AGORACOM Small-cap Investor Relations Blog

Affinity Metals Corp. (TSXV: AFF) (“Affinity”) (“the Corporation”) is pleased to release assay results from the late fall drill program conducted on the Regal property encompassing 8,800 hectares of the northern end of the prolific Kootenay Arc approximately 25 km northeast of Revelstoke, British Columbia, Canada.

Along with numerous high grade intercepts in multiple holes, a significant new silver discovery was made in the ALLCO area with drill hole #10 intersecting 11.10 meters of 143.29 g/t silver including 0.55 meters of 2612.0 g/t silver. This intersection also carried high grade zinc and lead with some copper.

A total of 1,846.35 meters of diamond drilling was completed with 21 holes being drilled.

The drilling was divided over two separate target areas with 10 holes from two separate drill pads allocated to testing two areas within a graphitic argillite/limestone contact in the ALLCO area. Mineralized intersections encountered within the ALLCO area drill core consisted mostly of argentiferous galena, sphalerite and tetrahedrite hosted within quartz veins and breccias along a northwest-southeast fault that separates the limestones from the argillites.

A further 11 preliminary confirmation holes were drilled from a single drill pad designed to begin testing the underground structure associated with the historic 1971 resource (pre NI43-101 and therefore not compliant) reported for the past producing Regal/Snowflake mines. The Regal mine is located within moderately to gently, westerly dipping, graphitic phyllites/argillites of the lower Index Formation. Mineralization, hosted in quartz veins concordant with host rocks, consists of pyrite, galena, sphalerite, and locally with scheelite (lower levels), stannite (upper levels), and trace chalcopyrite/tetrahedrite throughout. Sulphides occur either as disseminations in the quartz, or as massive pods or bands parallel with slatey partings.

Robert Edwards, CEO of Affinity stated: “We are extremely encouraged to see such positive assay results from the 2019 drilling, our first drill program on the property. Our expectations were that the assays would show strong mineralization given what we have seen from our prior surface sampling program and the historical production grades, but to find this new 11 meter silver zone is truly exciting! These results set the backdrop for our 2020 exploration program which will target not only this new silver discovery but even more importantly, the two very large anomalies identified by the geophysics that may be the core deposits associated with all this surrounding mineralization. 2020 should be a very exciting year for Affinity.”

Significant intervals from the drill program are presented below:

