Gold signals the end of fiat currencies

There is increasing evidence that the fiat currency era is drawing to a close. Like the canary in a coal mine, this is what a developing crisis in gold and silver derivatives indicates.

Derivative dislocation is just the start…

With the ultimate insiders from central banks and governments downwards cleaning out bullion supplies and market liquidity, lease rates are soaring and backwardations are now common, notably in silver. The entire basis of paper contracts in precious metals is now undermined by the absence of physical liquidity, leaving delivery obligations at a growing risk of failure.

Disruption to these vital derivatives appears to be intensifying as prices rise. And there is little doubt that they will spike higher — probably much higher as the entire foundation of precious metal derivatives disintegrates. Given our repeated reasoning that the fiat currency system is coming to an end, it should be little surprise to regular readers to this Substack column that it is now being telegraphed by a developing crisis in precious metals.

This is not a repeat of the nickel crisis which hit the London Metal Exchange in March, 2022 resolved by the cancelation of contracts. That was one major short failing to deliver metal in the required configuration. Gold and silver involve the entire market: declare force majeure and prices will spiral even higher.

To innocent bystanders, gold is in a bull market and silver too. For them it raises the question as to whether they should buy, or if they are lucky enough to have bought lower down to take some profits. It is entirely natural to think this way, but it would be a mistake.