Surge in gold borrowing rates spurs short covering rally
Good explanation for what is driving gold prices. As he suggests, it likely will settle down and correct a little once we get to February and especially if PM’s are exempted from any tariffs.(if any even get enacted)
The more interesting question, which doesn’t get addressed in this piece, is what about silver? Silver isn’t owned by the banks and has a much greater short position.
While the dynamics might be different for silver in terms of how much physical silver is being demanded and shipped either into NY, or more importantly to India and China, any disruption that causes bullion bank shorts to be squeezed and covered would likely have a much greater impact on pricing compared to the percentage move in gold. https://www.zerohedge.com/news/2025-01-23/ross-norman-surge-gold-borrowing-rates-spurs-short-covering-rally
I believe that Trump is trying to thread the needle of gradually ending the banks manipulation of silver with the naked shorts without blowing up the whole huge derivative position that would implode the system. I think he is purposely not saying that PM’s would be exempt (so far) because he wants the banks to gradually start covering their shorts. It wouldn’t surprise me if little or no tariffs actually get enacted on anything. He has telegraphed and used it to negotiate to make incremental progress. Silver is so crucial and so sensitive a topic(because much of the military needs etc. are likely classified) that it can only be discussed in generalities with no specifics.It will be interesting if the price can rise enough to get miners to increase exploration and production over time without going too crazy and bringing down the financial system?