Latest / Kinesis Money / The Battle of the Gold Whales - LFTV Ep 289

Transcript

The Battle of the Gold Whales - LFTV Ep 289 · Kinesis Money

• 0:00
  SPEAKER_01: Gold only provides genuine protection if ownership is clear, custody is secure, and delivery is reliable.
• 0:10
  SPEAKER_00: They now have to keep printing a week rather.
• 0:13
  SPEAKER_00: We've got this ticket time on talking gold with the one and only Andrew McGuire.
• 0:19
  SPEAKER_00: Welcome to Life from the Vault.
• 0:25
  SPEAKER_00: Welcome to Life from the Vault, brought to you by Kinesis Money, and we're certainly glad you joined us here.
• 0:30
  SPEAKER_00: And as you can see, I'm out of the vault again in Costa Rica.
• 0:34
  SPEAKER_00: We're in the jungle, and uh it's exciting to be here.
• 0:37
  SPEAKER_00: But Life from the Vault is the show that goes way beyond the headlines to uncover the truth about the precious metals industry.
• 0:43
  SPEAKER_00: And joining us today is Kinesis' very own world-renowned whistleblower and precious metals industry expert, Andrew Maguire.
• 0:52
  SPEAKER_00: And this week we'll be answering again more questions from you, the Live from the Vault community.
• 0:57
  SPEAKER_00: So keep those questions coming in.
• 0:59
  SPEAKER_00: Just click below in the description, and you never know, your question may be chosen for Andrew to answer right here on Live from the Vault.
• 1:07
  SPEAKER_00: So let's head over to the UK and talking gold with Andrew McGuire.
• 1:14
  SPEAKER_00: Hey Andrew.
• 1:15
  SPEAKER_00: Uh, normally to answer uh the most frequent uh subscriber questions, we always start by putting the prior two weeks largely, you know, paper-driven action into perspective uh with the larger wholesale market picture.
• 1:29
  SPEAKER_00: So can you give us your take on what you're seeing since our last episode two weeks ago?
• 1:35
  SPEAKER_01: Yeah, thanks, Shane, and thanks everyone for the questions.
• 1:37
  SPEAKER_01: And um, I mean, there's a range of them, and um, but as you say, um it's it's really it's kind of good stepping back and doing this every two weeks because what it does is cut out a lot of the noise, and there's an awful lot of noise, but enables one to much more clearly look at the big picture.
• 1:59
  SPEAKER_01: And in this episode, now we're gonna reaffirm our$8,000 year-end gold target, but we'll also reveal a developing historic battle between two legacy market whales.
• 2:14
  SPEAKER_01: One has abandoned synthetic gold and silver shorts for SGE-aligned physical metal, and the other remains trapped in this historically derived, and they're only geared up for the historically derived derivative-only strategy and primarily options, and it is become increasingly wrong-footed.
• 2:38
  SPEAKER_01: So the implications of this battle for gold and silver could be explosive.
• 2:44
  SPEAKER_01: So let's start by um the reasoning behind the end of fourth quarter$8,000 gold target.
• 2:52
  SPEAKER_01: Now you might have opened up on Tuesday after the US holiday and we thought, what's going on?
• 2:57
  SPEAKER_01: You know, like, you know, where's our$8,000 as when we're going down?
• 3:02
  SPEAKER_01: Well, yeah, absolutely.
• 3:05
  SPEAKER_01: There is some shorts in the market.
• 3:07
  SPEAKER_01: But we're gonna explain why.
• 3:10
  SPEAKER_01: That's gonna blow back and we're on the cusp of a very big rally.
• 3:16
  SPEAKER_01: And more immediately into the battle of the Titans, though, um, that we're gonna look at, the September setup is bullish for gold and silver.
• 3:28
  SPEAKER_01: If I had to boil it down uh from a paper-to-physical uh supply-demand perspective, the constructive outlook really rests on three impossible to ignore factors.
• 3:41
  SPEAKER_01: And that's why sometimes it's better to step away from these short chart, uh short-term charts.
• 3:48
  SPEAKER_01: What it is is if we look at the strong August gains, let's look at the month of August, the strong gains into a rearward-looking published.
• 3:58
  SPEAKER_01: And remember, we looked at the COT reports, which pretty much sums up the open interest, the who the position, whether it's the dealers or the speculators.
• 4:08
  SPEAKER_01: And and and basically that is a that's published.
• 4:12
  SPEAKER_01: Um, and it's obviously very rearward-looking because it's never on time.
• 4:16
  SPEAKER_01: Uh, and we'll have a look at that later in the charts, maybe later, but um, so what this this report actually indicated that the commercial structure was bearish.
• 4:32
  SPEAKER_01: Um, and so yet we gained through August into that structure, and we looked at the report and it looked bearish, but we knew it wasn't.
• 4:43
  SPEAKER_01: And perhaps I think that's one.
• 4:46
  SPEAKER_01: The next one would be factor that I'm looking at is resilience.
• 4:50
  SPEAKER_01: And despite multi-decade tests in long-dated sovereign yields, and institutional physical buyer buying that restored prices to their pre-wash um pre-non-farm payrolls ranges.
