Interview with Fabrice Drouin Ristori to get to know his views on economics, gold and where the global monetary system is heading.
What is your background?
I am a French serial entrepreneur and investor. Prior to 2008 I developed companies in the internet sector and then, after selling one of these companies, I got interested in everything related to our monetary/financial system and decided to invest my funds in physical gold and silver. I have been analyzing and investing in the gold and silver markets since 2008 and I created Goldbroker.com in 2011.
What made you decide to start a gold shop/storage company?
Simply, as an investor myself I wanted to own physical gold and silver bars in my own name. No paper gold, no mutualized gold. I wanted to own physical bars outside the banking system.
I didn’t want to be exposed to any counter-party risks, so I decided to set up Goldbroker.com as an answer to these issues. Goldbroker.com enables investors to:
– Own real physical gold and silver bars, not paper gold
– Own those bars in their own name, without counter-party risks
– Store in their own name, so they can access the vault and even withdraw their bars
– Store outside the banking system
This is the investment solution I wanted for myself as an investor.
Where is your company based, where are the vaults based, and can any customer withdraw one’s gold at any time?
Goldbroker.com is based in Malta where we have our operational team. The vaults are located in Zurich, Switzerland, and soon in Singapore.
Our clients can go to Zurich anytime and withdraw their gold, even without the presence of any Goldbroker.com employee. This constitutes an absolute guarantee that they don’t own gold through our company, but directly in their own name.
Does your company handle unallocated accounts?
All the gold and silver bars are 100% allocated to each of our clients. We don’t provide mutualized gold either, since it would not be appropriate for taking possession of the bars in case of an emergency.
Are you more bullish on gold or silver? Do you think gold will be re-monetized?
I’m definitely more bullish on silver. I personally own a high proportion of my portfolio in physical silver. One just needs to have a look at the gold/silver ratio to realize that silver is way undervalued compared to gold. Besides, silver is the only asset in the world which price is 80% below its 1980’s price.
Silver combines investment and industrial demand as well and is consumed when used. So yes, I’m very bullish on silver.
I do think that we are moving back toward a re-monetization of gold. Like mankind has always done throughout History.
What we are witnessing is the end of a paper money experience which will materialize in a complete loss of confidence in everything not tangible.
I think this move toward a re-monetization of gold will be pushed as well by international trade. Trade dictates monetary reforms and soon the BRICS, oil and natural gas producers will stop accepting paper money in exchange for the commodity they sell and move toward a gold trade settlement system.
How will it be re-monetized? How will this process unfold, in what time frame?
Loss of confidence and international trade will require it.
I tend to think that we will see an international monetary reset at some point, and gold will be part of it. Again, gold will be used because of its monetary attributes, the most important of which is that gold is money without any counter-party risk.
A time frame is always hard to foresee as human decisions/behaviors are involved, but I wouldn’t be surprised to see it happening in the next five to ten years.
Do you think the price of gold is manipulated?
Manipulating the only form of money that has been used for thousands of years is the best way to protect a fiat monetary system. So you don’t need to be a genius to understand why gold would be manipulated, you just need to understand money and the huge power that the central banks have when printing unlimited amounts of money.
Gold and silver are manipulated. Chis Powell and Bill Murphy from the GATA camp have done a great job documenting this manipulation. For those who want to see they provide all the evidence.
People, investors and the mass media are slowly waking up to the fact that gold and silver are manipulated, but this manipulation scandal will be revealed in the coming years.
Gold price rigging is more and more becoming mainstream news and this article published by the Financial Times proves this.
How is it manipulated? In what market (NY, London)? With what instruments? (futures, gold leasing, unallocated accounts, options, forwards)
It’s manipulated through different instruments or techniques:
– Physical gold sales in the market, though this has stopped recently as central banks don’t want to sell/lease more physical gold or simply don’t have enough physical gold to continue playing this game.
– Re-hypothecation of gold: basically selling several times the same gold bar to different clients. Investors are exposed to this when they own unallocated gold bars.
– Selling of paper gold certificates to investors who think they own gold when they only own a piece of paper. This bypasses the massive demand from the physical market, limits the pressure on the physical market and creates an important virtual supply of gold. I think you can analyze the creation of certain gold ETFs in that perspective.
– Massive selling of future contracts when the market is the most illiquid on the COMEX.
As confidence in everything “paper” breaks down and physical gold supply disappears at these artificially low prices, the physical market will take over the paper market and it will put an end to the capacity to manipulate gold and silver.
You can’t manipulate reality forever.
Do you think the US is collaborating with other countries, like China (or even BIS), in gold price suppression?
I don’t think power is easily shared and you know the saying “Who owns the gold makes the rules”, so I don’t really see the US helping China get their hands on cheap physical gold thanks to the price suppression.
I think the manipulation’s first objective is to protect the dollar and the international fiat money system.
That said, I think Western central banks and the BIS, since they get their power from their capacity to issue money out of thin air, are collaborating in this gold price suppression.
Do you think Shanghai will take over the London Gold Market?
I think that China, Russia and all the big buyers of physical gold are helping the gold market move back to a physical determination of its price.
This trend toward direct physical possession of gold will destroy the LBMA (London gold market) and the COMEX in time, as they are highly leveraged and a lot of unallocation and re-hypothecation has been happening there.
On the COMEX market alone you have 112 paper gold claims for each ounce of physical gold available. Watch for cash settlements before any official default on physical gold delivery, which will happen as well in the coming years.
What China and Russia are doing by acquiring physical gold is very telling for any gold investor: if you don’t own physical gold you don’t own anything.
How will the monetary system look like in ten years?
I think physical gold will be central in the coming monetary system, with international trade settled in gold notes (convertible in physical gold), since nothing else will be accepted as a form of payment.
A global debt restructuring will be needed to begin the process.
We might experience first a reformed SDR basket, which will fail before moving to a new monetary system backed by gold. This should happen in the next ten years, probably before, but it will be heavily discussed between powerful countries, since redistribution of power towards Asia is at stake. The transition won’t be smooth.