China Just Attacked the Gold Market

China just attacked the gold market, but not by dumping gold, not by crashing the market, it targeted something much more specific. Now, some of China's biggest banks are shutting ordinary investors out of paper gold. They're telling them to close their positions, sell, take delivery, get whatever you can, get the physical metal. Now, officially, this is about, of course, investor protection. And the gold guys, well, everyone online is saying that this means that real price discovery is going to be here. Suddenly, we're going to see the real price of gold, but both are wrong. This isn't a one day event. It's the latest move in a sequence strategy that I've been showing you since gold was below $2,000. Now, China isn't trying to stop gold trading. It's trying to control how gold gets priced. And I'm going to show you what this means for gold, for the price of gold, for the dollars in your accounts and the global financial system that everything's built on top of. So let's go. All right, this is a big video. It's one that I've been talking a lot about over the last couple of years. This is the latest step and it has massive ramifications. It's going to be long. I've got a lot of slides. We're going to jump through this as quick as we can. But let's talk about what just actually happened. Now, just a few weeks ago, June 24th, the Industrial and Commercial Bank of China. Now, this is the biggest bank on earth. All right. The biggest bank on earth posts a notice. As of July 24th, individual customers are done trading gold contracts through the bank. The biggest bank on earth said you can't do that and we can't trade gold contracts. So you have three options. Either one, you can sell to get rid of everything to close your positions, take something else or three, take physical delivery of the metal. OK, we're going to be following this trend quite a bit. Now, the ICBC, they weren't the first one. All right. If you check out the sequence of how this has all been laying out and going through, we've seen Ping An. We can see this right here. Ping An Bank was the first one started in April 1st. Then we had the postal savings. This happened in June. Then we had China's bank here pre-June. The China CTIC was pre-June as well. And now all of this is happening. The ICBC, China Construction Bank, Bank of Communications and then China merchants right behind them. What this means, what this shows right here, is eight of the biggest banks in the world all coordinated exit within four months. Big deal. Now, the official story that China is putting out anyway, there's two stories, and I'm going to tell you what I believe. The official story is, of course, for your protection. Of course, it's always about investor protections. And look, we can see this crash. It was real, right? We can see gold ran up here. Four thousand dollars an ounce peaked at well over five thousand dollars on fifty six hundred dollars in January of this year. And then it started crashing. And we can see it's down more than 30 percent at this point, traded below four thousand dollars. And a lot of people got wrecked. So the investor protection story, it's real. Chinese people were buying a lot of gold. And when the price dropped 30 percent, they got they got crushed. Now, when this happened, the banks, they jacked margin requirements to 120, some to 140 percent. ICBC went to 190. And China's been here before. China's dealt with this before. In 2020, Bank of China had an oil product blow up on 60,000 retail customers. And of course, Beijing remembers that. So they do want to protect them. But more specifically, they want to protect them from outside influence, which we're going to get to now. The story, that part of the story, it's true, partially true. I don't believe it's the whole story. Now, there's another story. And this is the one that you see probably all over Twitter and you see all over YouTube or whatever right now. And they say that on July 24th is the day the suppression ends, that the gold suppression is no longer going to be there. And the gold's quote price, the quote unquote real price, it's going to get revealed. But I don't expect it to happen in a single day. Right. So all the channels on YouTube, they're going to be promising you a huge move, but it's going to be wrong because this isn't just an event that's happening. All right. This is a process that we've been documenting for years. This is a big step in that process. But it all started years ago. Now, again, I've been walking you through the system on the channel since gold was under 2000. We talked about how they were using the Shanghai Gold Exchange, which had physical settlement rules. The physical settlement rules of the SGE is the whole architecture. OK, so this is all part of China trying to break the grip of gold's price suppression and forcing a repricing back to free markets. All right. And again, it's been happening slowly. It's been happening for years. But this is another really big step that's accelerating