutional demand in silver.
• 1:36
  SPEAKER_00: Um, and it what it's done is illustrate the sharp contrast between momentum-driven leveraged sellers and real unleveraged strength in physical markets.
• 1:49
  SPEAKER_00: It's this paper-to-physical dynamic.
• 1:53
  SPEAKER_00: And this it's the underlying slower, unleveraged physical demand that has now caught up with the wrong at both ends, leveraged fast market sellers being called in now to stand to deliver bullion they simply do not own.
• 2:11
  SPEAKER_00: And yeah, you can borrow it and you can uh get look to cash settle, but there comes a point where um physical buy physical buyers, unleveraged physical buyers, are saying, Well, give it to me then.
• 2:25
  SPEAKER_00: So obviously, not having any, what are they gonna do?
• 2:28
  SPEAKER_00: They have to buy it back.
• 2:30
  SPEAKER_00: Now, if they have to do all that do that at the same time, that's a problem for them, but certainly not a problem for us or our stackers.
• 2:41
  SPEAKER_00: Now, we're gonna examine the the participants, the actors behind this huge counterintuitive directional sell-off, uh, the overshoot essentially of central bank support at 54,000, but how it's created a setup which is closely resembling the late October 2022 capitulative low, almost a mirror ex mirror imprint of that.
• 3:14
  SPEAKER_00: As we will demonstrate here on the charts, at that point, this particular point here that I'm pointing to, the Bank of International Settlements, the BIS, the central bank of central banks referred to as the house, covered all 500, all remaining of their 500 tons of the accumulated short gold exposure.
• 3:38
  SPEAKER_00: The officially driven mark-to-market position squaring event front ran the commencement of a 250%$4,000 rally, just two months.
• 3:52
  SPEAKER_00: This commenced just two months before gold was revalued on the 1st of January 2023, which was referred to as Basel III reclassification.
• 4:06
  SPEAKER_00: Now that advanced positioning preceded a sustained repricing as central bank sovereigns and institutions gained access to a newly reclassified first-tier gold with prices, as I say, advancing$4,000 from the November BIS squaring position into the January 2026 event.
• 4:27
  SPEAKER_00: And yes, as we've looked at this before, the this was an overshoot with speculators hanging on, tailcoating what was really a very, very, very large physically driven rally, where the physically driven rally started to expire around about the 4,500 level.
• 4:47
  SPEAKER_00: And this was really a complete overshoot.
• 4:52
  SPEAKER_00: And the point I'm also trying to make here is that was a bubble short element, long gold element and silver element as well.
• 5:03
  SPEAKER_00: And then it was unwound through margin cores, and we've just evidenced an equal bubble short situation, almost identical in scope.
• 5:15
  SPEAKER_00: And while it doesn't look as big now, bearing in mind open interest was a lot higher here in COMEX, and now it's much reduced.
• 5:24
  SPEAKER_00: So essentially, this was bubble long, this is now bubble short.
• 5:30
  SPEAKER_00: This is when when you've doubled down on lower on higher margin calls into a rise, and then it reverses on you, then you need to sell those positions.
• 5:41
  SPEAKER_00: Now, here we have a bubble short situation where the being now that it's a percentage-based percentage-based margin condition, what the specs have done is doubled down.
• 5:57
  SPEAKER_00: And here's evidence that I'm doubling down, using the lower margin cores just to double down.
• 6:04
  SPEAKER_00: So now what happens is leverage works in two ways.
• 6:07
  SPEAKER_00: Now they're being forced to cover, and drilling down into the 20-minute charts, you can see that better.
• 6:16
  SPEAKER_00: Now, this is where the interventions came in.
• 6:20
  SPEAKER_00: And drilling down, if you remember, we noted the exact reversal on this 50% retracement fiber.
• 6:29
  SPEAKER_00: This is when the aggressive selling, this was to avert an upside breakout.
• 6:35
  SPEAKER_00: Aggressive selling began from that point there.
• 6:38
  SPEAKER_00: So looking at it on the daily, what this evidenced is the dollar scale of this 18% sell-off, basically 18%,$832 sell-off from the officially capped gold breakout at spot gold 4697.
• 6:59
  SPEAKER_00: And weigh that 18% percentage against what we evidenced into the front running of Bank of International Settlements.
• 7:09
  SPEAKER_00: That was actually, although it looks smaller because of the scale, it was actually a 22% sell-off into the October lows.
• 7:21
  SPEAKER_00: So, in other words, the reason that was higher was because, if you remember, there was a heck of a lot more gamers willing to borrow chips from the house before the open interest really started to evaporate as the price became more physically settled.
• 7:39
  SPEAKER_00: Now, Comex open interest significantly reduced and steadily migrating out of the toxic COMEX casino, a similar, almost mirror-like pattern of anticipatory insider front-running positioning has appeared, ahead of really the expansion of Hong Kong's physically deliverable market infrastructure launching early in the first quarter of 2027.
