Guest Post: "The Death Of The Gold Market", by Paul Mylchreest

Sun, May 8, 2016 - 11:11am

Our friend, Paul Mychresst, has written this extraordinarily comprehensive report on the current state of the global gold "market". His timing couldn't be better. As price holds firm against the extreme efforts of The Bullion Banks, it is absolutely critical that you take the time to read this tremendous summary of the current situation.

As you've often heard me state, the global gold "market" is much more vast than the Comex-centric analysts would have you believe. There are literally hundreds of moving parts that affect price...and the price "discovered" on the Comex has no direct relationship to physical supply/demand fundamentals.

This new piece from Paul Mylchreest is the sort of thing I would have loved to have written myself...if I had the time and expertise to do it! With Bullion Bank leverage soaring to extreme levels and paper obligations to deliver gold reaching heights unseen for years, it is CRITICAL that you take the time to read through this report.

Mylchreest Gold London Bullion by zerohedge

Additionally, NOW would be an excellent time to re-watch this exceptional presentation from another one of our friends, Grant Williams. Though originally posted in early January, many of the themes Grant discusses are still relevant four months later. PAY PARTICULAR ATTENTION to the information presented at the 20:00 mark and forward. I've grabbed screenshots so that you're sure not to miss them. In 2015, the cumulative allocation of global pension fund assets to gold and gold-related securities was only 0.15%. If that were to double to just 0.3%, the effects upon gold, the gold ETFs and the mining shares would be historic.

Now consider that, in this environment, The Banks are already on the run. As we learned a few weeks ago, the Central Banks are no longer providing unlimited amounts of gold to The Bullion Banks for the management of price. Without this supply, The Banks are desperately working to cover and manage all of their outstanding lease arrangements as well as meet the global demand for physical metal. We've often referred to this is living off of "flow" instead of "stock". The Bullion Banks manage the global physical gold market in much the same way your supermarket manages its inventory. Namely, with "just in time" delivery. So what happens at the first delivery failure...when the music stops and there's a sudden scramble for chairs?

And this is what the Banks on the Comex (The Bullion Banks for those too obtuse to otherwise understand) recognize and this is why they are so desperately doubling down and adding to their record short positions at present. Having been left to their own devices by the Central Banks, the Bullion Banks are left with no choice but to put "good money after bad" in the hopes of exhausting Spec demand and reversing price lower.

As of the most recent Commitment of Traders report, the gold "Commercials" were net short 295,000 Comex contracts. Again, that's NET. On a a gross basis, it's 411,545 contracts! But even on the NET basis, that short position is equivalent to nearly 30,000,000 ounces of gold. Therefore, every $10 move in price generates an additional paper loss of $300,000,000. Doing the math, a $100 move generates additional losses of $3,000,000,000! And this is just one reason why The Banks are so desperate to contain price here.

The other is the physical situation described by Paul Mylchreest. In "the west", investors only seem to value items that are moving up in price. Assets that are falling in price are considered dead money and "pet rocks". However, as prices rise, western investors seemingly want more and more. Therefore, a rising price...a price allowed to move through $1300 and $1400...would only exacerbate the physical situation for The Banks. And, as laid out here daily, it is the physical market that will ultimately bring about the demise of the Bullion Bank Paper Derivative Pricing Scheme.

Putting this all together, you can now see the urgency behind this rare Sunday morning post. The Banks (on the Comex and in London) are doing everything they can to stymie this rally as they realize the very real and existential threat that it poses. Will they win and will they survive? I suppose that depends upon just many folks learn of this struggle that is unfolding behind the scenes. At TFMR, we're glad to do our part to bring these issues to everyone's attention and we are extraordinarily grateful for the efforts of good folks like Paul Mylchreest and Grant Williams in aiding the cause.


About the Author

turd [at] tfmetalsreport [dot] com ()


Royal Flush
May 8, 2016 - 11:45am

1st ?


arch stanton
May 8, 2016 - 11:55am

slow day

in Turdistan?

