Date: February 15, 2025Author: Editor, cairnsnews 11 Comments
“WE all know that the financial system is, as some people would say, it’s been cooked,” US gold trader, Josh Phair, CEO of Scottsdale Mint, said recently on the precious metals site Kitco News.
Phair was attempting to explain the recent massive moves of gold from London to New York, as the precious metal repeatedly broke it’s all-time highs, reaching $USD2942.79 an ounce or $AUD4631.36/oz. Physical gold delivery times in London blew out around a month.
Mainstream media channels cited the Trump administrations threats of tariffs as the reason for the boom in demand coming out of New York, whose COMEX metals exchange is notorious for trading “paper gold”, i.e. gold futures contracts and other derivatives that have historically suppressed the physical gold price.
Another factor suppressing gold has been the frantic Bitcoin and wider cybercurrency market that has skyrocketed in recent times. Bitcoin recently topped around $USD109,000, which critics say is insane, given that it is essentially a mere digital entity.
Defenders say it is a unit of currency fixed in number, traded person-to-person and outside the control of central banks, and therefore cannot be inflated like paper currencies and lose its value.
Phair told Kitco the goal of traders was “to get all the metal stateside” while banks were trying to minimize risk by ensuring their holdings were within U.S. borders. This had led to the surge in shipments to the COMEX exchange, where inventories were up nearly 75% since the US election.
Phair also believe the new administration might want to conduct a gold audit of U.S. reserves. “Maybe… someone gets the heads up that they need to make sure there’s an audit, and they want more material here?” He said the new Treasury Secretary Scott Bessent might also favor a larger role for gold in monetary policy.
Meanwhile BRICS nations’ banks, primarily China and Russia, are reported to be running short of gold. Chinese news agency Yicai reports that the trading app of Industrial and Commercial Bank of China shows 5, 20, 50, 100, and 200-gram gold bars are out of stock, with only the 10-gram option showing limited availability.
Agricultural Bank of China is sold out of 10 and 20-gram gold bars, while the 100 and 200-gram bars are running low. Meanwhile, the China Construction Bank only has 50 and 100-gram investment gold bars while the Postal Savings Bank of China and Bank of China show all gold bars are in pre-order status, that is, none are currently available.
The BRICS nations have been accumulating significant gold reserves. “Is this just the U.S. wanting to make sure that they maintain the top place, the top holding for gold?” Phair asked, pointing out that the focus has shifted from Bitcoin back to physical gold.
Despite all of this Phair said retail investor demand has been subdued due to distractions and limited discretionary income. Gold mining shares are also at a shocking 10-year low, in spite of the physical metal’s all-time high.
The lack of interest in gold mining shares can be attributed to young investors distracted by crypto and rare earth minerals for EV batteries, and woke investment company boards steering away from “environmentally unsustainable” old-school mining.
The major banks and the relative few major global investment funds like BlackRock have also been heavily biased towards maintaining and upholding the global fiat currency system, while suppressing the gold sector which is seen as a vote of no confidence in this system.
However the soaring price of gold is telling us that banks and big funds, while constantly suppressing gold company shares to give the impression of a lack of interest, are actually buying up physical gold.
Meanwhile Cairns News is well aware that private gold prospecting is a very popular activity across the Australian goldfields from WA to Victoria and North Queensland – a little too popular in some places as we recently reported.
At the current AUD price of $4300 an ounce, it would only require 10 to 20 ounces to make a reasonable income from panning or electronic detecting. A 1 gram nugget currently sells on eBay for around $200.
Phair also anticipates that retail investors will eventually return to the market as they become aware of the ongoing shifts. “Wait till people figure out what’s going on,” he said.
He noted that gold and silver lease rates have surged, signaling a tightening market for physical metals. The normal practice has been for banks to buy gold, but then lease it out to someone to use it for a short amount of time.
“But right now, they want it,” Phair said. While some believe gold is exempt from tariffs due to its status as a monetary metal, he noted that banks were acting as if tariffs were a real possibility. We suggest the banks know it’s more than just a matter of tariffs because the entire global financial system is unsustainable – in the real sense.
Individual US states are also looking at ways to incorporate gold into their financial systems. “There are more than a dozen states right now with bills about buying gold,” he said, highlighting a potential new wave of gold buyers.
Phair emphasized the rapid pace of change in the market and the difficulty consumers faced in keeping up. “I’ve never seen anything quite like this,” he said, predicting an explosive decade ahead.
He also highlighted the potential for silver, noting that it had a significant upside due to its industrial uses and growing deficits. “Silver’s got a lot of opportunity to do really good this decade,” he said, predicting increased demand as consumers realized its value.
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