• 5:07
  SPEAKER_01: And when you were looking at the what we were looking at a minute ago, we were talking about two big events that were necessarily that were looking very bearish for gold, but weren't.
• 5:18
  SPEAKER_01: And what's so good about this is that um after this rinse, um it the the this this buying is restored um to their pre-wash levels and non-farm prerance levels, but without building speculative froth.
• 5:40
  SPEAKER_01: And that's the key.
• 5:42
  SPEAKER_01: Finding a higher September opening stair step, which is$400 higher than August when we opened it in August.
• 5:50
  SPEAKER_01: This is this time, it's without rebuilding speculative froth.
• 5:56
  SPEAKER_01: That's really important.
• 5:58
  SPEAKER_01: And to provide context, since our 26th of August update, which was our last update, the Walsh led Fed put pushback at Jackson Hole that gave the wrong-footed insiders cover to engineer a dip, uh, stop out, leverage longs, and repositioned long themselves ahead of a stronger um non-farm payrolls print.
• 6:22
  SPEAKER_01: Now, that was a move that the broader markets are still digesting after Monday's US holiday.
• 6:30
  SPEAKER_01: And I can tell you that those shorts, those commercial shorts, are using that rinse, that downside rinse to cover into.
• 6:39
  SPEAKER_01: Through both events, strong and leveraged Asian institutional and central bank physical demand stepped in, capitalizing on the dollar's two-week highs, which is exactly what we saw.
• 6:52
  SPEAKER_01: Two-week highs in the dollar, and they raced in to convert these higher dollars into physical gold, uh, driving the physically backed HAU contract, which is the physically deliverable contract, to command premiums of up to$20 an ounce over London spot, as physical buyers absorbed this synthetically driven weakness.
• 7:17
  SPEAKER_01: Now, into the stronger dollar and the higher bond yields, liquidity providers reported that the lead-by-the-kno's uh leveraged long specs had mechanically flipped naked short following the targeted breach of the got of gold's 200-day moving average, which is a guarantee you push that price up or down through that, you are gonna knee-jerk the lead-by-the-nose specs to do one thing or another.
• 7:44
  SPEAKER_01: Uh, providing the house with some much needed short cover uh and uh and liquidity to hedge into this surge of HAU-driven T plus one delivery obligations.
• 8:00
  SPEAKER_01: So, in other words, the HAU price is a physically deliverable price, the London price is diluted, and that arbitrage situation forces gold out of London into um into China, into Hong Kong, and ultimately China, and we'll look at that later too.
• 8:21
  SPEAKER_01: Now, while the legacy paper market attempts to manufacture uh leverage trend reversals, uh, liquidity providers report exceptionally large concurrent sovereign and central bank buying into every single speculative washout.
• 8:39
  SPEAKER_01: And this reinforces our liquidity providers' view that pullbacks actually remain tactical entry point points.
• 8:47
  SPEAKER_01: And that's what we're seeing.
• 8:49
  SPEAKER_01: And despite the synthetically driven volatility short term, including the hawkishly interpreted month end wash-driven sell-off, gold still gained 10% into the end of August after that rinse, while silver surged more than 15% after that rinse.
• 9:10
  SPEAKER_01: Those gains held even as long-dated sovereign yields repeatedly tested levels not seen in decades.
• 9:20
  SPEAKER_01: And after Friday's sharp non-farm payroll sell-off, underpinning underpinned by very strong Shanghai gold and silver premiums, institutional dip buying has driven both metals back up inside their bullish pre-wash and non-farm payrolls rigged ranges.
• 9:38
  SPEAKER_01: And with virtually no speculative froth left to rinse out, the setup is more constructive and firmly bullish for gold and silver.
• 9:47
  SPEAKER_01: Now, we'll look at these footprints in the charts momentarily, but the real story is that gold's bullish divergence from yield yields marks a structural regime change.
• 10:00
  SPEAKER_01: Now, as illustrated in this Financial Times piece authored by UBS's chief strategist, gold has broken this relationship with real yields.
• 10:12
  SPEAKER_01: Now, this bullish divergence from real yields is becoming impossible to ignore, signaling a structural regime change in gold.
• 10:20
  SPEAKER_01: Beyond the smoke and mirrors analysis that continues to extrapolate bearish projections from legacy correlations, the emerging regime is being driven by a rotation out of debt-laden US treasuries and into an increasingly tight supply of physical gold.
• 10:42
  SPEAKER_01: Now, to better illustrate, let's take a quick look at the charts.
• 10:46
  SPEAKER_01: Now I'm recording this live on Wednesday for tomorrow's publication.
• 10:52
  SPEAKER_01: Um, so Wednesday the 9th for tomorrow's publication.
• 10:55
  SPEAKER_01: In other words, just a few hours from now, the the fastest that we can possibly turn it around.
• 11:02
  SPEAKER_01: Gold is no longer merely reacting to real yields, it's repricing the mounting risk embedded in sovereign debt.
• 11:08
  SPEAKER_01: Just as the Basel III reclassification of gold right back here, even though the Bank of International Settlement squared theirs two months ahead, but basically from the 1st of January 2023.