ALLCO
Hole No.	From (m)	To (m)	Interval (m)	Ag g/t	Cu %	Pb %	Zn %
RP-19-01	28.67	29.09	0.42	106.00	0.06	0.33	0.01
RP-19-01	105.00	106.00	1.00	28.72	0.10	0.05	0.09
RP-19-03	48.70	48.77	0.07	171.00	0.05	1.24	0.46
RP-19-04	38.64	41.00	2.36	214.13	0.14	2.60	2.67
including	38.64	40.32	1.68	62.55	0.08	0.25	0.16
and	40.32	41.00	0.68	588.63	0.30	8.41	8.87
RP-19-05	40.25	43.00	2.75	29.74	0.02	0.02	0.01
RP-19-05	44.75	45.51	0.76	50.80	0.02	0.25	1.64
RP-19-05	56.33	56.78	0.45	26.16	0.00	0.89	0.91
RP-19-06	39.26	43.29	4.03	29.53	0.08	0.13	7.38
including	42.00	42.62	0.62	17.90	0.04	0.02	4.12
and	42.62	43.29	0.67	130.00	0.40	0.41	40.14
RP-19-06	49.72	50.57	0.85	129.02	0.03	0.04	0.32
RP-19-07	38.37	39.27	0.90	182.00	0.13	0.30	0.32
RP-19-07	43.70	46.51	2.81	49.21	0.02	0.34	0.78
including	45.10	46.25	1.15	91.92	0.02	0.71	1.68
RP-19-07	56.61	57.42	0.81	98.60	0.01	2.42	2.45
RP-19-08	45.44	45.94	0.50	20.64	0.00	0.46	0.01
RP-19-08	47.84	52.27	4.43	111.96	0.09	0.23	0.29
including	49.24	51.12	1.88	238.20	0.19	0.51	0.50
RP-19-08	57.51	58.52	1.01	45.70	0.00	0.05	0.03
RP-19-08	67.86	68.05	0.19	85.24	0.02	1.21	0.11
RP-19-08	82.46	82.66	0.20	11.39	0.00	0.32	0.01
RP-19-08	84.82	85.02	0.20	568.00	0.55	0.08	0.18
RP-19-09	44.41	46.62	2.21	28.70	0.02	0.15	0.13
RP-19-09	46.62	48.70	2.08	31.70	0.02	0.47	1.12
RP-19-09	48.70	49.76	1.06	6.88	0.00	0.14	0.32
RP-19-10	61.00	72.10	11.10	143.29	0.04	0.62	0.50
including	61.00	67.81	6.81	230.84	0.07	0.94	0.66
including	61.00	61.31	0.31	122.00	0.03	4.18	5.04
and	62.72	63.27	0.55	2612.00	0.66	6.00	2.89
REGAL
Hole No.	From (m)	To (m)	Interval (m)	Ag g/t	Cu %	Pb %	Zn %
RP-19-11	9.14	9.38	0.24	13.24	0.00	0.73	0.03
RP-19-11	11.14	15.79	4.65	12.23	0.00	0.32	0.36
including	15.35	15.79	0.44	52.47	0.00	1.20	2.89
RP-19-11	58.44	59.85	1.41	24.85	0.01	0.77	0.25
RP-19-12	7.32	7.62	0.30	40.02	0.00	0.69	0.02
RP-19-12	11.20	11.80	0.60	39.64	0.00	0.95	0.25
RP-19-12	11.93	13.02	1.09	35.90	0.01	0.89	0.79
RP-19-12	13.80	17.77	3.97	26.00	0.00	0.59	0.25
including	13.8	16.17	2.37	39.78	0.00	0.90	0.30
RP-19-12	60.18	60.70	0.52	12.28	0.00	0.07	0.96
RP-19-13	13.76	17.41	3.65	25.38	0.00	0.58	0.48
including	16.91	17.41	0.50	102.21	0.00	1.87	0.28
RP-19-13	18.57	19.05	0.48	15.44	0.01	0.71	0.22
RP-19-14	10.89	11.18	0.29	60.81	0.02	1.24	1.64
RP-19-14	12.28	12.84	0.56	19.83	0.00	0.25	0.21
RP-19-14	12.99	13.34	0.35	13.28	0.03	0.54	0.47
RP-19-14	13.49	13.82	0.33	20.02	0.00	0.35	0.96
RP-19-14	13.93	14.22	0.29	33.00	0.00	1.32	0.53
RP-19-14	16.04	16.31	0.27	43.86	0.00	1.65	1.01
RP-19-15	14.88	15.38	0.50	12.37	0.00	0.38	0.68
RP-19-16	11.30	11.88	0.58	31.23	0.01	0.91	0.55
RP-19-16	13.07	13.80	0.73	41.88	0.00	0.92	0.46
RP-19-16	14.48	15.32	0.84	23.84	0.00	0.62	0.44
RP-19-16	16.88	17.80	0.92	32.15	0.00	1.40	0.56
RP-19-16	28.13	28.29	0.16	4.99	0.02	0.02	2.21
RP-19-17	7.01	7.16	0.15	1360.00	0.01	19.67	0.21
RP-19-17	10.94	11.69	0.75	62.32	0.00	2.78	0.19
RP-19-17	14.64	15.47	0.83	19.82	0.00	0.52	0.36
RP-19-18	12.12	13.41	1.29	48.31	0.00	2.66	0.53
including	12.12	12.94	0.82	70.50	0.00	4.02	0.53
RP-19-18	15.97	18.53	2.56	13.02	0.00	0.33	1.43
including	15.97	17.41	1.44	12.81	0.01	0.37	2.52
RP-19-18	19.92	20.52	0.60	27.27	0.04	1.15	0.76
RP-19-19	6.00	7.00	1.00	68.42	0.00	2.38	0.22
including	6.00	6.30	0.30	134.00	0.01	7.13	0.13
RP-19-19	12.13	17.68	5.55	13.35	0.00	0.46	0.39
including	15.82	17.68	1.86	30.83	0.00	1.17	0.78
RP-19-19	29.91	30.42	0.51	22.88	0.02	1.22	0.89
RP-19-20	6.15	6.65	0.50	46.47	0.01	1.75	0.13
RP-19-20	7.60	8.32	0.72	33.37	0.00	0.50	0.19
RP-19-20	12.01	12.68	0.67	21.51	0.01	0.67	0.49
RP-19-20	15.27	16.36	1.09	18.63	0.00	0.48	0.43
RP-19-20	17.29	18.68	1.39	10.52	0.00	0.34	0.62
RP-19-20	28.08	31.17	3.09	58.78	0.00	0.35	0.33
including	29.52	30.22	0.70	214.00	0.00	0.34	0.19
RP-19-21	9.05	9.56	0.51	37.45	0.00	0.58	0.02
RP-19-21	12.98	13.82	0.84	17.29	0.01	0.47	0.79
RP-19-21	15.89	17.27	1.38	39.77	0.00	1.55	0.70
including	15.89	16.57	0.68	76.50	0.00	3.07	0.31
and	17.00	17.27	0.27	1.84	0.00	0.06	2.27
RP-19-21	30.40	30.54	0.14	46.83	0.00	0.31	0.16
RP-19-21	31.82	32.82	1.00	61.10	0.01	3.39	1.49
RP-19-21	72.01	72.26	0.25	77.11	0.00	0.62	0.02

