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July 24th: The Day China Reveals Gold’s Real Price — Transcript

by The Jay Martin Show · 2,923 words · 449 segments · language en · Watch on YouTube

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0:00One month ago, one of the largest banks
0:02on Earth, the Industrial and Commercial
0:04Bank of China, announced it was shutting
0:07down paper gold trading for [music] its
0:10everyday customers. The change takes
0:12effect on July 24th, 2026. The
0:15Industrial and Commercial Bank was not
0:17alone. The Postal Savings Bank of China
0:20moved first, and then the Ping An Bank.
0:23More followed. Some of the biggest banks
0:25in the world all ending the same
0:27products, paper gold trading, all in the
0:30same window of time. Now, the official
0:33explanation is that this protects
0:36ordinary people from gold's wild price
0:38swings. And gold has been wild. It hit
0:41an all-time high in January, and then
0:43dropped nearly 30%, [music] and people
0:46got hurt. So, the story is the banks
0:49stepped in to protect them. That
0:51explanation is convenient, but I don't
0:54believe it. I think that July 24th is
0:57the day that China starts finding
0:59[music] out what gold is actually worth.
1:02And I think the price that you see
1:04quoted on your screen [music] every
1:06single day isn't the real one. But to
1:09show you why, we have to go back to a
1:11room inside the Bank of England, where
1:14in March of 1968, the floor collapsed
1:18under the weight of gold stacked on top
1:21of it.
1:23What happened in that room is about to
1:26happen again. There's a room in the Bank
1:28of England where they weigh gold. And in
1:31March of 1968, the floor of that room
1:35gave way. Not from age, not from
1:37neglect, it collapsed because too
1:40[music] much gold was stacked on top of
1:42it. The United States had been flying
1:45gold from Fort Knox on military
1:47airplanes into London faster than the
1:49men in that room could weigh it and sell
1:52it.
1:53>> [music]
1:53>> The bars piled up until the floor
1:55physically gave way underneath them. So,
1:58the question is, why was America
2:00emptying its vaults into London? And
2:02they were doing it because the most
2:03powerful governments on Earth had made a
2:06promise that they could no longer keep.
2:09And the whole world had figured it out
2:11at the same time. To understand March of
2:141968,
2:15you only need to understand one promise.
2:18After World War II, the world's
2:21governments agreed on a simple system.
2:24The US dollar would be the money that
2:26everybody used for trade.
2:28And to make sure that the dollar could
2:30be trusted, the United States made a
2:32guarantee.
2:33Any government holding dollars could
2:36trade them in for gold at a fixed
2:37[music] price of $35 an ounce. $35, 1
2:43oz, anytime, forever.
2:46And that guarantee meant that holding
2:48dollars was the same as holding gold.
2:51So, the world held dollars. But, through
2:54the 1950s and the 1960s, the [music]
2:56United States began spending a lot more
2:59money than it was earning, on wars, on
3:02social programs, on being the world's
3:04superpower. And when a government spends
3:06more than it has, it has to print more
3:09dollars to keep up. Now, here's the
3:11problem with that. The number of dollars
3:13kept growing, and the amount of gold
3:16didn't. Now, do the arithmetic that any
3:19foreign government would do.
3:21If there are twice as many dollars in
3:23the world, but the same amount of gold
3:26in the American vaults, then each dollar
3:28is really only worth half as much gold
3:31as promised.
3:33The price tag still said $35 an ounce.
3:36Everyone could see the real number was a
3:39lot higher.
3:40So, what would you do in that situation?
3:43You'd hand over your dollars, take the
3:45gold at the discount price, and say,
3:47"Thank you very much." And that is
3:49exactly what the world started doing.
3:52The United States and seven European
3:54allies decided to defend the price of
3:56gold. In 1961, they formed what was
3:59called the London Gold Pool, and it
4:02worked in a very simple way. Whenever
4:04buyers pushed the price of gold above
4:07$35, the eight central banks, the
4:10government banks that managed each
4:11country's money, they sold their own
4:14gold into the market to push the price
4:16back down. Now, think about what that
4:18means. They were not selling because
4:21they wanted to sell, they were selling
4:23the most valuable thing they owned to
4:25protect the claim that their paper money
4:28was worth just as much. And for a few
4:31years it worked. Then, France did the
4:34math
4:35and quietly left the pool and started
4:37trading its dollars for gold instead.
