Why banks changed the rules of gold trading. #finance #financetok #moneymindset #usatiktok🇺🇸 #investing

You can no longer run the shell game the way they used to. Why would they do that? Because thanks to private investors and central banks in China, the paper shell game became too expensive, too regulated, and way too risky to continue the hustle at the scale, right? It became super risky because if the price of gold suddenly went up by a lot, and you're a bank sitting on a huge short position in gold, meaning you sold a lot more gold promises than you actually had gold, and the price of it suddenly went up, you were in serious trouble. So the BIS changed the rules to make sure Western banks got their gold positions on the right side of the trade. If you follow the logic, why would they do that? Is because maybe you expected the price of gold to adjust higher. That is why gold has been replacing US Treasury bonds as the world's number one reserve asset for the first time in history. That's why central banks bought more gold in the last three years than at any point since the end of the gold standard. That is why something called Komex, the gold futures open interest, which measures how much paper trading is happening just collapse to its lowest level in 13 years. Those two things have never diverged like this in 40 years of data, and it's because one way or another, the physical market is going to be taking over. Just like the Bank of International settlement said it would in 2021. Just like the rule change was designed to allow them to do so that they could protect themselves if gold ever went up. The question is, what does that mean for the price of gold?