this forward. Now, to see how they're doing it, you have to understand something about gold that almost nobody seems to understand about gold. You have to understand how does the price of gold get set? When you look at the price of gold, where does that come from? Because when most people buy gold, no gold actually moves anywhere. OK, so how does it work? So if I buy gold today, most likely I'm not going down to my local pawn shop and buying a gold coin. I'm probably going to my bank. I'm opening up an app. I'm on my brokerage accounts inside of a fund or something like that. And when I buy that gold, obviously it's online. Nobody hands me a physical bar of gold. So when I bought that, I didn't get one and nobody moved one. It was all done on a ledger. So I'm sure somewhere there is a there's an actual vault and I'm sure there's actual metal there. But what I have is a claim to that. So what I really have is an IOU that says I'm owed gold. All right. So let's check this out. So if we start with, let's say, one ounce of physical gold. Now, this is sitting in a vault somewhere. Hopefully it's part of one bar. I think a bar is 400 ounces of gold and it's priced based off its worth. Right. Pretty simple. But let's say that the vault sells a claim on that bar. So that's like an ETF, a gold ETF, right? Fine. Somebody now has a receipt saying that they own this ounce of gold. OK, that's fine. But the price is still anchored to the metal. Nothing's broken here yet. But here's the thing. The seller that sold me this paper claim, they know that I'm never going to call for this physical ounce to be delivered for me. I don't want to store it. I don't want to pay for the shipping or I don't have to deal with the security of that. I don't want to insure it. So I'm just going to hold the claim. And then I want to sell the claim for more than I paid for it at some point, right? Buy low, sell high. Now, if nobody ever picks up the metal, then nothing stops the seller from selling more claims on the same ounce over and over again. So we can see all these claims start to stack up. This is vault receipts, structured notes, derivative claims, retail app balances, futures, options long, leasing to counterparties. All these claims get started, racked up on this one ounce. And that's fine, right? It's an unallocated account, a futures contract, like I said, a structured note, all of these things. And all of a sudden we have 10 different balance sheets are showing that they own the same piece of gold. But watch what it does to the price, because, of course, price is made up, it's elementary, price is made up of supply and demand. But if the supply setting the price isn't the metal, what is it? It's the claims. It's the paper gold. And every claim that the market sees is another ounce of gold that doesn't exist. Then, of course, we get, based off of this, we get phantom supply. Phantom supply presses the price down, right? We get more supply, not real supply, but more supply, then there is demand. And so then the market starts pricing the paper claims and not the actual physical bar, okay? So now that you understand this, the question you should ask is, good question, how many paper claims are there for each real physical ounce? Well, the truth is nobody knows. The truth is that nobody knows and estimates run as high as 10 to 1. As a matter of fact, there was older testimony in front of the CFTC saying that number was as high as 100 to 1. What does that mean? That means 100 people own one ounce of gold. 100 paper ounces for one physical ounce. Now, we don't know if it's 1, it's 5, it's 10, or it's 100. We don't know. The point is nobody knows. There is no official number. Now, the most important price in the world, the price of gold, is set by a market that nobody can tell how much of the thing is actually there. So if prices are derived by supply and demand, and we don't know what the supply is, and the supply can be phantom, it can be faked, it can be lied, what does that really tell us? Okay, and look, this is in theory. We have London's clearing system. It moved 17.7 million ounces per day back in February. Almost $89 billion in gold changing hands, but on paper. On COMEX in New York, less than one percent of the future contracts being traded on gold ever ends in any physical gold moving. So you can see we have two markets, two entirely different things being bought and sold. Physical gold and paper gold. Now, when the metal, when the physical gold does fight back, when it tries to force its way, force its way, force its price discovery, watch what happens. So we can see back in March of 2022, we saw nickel squeeze on the London Metal Exchange. We saw delivery pressure. People wanted the physical, so they were pressuring to get the physical, and it threatened the members. So what'd the exchange do? Well, the exchange cancelled the trades. It changed the rules. Somewhere between $4 and $12 billion evaporated, erased out of thin air. Now, of course, sure, the traders, they sued, right? They sued, hey, we