COMEX CRISIS: GOLD THROWS THE FED A CURVE

 

The unfolding drama of the comex being forced to deliver gold: something it was never meant to do, is creating the first crack in the Fed's Global Financial Dominance.

Ther comex was created expressly to control the price of gold.  As long as Fed-financed JP Morgan et alii were able to drop unlimited sell order on a paper market, the gold price was forever under the cotrol of the US Central Bank.

Since every other Central Bank has gold as its principal Basel Teir 1 reserve asset along with the US dollar - The Fed has tremendous power over the Global Economy - as it controls to a considerable extent the value of the US dollar and the value of Gold.

But everyone who followed the Gold market has wondered for some time: What happens when other central banks decide to take DELIVERY of the Comex contracts?

What happens to the price of gold?

We are in the prcoess of  seeing that unfold day to day right now.

Friday the Fed knocked the gold price down $50 in a day with a classic raid.  Monday and Tuesday - in stead of creaiting a short squeeze panic (something that has occured with regularity the last 40 years) - the price recovered.

But the other most intriguing question: What happens to the dollar - and the US hegemonic position as the only country to fund its own debt with a reserve currency - when other central banks drop US dominated debt in favor of uncontrolled GOLD as the Tier 1 reserve asset of choice?

That is something that is also playing out.  But at a slower pace and far behind the scenes with no real time measurement of the rate of change.

But one thing is for sure: despite the global move towards  protectionism and mercantalism: it is still a GLOBAL ECONOMY.

That genie is out of the bottle.  All comodity markets are now GLOBAL and are being settled outside the US dollar.

All suply chains are GLOBAL.

Every country can try to reverse this - but they will only succeed at the margins.

If China can supply a cheaper AI or a better Electric Car - no amount of Tarrifs or Sanctions will make a difference OVER TIME.  The best products will eventually dominate the market.

The only thing holding the US hegemony in tact (And the US inflation rate) was the Rerserve Status of the US dollar.

As that goes - so does our control over the Global Economy as well as our conrol over the Domestic Inflation rate.

Nobody's suggesing trends that has been in place for over 50 years will reverse over night.

But they are reversing.

Invest accordingly.