by David Jensen
The Governor of the Bank of England Mark Carney has a problem and it is a severe problem. For decades, the Bank of England has acted as a coordinating market-maker for bullion banks in the City of London that trade ‘unallocated’ or unsecured gold and silver contracts through the London Bullion Market Association (LBMA). The market is uncovering that the Bank of England (BoE) has in effect been facilitating what amounts to a kiting operation in maintaining the structure of the London metals market where the vast majority of spot claims for gold and silver can never be settled with actual metal delivery. The irony is not lost when one considers that the BoE operates the Prudential Regulation Authority that regulates 1,700 UK banks to ensure their “safety and soundness”.