got the trade right. We risked our money, we got it right, and you cancelled on us. So they sued. They took it to the highest courts here, UK High Court, Court of Appeals, UK Supreme Court, all of them denied. Now, if you think that's a London problem, this is also in the CME rule book, Chicago Rule 230K, emergency powers. What does it tell us? It tells us that they can suspend trading, suspend, curtail, or terminate trading. It says that they can alter conditions of the Look at number three. They can fix the settlement price. Look at that. The price at which your contract gets liquidated, and it's all written down. Require additional performance bonds. All of this is written down. The exchange keeps the emergency key to all of this. So in London, in New York, the metal, the physical answers to the paper, right? Which raises the obvious question here. If the paper can always outvote the metal, why hasn't it always? There's one time before that we can see where the physical fought back and it forced its price onto the world. And the last time it happened, we saw the most powerful governments in the world lose in a single week. So let's go back. Let's go back in the time machine. Let's go back to 1968. This is at the end of World War II. We had the entire Western financial system. It was on a gold monetary system. Back then, the price was set. 35 US dollars equaled one ounce of physical gold. So the dollar was pegged to gold, and then every other currency of the world was pegged to the dollar. Now that $35 is the anchor that held all of this in place. But by the late 1960s, the US, of course, was printing way too much money. This started in 1944, and I'm pretty sure they started printing way too much currency from the beginning. But by the 60s, it really started to come into head. They're printing way more money than they had the gold for. Of course, the US was fighting wars in Vietnam. They're building the Great Society, all those things. And so the market started to figure this out. And they're like, wait a minute, you're just printing a lot of these dollars, and I know we can convert them to the gold. So you know what? We don't want the dollars anymore. We want the gold. So they started taking the gold in the United States. And then eight of the most powerful central banks on earth, talking about the US, the UK, West Germany, France, Switzerland, some other big banks, they formed a cartel to stop this. It's called the London Gold Pool. Now the job, the entire job of the London Gold Pool was to keep the price set. The job was to defend the $35 peg. So if somebody buys too much gold, then the pool would sell into it. They'd knock the price back down. Sound familiar? They would coordinate the official supply. They would deploy to hold a price where the paper says it should be. But then finally, governments again started waking up to this. They started demanding the physical gold. They didn't want the paper anymore. They knew the game that was being played. So on a normal day at the London fixing, about five tons of gold changed hands. By mid-March 1968, we saw the market start to call its bluff. And they started pulling about 200 to 330 tons out the door in a single day. And in the final week, we saw over 1,000 tons gone in a single week. Now, all of this happened. Central banks were sitting there watching, and they were watching their vaults get drained in real time. And so finally, on March 14th, they hit the limit. And the next morning, this statement goes out right here. The London Gold Market, their official release, they're going to close for today. Now when you go back through time and you look back from the beginning of time, from the first central bank, the Bank of England, you'll notice there's a trend. The banks, they close. They go on a bank holiday. And when they open back up, the rules have changed. And that's exactly what happened. So they closed. They were going to close Friday, March 15th. Closed by U.S. request, requests of the U.S. government. Read that again. The deepest gold market on earth. The foundation of the entire global financial system was closed by government requests. Because why? Because the physical metal was winning over the paper. And if we look at a major institution suddenly shutting down gold trading, telling everyone it's for the stability, for the protection of their investors. So we've seen that before, right? You've already seen that in this video. Now, maybe a different century, but it's the same move. OK, remember that for later. OK, so then what happens? Well, they reopen, but with two prices, two prices. So we still have the official tier. This is the one the governments give you, $35 per ounce. It's frozen. But the free market tier, the price for everybody else is different. The free tier, the free price tier is $42.60, which is 22% above the official price. The quote unquote official price was still printed. It just stopped being real. That's not what people could buy and sell it for. Now, once the paper price was decoupled