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Four Scary Words: "Silver Delivery Not Possible"

Submitted by Tyler Durden on 04/25/2011 12:38 -0400

The SHTFPlan's Mac Slavo brings us the story of one Bill Cramer who decided to cash in on his silver profits after a nearly decade holding period (under the assumption he was receiving warehousing services considering he was paying storage fees), confident that he could simply receive the metal he held with a broker, until he heard the following 5 very disturbing words: "Sorry, delivery is not possible."

From SHTFPlan:

"Bill Cramer of St. Louis was pretty confident everything was on the up-and-up. He purchased 5000 ounces of silver back in 2003 for a spot price of $4.94 and stored them with an east coast broker. When he was discussing his holdings with his coin dealer, the dealer dared him to try and take delivery of the metal.

Bill took him up on that dare and contacted his broker requesting to take delivery of his supposed physical metal holdings, for which he had been paying storage fees for years. As you may have guessed, the broker advised him that physically delivering the metals was not possible."

Here is how Bill recounts his experience:

So, I took his dare, I called them up, it was June of last year. The metal I had purchased in January of ’03. I said “I’d really like to take delivery of my metal – the five thousand ounces.” They go “well, that’s not possible.” And, I go “well, I’ve been paying storage fees since January of ’03, what do you mean I can’t take delivery.”

“Well, it’s part of the account. It’s called a pool account. And, you don’t take delivery, you just participate in the appreciation.”

So I immediately sold that 5000 ounces at $18.33 and I had my cell phone in my hand and I immediately purchased 2500 silver eagles at $18.41 and that’s how I reconciled the problem of not being able to take delivery of my physical metal from a brokerage account.

In other words: anyone who has "pool account" exposure may want to reevaluate their options. And, if we may add, anyone who has Comex storage exposure in general (University of Texas wink wink) even for allegedly delivered gold, and when massive amounts of "registered" gold get mysteriously shifted to "eligible" status, may want to be reeeeally careful now that silver is about to take out its all time nominal high.

- advertisements -

Mon, 04/25/2011 - 15:04 | 1204724 Al Gorerhythm

Depends. Will the banks make holding paper as a savings medium worthwhile? Have the ever? Now that isn't the same as borrowing for leverage and using money to make nominal gains, so your question requires some refinement.

Mon, 04/25/2011 - 13:00 | 1203981 SilverDoctors

Bye-Bye Miss American Blythe!

http://silverdoctors.blogspot.com/2011/04/bye-bye-miss-american-blythe.h...

Mon, 04/25/2011 - 13:01 | 1203984 andilinks

Banks began their existence as "safe" depositories for gold and silver and losing that function they simply join the bandits they originally were formed against.

Mon, 04/25/2011 - 15:10 | 1204736 Al Gorerhythm

First instance of anti-monopoly legislation. Competition in the market place.

Mon, 04/25/2011 - 13:02 | 1203988 CD

Pls. note the spot price in the example quoted. This was LAST SUMMER. Do you think the market has gotten tighter or looser since then?

Mon, 04/25/2011 - 13:12 | 1204036 Cognitive Dissonance

Oh Oh, I know the answer. Pick me. :>)

I'd like to see someone pick up the phone, order 2500 Silver Eagles and get delivery within 2 months in today's PM environment.

Mon, 04/25/2011 - 13:43 | 1204233 nevadan

Tulving claims 450,000 oz silver bullion in stock. No figures for eagles but 100 boxes of 500 count maple leafs claimed in stock. Minimum order 500 oz. Silver is available but pikers need not apply. I haven't bought from them in a couple of years but when I did the order arrived in three days UPS.

Mon, 04/25/2011 - 13:49 | 1204296 NotApplicable

Actually he has no AEs in stock (shipping in May). Even for those he's raised his premium a buck over what I saw it a week or so ago (I use him as a barometer for wholesale market premium).

Mon, 04/25/2011 - 14:13 | 1204426 Cognitive Dissonance

Silver is available. Silver Eagles is another matter.

I love how America, the Ponzi King nation, still produces the Gold standard for one ounce Silver bullion.

Mon, 04/25/2011 - 22:37 | 1206415 RockyRacoon

How many did you want exactly?

2011 American Silver Eagle 500 Coins-Green Monster Box

$56.50 each ain't my idea of a bargain, but I'm always late.

