55 Tonnes in a Month, +15% Commodities, 2% Inflation ‘Target’ in Shreds—The Quietest Gold Squeeze Is Becoming the Loudest Currency Collapse

⚡ Are We In The Early Stages of The Next Liquidity Crisis?
SOFR’s (overnight funding rate) in the range of 4.39 → 4.42% since September 2nd is not noise — it’s compounding cost across trillions in daily rollovers.

Source for the above image is newyorkfed.org

Dealers can’t endlessly absorb this; each uptick eats balance-sheet capacity.

Combine that with reverse repos being nearly empty, and the stage is set where even a small funding shock must transmit directly into live markets.

Silver ripping through $43 while borrow costs are spiking and borrowable shares are disappearing only confirms: real collateral is repricing while synthetic collateral is choking.

The Goldman Estimate

Goldman Sachs is saying China bought 55 tonnes of gold in October 2024 alone, with actual purchases possibly 10x higher than what’s officially reported by the PBoC (People’s Bank of China).

That means:

• The “official” data grossly undercounts what’s really happening.

• China is stealth-loading physical gold in London’s over the counter derivative market.

• Demand is far outstripping transparency, which usually signals preparation for something structural, not speculative.

This is like someone quietly buying up the foundation stones of a castle before declaring they own the hill.

The Shanghai Futures Exchange Inventory Surge

The chart shows Shanghai gold inventories at record highs, spiking almost vertically in 2024–2025.

That means:

• Physical gold is being moved into Shanghai in unprecedented size.

• This coincides with China’s quiet accumulation on the London side—suggesting coordination between offshore sourcing (London OTC) and domestic vaulting (Shanghai).

• Instead of gold flowing West, it’s being absorbed East into a closed-loop system, tightening global availability.

Think of this as China pulling liquidity (in the form of real collateral) out of the global dollar system and locking it behind their own walls.

Connecting the Dots: The Silent Gold Squeeze

Taken together, these images suggest:

• Massive Eastward migration of physical gold. China is hoovering up supply quietly, far beyond reported levels.

• Collateral stress in Western markets. If gold is collateral in the financial plumbing (think swaps, margin, FX hedging), then less available supply means higher stress for dollar liquidity.

• Emerging bifurcation of markets. Shanghai inventories building up while London drains hints at two parallel systems: one for the West (paper-heavy, collateral-short), one for the East (metal-heavy, settlement-secure).

This is the “quietest, biggest gold squeeze” because it’s not just a COMEX price spike—it’s the underlying physical foundation being pulled away while everyone’s distracted by paper derivatives.

What the Chart Shows

• The S&P GSCI Equal Weight Commodity Sector is up +15% YoY as of September 2025.

• That’s broad-based strength across the commodity complex—not just oil or metals, but the whole basket.

• Despite this, the Fed is preparing to cut rates.

Normally, if inflation is running hot, the Fed would be hiking, not easing. Instead, they’re signaling looser policy into an inflationary impulse.

In plain terms, the Fed is quietly choosing to protect the system’s solvency over the currency’s purchasing power. This is how governments throughout history manage unpayable debt loads—by stealth default through inflation.

Actual CPI has run 4% annualized since 2020, far above the Fed’s supposed “2% target.”

The cumulative gap is now +11.6% above where CPI should be if they’d held their line. Implication: the Fed is slowly but surely losing control.

“2% inflation” is no longer policy—it’s mythology. The trillions printed during COVID and afterward are still echoing, and instead of tightening, the Fed is loosening.

Reading Between the Lines

• This is the endgame of the dollar standard. The Fed’s inability to enforce its own inflation target signals the twilight of credibility.

• East vs West divergence is accelerating. Western “paper gold” vs Eastern “physical gold” is the battlefront. Shanghai’s surge shows where the future collateral pool will sit.

• Financial repression is policy, not accident. The Fed will quietly inflate debt away - the middle class will feel the most pain.

• Commodities = scoreboard of trust. The more they rise, the more the world signals it’s fleeing paper promises for tangible assets.

The Bigger Picture

All four images (from X.com) converge on a single conclusion:

We’re living through a controlled demolition of fiat purchasing power and the quiet re-monetization of real assets. 

Gold is the cornerstone, commodities are the vanguard, and China is the architect of the new system. The West clings to its 2% fairy tale. The East is building a parallel reality, brick by brick, tonne by tonne.

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Luke Lovett
Cell: 704.497.7324
Undervalued Assets | Sovereign Signal
Email: [email protected]

Disclaimer:
This content is for educational purposes only—not financial, legal, tax, or investment advice. I’m not a licensed advisor, and nothing herein should be relied upon to make investment decisions. Markets change fast. While accuracy is the goal, no guarantees are made. Past performance ≠ future results. Some insights paraphrase third-party experts for commentary—without endorsement or affiliation. Always do your own research and consult a licensed professional before investing. I do not sell metals, process transactions, or hold funds. All orders go directly through licensed dealers.