Exclusive Interview – Ned Naylor-Leyland: “The Chain of Custody Behind Gold’s Price Setting Mechanism Appears to be Breaking”

January 4, 2012 | By Tekoa Da Silva | 4 Comments

ned I had the chance to speak with Ned Naylor-Leyland yesterday, Investment Director with Cheviot Asset Management, and adviser to an offshore precious metals fund. It was a spectacular interview, as Ned is one of the few truly free thinkers in the investment business today.

During the interview Ned shared his thoughts on the new PAGE(Pan Asia Gold Exchange) launch in 2012 & the great opportunities it will provide investors, the recent pullback in gold and silver, and what may end up taking gold to go much higher levels.

In regards to the impending PAGE launch Ned said, “The great thing about this new exchange in China and the philosphy behind it, is its harking back to the old days of gold where you pay cash and get your gold…they’re opening up a 1 to 1 fully allocated recieipts market in gold. If Jeff Christian is to be believed, there is 350 to 1 leverage[in the Western paper gold markets]. That will give you a 0.3% coverage in terms of real metal behind your contract.”

Ned further adds, “I think the opening of the new Chinese allocated market will change people’s perception of holding huge leveraged unallocated positions within the LBMA system.”

dragon1 When asked about opportunities the PAGE market transition will provide, Ned said, “I think the arbitrage opportunity will manifest fairly quickly…The chain of custody behind the [gold] price setting mechanism appears to be breaking…the CME and comex futures market mechanisms are clearly nonsense, [investors] are leaving in droves as you would expect…I’ve labeled 2012 as the year of [gold] deliverance.”

In response to the current sell-off in gold, Ned commented, “You’ve got to bear in mind, they’re just selling leveraged paper, no one is selling physical. There is just a tsunami of paper selling in order to maintain the illusion of fiat value…and it will be overcome…the
physical buying will ride over the paper selling.”

He further stated that this sell-off, “gives [investors] an opportunity to diversify and hedge themselves at a reasonable level, because in due course we’ll get a huge move and the market will have recognized what is really going on...we’ll get some kind of event in the market which will drive price discovery and a change in the way markets behave in one fell swoop. The substantial illiquidity of gold and silver will prove to be a big problem for asset allocators and people trying to come in at that point.”

This was another outstanding “must-listen” interview with one of the real intellectuals in the business today.

To listen to the interview, left click the following link and/or right click and “save target as” or “save link as” to your desktop:

Interview with Ned Naylor-Leyland

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To learn more about Ned and Cheviot Asset Management visit: Cheviot.co.uk

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Thanks,
Tekoa

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Comments

4 Comments so far

felix on January 4, 2012 12:15 pm
So put me down as a: “Radical Dribbling Silver Bug” too… :0)
You get the very poshest chaps Tekoa!
Great stuff and ATB for 2012 to you dawg.
Larry Galearis on January 6, 2012 1:01 pm
Specs leaving the COMEX and LBMA in droves, eh? Yes, I can see that (assuming the data is accurate)BUT I have difficulty seeing how a dropping open interest rate or transfers of ownership rate (LBMA) supports price rises when it allows the bullion bank market manipulators an easier task of setting whatever price they want. Sure, leverage is dropping but that is like a return to those totally controlled markets of the ’80s and ’90s and I have YET to read one word of how we can expect an explosion in price for gold and silver (paper) while this process is on-going…In other words this system is so perverse and corrupt that even as a paper market like the COMEX fails, it allows the bullion banks easier price control.
FWIW,
Galearis
jt on January 7, 2012 2:27 pm
Galearis…those are some of my thots/questions as well. We all “know” (*see below) that it is the physical market that will eventually liberate the price of gold and ESPECIALLY, we hope, the price of silver from the paper / derivative / electronic manipulation. But many of us have expected that to happen already and already and already, and it still does not happen (doesn’t mean we’re not “close”…nevertheless we’re not “there” yet, whatever “there” is going to look like in terms of “everything else” outside the prices of gold and silver…and “priced” in WHAT exactly?).

On top of that, though those of us who are free-and-non-manipulated market proponents and seekers and desirers (aka “goldbugs”) detest and disdain the paper markets as they now are, one STILL cannot without great difficulty find an analyst or writer or subscription site owner in our group that doesn’t follow closely and comment daily on every heartbeat, or should I say “arrythmia,” of the paper markets (COMEX/LBME), kowtowing to them and showing them “respect” simply by doing that, even as they poohpooh them.

Why is that? I say it’s b/c we just don’t know WHEN it will or perhaps even MAY happen (TPTB have SUCH control and have become totally criminal and above the laws), and so we’re STILL stuck in this paper system for only God knows how long. And we all still have to function in the paper world to buy and sell…ie, we STILL need fiat currency. But no true gold/silverbug is going to be selling any significant amt of his metal down here to HAVE paper…which makes the balancing act of one foot in the paper system, one foot out, along with the timing of when we would yank that endangered foot “out” of the paper system completely (whatever exactly that would look like–ALL in precious metals? some still in mining stocks? out of the country in PMs? out of the country in what?…and WHERE?), a very precarious and mind-fatiguing ongoing pain in the buttolios.

*I say, “we know” in quotes above b/c there certainly are stories (eg, per BFulford), semi-believable at least, of vast amounts of off-the-market sequestered gold (whether accompanied by equally vast amts of silver or not, I don’t know) in places in Asia for example. If these stories are true (and I find the “two-Olympic-sized-pools-hold-all-known-gold” story ALSO simply a story with MINIMAL actual fact and massive assumptions backing it)then how would we ever determine the true value of gold (+/- silver) without knowing the actual above-ground amounts?

The free market would tell us how high it would go before someone with a “stash” would start unloading it…but the bigger question again is “for what other currency / money / thing of value” would or could it be exchanged for were it decided by its owners to “dump” it on the market? Since there isn’t such a currency alive today, there would be no reason to “sell” it, or more accurately, exchange it in the “market.” Therefore, I think we can assume that there is no intention to sell it presently and that it would remain, perhaps forever, and assuming it exists, off the world markets and be used as a position of power and bargaining rights. I don’t know…jt
Erwin Witt on January 24, 2012 9:50 pm
Gold manipulation? If the price goes down it is manipulation. If the price goes up, it is so wonderful and moral. All the while gold bugs are hoping to unload their hoard at higher and higher prices to naive fools who really believe there will be hyperinflation without hyperinterest rates. History will show what happens to any fool who believes any asset can only go up at 20 or 30 percent per year forever!