Note: True widths are presently unknown.

Additional assay work is presently being conducted regarding Tin results in the drill core. Those results will be released once received and interpreted.

To view an enhanced version of this graphic, please visit:
https://orders.newsfilecorp.com/files/5458/54511_53b9ae91d42028a8_001full.jpg

To view an enhanced version of this graphic, please visit:
https://orders.newsfilecorp.com/files/5458/54511_53b9ae91d42028a8_002full.jpg

Photo description: Photos of 11.10 meter silver discovery intersection in Hole #10. Host rock is a limestone dissolution breccia/dolomitization breccia with weak to moderate silicification overprinting. Flooding this is milky quartz which hosts wispy veinlets of galena and blebby sphalerite at intersections of these or other veinlets.

As previously reported, the Corporation received assay results for 22 rock samples collected from surface outcrops in September 2019 from the Black Jacket and ALLCO areas of the property. Of the 22 grab samples collected, the majority contained bonanza grade silver, zinc, and lead with many samples reaching assay over-limits. The over-limit results for zinc and lead are reported in the table below (italicized) beside the original assay values. Assay values for tin, including high grade samples 11, 14 and 20 which were over-limit in the original assay report, are also presented in the last column of the table.

Sample Number	Sample Type	Silver g/t	Copper %	Zinc %	Lead %	Gold g/t	Tin ppm
ALC19CR01	grab	0	.035	0	0	0	0.4
ALC19CR02	grab	1300	.415	18.20	>20.0 (35.69)	0.70	46.1
ALC19CR03	grab	120	.232	.034	.984	0.02	2.4
ALC19CR04	grab	131	.089	.026	.102	2.66	1.1
ALC10CR05	grab	16.7	.295	.060	.013	0.09	0.4
ALC19CR06	grab	74.9	.144	>30.00 (34.97)	.059	0.28	2.6
ALC19CR07	grab	10.05	.310	.086	.029	0.04	0.5
ALC19CR08	grab	1870	.495	24.5	>20.0 (31.90)	1.85	189.5
ALC19CR09	grab	88.1	.077	>30.00 (39.98)	1.88	0.08	32
ALC19CR10	grab	1545	.178	26.7	>20.0 (28.67)	0.68	373
ALC19CR11	grab	2360	.366	16.80	>20.0 (43.67)	0.11	900
ALC19CR12	grab	3700	.624	1.645	>20.0 (71.14)	3.14	273
ALC19CR13	grab	964	.716	17.30	17.5	0.11	386
ALC19CR14	grab	3530	.350	1.945	>20.0 (59.54)	1.57	1600
ALC19CR15	grab	3670	.026	1.895	>20.0 (77.01)	0.33	205
ALC19CR16	grab	1790	.107	5.28	>20.0 (52.77)	0.37	146.5
ALC19CR17	grab	751	.069	6.45	18.05	0.45	107
ALC19CR18	grab	1065	.718	.178	.514	0.10	7.6
ALC19CR19	grab	2510	.299	5.58	>20.0 (70.63)	0.06	167
ALC19CR20	grab	4410	2.27	26.40	>20.0 (21.56)	5.68	4500
ALC19CR21	grab	47.5	.177	.048	.092	1.78	8.8
ALC19CR22	grab	87.7	.095	.011	.047	4.79	2.9

Property History & Background

The Regal Project hosts several past producing small-scale historic mines including the Regal Silver.