• 8:03
  SPEAKER_00: Similarly, two months ahead of a game-changing physical pivotal gold repricing event.
• 8:11
  SPEAKER_00: This is no coincidence.
• 8:13
  SPEAKER_00: The insiders knew what was coming.
• 8:15
  SPEAKER_00: The paper markets completely ignored the effect that the Basel III reclassification would have on gold, which suddenly became exchangeable with treasuries.
• 8:27
  SPEAKER_00: So essentially, now, two months ahead of this pivotal, game-changing repricing event, we're seeing front running.
• 8:38
  SPEAKER_00: So, as we say, the current structure is strikingly similar.
• 8:41
  SPEAKER_00: The house has once again displaced all the speculatively longs while drawing in a concentrated leveraged speculative short position to lean against.
• 9:29
  SPEAKER_00: It indicated that this anticipatory front running was already gaining momentum.
• 9:35
  SPEAKER_00: Now we have a mirror-like paper to physical pattern that recalls the previous major bullish structural transition.
• 9:43
  SPEAKER_00: And as much as this, the effect of Basel III would have on gold, once again, the effect of that physical prices is going to have on gold in a liquid environment is completely underestimated once again.
• 10:02
  SPEAKER_00: And the migration of dollar gold price discovery into a global-facing physically delivered supply-demand hub is of equal importance as when the BIS revalued gold against treasuries.
• 10:14
  SPEAKER_00: While our time frames for gold to be physically priced at 8,000 have been slightly delayed into the first quarter, this will be the flaw in 2027.
• 10:26
  SPEAKER_00: Now, a mirror-like 250% rally from the point insiders started ringing the register on the sucked-in short sellers on Monday at 3865 spot here.
• 10:39
  SPEAKER_00: We place gold simply from that level at 9,600 to 13,500.
• 10:45
  SPEAKER_00: And while we're on the daily charts, I just wanted to quickly look at silver and how that sell-off essentially also has bottomed and is also, much as silver also related to gold, even though silver wasn't reclassified as a Dazzle 3 NSFR compliant inventory.
• 11:07
  SPEAKER_00: Essentially, we saw the same sort of front running.
• 11:11
  SPEAKER_00: And yes, we saw again the speculative longs getting on board.
• 11:15
  SPEAKER_00: But now we have an similarly speculative bubble short position in silver, which has to be ready to rally.
• 11:25
  SPEAKER_00: However, for that sense, Judy Shelton, the White House team that she's on, uh to issue really a proposed uh for them to issue their proposed Treasury Trust bond convertible to gold, which is really what the plan was.
• 11:44
  SPEAKER_00: But in order to do that, to stop foreign bold uh bondholders converting these bonds right back into gold pre-Nixon as it was happening, what she's gonna have to do is she's actually gonna have to reprice the 8,100 tons of US Treasury gold, she's gonna have to price that correctly.
• 12:07
  SPEAKER_00: Now, this would mean pricing gold at legacy pre-Nixon PE levels.
• 12:14
  SPEAKER_00: Now, historically, foreign holders of treasuries, uh, and we've looked at this, I think we looked at this 2002, 2003.
• 12:22
  SPEAKER_00: We look at it pretty much every year, but uh this is a particularly appropriate moment.
• 12:28
  SPEAKER_00: Um as we looked at historically holders of of uh uh foreign holders of treasuries outstanding levels that has always pre-Nixon averaged between 40 and 60 percent, which means just from current levels, gold would have to rise between 12,000 and 20,000 bucks.
• 12:51
  SPEAKER_00: Uh and and with first quarter of 2027 approaching fast, don't be surprised if gold gets repriced, front-running the Chinese sanctioned dollar-based Hong Kong gold exchange launch.
• 13:07
  SPEAKER_00: Now, Bessen is fully aware that rising yields are intensifying fiscal concerns and the risk of currency debasement, and that foreign central bank sovereign and institutional physical buyers, of course, increasingly view incredibly underpriced gold as the only alternative first-tier reserve asset capable of hedging rate volatility and the erosion of sovereign credit quality and obviously currency purchasing power.
• 13:41
  SPEAKER_00: And gold is the only benchmark for that.
• 13:46
  SPEAKER_00: Now, footprints suggest the House is also ultimately positioning for a long overdue US Treasury gold revaluation.
• 13:55
  SPEAKER_00: Now, bringing Judith Shelton into the an advisory role with the ESA, ESF, and given her long history of pushing for a gold ink dollar, it's not a coincidence.
• 14:08
  SPEAKER_00: And it won't be, it won't be a gold ink dollar so much as uh as what we've just described.