Mon, 04/25/2011 - 13:02 | 1203989 rumblefish

those pools always seemed questionable to me.

anyone wanna have a guess as why miner, specifically SLW is not particpating in the silver move north in the last couple of weeks.

Mon, 04/25/2011 - 15:19 | 1204774 SkewYou

Rumble,

SLW gains most of its exposure to silver by buying other mines byproducts and then extract the useable silver and sell at spot price. The last time I ran the numbers they were buying these byproducts for $4-5. One possible reason SLW has not participated is some of these miners (GG, PAAS, ABX) may be trying to figure out how to squeeze SLW for more of an upfront payment.

Mon, 04/25/2011 - 13:06 | 1203995 tomster0126

What a scam! pool holdings are far too sketch...i'm hoarding my eagles for a few more months maybe, then selling

www.forecastfortomorrow.com

Mon, 04/25/2011 - 13:08 | 1204006 John McCloy

It is taking ever fiber in my body not to go super margin AGQ right now waiting for a QE ending market crash. If QE 3 is announced I'm done and have finally learned the games answer which is "when the Fed is falsifying the economy with fresh fiats go long metals till they cease"

Mon, 04/25/2011 - 13:06 | 1204007 Diogenes

You can't even trust Sprott's physical gold trust. I bought 1000 shares nearly a year ago and it is now worth less than when I bought it. How much has gold gone up in the last year? By the way I also hold real gold so I am not crying. But if phys ever goes over what I paid for it I am out.

Mon, 04/25/2011 - 13:15 | 1204063 Pedro

I was thinking the same thing. However, sprotts PSLV is doing okay for me. I think I am going to hold on to my shares of both PHYS, PSLV, though.

Mon, 04/25/2011 - 13:09 | 1204027 DNB-sore

gold didn't move much, silver did

Mon, 04/25/2011 - 13:13 | 1204053 nmewn

I said “I’d really like to take delivery of my metal – the five thousand ounces.” They go “well, that’s not possible.” And, I go “well, I’ve been paying storage fees since January of ’03, what do you mean I can’t take delivery.”

“Well, it’s part of the account. It’s called a pool account. And, you don’t take delivery, you just participate in the appreciation.”

So lemme see if I got this straight...storage fees for storing things that can never be possesed...excellent!

A setup only a friggin banker could love.

Mon, 04/25/2011 - 13:17 | 1204060 dr.charlemagne

Gotta tell you guys. Taking home the physical is a beautiful thing. Genius, really. I can't believe American's didn't buy it all decades ago.

Mon, 04/25/2011 - 13:15 | 1204064 sellstop

It seems that all of the silver bugs hate Bernanke. But he holds their fate in his hands.

The silver/gold bugs hate what he is doing to america, but if he stops doing it, their investment is gone where the woodbine twineth.

If we patch this ship, I say we don't let the rats back on board....

Mon, 04/25/2011 - 13:20 | 1204095 slaughterer

Four scary words: "CME hikes silver margins"

Mon, 04/25/2011 - 16:49 | 1205175 Slewburger

More scary words: "Chinese liquidate USTs.... 2+ tril looking for good home"

Connect the dots asshole. Margin hikes can only effect the short term.

"Now all dorra berong to you roundeye"

Mon, 04/25/2011 - 16:47 | 1205188 tmosley

Scary to retards who know nothing about recent history, perhaps.

Mon, 04/25/2011 - 13:20 | 1204098 Marty Rothbard

I closed out my kitco silver pool account in November, and used the proceeds to purchase physical silver from them. I could tell that they were not happy about it, and they kept trying to get me to pay my fabrication, insurance, and shipping fees out of my withdrawl, rather than write them a check, thus taking delivery of more silver. As soon as I heard that, I knew I was doing the right thing. As a matter of fact, if you live in the US you can't even get their rounds, or one ounce bars any more, as they only ship them outside the US. They even removed the "kitco signature products" page from their website. Thanks for helping me make the decision to go physical Zero Hedge contributors, and commenters. SILVER BITCHEZ!!!

Mon, 04/25/2011 - 13:56 | 1204340 NotApplicable

Interesting. I opened a pool account there back in 2004, and took delivery a few years later (once I saw them start to occasionally run out of Eagles). Back then there were no issues with sending them another check for fees.