4:39Other countries followed, and soon it
4:41was a full run on the gold. Everybody
4:44rushing to trade paper for metal before
4:47the metal ran out. And here's how fast
4:50it unraveled. In a normal week, the gold
4:53pool sold about 5 tons of gold to hold
4:56the price. But on March 8th, 1968, it
4:59sold 100 tons in a single day. In the
5:03final week, the pool lost roughly 1,000
5:06tons of gold to suppress the price. That
5:09was the week the floor of the weighing
5:11room collapsed. On the evening of March
5:1314th, Washington asked London to shut
5:16the gold market down completely. The
5:18Queen declared an emergency bank
5:21holiday. And when the weekend was over,
5:23the governments announced their
5:25solution.
5:26They gave up. From that day on, there
5:28were two prices for gold. The official
5:30price, $35, used only between central
5:34banks, and the free market price, which
5:37immediately jumped past $40 and kept on
5:40climbing.
5:42The official price was a number that
5:43governments used with each other. The
5:45real price was what people paid when
5:48they wanted the actual metal.
5:50Three years later, in August of 1971,
5:53President Nixon ended the gold promise
5:55completely. And within 10 years, gold
5:58traded at $850 an ounce.
6:01So, hold that sequence in your head. A
6:04paper price defended by official selling
6:07until demand for the real metal broke
6:10it. And then two prices, then a whole
6:12new system. Because you're about to see
6:15every step of it again, and this time
6:17[music]
6:17it's not an accident. Which brings us
6:19back to those Chinese banks. Because to
6:22see what they're really doing, you need
6:24to understand what paper gold and paper
6:27gold trading actually is. And I promise
6:30it's a lot simpler than it may sound.
6:33When most people buy gold today, no gold
6:36actually moves anywhere. Here's what
6:38actually happens. A bank or an exchange
6:41sells you a contract. The contract says
6:44you own 1 oz of gold, and you can sell
6:47this contract back whenever you like at
6:49the going price. The gold itself, the
6:52physical bar that you in theory own,
6:55sits in somebody else's vault.
6:57Supposedly.
6:59And most buyers never ask for that bar.
7:01They don't want to store it, they don't
7:03want to insure it or guard it or
7:04transport it. They just want the price
7:07to go up so they can sell the contract
7:09for more than they paid.
7:11And the seller knows that that's the
7:13case.
7:14And that knowledge changes everything.
7:16Because if nobody ever picks up the
7:18actual metal, then the seller can sell
7:21more contracts than there are bars. They
7:23can sell claims on the same ounce of
7:25gold twice, 10 times. Nothing stops them
7:29because the only moment this fails is
7:32the moment everybody asks for their gold
7:34at once. And everyone never does.
7:37Now, ask the important question. What
7:40does that do to the price? The price
7:43[music] of anything is set by supply and
7:45demand. But in the gold market, the
7:47supply that sets the price isn't the
7:50metal. [music]
7:50It's the contracts. If there are 10
7:53paper claims for every real ounce of
7:56gold, the market sees 10 times more gold
7:59than actually exists. More supply means
8:02a lower price.
8:03Every extra contract pushes the price of
8:06gold below what the metal alone would
8:09sell for. And in London and New York,
8:11where the world's gold price is set,
8:13most of the daily gold trading is
8:15exactly this. Contracts that get settled
8:18in cash, while the actual metal never
8:20moves.
8:22Nobody knows how many paper claims exist
8:25for each real ounce of gold. And that is
8:28not a small detail. The most important
8:30price in the world is set by a market
8:33that cannot tell you how much of the
8:35thing it actually has. Now, that should
8:38sound familiar. It's the same setup as
8:401968. An official price on paper and a
8:43different reality in the vaults. Now,
8:45you might be saying, "Hold on, Jay.
8:48That's just a theory." If the paper
8:50price of gold is lower than the real
8:52price, how would we ever know? You can't
8:54exactly walk into every vault in London
8:56and count the bars. No, you can't. But
8:59there are two tests, and anybody can run
9:02them. So, let's do that. The first test
9:05is watch for those two prices. In an
9:08honest market, a claim on a thing and
9:11the thing itself cost the same. When
9:14trust breaks down, people start paying
9:16extra for the real thing.