• 14:14
  SPEAKER_00: Now, liquidity providers assess that with the 1 trillion a week over-the-counter spot gold price underpinned very close to sub to suppressed levels, and increasing, and that and we're talking about minimum 4,000, and increasingly arbitrage flows, um arbitrage flows gaming over-the-counter gold for export out of London into nationally held global vaults, the house price suppression layoffs are limited to this dwindling volume of COMEX open interest, the chips, and borrowed ETF gold.
• 14:56
  SPEAKER_00: And that is a big issue here, having borrowed GLD and ETF gold really to well, borrowing it in the sense of short selling it, in order to flywheel this gold price revaluation.
• 15:13
  SPEAKER_00: Now, while ahead of it basically, now while the house is already hedging against spec sellers, uh borrowed, short-sold ETF gold has to be paid back.
• 15:25
  SPEAKER_00: And while the on and off ramps uh for ETF gold is so important to understand this, it's not physical.
• 15:32
  SPEAKER_00: The the on and off ramps uh for gold and silver ETFs are conducted in the over-the-counter, unallocated form.
• 15:42
  SPEAKER_00: So these positions are just gonna have to be repaid at a higher price.
• 15:47
  SPEAKER_00: And and when you have to then actually then uh buy these physical, and if that is being demanded for physical delivery and you've short-sold that, you're gonna have to pay a heck of a lot higher price in the over-the-counter market for to obtain that physical.
• 16:06
  SPEAKER_00: So as the central bank underpinned physical support levels rise into this outflowing over-the-counter liquidity, the bandwidth to suppress gold will run very, very thin against the exchange stabilization funds, 220 billion in assets.
• 16:26
  SPEAKER_00: We looked at that, how that pales in comparison.
• 16:29
  SPEAKER_00: It yes, it's been leveraged, and it but it pales in comparison to the 1 trillion a week over the gold market.
• 16:38
  SPEAKER_00: And there's little doubt Bessen is buying up this whole time, has been buying up cheap gold.
• 16:44
  SPEAKER_00: In fact, there's evidence of it that he's buying up cheap gold into these rigged synthetic discounts ahead of China taking control of the gold market in the first quarter of 2027.
• 16:57
  SPEAKER_00: So, as a refresher, on the 6th of July, Hong Kong began trial operations.
• 17:03
  SPEAKER_00: We've been tracking this so closely, week by week, episode by episode, since its launch on the 6th of July, Hong Kong began their trial operations for a globally accessible gold clearing system.
• 17:19
  SPEAKER_00: Uh, introduced uh it introduced a local price benchmark, and what it is is secure participation from the leading Chinese banks, tapping into their 60,000 tons of of uh state-held security of state-held bullion, ultimately.
• 17:39
  SPEAKER_00: And um, obviously, alongside the Chinese banks, um the major international LBMA and non-LBMA bullion banks, including JP Morgan, uh HSBC, etc., and Goldman Sachs, our reading of Comex's own reported positioning indicates that these institutions have all along maintained long exposure against speculative selling while preparing for the full international launch scheduled for the first quarter of 2027.
• 18:15
  SPEAKER_00: Now we characterized this beta testing period as the lull ahead of a physical repricing tsunami in gold and silver.
• 18:25
  SPEAKER_00: We stick to that.
• 18:26
  SPEAKER_00: This is exactly where we are in the paper to physical battle as we head into gold season next week.
• 18:34
  SPEAKER_00: So much of this is now moving into the rear view mirror.
• 18:38
  SPEAKER_00: It there's every reason in the world to now suggest that.
• 18:43
  SPEAKER_00: And through the Chinese-backed SGE Renembi gold ecosystem, um it's really it comes, what it did was commence, just simply commence a global rollout based on the Hong Kong physical hub structure.
• 18:59
  SPEAKER_00: It's going to be global.
• 19:00
  SPEAKER_00: We talked about every continent is getting this.
• 19:04
  SPEAKER_00: And the PBOC is linking Renembi liquidity to deliverable bullion, which is also concurrently advancing practical infrastructure for global investors to hedge the debasement trade and a very clear central bank de-dollarization footprint that we see.
• 19:25
  SPEAKER_00: Now, concerns over servicing more than 40 trillion of US debt at higher interest rates, it's going to accelerate sovereign reallocation into non-dollar assets, including a gold back yuan.
• 19:40
  SPEAKER_00: Now, beneath the synthetically driven short-term paper-driven bottoming action that we're looking at and look at again in the charts, front running is already underway.
• 19:52
  SPEAKER_00: It is no coincidence that into this paper-driven seller action, first-tier liquidity providers affirm extremely strong Indian, Asian, Saudi bullion demand into each of the synthetically driven lower gold and silver fixes.
• 20:22
  SPEAKER_00: And so buyers, some buyers are already settling in higher price per envy rather than US dollars just to obtain the metal now, reinforcing the de-dollarization process.
• 20:34
  SPEAKER_00: And these are well-connected insiders who know that a revaluation is imminent.