• 11:23
  SPEAKER_01: So since then, net of all pullbacks, that includes all of these pullbacks to where we are today, essentially gold has attracted some$3,000 of central bank and sovereign liquidity into the US Treasury gold abasement trade from 2023 to current levels, around$4,400.
• 11:45
  SPEAKER_01: That is the spot gold chart here.
• 11:48
  SPEAKER_01: This historic decoupling was going to drive the next leg higher towards our$8,000 end of fourth quarter projection.
• 11:57
  SPEAKER_01: And it's going to be looked back on as its defining catalyst, just when the least have expected it.
• 12:04
  SPEAKER_01: Now we'd like to look at the T240 chart, the four-hour chart occasionally.
• 12:08
  SPEAKER_01: I just want to bring this into context here.
• 12:11
  SPEAKER_01: This is where the Bank of International Settlements squared their July bets.
• 12:16
  SPEAKER_01: This is where they squared them at the end of August, notably$500 higher, having borrowed 10 more tons of gold along the way.
• 12:26
  SPEAKER_01: But regardless, essentially what we're looking at here is even at current levels here, uh six, just four weeks after the 6th of July launch of the Hong Kong SGE Gateway, the debasement trade decoupling has accelerated significantly.
• 12:43
  SPEAKER_01: And yes, we've had some pullbacks.
• 12:45
  SPEAKER_01: This was WASH, this was non-farm payrolls, but essentially that is just shaken out the froth.
• 12:52
  SPEAKER_01: We expect the rally now to continue up step by step higher.
• 12:58
  SPEAKER_01: Because despite higher bond yields, a net of two large derivative gold pullbacks, and we'll pop into the 20-minute charts to identify those, and that is WASH here, and that's non-farm payrolls here, and some follow-through selling.
• 13:17
  SPEAKER_01: This was after the PM fix closed yesterday, uh, and the usual um sellers came in.
• 13:25
  SPEAKER_01: But essentially, net of all of this short-term stuff, especially these two derivative pullbacks, previously unfactored physical demand has driven gold roughly$400 higher.
• 13:38
  SPEAKER_01: And net of pullbacks, silver$10 higher.
• 13:43
  SPEAKER_01: And as the COT reports uh showed, swap dealers have been adding short supply against a large fast money tail of speculative naked longs.
• 13:54
  SPEAKER_01: So in our last episode, we cautioned that a house controlled washout would be both necessary and constructive to prevent an even larger cell ignition event.
• 14:04
  SPEAKER_01: Indeed, that's what we've had.
• 14:07
  SPEAKER_01: And it's constructive.
• 14:08
  SPEAKER_01: Walsh's targeted reduction of leverage long positioning at the end of August was more than sufficient to remove all of the speculative, long speculative froth, and really the what is really essentially the prevailing leverage spec excesses.
• 14:27
  SPEAKER_01: During this entire period, commercials exposed to T plus one delivery obligations, substantial Shanghai physical deliverable premiums, so had to secure lower cost T plus one deliverable London spot positions in order to meet these deliveries.
• 14:46
  SPEAKER_01: And here's the perfect example is that yesterday, after the pit closed, this is the COT cutoff, which you won't get till next Friday.
• 14:56
  SPEAKER_01: The report won't be published till next Friday.
• 14:59
  SPEAKER_01: But essentially, this note that the minute that fixed into the access market, into the thinnest market conditions, then the sellers came in.
• 15:09
  SPEAKER_01: But what they were forced to buy back because at the AM fix, there was T plus one delivery obligations.
• 15:15
  SPEAKER_01: At the PM fix, there was T plus one delivery obligations.
• 15:19
  SPEAKER_01: Then we had Bessent come out and issue his first six billion of, in other words, it wasn't eight, it was six, so there was a sell-off.
• 15:28
  SPEAKER_01: In fact, any news, no matter what, any news event is always a trigger to try and sell gold in the derivative markets.
• 15:36
  SPEAKER_01: The only difference is now the physical buyers are jumping all over it.
• 15:40
  SPEAKER_01: The HAU premium is actually forcing uh the an arbitrage and forcing these uh dealers to actually go long.
• 15:50
  SPEAKER_01: Now we'll take a quick look at the COT report, the current COT report, because this one won't be published until Friday.
• 15:58
  SPEAKER_01: But essentially, look at this um$298 sell-off in gold futures and in silver.
• 16:07
  SPEAKER_01: We look at the essentially$4.10 sell-off between reports.
• 16:13
  SPEAKER_01: It was no surprise that the latest COT report, which is still the current one, evidenced the same insiders going long against the specs.
• 16:22
  SPEAKER_01: What more proof do you need?
• 16:25
  SPEAKER_01: So, here in the previous report on the 25th of August, we talked about the commercials going short.
• 16:33
  SPEAKER_01: Then, what do they do?
• 16:35
  SPEAKER_01: They, into this$298 move lower, they went long, covered shorts, went long and net long 11,598 lots.
• 16:46
  SPEAKER_01: And while they were able to hide their footprints a little more in silver, essentially you could see that this reduction of open interest was simply the specs getting rinsed, and the same insiders going long against those specs.
• 17:02
  SPEAKER_01: But in plain vanilla terms, both metals showed constructive de-risk structures.
