Maguire - An LBMA Default Was Delayed, But It’s Coming

"Today London metals trader Andrew Maguire told King World News that an LBMA default was delayed by Western central planners, but it is coming, despite the West’s frantic efforts to avoid it.  Below is what Maguire had to say in Part I of an incredibly powerful series of interviews that will be released today.

Maguire:  “The net result of all of this (gold) leasing activity means that the bullion which is still showing on the central banks’ books as an asset has more than one claim on it.  Worse, the bullion banks don’t have the gold to repay them....

“And as they’ve sold this bullion into the market, and it’s now vaulted outside of the closed loop of the LBMA system, never to return, this is a real problem.

Now this activity over the years has created a major mismatch.  This has placed these LBMA bullion banks in jeopardy, particularly now that it’s clear they are not getting this touted and relied upon dip into the $1,000 range that they keep trying to talk into existence.  The level of rigged discount would be the minimum amount needed to even partially bail them out of this ever-growing position mismatch.  

It’s now inevitable that there will be an LBMA bullion bank default -- it’s just been delayed.  And as I’ve noted now for over 18 months, the Bank for International Settlements (BIS) is no longer providing any real bullion to the bullion banks.  They are just issuing them credit by way of a book entry to sell bullion bank ‘owned’ gold, unallocated gold, on the spot market.  And when deliveries are demanded, they are actually forced to borrow gold from their own unallocated inventories.

And courtesy of a lack of regulatory oversight, they are able to rehypothecate bullion from their clients allocated accounts.  Even in the unlikely event that gold were driven to the bullion banks’ target of $1,050, the resulting discount would only cause China, Russia, India, and all of these other countries to take all (of the physical gold) that was offered, allowing very little bullion to be repaid.  So that would be a lose/lose situation.

They (the bullion banks) are not going to allow what happened last year, when a Fed sanctioned raid resulted in a mass exodus of bullion to China.  Either way, discount or not, we are approaching a forced LBMA cash settlement (which they will try to call a ‘non-default’).

Western central banks are increasingly being forced to compete against each other to look after their own interests now.  It’s become apparent that the BIS and the Fed don’t have the gold they claim to have, despite the paper claims to gold being shown as a physical asset (on their books).  This very act neuters the Fed’s ability to control the gold leasing.

In short, the bullion banks will be forced to mark paper gold positions to market, creating a (massive) gap up in the gold price as true supply/demand fundamentals are finally realized.”

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/3/21_Maguire_-_An_LBMA_Default_Was_Delayed,_But_Its_Coming.html