• 20:41
  SPEAKER_00: Now, rising US debt, the use of the dollar as a geopolitical instrument and leverage paper claims, they're just reinforcing the institutional case for physical collateral and jurisdictional diversification.
• 20:56
  SPEAKER_00: It's just from every angle.
• 20:58
  SPEAKER_00: Central banks are increasing physical gold allocations at record levels, no matter where you look now, World Gold Council, everywhere, even on record, let alone what is being monetary gold that is unreported, these physical gold allocations and developing increasingly liquid non-dollar settlement systems are exploding.
• 21:25
  SPEAKER_00: And although the dollar remains dominant, gold offers an issuer-free, sanction-resistant alternative.
• 21:33
  SPEAKER_00: That's what's being tapped into.
• 21:35
  SPEAKER_00: And as we noted previously, Basel III and SFR rules make LBMA FX gold fixes physically deliverable.
• 21:46
  SPEAKER_00: And it made them physically deliverable from January 2023.
• 21:52
  SPEAKER_00: And even now, further down the road, there are only three to five tons that actually are compliant at the fixes.
• 22:00
  SPEAKER_00: Is because we got six to eight hundred tons of cash of cash settled daily settlements, which is one of the ways that they have actually been able to gain, or Bessent, in fact, as an FX trader, has been able to balance that off now for balancing from his perspective, but imbalanced from a physical market perspective.
• 22:27
  SPEAKER_00: And obviously, while the HAU LBMA arbitrage is actually now redirecting 400 ounce bars towards national uh repatriation programs and the Hong Kong SGE network, and wait till that launches officially.
• 22:50
  SPEAKER_00: Now, flows into Hong Kong and the SGE impose enormous discipline on the LBMA CME market makers, increasingly so.
• 23:00
  SPEAKER_00: And it's placing pressure on paper gold and it's really strengthening physical price discovery.
• 23:06
  SPEAKER_00: Now, physical depositories streamline ownership and delivery for sovereign and institutional participants that require liquid, high-quality liquid asset settlement where they can actually take their bullion, purchase their bullion, hedge their, hedge their dollar debasement against it.
• 23:29
  SPEAKER_00: They don't have to sell it.
• 23:30
  SPEAKER_00: They can then trade that, because it's in a high-quality liquid asset, physical pricing uh structure, they can actually use that as collateral.
• 23:42
  SPEAKER_00: And these developments, you can't do that in it's too risky.
• 23:46
  SPEAKER_00: You can't do that in the COMEX.
• 23:48
  SPEAKER_00: Um, and you certainly can't do that.
• 23:51
  SPEAKER_00: You're you're vulnerable when you're playing in the paper game because people will see your positioning, and there are sharks out there, and they will take, they will take they'll have and basically they'll attack positions that are large enough to attack.
• 24:08
  SPEAKER_00: Now, these developments though, these bullish developments that we're witnessing, they broaden access to Hong Kong's physical pricing gateway and its links to the SGE.
• 24:20
  SPEAKER_00: And as we drew attention to last time, that's why Valcambi is establishing its first refinery outside Switzerland in Hong Kong, which will combine precious metals refining and with vaulting services.
• 24:35
  SPEAKER_00: And again, extending Hong Kong's capabilities across the physical bullion, the entire bullion value chain.
• 24:43
  SPEAKER_00: Now, the investment reflects the growing strategic importances of Asian physical demand and Hong Kong's ambition to actually compete with established refining, trading, and storage centers.
• 24:56
  SPEAKER_00: They are moving there.
• 24:58
  SPEAKER_00: And we're going to see that that's the thing.
• 25:02
  SPEAKER_00: They're all moving there.
• 25:03
  SPEAKER_00: Officials are really, and we're talking about foreign officials, are pursuing a whole value chain that combines really you absolutely need Swiss star refining, you need London-style over-the-counter trading and storage.
• 25:22
  SPEAKER_00: And, you know, for literally, you need that kind of uh volume, and US, but and also US star futures infrastructure within a single regional hub.
• 25:33
  SPEAKER_00: But critically and crucially, unlike the legacy pricing structures dominated by cash settlement, all of these upgraded components, the refining, um, over-the-counter trading, uh, futures infrastructure, they have to, they're intended to operate on an S NSFR, Basel III compliant, physically deliverable basis.
• 26:00
  SPEAKER_00: And what that's going to do is anchor price discovery more directly to verifiable bullion supply and demand metrics, which is all we've ever wanted.
• 26:10
  SPEAKER_00: This is all our clients have ever wanted.
• 26:14
  SPEAKER_00: Every institutional has just requires that simple, simple, level playing field.
• 26:21
  SPEAKER_00: It doesn't matter what the real price of gold and silver is.
• 26:25
  SPEAKER_00: I know that if a willing buyer, if I have size and I want to buy it, then somebody with physical bullion has to then supply that to me, and that will be the price because everyone will see that price.
• 26:41
  SPEAKER_00: And therefore, that will that will make that price the price.