• 17:07
  SPEAKER_01: These structures significantly improved after the spec wrong footing following non-farm payrolls, which of course is not yet captured in this report, deliberately delayed report.
• 17:20
  SPEAKER_01: And while the footprints we've trailed since non-farm payrolls have been deliberately withheld for a full week until Friday the 11th, it's clear that gold retains the stronger established long bias, while silver is more lightly positioned and therefore offers a greater catch-up potential.
• 17:36
  SPEAKER_01: The decline in open interest following non-farm payrolls were proved to have seen the commercials exposed to the large SGE premiums further long against the capitulating spec longs and further improving the structure.
• 17:52
  SPEAKER_01: It's pretty likely that the principal near-term risk is to the spec shorts, while the opportunity is a re-expansion of open interest to be led by fresh silver longs.
• 18:05
  SPEAKER_01: Now, Friday's subsequent non-farm payrolls-driven speculative liquidation occurred against a backdrop of unwavering SGE premiums, produced a similar outcome.
• 18:17
  SPEAKER_01: It further reduced leverage long exposure while leaving reactive short positions adversely positioned.
• 18:23
  SPEAKER_01: Now, commercials exposed to this significant arbitrage dislocation between deliverable HAU and underpriced unallocated FX Spot were subsequently compelled to recover.
• 18:36
  SPEAKER_01: And we see that, you know, that's going to happen again.
• 18:40
  SPEAKER_01: As I say, here we are on Wednesday.
• 18:43
  SPEAKER_01: And this is where we essentially basically, this is where the sell-off occurred ahead of Wednesday.
• 18:51
  SPEAKER_01: I've just expanded that out so you can see the two fixes here pretty close.
• 18:56
  SPEAKER_01: Then this is where the COT cutoff was, which is when the pit closed.
• 19:00
  SPEAKER_01: Now, who in their right mind is going to start dumping a lot of synthetic gold?
• 19:05
  SPEAKER_01: Literally, nobody is selling any physical gold.
• 19:09
  SPEAKER_01: Who would sell gold in thin access market conditions?
• 19:13
  SPEAKER_01: So what they were doing is there was an attempt to exploit the thin liquidity access market conditions.
• 19:20
  SPEAKER_01: And although spot gold remained capped near 4400, reportedly, this morning, reportedly around actually a large European foreign exchange options expiry ahead of CPI on Friday.
• 19:35
  SPEAKER_01: However, the attempt to chart paint the spot adjusted 100-day moving average, which is here, because we're looking at a futures chart, we always spot adjust that figure because it's the spot levels that are most important, that ran into very large institutional-sized bids, triggering short covering and a surge again in T plus one, buying ahead of today's 4400 capped AM fix and capped PM fix.
• 20:03
  SPEAKER_01: Silver also fixed higher again today and looks ready to lead gold higher.
• 20:10
  SPEAKER_01: Liquidity providers view this cap level as a very strong physically driven support, with no speculative longs on board to rinse, dips below 4,400 spot are viewed as bargain territory.
• 20:24
  SPEAKER_01: And this is the spot contract that trades alongside the futures contract, which is a December contract, therefore trades at a premium.
• 20:34
  SPEAKER_01: Futures found support on its next higher stair step, and the next higher stair step is coming.
• 20:40
  SPEAKER_01: And as we can see, the short-term action is just noise into a physically driven bull trend, hiding the breakdown in gold to real yield correlations.
• 20:53
  SPEAKER_01: Now, historically, rising real yields pressured gold sharply lower.
• 20:59
  SPEAKER_01: But since 2022, gold has advanced despite elevated yields, and it has responded disproportionately when yields fall.
• 21:09
  SPEAKER_01: Now, the resilience reflects stronger central bank demand, reserve diversification, a fiscal risk and gold's growing role as a portfolio hedge.
• 21:24
  SPEAKER_01: Now, the implication for gold is asymmetric upside.
• 21:30
  SPEAKER_01: Higher real yields now generated limited downside, while any meaningful decline in yields will serve to accelerate the gold rally.
• 21:39
  SPEAKER_01: It's a win win situation, never been experienced before.
• 21:43
  SPEAKER_01: And before the dollar was weaponized against Russia in March 2022, a one percentage point in US real yields implied a 14% fall in gold.
• 21:54
  SPEAKER_01: Yet from March 2022 to October 2023, for example, five years.
• 22:00
  SPEAKER_01: Real yields rose by four over four percent, actually more than four percent.
• 22:06
  SPEAKER_01: But the historical model would have been so that would have implied a 55% decline, as we would have seen uh historically.
• 22:16
  SPEAKER_01: Whereas instead, gold gained 7% into rising yields.
• 22:22
  SPEAKER_01: This is a huge, this is so many, the mainstream analysts are ignoring this.
• 22:29
  SPEAKER_01: I mean, dollar weaponization definitely played a part, um, but it was actually physical gold's Basel III first-tier asset reclassification that enabled the largest central bank and sovereign inflows to take place.
• 22:45
  SPEAKER_01: Now, over the following two years, yields fell by less than 1%, and gold surged 110%.