from the real settlement layer, the market had to find the new number. This is where we found price stability or price efficiency. And we saw this in 1971. So, of course, here in 1971, President Richard Nixon severed the ties, ended the gold currency as we know it, and the price started moving higher. The real price of gold started to skyrocket pretty quickly. By January 1980, it was $850 an ounce. From $35 to $850, that's a 24 times repricing in just a dozen years. Now, every year of it, the official line was that everything was under control, of course. Now, look, everyone takes the wrong lesson from that chart. The lesson is that when enough people demand the physical instead of the promises, the paper price, it won't bend. It breaks, right? It snaps. And you don't need a majority here. 1968 proved that it's just a motivated minority. Just taking delivery is enough, okay? That's the key piece. Taking delivery is enough. And so, of course, going back to China, they know this story better than anyone. And so, they're not running the 1968 playbook here. They're not attacking somebody else's pricing system. They spent 20 years building their own. And this pricing system is already running. So, let's go back to where we started at the in 2002. China launches the Shanghai Gold Exchange, right? Now, this was built with one rule in mind. The rule that was in the foundation of this is that every contract on the exchange is available for physical settlement, okay? That's the key piece. This is what changed the gold price as we know it moving forward. So, what this means is that if I hold a contract, I can call for the actual physical metal anytime. Now, what the rule does to the system is it prevents this fake paper claim, this paper claim inflation, as we call it the phantom inflation, because you can't sell 10 claims on one bar if that person is going to take delivery of the bar, right? If the claim can just walk in and demand the bar. And so, the convertibility of this is the discipline of the system. The paper has to stay true. It has to stay honest because the metal is always allowed to show up. It's always allowed to be called. So, Shanghai's price is anchored to physical reality. And when we have two prices that exist across the world for the same thing, for the same gold, one's anchored and one's not, what's going to happen? Well, the traders are going to come out to play. That gap becomes a magnet for who? For the arbitrage traders. So, September 14, 2023, Shanghai traded $121.20 an ounce over the London price. So, guess who's going to come out to play? The traders. The traders are going to buy where gold is cheap and they're going to go sell it where gold is expensive, of course. And when they do that, they drag the price towards the actual physical price, okay? And some may call that an attack. Maybe it is. It's not an attack. It's just arbitrage, right? That's what we do. We buy low, we sell high. And they were doing China's work for them. This is what China set this up to do. Then on June 26, 2025, the third piece dropped. Hong Kong launches offshore gold contracts linked to the SGE, the Shanghai Gold Exchange, pricing, okay? Now, these are settled in physical metal from a bank in China vault in Hong Kong. Now, if you've been following all of this, what this means is that for the first time now, international money, dollars, with no Chinese bank account required, can now buy gold priced in a physically settled system. Now, they can do that instead of a papered one, all right? This is exactly how China's been repricing gold. Now, the question is, maybe, you're asking is, is physical demand really strong enough to move the Western system along? Well, we can already see the answer to that. We can already see the experiments already run. Late 2024, we saw, you know, Trump's tariff scare that scared the whole world. And there was a big tariffs that were put on gold. And so we saw this all of a sudden start pulling gold out of London and back to the United States. As a matter of fact, 790 tons moved from London over into New York just from that alone. We're talking almost 80 billion dollars in just four months. This wasn't about China. This was just Western traders front running attacks. And so this proves how valid this is. And now that right there was enough to buckle London. We saw the Bank of England, we saw the Bank of England's withdraw queue went from one week to get the gold out all the way up to eight weeks. That's how far they got behind. Well, they probably weren't behind processing orders. They were getting behind on finding enough of the physical metal. We saw lease rates close through the roof. It went from under half a percent to over 10 percent. And we're talking about the deepest gold market on earth. We're not talking about a small pool, the deepest gold market on earth strained to produce the metal that was supposed to be in its custody. And this was just from a fraction of the claims that asked for delivery. So that was just barely even a stress test. But