The property also hosts numerous promising mineral occurrences. From the historic records it appears that most, and perhaps all, of the known mineralized showings/zones have not been previously drilled using modern diamond drilling methods.

The geology of the Regal property generally consists of the Badshot and Lade Peak limestones, and argillites and phyllites of the Index Formation.

Snowflake and Regal Silver (Stannex/Woolsey) Mines

The Snowflake and Regal Silver mines were two former producing mines that operated intermittently during the period 1936-1953. The last significant work on the property took place from 1967-1970, when Stannex Minerals completed 2,450 meters of underground development work and a feasibility study, but did not restart mining operations. In 1982, reported reserves were 590,703 tonnes grading 71.6 grams per tonne silver, 2.66 per cent lead, 1.26 per cent zinc, 1.1 per cent copper, 0.13 per cent tin and 0.015 per cent tungsten (Minfile No. 082N 004 – Prospectus, Gunsteel Resources Inc., April 29, 1986). It should be noted that the above resource and grades, although believed to be reliable, were prepared prior to the adoption of NI43-101 and are not compliant with current standards set out therein for calculating mineral resources or reserves.

ALLCO Silver Mine

The ALLCO Silver Mine is situated 6.35 Kilometers northwest of the above described Snowflake/Regal Mine(s). The ALLCO Silver Mine operated from 1936-1937 and produced 213 tonnes of concentrates containing 11 troy ounces of gold (1.55 g/t), 11,211 troy ounces of silver (1,637 g/t) and 173,159 lbs of lead (36.9%).

Airborne Geophysics to Guide Future Exploration

An extensive airborne geophysics survey conducted by Geotech Ltd of Aurora, Ontario, for Northaven Resources Corp. in 2011, on the Regal Project identified four well defined high potential linear targets correlating with the same structural orientation as the Allco, Snowflake and Regal Silver mines. Northaven also reported that the mineralogy and structural orientation of the Allco, Snowflake and Regal Silver appeared to be similar to that of Huakan’s J&L gold project located to the north, and on a similar geophysical trend line. The J&L is reportedly now one of western Canada’s largest undeveloped gold deposits. Rokmaster Resources Corp. recently optioned the J&L property in a $44.2M deal and has renamed it the Revel Ridge Project. Rokmaster is presently working on expanding the current resource.

After completing the airborne survey, Northaven failed in financing their company and conducting further follow up exploration on the property and subsequently forfeited the claims without any of the follow up work ever being completed. Affinity Metals is in the fortunate position of benefitting from this significant and promising geophysics data and the associated targets.

The aforementioned Northaven airborne geophysical survey conducted at a cost of $319,458.95 in August of 2011 is described in The BC Ministry of Energy, Mines and Petroleum Resources Assessment Report #33054. The results of the survey are competently explained and illustrated by professionals on You Tube at: https://www.youtube.com/watch?v=GX431eBY_t0

Condor Consulting, Inc. who compiled the survey data and produced the original geophysics report was recently retained by Affinity in order to provide more detailed interpretations and potential drill target locations with the aim of testing two of the four main target areas in the future.

Earth Sciences Services Corp. (ESSCO) has also recently provided acoustical geophysics data for portions of the Regal property. This data is also being interpreted and analyzed with respect to future drill targets.

The Corporation is presently in the process of correlating and interpreting all of the historic and new geophysical and geochemical data as well as the 2019 drill results with the objective of further defining 2020 drill targets.

Affinity Metals has been granted a 5 Year Multi-Year-Area-Based (MYAB) exploration permit which includes approval for 51 drill sites.

Assay Procedure, Quality Assurance and Quality Control Procedures

All drill core samples were sent to MSA Laboratories in Langley, British Columbia for assay. Samples were analyzed by the following methods, as appropriate, to determine grades: ICP-130 35 element two acid digestion with ICP-AES finish, IMS-130 51 element two acid digestion with ICP-AES/MS finish, FAS-418 Ag 30g fire assay with gravimetric finish, determination of Ag, Cd, Pb, W, and Zn with four acid digestion and ICP-AES finish, determination of Pb and Zn by titration, and determination of Sn by Sodium Peroxide fusion with ICP-OES finish.

The Company employed a QA/QC program that was managed by a Qualified Person during the entire drill program. Blanks, duplicates (both pulp splits and 1/4 core), and two certified standard reference materials were used. These QA/QC samples were inserted at a rate of 1 every 10 to 15 samples.