9:18In January, physical silver briefly cost
9:21about 40% more than the paper price of
9:24silver. 40% for the same metal on the
9:28same day.
9:29Now, gold's gap is still small, but
9:31remember 1968. The gap was zero right up
9:34until the week that it wasn't. The
9:36second test is better. Ignore what the
9:39smart money says and watch what it does.
9:41If you ran a central bank and you
9:44believed the paper price was fake and
9:46the real price was higher, you would do
9:48two things. You would quietly sell paper
9:51promises and you would quietly buy real
9:54metal. So, is anyone doing that?
9:57Central banks bought 244 tons of gold in
10:01the first quarter of this year, January
10:04through March. That is the strongest
10:06first quarter of gold purchases ever
10:08recorded. They've bought more than 200
10:10tons in 10 of the last 11 quarters. And
10:14here's the detail most people miss. The
10:17World Gold Council, the gold industry's
10:19own research group, openly estimates
10:22that a large share of this buying is
10:24never actually [music] reported. It's
10:26bought, but it's not declared. And what
10:29are these same institutions selling to
10:31pay for their gold?
10:32They're selling US Treasury bonds, the
10:35paper promises of the most powerful
10:37government on Earth. Gold has now passed
10:40US Treasuries as the largest share of
10:43reserves in central banks. Read that
10:45behavior plainly. The institutions that
10:48have been holding these paper promises
10:50for a generation are now selling it to
10:52trade for metal at the fastest pace ever
10:55recorded and they are not reporting the
10:58purchases.
10:59They're not betting that the quoted
11:01price is honest. They're betting that
11:03it's low. Now, I want to leave the
11:05central banks for a moment and talk
11:07about you because the gold price being
11:10held down sounds like a trader's
11:11problem, but it's not. It's the story of
11:14your last 50 years and I can show it to
11:17you in your grocery bill. In 1976,
11:20gold cost about $125
11:23an ounce. Here's what the average
11:26American would be spending that year,
11:28first in dollars and then in ounces of
11:30gold. Let's start with housing. The
11:33average new American house cost about
11:35[music] $44,000
11:37in 1976.
11:39That was the equivalent of 335
11:42oz of gold. A brand new car, about
11:45$5,400
11:47or [music]
11:4843 oz of gold.
11:50Groceries for a family of four, about
11:52$62 a week. 1 oz of gold bought 2 weeks
11:56worth of groceries.
11:57>> [music]
11:58>> And gasoline was priced at 61 cents per
12:00gallon. 1 oz bought 200 gallons of
12:04gasoline. Now run those same numbers
12:06today, July of 2026, with gold over
12:10$4,000 an ounce. That house that used to
12:13cost $44,000
12:16now costs about $425,000.
12:19That is nearly 10 times as many dollars,
12:22but in gold, the house cost 102
12:26oz. That new car went from $5,400
12:30to about $50,000, nine times more in
12:33dollars. In gold, it went from 43 down
12:37to 12.
12:39That weekly grocery bill
12:40>> [music]
12:40>> went from $62 to 320,
12:44a 5x increase in dollars. But 1 oz of
12:47gold used to buy 2 weeks of groceries.
12:50Today, it buys 13 weeks. Gasoline went
12:54from 61 cents a gallon to 379 per
12:58gallon. And 1 oz of gold went from
13:00buying 200 gallons to buying 1,100
13:03gallons of gasoline. So, do you see what
13:06happened? In dollars, everything went
13:08up. The house, the car, the food, the
13:11fuel, six times, nine times, 10 times
13:15more expensive. 50 years of politicians
13:18and economists [music]
13:19calling it inflation as if prices rising
13:22were simply what prices do. But measured
13:25in gold, nothing went up.
13:27Everything went down. That same house,
13:30the same car, [music]
13:31the same food. Houses did not get more
13:34expensive. Cars did not become more
13:36expensive. The dollar lost its value,
13:39and gold did not. And here's the part
13:42that connects back to our story. Every
13:45one of those numbers was calculated
13:47using the paper gold price. The price we
13:50have reason to believe is suppressed and
13:52held down.
