Potential Suppression of Gold Price by Short Selling Could Lead to Surge
Gold price manipulation and suppression are finally getting some attention. The Official Monetary and Financial Institutions Forum, a group linked with central banks in London, recently published a paper titled “Gold and the New World Disorder,” highlighting gold’s return to the heart of the global financial system.
The chapter titled “Market Disruption — The Short Squeeze” delves into the risks associated with the current demand for gold, particularly from BRICS-related countries. The paper mentions the potential for a short squeeze, where bullion banks with concentrated gold short positions may need to buy back metal during a price run. This practice of shorting gold has historically been linked to market manipulation, often observed in central bank sales and futures contracts on commodity exchanges.
Additionally, imbalances between allocated and unallocated gold accounts pose a risk for market disruption. Recent analysis suggests that for every ounce of physical gold backing these accounts, there could be 20 to 100 ounces of unallocated paper gold claims, indicating a fractional-reserve system that may lead to future claims surpassing physical gold availability.
Although the timing of such a squeeze remains speculative, the tensions in the world financial and economic landscape suggest that financial markets could face challenges ahead. With suggestions that some BRICS countries are considering ‘weaponizing’ gold against the West, the road ahead could be rocky.
It’s worth noting that organizations like the Gold Anti-Trust Action Committee (GATA) have been raising concerns about these issues for over two decades. The acknowledgment from the Official Monetary and Financial Institutions Forum underscores the gravity of the situation. The full paper can be found on OMFIF’s website.
In conclusion, the spotlight on gold price manipulation and market disruption signifies a potential shift in the financial landscape. As awareness grows, stakeholders will need to navigate these challenges with caution.