Mon, 04/25/2011 - 13:21 | 1204108 sellstop

I am watching CNBC. Mitchell is in Brazil to tell us why they HAVE to fly helicopters to avoid the traffic.

I wish she would tell us how they can AFFORD to fly helicopters. How they can AFFORD the fuel.

It was because their GOVERNMENT made them get into ethanol 30 years ago!

Mon, 04/25/2011 - 13:42 | 1204239 jerry_theking_lawler

you left off the biggest part of this line....Sugar Based Ethanol....now its correct.

Mon, 04/25/2011 - 13:45 | 1204243 Ying-Yang

And I believe their ethanol comes from sugar cane instead of corn. Yes, let's turn food into oil... what jerk thought that up?

Mon, 04/25/2011 - 13:48 | 1204262 nevadan

Politicians looking for votes in the Iowa caucus.

Mon, 04/25/2011 - 22:48 | 1206443 RockyRacoon

Not to mention:

Foreign-Produced Ethanol Tariff
The import duty on ethanol, currently 54 cents per gallon, has kept the price of Brazilian and other foreign ethanol higher than domestic production. A so-called "Caribbean Loophole" to the law, however, provides an exception for ethanol imported through or from the Caribbean islands, up to a total equivalent to 7 percent of U.S. production. Lawmakers from some farm states want to close this loophole.

http://www.google.com/search?q=ethanol+tariff+history&ie=utf-8&oe=utf-8&...

Mon, 04/25/2011 - 13:28 | 1204126 Miles Kendig

Anyone that doesn't take physical delivery is a sucker

Mon, 04/25/2011 - 13:26 | 1204132 AboutAverage

If you are dumb enough to buy ETFs/ commodity options from wall street, then you deserve to lose your investment. You been warned time and time again.

Mon, 04/25/2011 - 13:31 | 1204141 RobotTrader

Monex "Live Charts" of silver eagle transactions not updated today.

Mon, 04/25/2011 - 13:46 | 1204251 SheepDog-One

Wow thats gay.

Mon, 04/25/2011 - 14:44 | 1204596 akak

And your point is what, MomoTrader?

Perhaps that more and more people are waking up and deciding to take action and flee a collapsing currency, or even an entire collapsing fiat monetary system?

Go suck a lululemon.

Mon, 04/25/2011 - 15:21 | 1204792 Minyan Vince

talk about a silver enema...

Mon, 04/25/2011 - 16:57 | 1205219 akak

Give us the corresponding charts of the total US money supply and the total US federal debt, you disingenuous asswipe!

Mon, 04/25/2011 - 18:09 | 1205477 equity_momo

You fail for not using a logarithmic chart.

Mon, 04/25/2011 - 13:37 | 1204181 solidsteele

I Offer the only real safe investment... 100% genuine copper clad portraits of ABRAHAM LINCOLN, for the unbelievably low price of only $19.95, but wait theres more! if you act right now, I'll even include free shipping and insurance. What makes these copper gems so rare, I'll tell you, just line up each of our american coins, and you'll notice right away, that in these special portraits you'll notice that Lincoln faces the oposite direction from the rest of the presidents, making these commissioned portraits much much more rare and valuable that any others you might find. Some say it's because the other presidents are turning their back on Lincoln for freeing the slaves, but I believe it is Lincoln that was turning his back on the existing paradigm that has ultimately led to the current state of monetary affairs of the USA.

Mon, 04/25/2011 - 15:23 | 1204789 Alienated Serf

hilarious.

Mon, 04/25/2011 - 13:33 | 1204184 trav7777

Big nothingburger. The guy was in unallocated; it says that you cannot take delivery. He's a dumbass for thinking he could.

If COMEX can't make delivery, it's not COMEX's fault; it is the fault of the shorts who don't have the metal. Futures exchanges aren't meant for buying real commodities, only price fixing in currencies.

Mon, 04/25/2011 - 14:22 | 1204505 UncleFurker

You pay storage for unallocated?

Mon, 04/25/2011 - 16:39 | 1205142 NotApplicable

Well, looks like this guy did.

This is a poor story to run on ZH, as it is all misplaced hype better suited for the Yahoos of the world.

Mon, 04/25/2011 - 13:42 | 1204242 SheepDog-One

You cant eat silver and gold but you can eat with gold and silver teeth made into a nice rapper grill for yourself.