• 26:47
  SPEAKER_00: So this, I mean, this development sits with it in a broader program to deepen market liquidity and really institutional participation.
• 26:58
  SPEAKER_00: And this is the key ahead of the first quarter launch of a Comex crushing, global-facing, liquid, dollar-settled supply-demand, physical gold price discovery hub that ultimately interconnects a gold corridor with all the major continents.
• 27:19
  SPEAKER_00: Now, look, rather than demonstrating a whole migration away from legacy hubs, what we're doing is evidencing an incremental balancing of capacity towards Asia.
• 27:31
  SPEAKER_00: Now, the engagement of Val Val can be, for example, alongside official outreach, and we had MKS PAMP, Arga Jarayas, etc., indicates that the major refiners are definitely establishing a closer operational presence near the region's expanding pool of physical demand.
• 27:51
  SPEAKER_00: Now, trading, liquidity, and custody requirements are critical.
• 27:56
  SPEAKER_00: You need the volume.
• 27:57
  SPEAKER_00: They are bringing those aspects that are needed.
• 28:04
  SPEAKER_00: I mean, the broader market implication, though, is the emergence of a more physically anchored price discovery corridor, linking Hong Kong with mainland Chinese demand and the rapidly expanding, global-facing Shanghai gold exchange ecosystem.
• 28:21
  SPEAKER_00: And by integrating refining, vaulting, uh, clearing the bet the bench, you know, these benchmarks to price and the prospected futures in both, I mean, we're looking at an upcoming futures contract in both US dollars and Chinese yuan, Hong Kong will facilitate a more direct transmission of regional physical supply and demand conditions into internationally accessible true supply-demand derived prices.
• 28:56
  SPEAKER_00: Now, as offshore physical liquidity deepens, we expect confidence in paper gold to weaken.
• 29:04
  SPEAKER_00: And taken together, these developments really reinforce our bullish assessment that the conditions for a structural repricing are gathering strength.
• 29:14
  SPEAKER_00: And ex-Soros trader Bessent and gold advocate Shelton are aware of this tectonic shift and are raising the odds of an unfactored gold bullish surprise.
• 29:30
  SPEAKER_00: So, now to answer some other questions, and really it revolves around well, who was behind this counterintuitive sell-off?
• 29:41
  SPEAKER_00: Especially as in the larger picture, people noticed the questions were, well, how come gold fell alongside the dollar?
• 29:49
  SPEAKER_00: And that was causing a lot of puzzlement, also with the mainstream media who were just looking to try and form fit that with anything they could think of.
• 29:58
  SPEAKER_00: Now, look, to reveal who this and who was behind this, let's step through the market footprints ahead of last Friday's action.
• 30:11
  SPEAKER_00: Um, where into rising geopolitically driven oil prices, uh, we now saw Brent hitting 118.
• 30:18
  SPEAKER_00: That was one of the points that provided um uh some cell ignition.
• 30:24
  SPEAKER_00: Uh, and obviously, because that legitimate intensified inflation concerns, so you'd expect some form of mechanical reaction to that.
• 30:33
  SPEAKER_00: Um, and that would have obviously weighed on all the broader market crosses.
• 30:37
  SPEAKER_00: But in the case of gold, it it favoring the already entrenched Led by the Nose group of chart-painted precious metals short sellers.
• 30:46
  SPEAKER_00: So that really gave them a tailwind.
• 30:48
  SPEAKER_00: And sure enough, footprints indicate that the selling was predominantly Comex-centric, alongside related uh bearishly skewed option spats and GLD short selling.
• 31:01
  SPEAKER_00: However, all was not what it purported to be.
• 31:06
  SPEAKER_00: The 100% synthetically driven selling drove prices to a one-year low.
• 31:12
  SPEAKER_00: And we saw the end of October, it was literally gold was down 6.8% into the end of October, and by no coincidence, into the Bank of International Settlements mark-to-market end-of-month dollar gold swap swap squaring event at a conveniently lower price.
• 31:34
  SPEAKER_00: There was a price to pay for that.
• 31:47
  SPEAKER_00: Now we've uncovered sell tickets as we talked about last time.
• 31:51
  SPEAKER_00: And again, this is prevalent.
• 31:54
  SPEAKER_00: These sell tickets exceed single entity position limits.
• 31:59
  SPEAKER_00: Either that or there is collusion by some of the big banks to um to actually work it.
• 32:09
  SPEAKER_00: But the banks are long for their own book.
• 32:12
  SPEAKER_00: So this would have to be, one way or the other, this had to be sanctioned.
• 32:16
  SPEAKER_00: And because these are levels that a regulated bank would not risk without an exemption.
• 32:21
  SPEAKER_00: Now, the ESF, the Exchange uh Stabilization Fund, and the Fed and the agent banks transacting on behalf are really among the entities able to operate under such exemptions.
