According to Andy Schectman - Chairman of Miles Franklin Precious Metals, the physical gold market is under unprecedented pressure, with large amounts of gold flowing out of the London Gold Market Association (LBMA) and into warehouses in the US. Many countries are also actively bringing their gold reserves back into their countries.
Schectman cited data showing that since November 2024, more than 12.5 million ounces of gold and 40 million ounces of silver have left London and moved into the US COMEX system.
He stressed that the scale of these gold transfers shows a profound change in global monetary policy. Another notable point is that JPMorgan is preparing to hand over the $4 billion gold to COMEX for the February contract. This raises the question: "Who are the customers with the $4 billion available to buy gold?"
US gold reserves and the possibility of revaluation
With the US national debt exceeding $26,000 billion and the Congressional Budget Office (CBO) forecast showing a sharp increase in interest rates from $952 billion in 2025 to nearly $1,800 billion in 2035, there is growing speculation about how policymakers can cope.
Schectman quoted US Treasury Secretary Scott Bessent as suggesting that the government could seek to "tak advantage of the value of assets on the US balance sheet". One of the measures that could be considered is a re-evaluation of the amount of gold held by the US Treasury Department.
Currently, this amount of gold is still recorded at 42.22 USD/ounce - an unchanged figure since 2013. Meanwhile, the current gold price is nearly 2,900 USD/ounce, showing a huge unpaid profit.
Schectman explained: "Every time gold prices increase by $1,500, the US Treasury has an additional $1 trillion in its account." The idea of re-evaluating gold has been supported by some experts such as Judy Shelton. She once proposed issuing gold-backed Treasury bonds.
In addition, Senator Cynthia Lummis has also called for an audit of the gold warehouse in Fort knox, where the US claimed to be holding more than 8,000 tons of gold, but there has been no independent audit since 2015.
Recently, Elon Musk - head of the US Department of Government Efficiency (DOGE) - also expressed interest in auditing the Fort knox gold warehouse. When asked on social media about the frequency of audits, he asked, and Senator Rand Paul immediately asked Musk to do the task.
Is the gold supply crisis approaching?
According to Schectman, one of the most worrying problems in the current gold market is the increasing difficulty in finding physical gold buyers. "It's taking the LBMA six to eight weeks to deliver gold now - in essence, it's almost a form of bankruptcy," he said.
In China, some major banks have announced that they are out of gold products due to strong demand. In South Korea, the country's foundry has temporarily stopped selling gold bars due to tight supply.
Schectman also pointed out that the world's largest gold ETF - SPDR Gold Trust (GLD) has just had 16 tons of gold withdrawn. He said this could be a sign that institutional investors are withdrawing physical gold from the fund, reflecting a loss of confidence in the "paper gold" market.
Looking at the current situation, Schectman shared: "I felt like something big was happening. In my 35 years in this industry, I have never seen anything like that."
With market fluctuations, the question is whether the US will re-evaluate its gold reserves or will have new policies to deal with the growing influence of the BRICS bloc.
"All of this shows a possibility: gold prices could be revalued in the US Treasury Department's gold account," Schectman said.