May 8, 2016 - 11:57am

We think alike. I sent my son

We think alike. I sent my son the GATA REPORT and the video "no one cares". Are you a genius?

May 8, 2016 - 12:10pm

4 Marchas

Just finished reading it. Great read, and reassuring lol.

May 8, 2016 - 12:15pm


slow and easy

May 8, 2016 - 12:15pm

As you read this

Please be sure to pay attention to page 25 and the discussion of the DB settlement. Then consider again the idiotic and amateurish commentary that continues to label the settlement and ongoing investigation as "meaningless" and "a nuisance".

May 8, 2016 - 1:06pm

The spark

I never thought about investing in gold/silver....not even having a brokerage account. Until one day in 2008 financial crisis I read an article of Bill Fleckenstein where he mention two things:

1. Money printing by the gov....for decades,

2. That gold have many enemies...powerful enemies.

An that was the spark for me.

Edited. What puzzles me now that he ( mentor) ...still doesn't accept market manipulation.

Powerful enemies (read gov.)...keeping their hands off the cookies jar?...How is that possible?

Fred Hayek
May 8, 2016 - 1:50pm

excellent stuff by Mr. Mylchreest

Of course, the one place he didn't really go is . . what's to stop these despicable central banks from selling their nations' sovereign owned gold into the market to keep the game going longer if that's the only gold available? Or, even more likely, what's to stop the despicable central bank of Nation X from selling that gold it holds of Nation Y into the market to help kick the can a little longer? How would we know if such a thing was happening? Well, one corroboration of it would be if a nation with a large stock of gold such as, oh, Germany, asked for its gold back and then had to accept an absurdly long wait to get even a portion of it back and when it got it the bars weren't the same ones.

May 8, 2016 - 2:43pm

Boy I Missed

This One. Thanks Dirt_Reynolds. Keep Stacking

One heck of a long read but only got up to page 26 as I'm a listener not a reader. But this blew my mind,

"If we take the February 2016 monthly number of ounces transferred of 21.1m – multiply by 8.9, then multiply by 95% (for unallocated proportion of the total), then multiply by the aver-age gold price (US$1,232.07/oz.),

we get US$219.8bn of trading. Dividing by two gives US$109.9bn-

which is still comfortably over US$100bn of “gold” which has been bought in London each day."

AIJ Fred Hayek
May 8, 2016 - 2:51pm

Fred Hayek / Central Bank Gold

FH, Since there is no honor among thieves, venial, avarice pettifoggery would prevent each central bank from taking the bait and selling the rest of their own countries gold.

That and being afraid of the pitch fork crowd.

May 8, 2016 - 3:12pm

Awesome---Here's a thought

Become your own central bank

I notice he started with a quote from the proponent of "Freegold"

And on a sad note for Canada, Silver66 has more gold reserves then the country. Great for me and sad for the Country.But then again if you have 1 F@#kin ounce, then you have more then Canada !!


May 8, 2016 - 3:17pm

Grant WIlliams

at the 20 minute mark Grant demonstrates a hypothetical pension fund with 100 billion to spend can buy up so much. It just blows my mind. Everything related to gold is so undervalued its crazy!!!!!!!!!!!!

May 8, 2016 - 3:54pm

The Buffoon Bob Moriarty

Thanks to markedtothefuture for stopping by the KEReport thread.

I had to email this link to Cory and Al anyway but I thought I'd add the following so that they're sure to understand what a lying, disingenuous jerkwad this Moriarty is:

"Sorry to see your thread soiled by this buffoon. I saw that he's taken my article completely out of context and then spun it to make himself look brilliant. Only the truly obtuse would think that, by referring to the "Comex Banks", I'm somehow inferring that The Comex is a bank and not a futures exchange. Sad, trollish behavior from someone who used to be respected within the gold community."