• 32:36
  SPEAKER_00: Now, the sell-off, fueled by momentum selling and long liquidation, was exacerbated by the rout in AI stocks and rising energy prices.
• 32:47
  SPEAKER_00: And so, to answer some questions on this, so the questions were why did we evidence an unusual correlation between gold and AI?
• 32:57
  SPEAKER_00: I mean, that should not be the case.
• 32:59
  SPEAKER_00: Global investors actually hold substantial long-dollar positions linked to AI exposure.
• 33:08
  SPEAKER_00: Now, with downside AI SKU serving, surging, so we saw some bearish action into a risk, further risk that the AI domino has yet, and the next AI domino, of which there's been a couple that have yet to fall, AI was being sold during this sell-off, which in turn saw dollars dumped.
• 33:35
  SPEAKER_00: Now, with gold and silver, the other side of the dollar foreign exchange cross with dollars sold, the natural mechanical reaction should have evidenced gold as the beneficiary of that trade.
• 33:47
  SPEAKER_00: You sell the dollar, it benefits gold.
• 33:50
  SPEAKER_00: However, illustrating an FX market intervention, gold also fell alongside the dollar.
• 33:59
  SPEAKER_00: Now, this was because Bessence Exchange Stabilization Fund once again intervened against gold in support of treasuries while simultaneously serving to clean out the leverage speculator gold and silver deck.
• 34:15
  SPEAKER_00: Strategically ahead of uh avery valuation.
• 34:20
  SPEAKER_00: So don't read the bearish action as this there is a real reason for this.
• 34:25
  SPEAKER_00: And keep in mind that spot gold and silver, because they're both FX uh currency crosses against the dollar, and along with any other uh currency cross against the dollar, they're obviously regularly intervened in.
• 34:38
  SPEAKER_00: And these to suit uh last time we looked in detail as the ex-Soros trader Besend now heading up the exchange stabilization fund and his active uh open use of it.
• 34:51
  SPEAKER_00: Uh and as he was saying himself, I'm the market.
• 34:55
  SPEAKER_00: Um, and and we saw that um into when he intervened openly into the yen, um, and he, as he said, to defend off untimely treasury sales.
• 35:09
  SPEAKER_00: So that was his front running of that situation.
• 35:13
  SPEAKER_00: Now, gold suppression is timed to to slow down US Treasury migrations.
• 35:20
  SPEAKER_00: This is over the year, over the years, that is kind of where the focus is.
• 35:26
  SPEAKER_00: Uh so obviously gold is US treasuries uh are being sold for gold.
• 35:34
  SPEAKER_00: And as was just evidenced when the dollar recently became uh bearishly correlated with the AI sell-off, these dollar sales risked the oversold paper to physical gold rally to break out earlier than was planned.
• 35:50
  SPEAKER_00: So was intervened in.
• 35:52
  SPEAKER_00: And following midterms uh and the AI rollout being questioned, because today we see the midterms now with a blue sweep.
• 36:01
  SPEAKER_00: I mean, long-dollar bulls are risk very quickly reducing the AI exposure, AI exposure.
• 36:08
  SPEAKER_00: And the dollar could easily fall back.
• 36:11
  SPEAKER_00: However, following such heavily intervened gold-to-dollar interventions and with remaining short speculators the only remaining source of short cover because the longs are all gone, liquidity providers see this got uh this gold FX dollar cross returning to its broader global correlations uh with the de-dollarization and debasement flows into gold out of the dollar into gold, um, into an oversold retracement rally uh that is really long overdue, driving an oversold retracement value.
• 36:49
  SPEAKER_00: Um now official ESF sellers leaned into the gold rally that would typically accompany a weaker dollar, intervening by using the higher gold price to bolster US treasuries, in summary.
• 37:02
  SPEAKER_00: And obviously it's not plain vanilla because there's a lot of intraday uh other stuff going on, but essentially that's what we're seeing and what we saw.
• 37:12
  SPEAKER_00: And while also influenced by the dollar AI correlations, given the scale of the selling and the aggressive nature of the bearishly skewed OPEC structure, direct feedback from our liquidity providers affirms this selling was officially orchestrated with proceeds being used to support US treasuries to counter the de-dollarizing effect of an upsurge of Chinese, Saudi, and US uh treasury rotations into gold, which was happening at exactly the same time.
• 37:45
  SPEAKER_00: Now, Bessence ESF in intervention posture aims to support uh treasury demand and slow reserve migration into physical gold while buying time to consolidate a long gold advantage for themselves.
• 38:05
  SPEAKER_00: And as we just mentioned, it's no coincidence that into reported Indian, Asian, and Saudi bullying demand, it was so strong at each of the synthetically driven lower gold and silver effects fixes.
• 38:20
  SPEAKER_00: Now, the ES, the ESF is geared to intervene surreptitiously in all the dollar-related FX crosses, including gold and silver.