• 22:56
  SPEAKER_01: I mean, goodness me, uh you think mainstream would have picked up some of these divergences.
• 23:03
  SPEAKER_01: The divergence remains absolutely visible.
• 23:07
  SPEAKER_01: As of the 1st of September of this year, a few days ago, the US five-year real yield was still a restrictive 2.18%, while spot gold remained around 4,400.
• 23:23
  SPEAKER_01: And approximately, that's approximately 25% higher year over year.
• 23:29
  SPEAKER_01: Now, this is gold as a share of central bank reserves, and this reveals that the emerging market central banks are not, they're not price sensitive and are still have ample room to raise their gold allocations.
• 23:45
  SPEAKER_01: High positive real yields have triggered short-term bouts of knee-jerk inverse mechanical correlations to the downside, but not a breakdown in the structural bull trend.
• 23:57
  SPEAKER_01: And meanwhile, the official floor remains powerful, very powerful.
• 24:03
  SPEAKER_01: 89% of central banks surveyed in 2026 so far expect global gold reserves to rise over the next 12 months.
• 24:12
  SPEAKER_01: 84% expect gold reserve shares to be higher in the five years to follow, and 74% expect dollars share to decline.
• 24:22
  SPEAKER_01: Physical supply is simply insufficient to satisfy the market at current prices.
• 24:29
  SPEAKER_01: Institutional demand continues to rise while mine supply remains inelastic, and recycling is limited.
• 24:37
  SPEAKER_01: As strategic buyers secure physical metal as a long-term hedge against currency debasement rather than trading it back into the market as a trade, the available float has become too limited to meet an overhang of physical demand at prevailing prices, that is.
• 24:56
  SPEAKER_01: Sellers are therefore demanding higher prices to put bullion on offer, forcing the market to rebalance through higher prices.
• 25:05
  SPEAKER_00: All right, Andrew, you had mentioned that the battle of derivative goal whales.
• 25:09
  SPEAKER_00: This is interesting.
• 25:10
  SPEAKER_00: Can you share what your market intelligence has uncovered and uh what this may mean for the gold and both silver prices?
• 25:19
  SPEAKER_01: Yeah, I mean, this is perfect timing.
• 25:21
  SPEAKER_01: Um, as you say, our market intelligence reveals that the commencement of really just the commencement of a split in the once symbiotic relationship between JP Morgan and Jane Street.
• 25:36
  SPEAKER_01: And we've talked about Jane Street before and their predatory positioning.
• 25:40
  SPEAKER_01: And we're going to look at what this changing battle structure means for gold and in particular silver.
• 25:49
  SPEAKER_01: Now, while on the face of it the split is centered on bonds, this is far larger, reaching implications for paper to physical gold and silver for this battle.
• 26:01
  SPEAKER_01: JP Morgan has endured this secretive group trading in gold and silver, but has drawn the line at Jane Street encroaching on its US Treasury market making line of business.
• 26:13
  SPEAKER_01: And while this competitive relationship had symbiotic position concentration benefits, two Wales on the same side of a deal, JP Morgan appears to have tolerated Jane Street's expansion into gold and silver trading and most likely benefited from it.
• 26:31
  SPEAKER_01: Now that Jane Street is treading on JP Morgan's toes, there is little doubt the Fed's primary dealer, JP Morgan, is going to win this battle.
• 26:41
  SPEAKER_01: Now, Jane Street's encroachment into the US Treasury market makes, I mean, that is a massive franchise.
• 26:50
  SPEAKER_01: And it represents a much more direct competitive challenge.
• 26:54
  SPEAKER_01: And it really looks to have driven JP Morgan to also ring fence its very large gold and silver bets.
• 27:01
  SPEAKER_01: Let's look at the footprints heading into this battle of the trading titans.
• 27:07
  SPEAKER_01: And as we highlighted in January, around the period of silver's sharp advance and subsequent reversal, James Street's scale, concentrated position, and the access to proprietary order flow data raised legitimate concerns that its market making capacity had expanded into disproportionate influence over price formation.
• 27:32
  SPEAKER_01: That's a nice way of saying they rigged the options market on the way up and they pulled the plug on the way down.
• 27:42
  SPEAKER_01: So, I mean, we know that India's security and exchange board banned Jane Street from local securities markets, uh, alleging what a sinister scheme to manipulate cash and futures markets there in India.
• 27:59
  SPEAKER_01: Um, and they were talking about inducing retail investors to transact at unfavorable or misleading prices.
• 28:08
  SPEAKER_01: That's why they were banned.
• 28:10
  SPEAKER_01: The regulator's case centered on the uh coordinated use of cash, futures, and options positions to influence the underlying price for the benefit of synthetic exposures.
• 28:26
  SPEAKER_01: Now, comparable cross-market structures appear to be to be present in gold and silver, created the potential to impair or distort price discovery.
• 28:38
  SPEAKER_01: And I think one of those bets that we saw overnight in the uh it was a actually it was a European auction.
• 28:48
  SPEAKER_01: Um, so they and of course they're active uh in the FX markets, and it looked like that was going to expire uh on Friday into CPI.
• 28:57
  SPEAKER_01: But uh that is the intelligence we had.
