The desire of gold is not for gold. It is for the means of freedom and benefit.—Ralph Waldo Emerson
Magicians in the gold derivatives market (1) have long been engaging in creative sleight of hand, the extent of which is being exposed as a consequence of the Basel 3 regulatory change, which is requiring them to categorize their gold derivatives contracts under precious metals rather than exchange rates in their accounting statements (2).
Given that gold hasn’t been “money” since 1971, this begs the question of why gold derivatives have been categorized under exchange rates for so long, and whether doing so not only kept gold prices artificially suppressed, but also provided central banks advantages over other gold players as well as protection from the threat gold has posed to their monetary policies (3).
Given the geopolitical shifts, and the strengthening Russian-Chinese gold market (4) amidst the ongoing search for an alternative to the dollar as a global trade currency (5), it appears the West has realized that gold=strength and they must, therefore, “clean house” in order to mitigate the current rampant risks within their gold market (6).
A recent discovery of gold beneath Uganda’s soil, while likely exaggerated in amount (7), has the potential to strengthen the SCO’s geopolitical position, following the Ugandan government’s go-ahead for Chinese firm, Wagagai Gold Mining Company, to begin production (8).
Other countries appear to be walking down the golden road, with Zimbabwe returning to something similar to a gold standard in an effort to mitigate hyperinflation (9), while Switzerland has resumed gold purchases from Russia (10), continuing to ensure their domestic gold reserves are kept safe and sound (11).