• 38:31
  SPEAKER_00: So FX intervention footprints, they're easy to hide within a 1 trillion a week over-the-counter gold currency market, where only a fraction of these FX positions become NSFR T plus one delivery compliant at the fixes.
• 38:45
  SPEAKER_00: However, when these official FX interventions are flywheeled into counterintuitive, highly leveraged bearish OPEX structures, which is what we saw, where we saw calls being aggressively sold beyond what uh any compliance uh market would sign off, and the almost exact balance of uh puts being bought.
• 39:11
  SPEAKER_00: So you're talking about a very bearish structure, a directional structure, their footprints became visible.
• 39:18
  SPEAKER_00: And they expose a bearish high-risk structure that exceeds, again, single position concentration rules, one that, as I say, no private enterprise would be sanctioned to undertake, and no risk compliance test would ever sign that off.
• 39:36
  SPEAKER_00: Now, these high-risk option structures deployed while the dollar was declining during the lion's share of the gold and silver selling, underpins the assessment that the coordinated sell-off was officially sanctioned and had to be orchestrated by the White House ESF.
• 39:55
  SPEAKER_00: And while leveraged uh positioning has continued to pressure prices well below supply-demand fundamentals, we're seeing a bit of a retracement on that today, central bank unleveraged diversification demand, Chinese investor buying, and tightening physical supply provide as as an as-yet unseen counterweight to this synthetic action.
• 40:21
  SPEAKER_00: And really, as is the case after every full-blown official gold and silver FX intervention that we've seen over the years, the key question is always how long can leveraged synthetic selling persist against unleveraged underlying demand?
• 40:39
  SPEAKER_00: That is the question.
• 40:41
  SPEAKER_00: Now, the answer is the leveraged paper overshoot into unleveraged physical support started to become visible uh into the last three days of gold fixes.
• 40:54
  SPEAKER_00: And now we're recording this on Wednesday for publication in a few hours tomorrow on Thursday.
• 41:02
  SPEAKER_00: So, what we're trying to say is gold-silver physical demand finally caught up, underpinning the futures selling.
• 41:09
  SPEAKER_00: And we're looking at gold for the moment here.
• 41:11
  SPEAKER_00: So essentially we see a fix, see the pit sellers coming in one at a time.
• 41:17
  SPEAKER_00: Uh, but essentially we saw the strong rally in really capping what was consistently lower, but chart-painted fixes, rally here, rally here.
• 41:31
  SPEAKER_00: Now the short squeeze is on, and the rally is fixing at pretty much the highs of the session, much as it fixed at the high of highs of the session, with the uh insiders, sorry, the uh speculators trying to double down.
• 41:46
  SPEAKER_00: And all that happened is the Asia bought the AM fix and so on and so forth.
• 41:52
  SPEAKER_00: So essentially, I just wanted to point out, drill down into the action.
• 41:56
  SPEAKER_00: And yes, we had another pith attempt at selling today, and what did that do?
• 42:02
  SPEAKER_00: It's simply the PM fix bought it.
• 42:05
  SPEAKER_00: So, to answer the question and looking at these three days of fixes, what we're evidencing is gold-silver uh demand has finally caught up.
• 42:16
  SPEAKER_00: Now, to best illustrate that, the footprints were already visible in the staledated CO2 report, which was really published on the 27th of October.
• 42:29
  SPEAKER_00: And what it revealed was we're talking about a$68 decline uh between reports in uh gold, and we're talking a$3.50 decline between reports in silver.
• 42:44
  SPEAKER_00: So what happened?
• 42:46
  SPEAKER_00: Due to outside pressures, the COT report, just I wanted to add this, the COT report uh goes twice weekly from December because of a lot of uh complaining.
• 42:58
  SPEAKER_00: And while they're still delayed, it will be published on Wednesdays and Fridays.
• 43:02
  SPEAKER_00: And it just goes to show that information has always been available.
• 43:06
  SPEAKER_00: So it's deliberately delayed.
• 43:08
  SPEAKER_00: But as we just mentioned, the bearishly skewed options footprints that we were looking at versus the fully bullishly structured commercial COG report, which already evidenced the house moving long gold here and again here, and again here and again here in silver.
• 43:28
  SPEAKER_00: It was already evident.
• 43:30
  SPEAKER_00: You can see this in the swap dealer category, which are the prime suspects.
• 43:34
  SPEAKER_00: And what was happening was the house was already being forced to go long to meet large global demand in both metals.
• 43:42
  SPEAKER_00: And the positioning came amid signs that tiring overextended momentum driven gold and silver speculator future sellers were running low on open interest.
• 43:52
  SPEAKER_00: And you can see how low.
• 43:54
  SPEAKER_00: Remember, this was 800,000 contracts in 2020.
• 44:00
  SPEAKER_00: This is evaporating.
• 44:02
  SPEAKER_00: These leverage short sellers, the speculative short sellers, are really were risking a short squeeze of epic proportions.
