Assertive US moves could hand initiative to China: Gold, Silver, USD
Date: 4 Feb 2026 (Public release on 28 Feb 2026 truncated)
Dear reader
Three days after the crash in precious metals, which we think was probably induced to protect the Western financial system, we see our financial system more exposed than before the crash to potential action from China. Unintended side-effect of a stabilisation effort?
The more the US forces its hand, the more the fate of the USD seems to be resting in the ability to avert a steep rise in the price of Gold and Silver. While a rise at a moderate pace seems to be in everyone’s interest, the silver crash exposed a big price gap.
The widely expected US military action against Iran could lend much needed support to the USD though.
Decline of the LME
In the past our big banks’ massive paper trades could shape precious metal pricing on our metal exchanges practically unhindered, and nobody could do much about it, because there was no alternative exchange with differing prices. Paper trades were often more than 10 times bigger than real physical transactions. A s we argued in the past, even China benefitted from prices that did not reflect foreseeable supply shortages.
But since Europe and the USA used the USD and our banking system as a weapon, the Chinese currency and the Shanghai Metal Exchange have gained attractiveness on other continents. The Shanghai Exchange has been tending to pay a higher price for gold and silver than London. The premiums were often in the range of 1-3% (100 to 300 bps), our financial media barely covered it and very few investors knew about it.
What was a slow decline of our leading Metal Exchange in the West has being accelerated by the crash. Shanghai is rising, but we keep an eye on Singapore for clues and direction.
Silver Crash exposes price gap
T he big silver crash of early 2026 has exposed a big price disparity – our Western gold & silver prices were much lower than the corresponding gold & silver prices offered in Shanghai, China. Even if that gap had been closed after three trading days, it has sent a powerful message to all capitals around the world. China signalled its currency and financial system didn’t fear a re-rating of precious metals. Bring your gold to us!
In recent days the price gaps between London and Shanghai reached 20% (2000 bps) at times. Such huge price gaps are incompatible with free markets and arbitrage.
Following the crash, US investors received only USD 82 for an ounce of silver, in the Far East people were keen to pay USD 120. Such a phenomenon should not exist even for 10 minutes in trading of standardised commodities and shares. At those premiums chartering a plane to fly the metal is worthwhile.
The fact that neither our big banks are taking advantage of the premiums nor is the disparity making it to the headlines and talked about on prime time TV, underlines the reality of a bifurcating world and that our metal exchanges are dominated by paper trades and not physical gold nor physical silver.
Physical will trump out paper
Three years after we started using the USD as a weapon people all over the world are beginning to notice that Asian exchanges are more driven by physical demand & supply than our metal exchanges in London and ..
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Geopolitical Research Team – 4 Feb 2026 (Public release on 28 Feb 2026 truncated)
info@geopoliticalresearch.com
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