David Jensen claims that as discussed in 2014 and again in January of this year, with daily gross trading turnover at the LBMA (London Bullion Market Association) in January of about 200 Million oz. of gold per day, it was inevitable the world pre-eminent physical gold and silver pricing platform in London would fail due to the Gresham Law and we can now see from available information that it is collapsing.
The Gresham Law predicts that the introduction of debased (or bad) money will drive more valuable (or good) money out of circulation leaving only the debased, and ultimately worthless, money or claims circulating. Many will chuckle at the proposition of Western gold market failure and note that the price of gold has gone nowhere. If the markets are in collapse due to lack of available of gold, then where is the price action exploding to the upside? Well, digital gold and silver are still available in copious (infinite) amounts and continue to trade on both the LBMA and COMEX exchanges - you can have as much digital or virtual metal as you want on these digital exchanges. There is no shortage of virtual metal and thus the virtual price that most investors follow will not move up. The bullion banks have always sold-down this virtual gold price when it has risen.
The telling of the story is instead in physical metal availability and so we look first to the LBMA - the primary global physical exchange. The LBMA indicates in it owns market guide that its primary gold trading contracts, unallocated spot market contracts which are claims for spot physical gold (ownership right-here, right-now), give the holder just an unsecured claim for physical gold. This has allowed the creation and trading of non-existent gold to the point that the London spot physical gold market trades 200% of the global annual gold mine production of gold - each day.
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