Qualified Person

The Qualified Person for the Regal Project for the purposes of National Instrument 43-101 is Frank O’Grady, P.Eng. He has read and approved the scientific and technical information that forms the basis for the disclosure contained in this news release.

About Affinity Metals

Affinity Metals is focused on the acquisition, exploration and development of strategic metal deposits within North America.

The Corporation’s flagship project and present focus is the Regal.

On behalf of the Board of Directors

Robert Edwards, CEO and Director of Affinity Metals Corp.

The Corporation can be contacted at: [email protected]

Information relating to the Corporation is available at: www.affinity-metals.com

Sponsor: Affinity Metals Corp. (TSX-V: AFF) is a Canadian mineral exploration company building a strong portfolio of mineral projects in North America. The Corporation’s flagship property is the drill ready Regal Property near Revelstoke, BC where Affinity Metals is making preparations for a spring drill program to test two large Z-TEM anomalies. Click Here for More Info

By the mid-6th century BC, Darius the Great was ‘King of Kings’, ruling over the vast Achaemenid Empire.

By that time, gold and silver had already been in use by earlier civilizations for thousands of years.

There are cuneiform tablets that are nearly 4,000 years old from ancient Sumeria which record commercial transactions made in gold and silver.And subsequent civilizations – the Babylonians, Egyptians, Lydians, etc. all used gold or silver in commerce.But Darius had a unique idea. He borrowed the idea of minting gold and silver coins from the Lydians… but then established a fixed exchange rate between the two metals.

Darius decreed that one gold “daric” was worth 13.5 silver coins– one of the first examples in history of a fixed, bimetallic standard.

His idea caught on. And for thousands of years afterward, later civilizations established a fixed gold/silver ratio.

In ancient Greece during the age of Pericles, gold was valued at 14x silver. In ancient Rome, Julius Caesar valued gold at 12x silver.

It remained this way for centuries.

Even in the earliest days of the United States, eighteen centuries after Caesar, The Coinage Act of 1792 established a ratio of 15:1.

(According to the law, one US dollar is supposed to be 24.1 grams of silver, or 1.6 grams of gold. So those pieces of paper in your wallet are not dollars– they are technically “Federal Reserve Notes”.)

In modern times there is no longer a fixed ratio between gold and silver, though its long-term average over the last several decades has been between 50:1 and 80:1.

This is a lot higher than in ancient times… but the circumstances are obviously different.

Today, gold is still widely used as a reserve by central banks and governments around the world.  And investors still buy gold as a hedge against inflation and uncertainty.

Silver, on the other hand, has countless industrial applications; it’s a critical component in everything from mobile phones to automobiles to solar panels.

Like gold, silver is also a hedge against inflation and uncertainty.

But silver’s demand fundamentals are more heavily influenced by overall economic health. If the economy is in recession, silver prices can fall because there’s less demand from industry.

Gold, on the other hand, doesn’t follow that pattern. In 5 out of the last 6 recessions, in fact, gold has increased in price.

That’s why recessions, and extreme turmoil, can lead to a massive spike in the gold/silver ratio. Gold goes up, and silver stays flat (or falls).

• Just prior to World War II as Hitler launched his invasion of Poland, the ratio spiked to 98:1.
• In 1991 as the first Gulf War began, the ratio again reached 100:1.
• Today we’re back again in that territory; as of this morning, the ratio is 110:1, and it’s been as high as 120 or more in recent weeks

Source: MacroTrends.net

Now, there are very few things about this pandemic that we can be certain about.

Things that were unthinkable even a month ago are now part of our daily lives. And so as I’ve written over and over again, EVERY possible scenario is on the table right now.

But one thing that does seem very clear is that central banks around the world are going to print an extraordinary amount of money.

Many of them already have.

The Federal Reserve in the US, for example, has already expanded its balance sheet to SIX TRILLION DOLLARS.

That’s a nearly 50% increase from last month. And they’re just getting started.

Why does something so mundane as a central bank balance sheet even matter?

Because a rising balance sheet means they’re conjuring trillions of dollars out of thin air to bail everyone out.

This is the way they solve problems: they print money and debase the currency, something that policymakers have been doing for thousands of years.

But you can only get away with doing that a limited number of times before the currency starts to lose value.

We don’t know how long it will last, how much destruction it will cause, or what the world will look like once this is over.