May 8, 2016 - 4:02pm

What Mylchrest failed to mention-

That all his cited charts and reports and processes have no connection whatsoever to the price displayed on the gold chart.

This article is Psyops-prep the-minds-for-the-giant-false-flag-on-the-horizon-Deluxe.

May 8, 2016 - 4:03pm

Fred...or anyone else

I have a question, and I'm sorry if it's dumb! Why does a country hold gold for another country in the first place? For example, why does America hold Germany's gold? Thanks so much!

May 8, 2016 - 4:11pm

Thought I'd share.......................

Watching now..........

EPIC Silver Debate! Bull vs Bear: Gary Christenson & David Trungale
James Crighton Maryann
May 8, 2016 - 4:13pm


Supposedly for protection.

(what a joke, eh!)


J Siefert
May 8, 2016 - 4:13pm

@ Maryann

Put it this way if Libya had held its gold in China (or Russia), the US and EU would not have bombed the country and may well have not killed Gaddafi.

amarula4 canary
May 8, 2016 - 4:17pm

@The spark Submitted by canary - Fleckenstein

does not want the fight - he knows it is going on, Doug Casey knows it is going on, they are not going to slug it out until the next big gold market rigging break (last one in 1968, the London Gold Pool was drained)...just carry on and stack physical / invest wisely is their style...

May 8, 2016 - 4:21pm

Fred...or anyone else

LOL, tradition!

The Bernak, July 13, 2011

Or the government is a thief?

Or other governments are suckers?

May 8, 2016 - 4:24pm


But Edwards concludes by setting the scene for what is to come...

Let me tell you how all this ends.

It ends with investors accepting that they can pretend no longer and profits are sliding into recession.

It ends as the equity market spirals into a deep bear market as company management reach the end of the road in the face of the recessionary conditions and 'kitchen sink' years of EPS manipulation.

It ends as corporate bond spreads explode as years of excess debt accumulation lead to widespread corporate bankruptcies, making the recession much deeper.

It ends with social unrest and double digit budget deficits (again).

It ends with investors losing faith with the Fed as the resumption of QE proves ineffective in reviving the economy.

It ends in deeply negative interest rates, currency and trade wars, helicopter money and ultimately inflation.

In a nutshell, it ends badly.

May 8, 2016 - 4:26pm

Danny B

Bank stocks, Druckenmiller, Martensen

In the '60s, the CBs tried to control the price of gold. in 1968, the London Gold pool crashed because it didn't have enough physical gold for the few who took delivery. The LBMA is another attempt to control the price of gold. London is just about OUT of gold,,, again. There are over 300 owners for every bar of gold. "There is more than US$200 Billion of trading every day in unallocated (paper) gold." BUT, the gold just isn't there.

• World Corporate Debt Far Exceeds Pre-Lehman Financial Bubble (IBT)
• Warnings Mount On World’s Corporate Debt, China Crisis (AEP)
• China Commodities Selloff Deepens, Steel Has Worst Week Since 2009 (R.) No buyers.
• UK Stores Post Steepest Sales Decline Since Financial Crisis (BBG) No buyers
• When Wall Street and Washington Got in Bed Together (Arnade) Fascism at it's best
• The Emerging Markets Recovery Looks Fragile (Economist) No kidding,,, Venezuela and Brazil are just one step away from revolution. China is staring into the abyss.

Japan’s Topix Bank Stock Index sank 4.6%, with a two-week decline of 12.8% (down 32.5% y-t-d). The Topix Bank Stock index traded at 250 last summer and closed Friday at 140.
Hong Kong’s Hang Seng Financial Index fell 5.0%, with a two-week decline of 7.6%.
European bank stocks (STOXX) dropped 5.0% this week, increasing y-t-d losses to 22.2%. Italian banks were hammered 9.0%, boosting two-week declines to 10.8%. Italian bank stocks have lost 35% of their value already in 2016.
The Banks (BKX) dropped 3.2%, boosting 2016 losses to 8.4%. The broker/dealers (XBD) sank 3.5%, increasing two-week losses to 8.8% (down 12.2%). Leading on the downside, Citigroup dropped a notable 4.6% this week (down 14.3%), with Bank of America down 3.4% (16.3%), JPMorgan 2.9% (6.8%), and Goldman Sachs 3.3% (11.9%).
"As I have written repeatedly, I believe the global Bubble has been pierced. My view is that the world is in the initial stages of what will be a protracted bear market (at best)"
Credit Bubble Bulletin: Weekly Commentary: Inflection Point for EM