• 29:01
  SPEAKER_01: But particularly notable was Jane Street's January 2026 silver positioning.
• 29:08
  SPEAKER_01: Now, across the border market on the 30th of December, silver futures and options open interest rose by 14,000 lot in just one week.
• 29:17
  SPEAKER_01: And there was it was totaling around about 238 uh 800 contracts, which was over 37 million ounces.
• 29:28
  SPEAKER_01: And that exceeded, when you think about it, one point over 1.4% of global annual supply hanging out there in the derivative market with position concentration.
• 29:43
  SPEAKER_01: Late January data then indicated substantial repositioning by that followed by bid pulled liquidation.
• 29:51
  SPEAKER_01: Now, the strongest publicly available evidence is Jane Street's options quarter-end disclosure at the 31st of December 2025, and they had a put explosure equivalent to 43.3 um million SLV shares.
• 30:10
  SPEAKER_01: I mean huge.
• 30:14
  SPEAKER_01: Um that is a call explosure, though, in total, equivalent to uh 39.5 million shares of SLV and an additional 20.6 million SLV shares held outright.
• 30:30
  SPEAKER_01: Now I know a lot of people picked up on this in the past, but in aggregate, when you think about it, gross exposure exceeded 100 million share equivalents.
• 30:41
  SPEAKER_01: That's over 3,100 tons immediately ahead of January's price liquidation.
• 30:50
  SPEAKER_01: By the end of the first quarter of 2026, they'd liquidated 57.3% of those bets.
• 30:58
  SPEAKER_01: Just looking at the data there.
• 31:00
  SPEAKER_01: Now, collectively, these figures captured an unusually large and complex concentration of silver exposure around January 2026.
• 31:10
  SPEAKER_01: And due to a lack of opacity, it would be difficult to prove directionality or manipulation, as public disclosures simply do not reveal the strikes, um, expires, counterparties, um, short-positioned or intra-dray uh trading activity, and a lot of that is often uh closed before the market uh finishes.
• 31:34
  SPEAKER_01: However, JP Morgan now views Jane Street as a direct competitor and is correspondingly defending its core market-making franchises.
• 31:45
  SPEAKER_01: But this is strategically relevant because while JP Morgan acts as a Fed agent trading bank, JP Morgan itself maintains substantial exposure to its monetary debasement trade.
• 31:58
  SPEAKER_01: I was listening to them on Bloomberg a few days ago talking about this very one strong exposure to the monetary debasement trade, including sizable proprietary positions that we know of in gold and silver, and its direct exposure to the Hong Kong SGE physical exchange architecture.
• 32:19
  SPEAKER_01: J.P.
• 32:19
  SPEAKER_01: Morgan's pushback against this highly capitalized competitor cuts liquidity, reducing its capacity of deploying cross-asset options order flow advantages across precious metals and US treasuries.
• 32:36
  SPEAKER_01: They're cutting them off other knees.
• 32:39
  SPEAKER_01: Market intelligence from a well-connected liquidity provider suggests it's likely the call writer attempting to cap prices into quarterfall options expiry.
• 32:51
  SPEAKER_01: Now, with JP Morgan now openly adding to an already substantial long gold book, Jane Street is firmly in its crosshairs, forcing Jane Street to buy gold and silver futures as prices rise, forcing them to Delta Hedge is leverage short call exposure.
• 33:11
  SPEAKER_01: Now the next level to overcome um uh of their cause um we are somewhere between 4,500 and 4600.
• 33:23
  SPEAKER_01: And above that, that is uh potentially a self-reinforcing short squeeze um would then ensue above that level.
• 33:38
  SPEAKER_01: Um and so they are vulnerable to that.
• 33:41
  SPEAKER_01: And and you've got a whale on the other side of that trade who would benefit from that, and that would force higher prices, triggering more hedge buying, forced hedge uh buying, and a renewed cycle of upside pressure.
• 33:56
  SPEAKER_01: So in silver futures, their breakpoint looks to be about 75 bucks, above which we figure it's probably blue sky to 100, because they're gonna be forced to do a massive uh short covering.
• 34:12
  SPEAKER_01: So this is another large crack um in developing in what is the legacy uh uh market paper to physical battle.
• 34:22
  SPEAKER_01: And as far as its effect on gold and silver is concerned, it is going unnoticed so far.
• 34:30
  SPEAKER_00: All right, Andrew, what are you observing in the short term?
• 34:33
  SPEAKER_00: This is one of the most asked questions that we get there in the in the chat there.
• 34:39
  SPEAKER_01: Yes, that's true.
• 34:40
  SPEAKER_01: And and I I understand that you know there's a lot of traders that want to look at this kind of information.
• 34:45
  SPEAKER_01: But I think really um also it's important to understand the bigger picture, too.
• 34:51
  SPEAKER_01: And I mean, I just want to jump through.
• 34:53
  SPEAKER_01: I mean, uh where do I put the?
• 34:55
  SPEAKER_01: I mean, I can pick way more.
• 34:57
  SPEAKER_01: I can I'm just gonna jump through a sequence of bullish physical drivers, which are key to weakening um the very visible and increasingly vulnerable synthetic derivative bets currently seeking to cap gold and silver from breaking out.
