Scotiabank Exits the Gold Market

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We visited with Nick Barisheff, CEO of BMG Group, regarding Scotiabank’s announcement they are getting out of the gold market. Scotiabank is the biggest of the Canadian banks in the gold market, handling four times the volume of the other banks combined. We discuss with Nick the following points:

  • We discuss the reasons why Scotiabank may have exited the gold market;
  • We discuss how Scotiabank’s exit may affect the rest of the players in the precious metals markets;
  • We discuss how Scotiabank has allocated $200 million for exiting the market;
  • The costs may include settlement of futures hedge positions in gold;
  • We discuss how the gold will have to be transferred from Scotiabank, the storage agent, for customers who are using gold in their mutual fund offering;
  • The other LBMA members in Canada are Royal Bank of Canada and the Bank of Montreal, which is a requirement for mutual fund gold ownership;
  • How pension fund buying in North America, in event of a general market crash, could drive gold prices to $10,000;
  • We discuss the shortages in the everyday retail physical gold market and whether the top end of that market has been affected by supply chain closures;
  • We address the concerns that the gold futures participants manipulate metals prices based upon their futures positions and the inability to satisfy them with physical metal;
  • We discuss why some of those trades are still legal based upon rules of the markets;
  • We discuss the interview former CFTC Commissioner Bart Chilton had with Arcadia Economics, a Seeking Alpha contributor, on additional regulations needed for the futures markets to address the affect it has on physical trading;
  • We discuss why just holding gold since 2000 would have beaten many other investments, and why you are being paid to hold gold as a safe haven;
  • When the market corrects, selling gold to buy stocks, bonds, and REITS at rock bottom prices will be a sound trading strategy;
  • Discuss how commercial real estate is coming under fire in the US.

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