Whatever happened to the Tump-Musk visit to Fort | Australian Markets

Whatever happened to the Donald Trump and Elon Musk visit to Fort Knox? You’ll recall the buzz. Trump and Musk loudly introduced they had been going to visit the US bullion depository at Fort Knox, Kentucky to make sure the US gold was truly there. The press was invited to tag alongside.

Musk claimed that his DOGE group was prepared to ‘audit’ the gold bars to see that there have been none lacking.

This can be the mom of all picture ops.

In the in style creativeness, all of the gold is in Fort Knox. That’s the place they had been headed to show as soon as and for all that the gold was truly there.

Elon Musk deliberate to livestream the complete visit utilizing his Starlink satellite tv for pc system. Trump vaguely threatened that if any gold had been lacking, there can be disastrous penalties for any wrongdoers who eliminated it.

The plot was set. The drama appeared irresistible.

Then, out of the blue, the complete story went away. 

Trump by no means talked about it again after 26 February. It was as if the complete story by no means happened. It simply went away. The query is, why?

Let’s reply that, starting with the apparent level that the gold is all there.

There have been rumours of lacking and stolen gold nearly from the day the bullion depository was constructed.

The 1964 James Bond movie Goldfinger is constructed round a plot to steal the gold. This hypothesis makes for good rumormongering however, in reality, the gold is all current and accounted for.

There are two the reason why the visit didn’t proceed. The first one is that the US authorities doesn’t need to call consideration to gold’s function as a financial asset.

The Fed has a monopoly on the money printing press. The authorities has eradicated any reminiscence of gold as money. Why convey it back to life with a high-profile visit to Fort Knox?

There’s one other even more insidious motive why Trump and Musk backed off from their Fort Knox visit. Even permitting for the incontrovertible fact that the gold is definitely in Fort Knox, the deeper query is whether or not that gold is leased out.

Gold leasing is an established market, however not well-understood by non-specialists. Basically, it’s a approach for a gold holder to earn a return. Gold doesn’t pay dividends or curiosity like stocks and bonds. But you may lease it to a third occasion and make 2% or so yearly in lease funds.

The gold stays in the authentic vault. Gold leasing is a purely paper transaction. The lessee will get what’s known as a proper of rehypothecation. That means the lessee can lease the similar gold to one other occasion and so forth.

With rehypothecation, one metric tonne of gold may assist 100 metric tonnes of ‘paper gold’ transactions. The hazard is clear. If a group of paper gold buyers out of the blue calls for bodily supply, the counterparties have to buy gold in the spot market since the leased gold will not be of their bodily possession.

The gold market is liquid, however not liquid enough to assist supply if there was demand for bodily by more than a small slice of the paper gold market. A full-scale gold panic may emerge rapidly. The spot price of gold would go to $25,000 per ounce earlier than an investor may yell ‘buy!’

I take it that somebody (in all probability Scott Bessent) sat down and patiently defined the paper gold actuality to Trump and Musk. For the relaxation of us, the resolution to this downside is straightforward – buy gold.

All the best,

Jim Rickards,
Strategist, Strategic Intelligence Australia

All advice is normal advice and has not taken under consideration your personal circumstances.

Please search impartial financial advice relating to your own state of affairs, or if unsure about the suitability of an investment.