watch what the patient money is doing right now. The central banks, they're doing something different. The central banks just keep on buying the physical gold no matter what. We're talking about over 1,000 tons per year, 2022, 2023, 2024, 2025, a little bit less than a thousand. For Q1 of 2026, we're on pace to hit that number again. Now, one key date that's important is look when this really started, 2022. This is the date, February 2022 as a matter of fact, is when the West froze Russia's foreign exchange reserves. This was the moment where every central bank on earth learned the same lesson the same day. A reserve that somebody else can freeze isn't a reserve, right? It's permission to use that money if they want to give it back to you. And so what did they do? They started buying gold. We want the gold in our central bank vaults. And they've been buying it and they've been buying it from the price of $2,000, $3,000, $4,000, $5,000. Why? Because the price doesn't matter to them. They're not trading it. What they're doing is they're converting the U.S. treasuries into gold. And you can see where all that physical buying has taken us. We can see by the end of last year, the amount of physical gold being held at central banks up to 27%, while U.S. treasuries has dropped to 22%. For the first time in the modern era, the world's central banks hold more gold than U.S. treasuries. And that's not just my chart. It's from the European Central Bank, the ECB. In their own words, gold now surpasses both the Euro and U.S. treasuries. Now, the ECB, they put out a disclaimer and they say this is because gold went up in value. It's not that they bought more gold. It's that gold has been repriced. And so now, of course, you know, based off of current values, it's more gold. Sure. Okay. But they didn't rebalance. They didn't sell it down to keep the balance proper to keep U.S. treasuries or euros at a higher level. Right. Every treasury manager watched gold triple and they didn't trim it. They didn't trim it back into into balance. They let the winner run in the position. Why? It's not a trade. It's a transfer. Now, if you want to know what they expect next, then what we want to do is we want to watch the construction. We want to watch the leading indicators. And we can see in Hong Kong, they've been building a vault, an airport vault, 200 tons to a thousand ton capacity. Right now, the city stated goal is to target over 2,000 tons of storage within three years. So what does this tell us? Well, you build vaults into the future three years into the future for what you're expecting the demand to be in the future. So what this means is that they're expecting to have over 2,000 tons there in just the next three years. And of course, paper gold doesn't need a vault. Now, this is old news if you've been paying attention, right? They told us that this was going to happen. They signaled this would happen at least over a dozen years ago. We saw the chairman of the Shanghai Gold Exchange in the People's Daily. He said that gold is priced in the West, but it's consumed in the East. So what he's saying is in the East, over here in Asia, in China, we're the buyers, we're the consumers, we're the buyers of the gold. But even though we're buying the gold, we don't set the price. The West was. And they saw what was happening, and they devised a plan to fix it, to bring the price of gold back to a real global price. Okay, so let's go back to today. At the end of July, probably by the time you watch this video, eight banks begin pushing millions of retail investors out of paper gold. They can't do it, they can't buy it, they can't sell it, they can't trade it. They have to either sell it, they have to close it, or they got to take delivery of the gold. This means that China's closing the last paper leak in its own system. So that inside China, if you want exposure to gold, you have to buy the physical metal of gold. Why? Again, take delivery, a small percentage of people taking delivery to force the price higher. So what's happening? It's happening right now. The question is, what does gold actually cost? What does gold actually cost once the metal, once the physical sets the price over the paper? But there's actually a better question. The better question is, what does everything else cost? What does everything else cost when it's priced in gold and not dollars? Well, look at this. In 1976, the average home price in the United States was $48,000. Today, it's $540,000, up more than 10 times, okay? But if you look at the price of the same house priced in gold in 1976, it was 384 ounces, about 385 ounces of gold. Today, it's about 133 ounces of gold. So what does this show us? It shows the house didn't get cheaper. What you measure them in broke. If I measure them in dollars, they got more expensive. If I measure them in gold, they got way cheaper. Same story with a car. Look at this. The average new car was $5,000. How can you even buy a car for that? $5,400, okay? And then in 2006, it's now about $50,000, $49,000. That's