13:54If the real price of metal
13:56is higher than the quoted price, then
13:58everything I just showed you understates
14:00how well gold protected the people who
14:04held it and protected their purchasing
14:06power.
14:07Which brings us back to those Chinese
14:09banks and why anyone would spend
14:12billions of dollars to find out gold's
14:14real price. What starts in China this
14:17month is not a ban on gold. Chinese
14:20citizens can buy all the physical gold
14:22they want. What ends is the paper, the
14:25contracts, the promises. And what
14:27replaces it is a system with three
14:30parts. Watch how deliberately each part
14:33fits into the next. Part one, Shanghai,
14:37the Shanghai Gold Exchange. This
14:39requires physical delivery. When gold
14:41trades there, real metal has to move
14:44from the seller's vault to the buyer's
14:46vault. You can't sell 10 claims on one
14:49bar because sooner or later a bar has to
14:52show up. A market built that way can
14:55only measure two things, how much real
14:58metal exists and how badly people want
15:01it.
15:01Finding out what something is truly
15:03worth by removing everything fake from
15:05the measurement is called price
15:07discovery.
15:09Part two, Hong Kong.
15:11China's currency rules make it hard for
15:13foreigners to trade inside Shanghai
15:15directly. So trades from outside the
15:18country get handled through a new the in
15:20Hong Kong.
15:21That's where the rest of the world can
15:23buy and sell at Shanghai's physically
15:26set price. But part three tells you the
15:29most. Hong Kong is expanding its gold
15:32vault space from about 200 tons to more
15:35than 2,000 tons of space. 10 times more
15:40room to store physical gold. Built in
15:42advance.
15:44Now, sit with that number. A paper
15:45market needs no vaults. Contracts take
15:48up no space. You build room for 2,000
15:51tons of gold for one reason only,
15:53because you expect 2,000 tons of real
15:56gold to arrive and need to be stored.
15:59China is not predicting that the world's
16:01going to keep trading paper claims in
16:03London.
16:04Instead, it's building storage for what
16:06it believes will come next.
16:09In 1968, the run on gold was an
16:12accident. Nobody planned it. What China
16:14has built is the same event, but planned
16:17on purpose. Shut down the paper markets,
16:20make the real metal move, and find out
16:22what price the physical market produces.
16:25And here's the thing.
16:27They told us this was coming. Back in
16:292014, the head of the Shanghai Gold
16:31Exchange stood up at a conference in
16:33London, of all places, and said it
16:36plainly, "Gold is consumed in the East,
16:39but it's priced in the West. And when
16:41China gets influence in the gold market,
16:43the real price will be revealed." 12
16:46years later, the vaults are being built,
16:49and the [music] change takes effect on
16:50July 24. So, go back to that room at the
16:53Bank of England one last time. In 1968,
16:57[music] the men in that room believed in
16:59the price they were defending. They
17:01weighed and moved 1,000 tons of gold in
17:03a single week because they thought the
17:05system could be saved. [music] But the
17:07floor collapsed the same week that the
17:09promise did.
17:11Today, the gold is moving again, out of
17:13western vaults, headed east at a record
17:16pace. But notice the difference. Nobody
17:19is defending the price this [music]
17:20time. The institutions that set the
17:22paper price are the same ones quietly
17:25trading their paper for real metal and
17:28not reporting it. In 1968, it took a
17:31collapsing floor to show the world that
17:34the official price was not the real one.
17:36But this time the people who run the
17:38market may prove it themselves one
17:41unreported ton at a time. But if I'm
17:43right, remember, we're going to see two
17:45things happen. Number one, a gap will
17:48emerge between the paper price of gold
17:51and the physical metal, just like we saw
17:53in the silver market last January. And
17:56secondly, central banks will keep adding
17:59gold to their reserves instead of US
18:01Treasuries. And this matters. Remember
18:04that grocery bill?
18:05But honest question, what am I missing?
18:07Let me know in the comments. If you
18:09enjoy my content, my name is Jay Martin
18:11and this is the Jay Martin Show. I
18:13publish here every Saturday and I love
18:16doing it. If you enjoyed this, do me a
18:18favor, click like, hit subscribe, but
18:21most importantly, share this video with
18:23a friend, somebody that you know needs
18:26to see it. I'll see you next Saturday.

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