But we can be pretty sure that central banks are going to print a ridiculous amount of money, and that governments will go into a ridiculous amount of debt.

They’ve told us this much. And they’ve already started to do it. So this seems pretty obvious.

The price of gold is up significantly over the last several months, and since the start of this crisis.

But the price of silver has declined… leading to a record-high gold/silver ratio.

This ratio may stay elevated for a while, or even go higher.

But in the past, the ratio has always returned to more traditional levels. Always. Even when the world was facing Adolf Hitler or the Great Depression.

So it stands to reason that, if they keep printing money (which they already are), and the ratio eventually returns to its historical range, the price of silver could really skyrocket.

We’ll spend some time this week talking about some interesting ways to take advantage of this.

SOURCE: https://www.zerohedge.com/commodities/why-price-silver-could-skyrocket

Sponsor: Affinity Metals Corp. (TSX-V: AFF) is a Canadian mineral exploration company building a strong portfolio of mineral projects in North America. The Corporation’s flagship property is the drill ready Regal Property near Revelstoke, BC where Affinity Metals is making preparations for a spring drill program to test two large Z-TEM anomalies. Click Here for More Info

• The gaping price differential between spot gold and gold futures that has been plaguing the paper gold markets in London and New York for the last three weeks shows no signs of abating and is continuing to flare up.

In essence, the contango phenomenon we are seeing is one of gold futures prices trading far above spot gold prices, a sign of liquidity problems in the London gold market and a signal that something is completely broken between the world‘s two predominant â€œgold price discovery” trading venues – which both, by the way, trade paper gold. As a reminder, London LBMA trades unallocated gold over the counter (OTC), a form of synthetic fractional gold derivative. The vast quantities of unallocated gold which are traded in London are then netted and cleared in an electronic clearing engine called Aurum by 5 LBMA bullion banks that comprices London Precious Metals Clearing Limited (LPMCL), namely JP Morgan, HSBC, UBS, Scotia, and ICBC Standard Bank). Allocation of physical gold is a totally separate process beyond clearing in Aurum

COMEX trades predominantly cash-settled gold futures contracts on exchange and facilitates the trading of these contracts bilaterally. COMEX futures are 99.9% cash-settled and even those that result in delivery really result in warehouse warrants changing hands but the gold staying in the New York vaults of JP Morgan, HSBC and Scotia.

That the wide-open spread continues to persist is even more remarkable, despite the best efforts of the London Bullion Market Association (LBMA), CME Group (operator of COMEX) and the powerful London-New York bullion bank syndicate to throw all they have at the problem.

At the time of writing, spot gold was trading at US$ 1696 against US$ 1753 for the front-month (most actively traded) COMEX gold futures contract, a $36 spread with futures over 3.44% over spot. The spread we‘re referring to can be seen in the below 3-day chart, which plots June 2020 gold futures (red and green line) against spot XAUUSD (blue line) from 6 April to 8 April. Notice that over this time the futures price has stayed far above spot, and more importantly, it has persistently done so.

3 day chart of COMEX gold futures price (June 2020) versus LBMA spot gold price, 6 – 9 April 2020. Source: www.barchart.com

The spot-futures spread blow out that has been running into its third week now can vividly be seen by zooming out and looking at a similar chart but this time from 24 March until 9 April, the first day that the price spread between London and New York gaped open. Notice the big gaps between futures and spot over 24-25 March, the persistence of the gap over the remainder of the week, and the subsequent re-explosion of the divergence since early April, particularly over the last few days.

COMEX gold futures price (June 2020) versus LBMA spot gold price; Source: Bloomberg

Three Weeks and Counting

Its instructive to review a short timeline of some of the events which have contributed to this ongoing saga over the last three weeks, because it shows that no matter what the LBMA and CME do, the spread between London and COMEX continues to stay out there.

Week 1

23 March – COMEX gold futures (April contract) begin trading noticeably above LBMA bullion bank spot gold prices.

24 March – Spreads between COMEX futures and London spot blew out to $100 at one point during the day, while bid – ask spreads within London spot widened substantially.

24 March – Rumors in the gold market suggested that bullion banks that were required to deliver physical gold for COMEX Exchange for Physical (EFP) transactions failed to do so, suffered losses and exited the market, and that this caused the Spread between COMEX and London to widen substantially.

