Prosperity Depends Upon Trust
Markets Are Losing Trust in the LBMA and COMEX
Via his own Substack account my esteemed friend Alasdair Macleod recommended that his followers invest thirty-two minutes of their time watching an interview of precious metals market analyst David Jensen, conducted by Andy Schectman. These two gentlemen call into question whether the LBMA (London Bullion Market Association) and COMEX (Commodity Exchange) can be trusted after numerous instances of delays in fulfilling trades. For those unfamiliar with either institution I recommend a quick read of the Bullion Hunters website, which explains their importance, functions, and differences.
Society cannot function without trust in one another and our institutions. Almost every market transaction requires trust. Take the example of engaging a neighbor’s teenager to perform a routine service, such as mowing a lawn or washing a car. If the teenager demands full or partial payment in advance, we trust that he will do the job and do it well. If he does not ask for payment in advance, he trusts that we will pay him the agreed upon amount after completion of his service.
Elevate this example to the trust that market participants must have in buying, selling, shipping, and storing millions of ounces of precious metals—gold, silver, platinum, etc. This trust is established over years and decades. But recently that trust has been shattered by delays in actual delivery of the metals. I will let Mr. Schectman and Mr. Jensen explain the details of what has been happening. It appears that decades of trust have been shattered by revelations of insider dealings which put client resources at risk.
This revelation is more than just a squabble among rich bankers and their clients. Walker Wright explains the importance of trust for market societies to function in the first place. He further explains that well functioning market societies encourage even greater trust. This beneficent synergistic loop reduces costs and builds ever widening markets. Bullion and commodity markets lie at the heart of capitalism. These markets must not be allowed to hide their corruption. Nothing less that modern civilization is at risk.