in dollars. But if we go back to gold, we can see the same thing. In 1976, it was 43 ounces of gold. Today, it's 12 ounces of gold. We can see the same thing with gasoline. Look at this. Gasoline back in 1976 was 61 cents. Today, it's about four bucks a gallon. And in gold, we can get 200 gallons with an ounce. And today, we can get over 1,000 gallons with a single ounce, five times the gas. So as you can see, whether it's homes or cars or gasoline, if you measure them in dollars, they got more expensive. You measure them in gold, everything else has gotten cheaper over time because that's what's supposed to happen. When productivity rises, things are supposed to get cheaper. Your money is supposed to buy you more things in the future and not less. Your life is supposed to get easier and not harder. Now, if you think this repricing stops at gold, well, hang on because it's already starting to jump into all the other markets. In February, we saw the price of silver in Shanghai trade 29% over the COMEX price. US dealers were scrambling to get the silver. Physical went up as much as $8 to $17 an ounce over the paper spot price because when the physical price and the paper price disagree, guess which one wins out? The physical as long as people are demanding it. So here's what I'm actually watching as all this plays out. Like I said, we've been talking about this for years. So here's the signpost that I'm watching. There's five things that I'm watching. Okay. Number one, the Shanghai premium over the London price. Okay. As I said, the Shanghai premium, which is physically settled over the London price, which is paper. Okay. That's the pull. That's pulling things along. Number two, I want to look at the Bank of England queue and the lease rates that they have. All right. That's the strain. When the Bank of England, the largest, the deepest gold market in the world starts running out, not able to fill orders, having to borrow gold to fill it. Okay. That's the strain on the system. Third, I want to watch central bank purchases every single quarter. That's the conversion, central banks are not trading. They're converting the treasuries into gold. We want to watch that, keep an eye on that. We will see what number four, Hong Kong's vault build out, right? So as they said, they want to get to 2000 ton target within three years. This is the infrastructure for all this to happen. And then of course, number five, we want to see more Chinese banks closing the paper gold products and pushing people back into the physical. That's the consolidation of the system. So when all of these things start moving together, you're watching the repricing accelerate in real time. Actually, let me go back, screenshot this one real quick. We'll put it up on the screen for you. Okay. So let's pull all the way back. Let's zoom out because this was never really about gold. Everything that you own sits in one of these two columns. You either have promises, things that are promised to you. We call that debt or you have physical property, right? Debt. This is things that these are paper claims. Someone else owns it, owes it to you. Unallocated accounts, futures contracts, ETF shares, government bonds, all of these things are owed to you. Okay. But then we have property like physical metal, things that are nobody's liability. When you have the metal, you have the metal. What China just did, what central banks have been doing since 2022 is moving from the promise column over to the property column. That means the most sophisticated balance sheets on earth are all making the same trade. Now look, of course, I can't end this video just talking about gold. I can't end this video without talking about my favorite asset, Bitcoin, because taking physical delivery of the gold is what keeps the market honest, right? But good luck taking delivery of gold, especially if it's a big delivery of gold, right? It's slow. It's going to be really expensive to ship to you. You have to pay insurance. And then where do you even keep it? How do you protect it? And so, because it's hard to transfer, because it's expensive, because it's hard to store and protect, a lot of people don't take physical delivery of the gold. But Bitcoin can be transferred to self-custody in minutes. It can be done for virtually free. It can be done by anybody. It costs almost nothing to do that. And I can store it. I can protect it for no cost. It can be verified by anybody. It can be seizable by nobody. And I don't need to build vaults for it. Property that settles itself is the one thing a paper system can't fake. It can't control it. So gold is how nations are making this trade. But Bitcoin is how you can front run them right now, today. Now, if you want the full framework for how I position for this, and how you actually structure it, not just watch all this go out, then you might want to go check out the link I have in the description down below where I can break that down for you. And check out this video right here. And I'll see you over there.