The bullion bank controlled LBMA releases its first control statement, deflecting attention away from London, saying it will help (essentially collude with) the CME-COMEX in the gold market – The official language is that the LBMA â€œis working closely with COMEX and other key stakeholders to ensure the efficient running of the global gold market.”

Note – Who are these other key stakeholders, what do they mean by efficient running, and what gives them the right to think they can â€œrun“ the global gold market?

24 March – LBMA and its bullion banks pressure CME to launch a gold futures contract with a deliverable clause in London 400 oz gold bars.

24 March – At end of day, CME announces the launch of a new gold futures contract that can theoretically deliver 400 oz bars, 100 oz bars and kg bars but that uses a fractional paper concept called Accumulated Certificates of Exchange (ACEs) to divide 400 oz deliverable bars into 100 oz bars, and that critically includes all refiner brands on the LBMA Good Delivery List (current and former Good Delivery refiners). This contract will be called 4GC (See here and here).

See BullionStar article “LBMA colludes with the COMEX – To lockdown the global gold market?” for background to the above.

25 March until end of March – For the rest of the week, disinformation from bullion banks to mainstream media about flight cancellations and refinery closures preventing bullion banks delivering gold from London to New York thus causing prices on COMEX and London to diverge. See here, here, here and here for examples. From the below chart you can see that there is never any gold exported from London to New York.Gold imports in the USA, 2019. US DOES NOT import gold from the UK, despite what Reuters parrots without checking facts. Source: www.GoldChartsRUs.com

Week 2

30 March – CME published its daily gold vault stocks report (for Friday 27 March) with a new category for “400 oz AND eligible brands”, but with all vaults showing zero stocks of 400 oz gold bars. And notably, that the JP Morgan vault in New York had zero holdings.

30 March – When Bullionstar draws attention to this new CME vault report,  in “COMEX can’t find a 400 oz bar for its new 400 oz gold futures contract“, the CME then deletes the new report from its website on the morning of 31 March,  and replaces it intra-day with a report which reverted to the original version.

1 April – LBMA and CME publish an unprecedented second control statement titled “LBMA and CME group comment on healthy gold stocks in New York and London”, saying that “CME Group and LBMA..will continue to coordinate efforts as market circumstances evolve”. See “LBMA and COMEX try to Reassure the Market – Twice in One Week“ for background.

Note – If LBMA and CME are trading gold bars, why would they need to coordinate efforts, and more importantly, coordinate efforts to what end?

LBMA disingenuously refers to 8326 tonnes of gold in London, a figure that is from 3 months ago, and nearly all of this total tonnage is central bank gold, gold held in ETFs, and allocated gold held by other investors. The real float of physical gold in the london LBMA gold vaults controlled by the LBMA bullion banks is less than 1000 tonnes and some estimates from sources in the bullion banks say it could be between 300 and 500 tonnes.

In the same statement, CME refers to 9.2 million ozs ( 287 tonnes) of gold held in its approved vaults, with irrelevant claims that 5.6 million ozs of this is eligible gold. Eligible gold is gold which just happens to be in the form that satisfies the deliverable unit of the contracts (1 kg bars or 100 oz bars). The rest of this figure is registered gold, which already has warehouse warrants attached.

2 April – The spread between COMEX gold futures prices and London spot gold prices starts to gap up strongly again.

Rest of week – CME Group releases publicly a PowerPoint slide presentation titled â€œPrecious Metals Physical Delivery Process”, which includes the new 4GC contract and explains how to get an electronic warrant if standing for delivery of COMEX gold futures contracts, but that explains nothing about withdrawing gold from the COMEX vaults.

The COMEX presentation also features a slide discussing the COMEX New York approved vaults but unbelievably instead of showing photos of one of its approved New York vaults, this slide contains photos of a HSBC gold vault in London showing gold bars belonging to the exchange traded fund, the SPDR Gold Trust (GLD). This GLD gold has nothing to do with COMEX gold vaults in New York (or does it?).

COMEX presentation slide uses photos of a HSBC gold vault in London featuring SPDR Gold Trust gold bars

Week 3

6 April – The spread between the COMEX June gold futures contract and the LBMA spot gold price blows out again very widely to over $80 at one point in the day.

