Gold's big bull market sucks in big bulls...

NO ONE RINGS a bell at the top. Or so the old lags on Wall Street will say, writes Adrian Ash in this snark first shared with BullionVault's Update email readers last week. 

But Wall Street does make a big noise when hot markets peak...

...shouting at clients to burn money on over-priced mergers and acquisitions...

...while brokers, dealers and big-name investors rush to hire all the big-name talent they can, paying top dollar.

Cue Bloomberg:

If you have been looking for a reason to quit gold above $4000 (or £3000 or €3500) this might do the trick.

To add to the fun, it's not Wall Street or the City making these big-name hires from one of London's biggest bullion banks, but self-declared "financial freedom" fighters, crypto firm Tether.

Operating out of <checks notes> El Salvador, Tether-owned TG Commodities, S.A. de C.V. issues what it calls a gold-backed token. Known as XAUt, the token apparently "provides ownership on a 1:1 basis of one fine troy ounce of gold."

I won't bore you with the details. Suffice it to say, the Tether's token carries no ongoing custody fee. Which is good. Because I sure wouldn't pay safe-keeping and insurance for anything "backed" by gold with no independent Bar List to review, no reconciliation to prove there's no double-counting, no independent inspection reports, and no assurance that there's insurance cover in place from the custodian...

...a custodian who, apparently, is in fact the token provider itself...

...a company which famously has never been audited.

But never mind that...

(...and ignore the fact that, added together, all the "gold-backed tokens" sold worldwide don't match half of the gold currently owned by BullionVault users, let alone the world's wider "digital-but-not-crypto" offerings such as ICBC's in China or MMTC Pamp's in India.)

No, the amount of gold "backing" Tether's XAUt gold token isn't the story. Because the real hoo-ha is about the larger pile of gold which Tether asserts it has bought to help back the value of its far larger US Dollar-tracking token...

...the USDT.

With 184 billion apparently now in issue, this US Dollar crypto token keeps only 77% of the assets held to back each unit's $1 value in the form of actual US dollars in cash or cash equivalents (or it did, as of 30th September's "attestation report") such as US Treasury bills and money market funds.

For the rest, Tether's management have chosen more volatile, more risky and decidedly non-cash assets such as corporate bonds, loans, Bitcoin, precious metals, and the ever useful "Other investments".

That last category accounts for more than 1/3rd of the $41 billion in non-cash assets which Tether holds to back its 1-for-1 USDT tokens.

But it's the 29% of those non-cash assets held in precious metals (as of 30 September's "attestation report") which has grabbed the headlines.

Because, to quote Bloomberg quoting − well, I guess quoting Tether, if not its new gold trading hires − the crypto giant is going to "build a vast gold reserve and challenge the established players of the bullion market."

Sure. Take a number, join the queue. Bloomberg again:

Hardly new to the gold market, Citi has really been pushing its precious metals business and profile in the past couple of years.

Morgan Stanley in 2024 hired a senior exec from an existing clearing bank. So its part in this PR story isn't too surprising either.

Meantime this year, Société Générale...

...France's third largest bank...

...has joined Germany's Deutsche Bank and Japanese trading house Mitsui in returning to bullion trading after quitting when things were much quieter.

SocGen got out in 2019, just before Trump's first term in the White House finally lit a fire under the gold price. Mitsui had quit gold in 2015 and Deutsche quit the same time, pretty much right at the bottom of gold's post-financial crisis bear market.

So if their exit rang a bell when gold bottomed, their return rings a bell at the top. No?

What about US retail-and-wholesale dealers A-Mark changing their brand name to Gold.com (after apparently paying $8m for the domain name) and changing their share-price ticker (now on the New York Stock Exchange) to <GOLD>...?

Or Australia's public pension pot the Future Fund growing its gold allocation because of the global "perma-crisis"...

...while Australian refiners and retailers ABC are "hiring like mad" after lines of buyers showed up at their Sydney store during last month's price spike?

Or how about the Gold/Silver Ratio becoming mainstream UK news...

...while energy-and-base-metals trading houses Trafigura and Gunvor push into precious metals too? 

Or, most contrarian of all for 'contrarian' gold fans, how about Morgan Stanley AND now Bank of America telling investors that they don't own enough gold...

...both urging everyone to switch their portfolios from a classic 60:40 split of equities and bonds to 60:20:20, with gold getting half the old allocation to fixed income?

"Wall Street is betting against itself," warns eternal gold bull Bill Bonner, spying a top for gold headlines if not quite yet for the price.

But maybe gold is a long way from finished just yet. Because, to quote those old lags of Wall Street again, bull markets come to an end when the last bear jumps in...

...and the bears are still out in force against gold.

We'll dial into their growling, and check its decibel level against the bulls, in your next Update.