• 44:13
  SPEAKER_00: And to just put that into context with what we looked at uh in the COT report, that's between here and here.
• 44:20
  SPEAKER_00: They were already going long.
• 44:22
  SPEAKER_00: Imagine how long they were going into the lows.
• 44:27
  SPEAKER_00: And that report will yet is yet to be published.
• 44:31
  SPEAKER_00: And in gold, same thing.
• 44:33
  SPEAKER_00: So they were already long.
• 44:36
  SPEAKER_00: And just leaning into these short sellers to short cover.
• 44:43
  SPEAKER_00: And looking at that option structure, there are no calls left to cash in below 4,000 bucks.
• 44:49
  SPEAKER_00: And puts already deep in the money, sub 3,900 to 4,000.
• 44:54
  SPEAKER_00: And the BIS is synthetically squared at its end of September.
• 45:00
  SPEAKER_00: Squaring levels.
• 45:02
  SPEAKER_00: Job done.
• 45:04
  SPEAKER_00: And that can be better illustrated on the daily charts.
• 45:09
  SPEAKER_00: This is spot, but it's not futures.
• 45:11
  SPEAKER_00: Just scrolling back to really look at the action and looking at this constructed bearish structure from absolute determined capping at 4200.
• 45:22
  SPEAKER_00: This is futures.
• 45:23
  SPEAKER_00: So it was trading at a premium to spot back then, a bigger premium to spot back then.
• 45:29
  SPEAKER_00: But it was determined capping at 4200.
• 45:41
  SPEAKER_00: And then we moved forward all the way to where we are today into BIS squaring on Friday, which was the end of October, we started to see the extremely massively bearish naked short sold call and long put structure was largely played out against underlying as yet undeliverable physical demand.
• 46:10
  SPEAKER_00: And while the lead-by-the-nose momentums are still naked short, they've used low percentage-based margin requirements to double down, placing them at great risk of an upturn into percentage-based higher margin costs.
• 46:23
  SPEAKER_00: And given the houses leaning into them to hedge a wall of accruing upcoming central bank size T plus one delivery obligations, this open interest is looking extremely tapped out.
• 46:35
  SPEAKER_00: Fast forward to this to this morning, where we engaged the market at uh around about four o'clock in the morning.
• 46:43
  SPEAKER_00: And really, we again we're recording this on Wednesday for release at a few hours tomorrow.
• 46:49
  SPEAKER_00: What they did with the these the crosses against uh gold and silver, what it did was provided more evidence that synthetic mechanical AI dollar to G C and SI bearish correlations were already breaking down more and quite notable in silver too this morning.
• 47:10
  SPEAKER_00: And what it's doing is simply restoring gold safe haven fundamentals, placing the wrong at both ends bubble shorts into the crosshairs of a very large upside rinse.
• 47:21
  SPEAKER_00: And while midterm uncertainty is still settling, uh one last hurdle to overcome is Friday's upcoming non-farm payrolls volatility.
• 47:30
  SPEAKER_00: However, the low-hanging short rinses we've evidenced over the last three sessions will have both incentivized waiting sideline buyers and spooked low-hanging high-margin shorts.
• 47:42
  SPEAKER_00: And with momentums having doubled down on lower price percentage-based margin, an upside breach of each capped layer will force an equal higher percentage margin cost to hold shorts, accelerating margin calls to cover just as this short covering runs into auspicious gold buying season.
• 48:07
  SPEAKER_00: They couldn't be more wrong-footed.
• 48:10
  SPEAKER_00: We're just about to witness the breach of we've seen the breach of the 10-day moving average.
• 48:15
  SPEAKER_00: We're just about to see a breach of all the moving averages, the 100, the 50, and the 200.
• 48:23
  SPEAKER_00: I mean, the scale of this short covering fuel is sizable, ultimately retaking each of these moving averages, and each of them will force a further reversal of shorts to longs, sufficient to drive gap closes above the 200-day moving average, which is here, which will start to turn up.
• 48:43
  SPEAKER_00: And that's an inflection point, where broader market longs will join central bank sovereign and institutional physical buyers, resetting bullish physical supply-demand fundamentals.
• 48:55
  SPEAKER_00: Essentially, while unleveraged official buying is slow, leveraged paper market selling is fast, hence the overshoot into a strong underlying global central bank debasement and de-dollarizing protection mandate.
• 49:13
  SPEAKER_00: We think this leads us to the only question, and I'm sorry to keep asking the same one, but it's so important.
• 49:20
  SPEAKER_00: Are you along with Bess End, Judy Shelton, every other central bank, sovereign, and a growing number of first-year bullion banks ready for a physically driven fourth quarter upside gold breakout?
• 49:33
  SPEAKER_00: Led by a massive physical silver realignment?
• 49:38
  SPEAKER_00: I hope you are.