"hedge fund legend Stan Druckenmiller spoke" "most illustrious investing minds of any generation (with a 30% average return from 1986 through 2010) "
For Stan Druckenmiller This Is "The Endgame" - His Full 'Apocalyptic' Presentation | Zero Hedge

Chris Martensen;
"The economy no longer spins off enough surplus for the elites to take what they consider their share with enough left over for everyone else. So the wealth gap grows unchecked into politically and socially destabilizing levels."
"Those of us who can read the signs for what they are, not what we wish or believe them to be, have a special duty to first prepare ourselves for what's coming and then help others. To put on our own oxygen masks first, and then help the others around us.

For a variety of reasons, most of them rooted in archaic evolutionary brain structures, most humans are not well adapted to face change, let alone major change."
Chaos & Volatility On The Rise | Peak Prosperity

Just imagine if everybody tried to take up farming?? In the '30s, fifty% of Americans worked on the farm. Mechanization and automation displaced them. Manufacturing opened up LOTS of good paying jobs. In the last few decades, mechanization and automation have once again displaced workers. We have to employ all the displaced workers OR, they have to revert to the agrarian economy.
"There were 81,410,000 families in the United States in 2015. Of those, there were 16,060,000 families in which no member was employed, or 19.7 percent of the total."

Read more: Blog: No one works in 20% of US families
51% of Americans receive a check from GOV. Much of this is for make-work like building jet planes that can't fly. What happens to all these people if GOV goes insolvent? If / when the U.S. dollar is rejected for foreign trade, what happens to our imports. YES, U.S. GOV can print unlimited dollars BUT, it can't force foreigners to take them.

May 8, 2016 - 4:36pm

No way...

A plethora of fully stuff..

Sorry, It's been too serious here lately.....

5h5 hours ago

Sleep well sweet prince.

May 4

Why women live longer than men.

May 8, 2016 - 4:37pm

"Comex Banks"

Well they do conjure money out of thin air, like banks and do reportedly hold bullion, which is in turn fractionated, like banks. So, that isn't far off the mark.

May 8, 2016 - 5:04pm


Do you think that by reading and understanding what he laid out there that you might reach the conclusion that gold prices just might be suspect? It's not too far a reach! Give someone a break once in awhile.

Royal Flush
May 8, 2016 - 5:21pm

@ J Siefert

@ J Siefert - you forgot to mention the part where he was selling his countries oil for gold instead of US dollars. The criminals in this country just cant have that!

Angry Chef
May 8, 2016 - 5:24pm

For Safety Dan !!!

Well, aren't you hanging out with some pretty gawdy company.

"PhD., a nuclear chemist, geochemist, and cosmochemist – most noted for deducing the composition of the inner core of Earth as being nickel silicide, not partially crystallized nickel-iron metal

May 8, 2016 - 5:25pm

@amarula4.....I agree

I would add, that on few occasions when they couldn't find a logical explanation (saying that "markets are irrational sometimes"), my impression was that their egos was to blame......They're a smart cookies after all.

Royal Flush
May 8, 2016 - 5:47pm

4 1/2 hours.

four and a half hours till Shanghai opens. Forever optimistic! rofl :P

May 8, 2016 - 5:48pm

Scroll fwd to 13 min mark for viewpoint at odds with Turdville,

ZeroHedge, etc.

(no idea why this was attached to Chris Hedges presentation)

Video unavailable


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