• 35:13
  SPEAKER_01: Now, just as was predicted, extending the PPOC's officially disclosed 22nd consecutive gold debasement trade buying streak, August gold buying at 20.2 tons, over 20.2 tons, exceeded July's record intakes, but do not come close to touching unreported monetary gold accumulations.
• 35:36
  SPEAKER_01: If you remember last time we said it's going to be bigger, and it has been, but it doesn't come close to capturing the monetary gold accumulations.
• 35:45
  SPEAKER_01: These sequential declared additions are dwarfed by credible estimates that China has accumulated vastly larger unreported monetary gold reserves in aggregate of about 60,000 tons.
• 36:00
  SPEAKER_01: And in that context, July's 19.9 tons and August's 20.2 tons should be read as just a public-facing signal.
• 36:10
  SPEAKER_01: They're not hiding this anymore of a much broader shortage, as well, strategy really, and creating a shortage of bullion uh around the globe.
• 36:21
  SPEAKER_01: But it's a it's a much broader strategy to deepen the Yuan's credibility, reduce reliance on dollar assets, and anchor China's monetary system to physical gold.
• 36:33
  SPEAKER_01: And given current threats by Bescent, and we talked to that last time, and there was warning any country trading with Iran faces expulsion from the dollar system.
• 36:44
  SPEAKER_01: Well, China is, Russia is, many, India is.
• 36:47
  SPEAKER_01: I mean, watch the buying expand through the last quarter.
• 36:51
  SPEAKER_01: You can't stop it.
• 36:53
  SPEAKER_01: And as we drew attention to in our last episode, and it's worth underscoring that it is the previously unavailable mainland gold integration integration through the S3 SGE delivery connect uh system, which we talked about last time.
• 37:11
  SPEAKER_01: That's what gives Hong Kong direct access to Shanghai's physical gold ecosystem.
• 37:17
  SPEAKER_01: And ultimately, it's substantial 60,000 tons of underlying liquidity that can be collateralized.
• 37:26
  SPEAKER_01: Now, by tightly integrating Hong Kong with mainland physical flows, this framework materially strengthens the credibility of the physical, physical deliverable HAU, this running contract.
• 37:39
  SPEAKER_01: It's not a single fix, it's a running contract that can be delivered.
• 37:43
  SPEAKER_01: And but when it comes to the fixed hour for the for the uh for the for the LBMA's fixed hour, that price is relevant.
• 37:52
  SPEAKER_01: And and especially as it's trading at a premium.
• 37:55
  SPEAKER_01: Um because that's a true supply-demand benchmark.
• 37:58
  SPEAKER_01: It's just not, it's not just another financialized contract price.
• 38:03
  SPEAKER_01: And that distinction is absolutely critical.
• 38:06
  SPEAKER_01: The LBMA's parallel over-the-counter FX gold market remains just a financialized, unallocated, unregulated, um, cash-settled structure, really, with only a weak connection to real physical supply and demand.
• 38:23
  SPEAKER_01: And here's the kicker: it is being arbitraged.
• 38:27
  SPEAKER_01: And I think this is just not being realized.
• 38:32
  SPEAKER_01: It's sucking 400-ounce bars out of Western vaults, which is exposing the extent of ETF rehypothecations.
• 38:41
  SPEAKER_01: And we looked at ETF rehypothecations last time, and now given the additional 10 tons of gold swaps undertaken by the Fed during the$500 higher, Bank of International Settlements closing price from end of July to end of August.
• 38:56
  SPEAKER_01: Remember, they end of July, they settled uh uh at a price, and at the end of August, it was$500 higher.
• 39:04
  SPEAKER_01: So they borrowed 10 tons into that process.
• 39:07
  SPEAKER_01: Where did that come from?
• 39:08
  SPEAKER_01: It certainly didn't come out of London.
• 39:10
  SPEAKER_01: That had to have come by borrowing ETF gold.
• 39:15
  SPEAKER_01: And it really suggests that um it's almost certain that uh that some form of double counting has shifted into the ETFs.
• 39:27
  SPEAKER_01: We kind of looked at it in more detail last time.
• 39:29
  SPEAKER_01: If you missed it, have a look.
• 39:30
  SPEAKER_01: But the latest round of US sanctions uh and to date, there are seven suspensions of Chinese LBMA members, and that's already backfiring.
• 39:43
  SPEAKER_01: It reinforcing the shift, increasing the appeal of Hong Kong vaulting and SGE link delivery channels for affected Chinese refiners and miners alongside Western entities, all unsanctioned.
• 39:58
  SPEAKER_01: The process is structural and impossible to ignore.
• 40:02
  SPEAKER_01: Just four weeks after its official launch, Hong Kong is building the rails to pull global bullion flow east, with clearing, vaulting, and delivery uh infrastructure, giving Asia more control over the physical price discovery day by day.
• 40:21
  SPEAKER_01: Western paper complex uh sanctioned weaponization is just simply feeding this process.
• 40:29
  SPEAKER_01: Now, there are many other bullish gold drivers abounding.
• 40:33
  SPEAKER_01: So the world's biggest money managers have rebuilt their gold holdings.