6 April – CME adds back the category “Enhanced Delivery (400 oz AND eligible brands)” to its New York daily vault report. Of the 9 vaults on the report, 5 have 0 holdings in this 400 oz category, 2 (Brinks & Loomis) have a combined 2 tonnes, HSBC claims 21.5 tonnes, JP Morgan appears for the second time, claiming 126.8 tonnes. The first time being 30 January when JP Morgan was listed as having zero tonnes of 400 oz bars.

Note – “400 oz AND Eligible Brands” will be the subject of another article soon, but for now it means as follows. For the new 4GC contract, CME added all LBMA Good Delivery gold bar Brands (Current and Former) as Eligible brands. That’s 68 brands from the existing GC100 contract + 71 brands from the LBMA current Good Delivery List  + another 113 LBMA former Good Delivery List As another aside, where did the JP Morgan New York vault suddenly get 126.8 tonnes of gold suddenly to add to Eligible category for the COMEX 4 GC contract? Was this 126.8 tonnes of gold suddenly shipped in to the JP Morgan vault from London? Hardly. Were 126.8 of London Good Delivery gold bars already sitting in its New York vault. Probably not as its London and not New York which is the center of 400 oz gold bar storage. Was there some type of gold swap involved between London and New York. Possibly.

Another intriguing possibility is that now that former LBMA Good Delivery List gold bars are eligible for the new 400 oz contract, that JP Morgan borrowed Old US Assay Office gold bars from the New York Fed (their two gold vaults are beside each other), and then added these to the Eligible category for the new 4GC gold contract.

Root Cause of Spot vs Futures Gold Price Discrepancy

So what is the cause of this dislocation in pricing between the lower ‘spot’ price and the higher ‘futures’ price, i.e. between the London LBMA gold spot market and the New York COMEX gold futures market? The answer in general is that the problem is with the spot price. And where is the spot price? London.

Ironically, the LBMA bullion banks are trying to shift the attention away from London, when London is exactly where the problem is. The spot price problem appears to be due to liquidity problems of the LBMA market makers in London where they are suspicious of trading with each other. This is despite the fact that these LBMA market makers are obliged to constantly make a market and offer two way price quotations to each other. These market makers are BNP Paribas, Citibank, Goldman Sachs, HSBC, ICBC Standard, JP Morgan Chase, Merrill Lynch, Morgan Stanley, Standard Chartered, Bank of Nova Scotia, Toronto-Dominion and UBS.

The spot price problem has nothing to do with air travel cancellations or shipments of 100 oz gold bars from London to New York. These market makers do not make markets in physical gold. The unit of trading in London is not real gold anyway, its unallocated gold or gold credit which is issued by a bullion bank and which has counterparty risk.

Something has spooked these market makers and caused a drop in liquidity in the London market. These banks, which normally trade with each other, now do not want to trade with each other due to heightened counterparty risk. Unallocated trading volumes in the London gold market have fallen over the last three weeks. See chart below.LBMA – Unallocated gold trading volumes, week-to-week, last 4 weeks to 5th April. Source: www.lbma-i.com

Likewise, according to Bloomberg, COMEX gold futures trading volume last week was 80.6 million ounces, a 72% drop compared to the end of February. From the same Bloomberg article, there is an intriguing and obviously dramatic quote from commodities broker Marex Spectron, saying:

“You have a bunch of shell-shocked market makers who are literally hiding under their desks and do not and possibly can not make markets in any size, shape or form,” said David Govett, head of precious metals trading at Marex Spectron. “Hence we have the lack of liquidity, the small volumes and the wide spreads.”

Marex is a broker for EFPs, so maybe the LBMA market makers are not answering calls. Then they are failing in their duty and obligations as market makers. But why would market makers not want to trade and how does this relate to EFP spreads? If banks suffered EFP problems and then the EFP spread between London and New York blew up, and then they use the excuse that the EFP spread is too large for them to make a market in spot because they don’t want to take on risk, then that’s just circular logic and a pathetic excuse. But what causes LBMA market makers to become shell shocked and literally hide under their desks?

Could it be that the gold trading activities of some of these LBMA bullion banks have blown up and they have ceased their market making activities, but have not publicly stated this, and covered it up? Stranger things have happened. All the while, as trading volumes continue to fall in the paper gold markets of London and New York, the opposite is the case in physical gold markets, where BullionStar and other bullion dealers – those that continue to have inventory – see unprecedented demand and increasing trading volumes.

SOURCE:BullionStar.com website with the same title “Bullion Bank Nightmare as LBMA-COMEX Spread Blows Up Again“.