How “Paper” Gold Controls Prices and Threatens the World Economy
The international gold price, often seen as a reliable barometer of global financial stability, is actually the product of complex manipulations and hidden interests. Beneath the shiny surface of the global gold market lies a dark side of the financial world, where the true value of this precious metal is distorted by “paper” instruments, accounting irregularities, and deliberate actions by major financial players. How does the gold price, which we consider a reflection of real supply and demand, turn out to be just an illusion designed to deceive the global public? Let’s explore this in more detail.
London and New York: The Heart of Manipulation
The central markets determining the gold price are in London and New York. The London over-the-counter (OTC) gold market and the New York COMEX exchange are the key hubs where the international gold price is formed. However, these platforms mainly deal in “paper” gold—synthetic instruments that exist only on paper and never materialize as physical metal. In London, 80% of the global gold trading volume is conducted on the OTC market, where trading is carried out with unallocated gold, which is essentially a credit obligation from bullion banks to their clients. This gold is not stored in physical bars and is not subject to delivery; it is merely a financial entry in the bank’s ledger.
On the COMEX, where gold futures contracts are traded, the situation is equally opaque. Over 99% of contracts are settled in cash, with only a minimal portion leading to the delivery of physical gold. As a result, the actual gold reserves on the COMEX are small and do not correspond to the trading volume. Nevertheless, these two markets determine the gold price, which is subsequently used worldwide to value physical assets. This means that the gold price we see is formed not by the supply and demand for physical metal, but by speculative operations with “paper” gold.
How Banks Manipulate Prices
The main players in these markets are bullion banks such as HSBC, JPMorgan, and other members of the London Bullion Market Association (LBMA). These banks effectively control the international gold price by leveraging their positions in “paper” gold trading with fractional reserves. Trading on the London gold market is particularly opaque. The LBMA’s gold clearing statistics include numerous speculative operations, such as leveraged bets on the gold price and settlements by investment funds through unallocated positions. This trading is not linked to physical gold, yet it determines the gold price.
Central banks also play a role in manipulating gold prices. In London, under a veil of secrecy, central banks and commercial banks conduct gold lending and swap operations, increasing the available gold reserves. These transactions are conducted away from public scrutiny, and their details remain unknown. However, these operations significantly affect the gold supply, creating an oversupply and depressing its price. Central banks participating in gold lending consolidate their gold reserves and loans into a single balance sheet line item—”Gold and gold receivables.” This makes it nearly impossible to determine how much gold is in actual reserves and how much has been loaned out. As a result, the market remains ignorant of the true state of gold reserves and the impact of these deals on prices.
The Hidden Threat: Inflating the “Paper” Bubble
One of the most alarming aspects of the current situation in the gold market is the inflation of the “paper” bubble. Trading in synthetic gold allows bullion banks and financial institutions to create enormous amounts of “paper” gold out of nothing, increasing trading volumes and influencing the price. In London, the gold trading volume reaches 2.5 million tons per year, which is 16,000 times the physical gold reserves held in banks. These vast volumes of synthetic gold, not backed by real bars, create an illusion of abundance that does not match reality.
If, at any point, the holders of these “paper” assets demand the conversion of their claims into physical gold, the market would face a catastrophic shortfall. In such a scenario, the gold price could skyrocket to unprecedented levels, but this would also lead to the collapse of the entire system based on fractional reserves and opaque operations.
Conclusion: The Inevitable Collapse of the System
The global financial system, built on “paper” gold manipulations, is already a gigantic bubble ready to burst. Central banks, bullion banks, and other financial institutions use their positions to control the gold price, hiding the real volumes of physical reserves and manipulating the market to their advantage. This system, based on synthetic instruments and fractional reserves, cannot remain stable for long.
The question is not whether this system will collapse, but when it will happen. And when that moment comes, the consequences will be devastating for the global economy. Owning physical gold is the only protection against the impending crash. In a world where “paper” gold loses its value, physical metal will remain the only real asset capable of preserving wealth and stability in a world filled with financial illusions.
Now that you understand the true nature of the international gold price, the question remains: Are you prepared for the moment when this golden bubble finally bursts?
BT
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