• 40:38
  SPEAKER_01: Here we also got a Bloomberg piece summing up why gold's plumbing is important.
• 40:43
  SPEAKER_01: And actually, this is a lesson for everyone from a stacker or a whale.
• 40:48
  SPEAKER_01: Understanding gold's safe haven plumbing means knowing where the metal is held, who controls it, and whether it can be accessed during a crisis.
• 40:59
  SPEAKER_01: Gold's only provides genuine protection if ownership is clear, custody is secure, and delivery is reliable.
• 41:10
  SPEAKER_01: These mechanics expose counterparty jurisdictional and liquidity risks that may remain hidden in normal markets, making physical location and access as important as price itself.
• 41:27
  SPEAKER_01: Now, the key distinction that leverage derivative selling can dictate price in the short term, um yes, of course, it can, but it cannot negate the underlying bullish flow.
• 41:43
  SPEAKER_01: Unleveraged sovereign uh central bank and Asian physical buyers are using the underpriced paper-driven sell-offs to accumulate metal at a discount.
• 41:53
  SPEAKER_01: And why wouldn't you?
• 41:55
  SPEAKER_01: The bearish effect is therefore tactical and temporary.
• 41:59
  SPEAKER_01: Exposure is being transferred from leveraged weak hands to unleveraged strong hands, ultimately reinforcing the bullish structure even more.
• 42:09
  SPEAKER_01: I mean, technicals still matter, but the dominant signal is structural.
• 42:15
  SPEAKER_01: Hong Kong is building the infrastructure to draw this bullion flow into the East with expanded, and it's got the clearing architecture, the vaulting, the delivery capacity, and it's given Asia greater control of physical price discovery.
• 42:30
  SPEAKER_01: So legacy technical models anchored to these historical derivative-driven pricing um uh models do not capture this structural shift, even down to the point where the the the rinse of the 200-day moving average that we saw into Walsh and non-farm payrolls, knee-jerked people looking back at historicals and not realizing that what you're doing is actually capitulating and empowering the um legacy market, the legacy paper market when you could hold tight or stack.
• 43:11
  SPEAKER_01: So, from a physical supply and demand perspective, the lag between mispriced leverage selling and powerful unleveraged underlying demand creates an opportunity to exchange a limitless, dilutive supply of debt-based dollars, pounds, euros for a finite supply of deeply underpriced safe haven bullion.
• 43:38
  SPEAKER_01: The shift is bullish, raising the floor under gold and increasing the risk of a sharp upside repricing as paper shorts are forced to respond to physical scarcity.
• 43:50
  SPEAKER_01: And as we have just discerned into the early September action, especially with some options-related dealer positioning still leaning short.
• 44:01
  SPEAKER_01: So let's look at the footprints.
• 44:04
  SPEAKER_01: Again, recording this on Wednesday the 9th for publication tomorrow.
• 44:09
  SPEAKER_01: Bottom line: just four weeks after the launch, Hong Kong SGE physical price discovery is steadily overriding legacy paper market signals.
• 44:20
  SPEAKER_01: Synthetically driven dips into arbitrable, liquid, deliverable HAU, LBMA disconnects exposes the dilution and the and which is embedded in loco London pricing.
• 44:34
  SPEAKER_01: For traders, the pullbacks remain tactile entries.
• 44:38
  SPEAKER_01: And for investors, the structural repricing thesis is actually strengthening.
• 44:43
  SPEAKER_01: In this framework, quarter four targets near$8,000 gold, and in silver at$140, minimum 100.
• 44:56
  SPEAKER_01: These are not outliers, they're potential clearing prices for a market increasingly anchored to physical supply and demand.
• 45:06
  SPEAKER_01: And silver enjoys the benefit of that too.
• 45:10
  SPEAKER_01: So the only remaining question for our faithful stackers are you positioning alongside every central bank, sovereign whale, and global stacker, ditching mispriced fierce debt for physical gold and silver before this debt bubble implodes.
• 45:32
  SPEAKER_00: All right, that wraps up another episode of Live from the Vault, brought to you by Kinesis Money.
• 45:37
  SPEAKER_00: And a big thank you to Andrew McGuire for sharing his deep market knowledge, and also to you for tuning in and being a part of this growing global community.
• 45:47
  SPEAKER_00: Uh, if you if you're new here, uh just make sure that you hit that subscribe button right there, tap on the bell uh so that you never miss out and you know when this show goes live here.
• 45:58
  SPEAKER_00: And if you've been with us a while, help us keep spreading the word uh and give us a like.
• 46:04
  SPEAKER_00: Hit that like button right now, share this episode with someone who really needs to hear uh this information and get your questions into Andrew McGuire.
• 46:12
  SPEAKER_00: Keep them coming in, and you know, you never know your question may well be selected for the next episode right here on Live from the Vault.
• 46:20
  SPEAKER_00: And with that, we'll be back next week with more truth that you just won't find in the mainstream media.
• 46:26
  SPEAKER_00: And until then, remember buy physical, make sure it's backed one to one, and we'll see you next time right here on Live from the Vault.
• 46:34
  SPEAKER_00: Bye for now, you're