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Gleason is president of Money Metals Exchange, a national precious metals investment company and news service with over 450,000 readers, 35,000 paid customers, and $120 million in annual sales. He launched the company while president of a national newsletter publishing ... more

New Regulation Could Pressure Paper Metals Markets

Date: Monday, May 24, 2021 12:24 PM EDT

Alasdair MacLeod, the Head of Research at Goldmoney, wonders if we may soon see “the end of paper gold and silver markets.”


The Bank of International Settlements (BIS) developed Basel III regulations, purportedly to prevent another 2008-style financial crisis. The roll out of these new measures began years ago.


Basel 3 - Source: Globalriskinsights.comUnless they secure a requested extension, European banks will have to comply with Net Stable Funding Requirements by the end of June. Along with other effects, these regulations could make trading in the gold and silver derivatives markets less profitable to them.


These paper markets operate like rigged casinos, with bankers as the organized crime syndicates in charge. In fact, the Department of Justice recently prosecuted JP Morgan Chase using the same RICO laws developed to prosecute the mafia.


The end of the paper gold and silver markets would be a very good thing for honest price discovery and for the cause of sound money.


We hope McLeod is right about the effect of the regulation. He certainly makes a good case.


However, the last thing anyone should expect is for the BIS and other regulators to be part of any honest effort at reform. They work for the bad guys. What then is really going on with these new rules?


MacLeod isn’t certain about what the BIS is up to, given the apparent dire consequences for gold and silver derivatives trading. Like many of us, he doubts the BIS can be counted on to do the right thing.


Maybe the policy wonks there made a mistake. They wrote a regulation years ago and didn’t understand what the true effect would be.


Perhaps killing the paper markets is part of a plan to reset commodity prices much higher. Massive price inflation and currency devaluation has always been, in our view, the most likely method for dealing with otherwise unpayable mountains of debt.


Another interesting theory suggests that derivatives trading simply won’t be needed to manage the gold and silver markets anymore.

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