[With Subtitles] David Jensen: The London Metals Exchanges are the Crux of Market Pricing

Tom Bodrovics welcomes back mining executive and metals analyst David Jensen. Together they revisit concerns around the London gold market's dominance, estimated to account for 91-92% of the global gold trade. This is thanks to the Bank of England's 'regulatory oversight' since 1986, permitting unallocated gold contracts instead of physical bars. The market trades $500 billion of gold daily andand 2.9 billion ounces of silver. However, only around 3.5% of London's vaulted gold is actual physical. They contrast the LBMA with the Shanghai gold market and point out the key differences.

David argues that the London market functions as a price-setting mechanism rather than one of price discovery. They discuss Gibson's paradox, where interest rates follow price levels rather than inflation rate. Central banks benefit from this control scheme due to their control over monetary policy and debt levels using gold and silver as loose policy indicators.

David delves deeper into the London Bullion Market Association (LBMA), which regulates through a voluntary code of conduct called NIPPS which is under Bank of England oversight. The metals market are dominated in London, with around 90% global cash trading occurring there.

David raises concerns over the transparency and authenticity of silver holdings in Exchange-Traded Funds (ETFs), questioning claims against metal, sub-custodians, potential rehypothecation or selling. The actual amount of silver held and its implications for interest rates and the economy if pricing proves fictitious are discussed.

Time Stamp References:
0:00 - Introduction
1:12 - Size of London Market
7:07 - Paper Claims on Metals
8:45 - Silver a Virtual Asset?
9:50 - Opaque Market & Claims
14:44 - Fractional Reserve Metals?
15:57 - LBMA 'Code of Conduct'
20:54 - Who Watches the Watchers
22:09 - Settlement Definition
24:29 - London Vs. New York
25:35 - Futures & Cash Markets
30:20 - ETFs & Bullion Banks
33:08 - Honesty & Transparency?
38:13 - Criticality Theory
41:10 - Scales & Incentives
42:18 - Wrap Up

Guest Links:
Substack: https://JensenDavid.substack.com/

Source: https://www.youtube.com/watch?v=1lrK5NVIOSQ