Gold revaluation and the July 4th letdown
Gold sits on the government's books at $42.22 an ounce, which is absurd. The first fix should be simple: mark it to market at the real price. Beyond that, two revaluation ideas circulate. James Rickards argues for revaluing gold to $24,000. Luke Gromen thinks they would let it climb to $7,000 or $8,000 first, then revalue from that higher point. Revaluing is an accounting trick run through the Federal Reserve and the Treasury. Push the book value high enough and the government doesn't have to print as much money.
The best idea I've heard comes from Judy Shelton: gold-backed Treasuries. Shelton was a former nominee to the Federal Reserve and a Trump advisor. She laid the plan out in two interviews and a best-selling book, and said Trump loved it. She believed strongly he might issue gold-backed Treasuries on July 4th. Asked a week earlier what the odds were, I put it at 50/50. Nothing was announced, and I was disappointed, along with everyone else. That does not mean the idea is dead. Anytime you pin hopes on a specific date, you set yourself up to get burned. I never called it guaranteed; I said I hoped it would happen. (Her name came up seven times in the discussion, so the credit was always there.)
Before any revaluation makes sense, some pieces need to be in place. Fort Knox needs a real audit so we know exactly what is there. The last audit was roughly 70 years ago. The world needs to know, not just the United States. I don't think revaluation happens until gold trades much higher; letting the price rise organically to $6,000 or $7,000 and then revaluing from strength is the cleaner path. Gold may also get revalued by the market itself if a new delivery-focused exchange starts setting a truer price.
The West prices gold, the East takes delivery
The heart of the shift is China and Asia. Charts from Nick Laird (shown via Ed Steer) tell the story. Take $100 and, starting January 1, 1970, buy gold at the 10:30 a.m. London fix and sell at the 3:00 p.m. fix, every business day for 54 years, reinvesting each morning. That $100 ends up worth $6.97 today, and that's before you count losses from currency debasement. You lost everything.
Flip it. Invest that same $100 at the afternoon London fix, hold through the overnight Far East Globex session, and sell in the morning as London closes. Over 54 years, the $100 grows to $112,274.
This pattern is old and stubborn. Dimitri Speck built a single graph packing 10 years of market moves: price drops at the AM fix, drops again at the PM fix, slides lower into New York, then rises through the Asian session, and repeats. A colleague once charted about 200 straight Sundays of Kitco data; 98% of the time the U.S. futures market opened lower into the session. This is not how markets normally work.
The World Gold Council calls Asia the engine of price support. In the first half of this year, gold rose almost 13% during Asian trading hours while falling during North American hours. The West has been feeding the East its gold at subsidized prices, and the East is winning at our own game. Asia values gold, so new exchanges are being built there to price it properly, and not only gold. China owns the London Metal Exchange, which sets base metal prices. What looks like gold flowing from West to East is really the price-setting power moving from a Western paper mechanism to an Eastern physical-delivery mechanism, where price ties to immediate delivery instead of the future. The tail stops wagging the dog.
COMEX, trust, and the case for competing exchanges
The question raised at the symposium: when does COMEX become irrelevant? My answer is that it already is. A market cannot stay relevant once trust is gone, and many people have lost faith in the system. Whoever stands for delivery isn't draining metal out and moving it to the eligible category, because doing so would blow up the system fast. The big players like the system exactly as it is: when they push the price down, they buy all the metal cheap.
In silver, roughly 200 times the amount available for delivery trades every single day. What could possibly go wrong?
Hong Kong built its own price-setting system because it doesn't want to rely on the LBMA and the CME Group. With only one port setting the price, a big squeeze can still be smothered: the banks and large traders own the exchange, so they'd just cash settle under force majeure rather than kill themselves. But once a second exchange sets prices for immediate delivery, being naked short in the global market turns very dangerous. More competing pricing centers should bring less volatility and better price discovery.
Keith Neumeyer of First Majestic made the sharpest point in an interview with Daniela Cambone: the metals industry is the only industry in the world that doesn't create its own pricing. Miners produce the metal but let others, mints, refineries, traders, set its value. That gap is the whole reason hedging exists.
The perfect storm that eviscerated dealers
David Morgan wrote an article asking whether the metals market let down the public, noting that people paid high premiums when buying and took steep reductions when selling. He's right about the pain, but the cause was a perfect storm, not dealer betrayal. Several forces hit at once: margin rates jumped 300%, ETFs rebalanced, and primary distributors were locked into taking their 2026 mint allocations at the very moment the public was capitulating and dumping metal. A wave of long-frustrated holders finally sold and walked away. Distributors choked on product they had to buy while retail flooded them with metal to sell. Refiners got blown up. Anyone who hadn't hedged was underwater by the time they wrote checks to sellers.
The primary distributors set the market and post the bids. Dealers, even large ones, have enormous cash tied up just holding inventory, hedging it, paying staff, and keeping product flowing.
India shows how premiums move on their own. India raised its import tax on gold and silver from 6% to 15% to cut imports and prop up its currency as oil costs climbed. It worked, but premiums exploded. From the last week of June into the first week of July, India's average domestic silver premium jumped from 10 cents an ounce to over $6.30. Premiums have a life of their own, and dealers cannot hedge them.
Why perfect hedging still can't save you
A normal trade is market-neutral: buy a thousand shares for a client, sell a thousand on the other side. Spot risk is covered. But if the premium shifts at the same time, say Silver Eagle premiums drop from $7 to $5, that $2 gap is a straight loss the company eats, whether it's a thousand ounces or a million. No hedge covers it. A large dealer trading millions of ounces a day can see premiums swing 20 times in a single day, sometimes without even noticing.
One example: a $10 million junk silver order came in. After 5 million was already bought, the buyer cut it to 5 million. That happened right before the price and the premium both collapsed, and there was no other buyer waiting. The loss was massive, and nothing could be done. In another case an order came in, a correction was emailed seconds later and missed, the trade was already locked, the distributor held the metal, premiums collapsed, and it turned into a disaster.
None of this reflects collapsing demand. It reflects market plumbing, distributor policy, taxes, logistics, and timing, all of which can matter as much as the price of the metal. The next time the market rallies, will it repeat, with nobody buying and everyone selling except central banks and speculators? I don't think so.
