(Kitco News) - The massive sell-off that rocked precious metals markets last week was not a standard correction but a calculated "liquidity event" and a "take down," according to mining mogul Frank Giustra, who warns that the 50-year dominance of paper gold pricing is coming to a chaotic end.
In an exclusive interview with Kitco News, the Fiore Group CEO broke down the mechanics of the flash crash, the White House’s newly launched "Project Vault," and why he believes the US is living on "borrowed time" as it faces an inevitable monetary reset.
A "Take Down" on a Friday Afternoon
Addressing the sharp 20% drop in gold and the "haircut" in silver prices that wiped out months of gains in 48 hours, Giustra dismissed the idea that the move was driven by fundamentals. Instead, he pointed to market structure and leverage.
"The metal complex didn't just see a correction, it was a liquidity event," Giustra said. "It happened on a Friday... Asia was closed, so there was no support. It was a Friday afternoon and... whoever had short positions on silver, especially, I'm sure participated in that downward... take down. In my opinion, it was a take down."
The sell-off was exacerbated by a swift tightening of trading conditions. Following the historic volatility, the CME Group raised margin requirements on gold and silver futures effective February 2, forcing leveraged traders to post significantly more collateral. Maintenance margins for speculative gold positions jumped to 8% from 6%, while silver margins saw a steeper hike to 15% from 11%.
Giustra noted that the crash was "overdue" after a parabolic run-up that saw gold approach $5,000 an ounce. "There was no fundamental changes in the long-term thesis... anybody who believes that [a parabolic move] can sustain itself without a correction... hasn't been in the market long enough," he said.
The Death of Paper Gold
For decades, the price of gold has been largely determined by futures contracts and derivatives—the "paper market." Giustra argues this era is now ending as pricing power shifts to Eastern exchanges requiring physical delivery.
"For the past 40, almost 50 years, the paper market has controlled the gold price," Giustra said, adding that it has often been used as a "mechanism to suppress the price." But with physical demand surging in China and Asia, he believes the "paper players are losing their efficacy."
He issued a blunt warning to investors relying on ETFs rather than bullion: "In a crisis, you better own physical gold... paper gold won't cut it. If you don't own physical gold, you don't own gold."
‘Globalization Is Dead’ & Project Vault
The interview came just hours after the White House officially unveiled "Project Vault," a massive $12 billion initiative designed to secure critical mineral supply chains. The project, backed by a $10 billion loan from the Export-Import Bank and nearly $2 billion in private capital, aims to build a civilian strategic reserve for materials like cobalt and gallium, mirroring the Strategic Petroleum Reserve.
Giustra views the initiative - which includes participation from industry giants like GM, Boeing, and Google - as a definitive signal that the free-market era is over, replaced by "state capitalism."
"Globalization is as dead as the dodo bird," Giustra declared. "The world is splitting up into camps... both in the economic and geopolitical sense... The old one [world order] is dead."
While he welcomed the US move to secure supply chains, he described the $12 billion commitment as "not a lot of money" compared to China’s decades-long head start. "The West... is trying to play catch-up now... They have no choice. China controls the critical minerals market and has for a long time."
The Debt Trap & ‘End of Fiat’
Giustra’s outlook for the US dollar remains dire. With interest payments consuming over $1 trillion annually and deficits rising by $2 trillion a year, he sees no mathematical way out other than currency debasement.
"We're living on borrowed time," he said. "There's no way to stop this train."
He predicted that this fiscal path will lead to a historic monetary reset. "We're coming to the end of the time of fiat," Giustra stated. "That's the only way historically that we've seen a reset in the global monetary system is you start with a complete debasement of currencies... and then you have to start from scratch."
‘Something Fishy’ at Fort Knox
Discussing global reserves, Giustra highlighted the discrepancy between China’s official gold numbers - 2,300 tons - and the massive flows of metal moving East. He agreed with estimates suggesting Beijing’s true holdings could be "10 times higher," accumulated covertly to back a "sanctions-free trade channel" for the Yuan.
He contrasted this strategy with the lack of transparency in the US, noting the last audit of Fort Knox occurred in 1953.
"You have to ask yourself, why don't they want to do an audit?" Giustra asked. "Maybe it's pledged... maybe... some of it's not there. It's been lent out... It's all weird... there's something fishy going on."
Bitcoin Warning: ‘Running Out of Buyers’
While bullish on gold and copper ("Copper is next" after gold, he noted), Giustra remained a fierce critic of Bitcoin, predicting a painful collapse for the cryptocurrency and the treasury companies holding it.
"Bitcoin is the one asset class to avoid," he said. "Bitcoin is running out of buyers... They're running out of reasons why people should buy."
He warned that leverage in the crypto system would lead to a "great unraveling," stating, "Bitcoin's gonna go, in my opinion... a lot lower."
Watch the full interview with Frank Giustra above for his detailed forecast on mining stocks, the "Synthetic Foreign Demand" for US debt, and why he believes the mining bull market is still in its "early days."
https://www.kitco.com/news/article/2...ult-signal-new
Whenever Trump announces that the Bitcoin Committee he put together determines that we can't have Bitcoin as a national strategic reserve is when Bitcoin will crash 50% or greater on the announcement of the news alone whenever it occurs. The Bitcoin pump & dump is OVER as Trump has opted for Project Vault. Besides, Trump pitched to the Bitcoin community for votes and the election is long over. Michael Saylor will only see BTC hit $1 Million per BTC only if Western Europe is stupid enough to go to war with Russia in which a flight of capital will flee Europe at the speed of light perhaps rushing into BTC. I wouldn't doubt it if Trump liquidated the strategic reserve of BTC LMFAO!
‘The paper era is over’: Giustra warns of ‘take down’ in gold, calls ‘project vault’ a signal of new world order