Mon, 04/25/2011 - 13:51 | 1204297 nevadan

I read a clever reply last night to the accusation that you can't eat gold or silver, which was "in the last 5000 years no one that had gold or silver in their possession has gone hungry". Maybe a bit of an overstatement but it is a good point. :)

Mon, 04/25/2011 - 13:45 | 1204264 Alea Iacta Est

I don't know on this one. Sounds more like a case of caveat emptor! Read the fine print before you buy my friend.

Mon, 04/25/2011 - 13:48 | 1204267 alangreedspank

Pool accounts are only good if you want to do short term swinging.

For the longer term, go physical.

Mon, 04/25/2011 - 14:29 | 1204520 Dr. No

EDIT

Mon, 04/25/2011 - 14:07 | 1204403 Bagbalm

I can't imagine agreeing to pay STORAGE for a pool...

Mon, 04/25/2011 - 14:14 | 1204435 Brokenarrow

This is a Madoff deal in the making..............

This is fucking scary as hell................................

How many scams are being rum like this all over the world where "they" cant make delivery?

Mon, 04/25/2011 - 14:15 | 1204447 SparkyvonBellagio

GOLD BUBBLE ENDS when someone announces they can turn anything like lead into GOLD and or Silver/Platinum/etc. LOL

Mon, 04/25/2011 - 22:51 | 1206451 RockyRacoon

I turn paper into gold on a regular basis. Where's the magic?

Mon, 04/25/2011 - 14:19 | 1204474 jsmfr

Anyone have any comments on CEF (Central Fund of Canada) as a mechanism for exposure to Gold. As I understand it, they have physical posession of their gold, and because I, as an investor, own an equity rather than a "collectible", I get better capital gains treatment. Any counter-opinions out there?

Mon, 04/25/2011 - 14:55 | 1204685 slewie the pi-rat

i don't know abt. "mechanism(s) for exposure to Gold" but why not just walk down the street and buy some gold coins? and keep the receipt. you can buy several nice rolls of gold for 1/2 million $$$!

Mon, 04/25/2011 - 16:28 | 1205104 Marty Rothbard

Speaking of which. How in the hell can bullion be classified a collectable? I can see it for nuismatics, but for bullion? Isn't it odd that gold bullion is treated as a collectable, while it is actively traded on commodity markets? It's not as if you can buy a put on 1000 Roger Maris rookie cards. Are bushels of wheat a collectable? How about pork bellies? What about shares of IBM for that matter, the stock certificates are quite ornate.

Mon, 04/25/2011 - 23:06 | 1206482 RockyRacoon

Lots of bullion issues of the U. S. Mint are collectible coins. I have several sets of the America the Beautiful 5 ounce BULLION sets. The mintage is about 27,000 of each of the 2010 first year issue. There is your collectible bullion. Many more are available in other denominations and formats. Any other questions? http://americathebeautifulsilvercoins.com/

Mon, 04/25/2011 - 16:49 | 1205187 DollarMenu

CEF has both gold and silver holdings.

There is usually a premium to asset value in the price.

This might be a good way to have a PM allocation in a IRA or a 401-K.

It's difficult to have PM exposure in retirement accounts;

maybe some gold stock funds, there are the PM ETF's with their well noted

issues; some dealers say they can hold PM's for you in retirement accounts.

CEF and the Sprout funds, PHYS and PSLV, are traded on exchanges, yet are backed with physical metals.

DYODD, but I think these are pretty good vehicles for retirement allocations.

Tue, 04/26/2011 - 01:44 | 1206755 fellatio is not...

Today CEF is at a 2% premium, unlike Sprott at a 22% premium, CEF is a good liquid way to play PM, and yes, they hold the physical themselves

Mon, 04/25/2011 - 14:30 | 1204550 acrabbe

For those of you interested in investing/speculating in silver via options, there's an online trading service via a new brokerage-linked platform that I would recommend. They seem to know what they're doing. There's nothing wrong with leveraging physical profits into greater paper gains and then recycling them back into physical. That's beating HSBC/JPM at their own game...

http://silveroptions.collective2.com

Mon, 04/25/2011 - 14:35 | 1204578 Tommie-ZeGerman...

I have an offer currently on table in front of me for rolls of AE's @ $1060 (20 a roll). Wondering whether I should go make a pickup.

Tue, 04/26/2011 - 01:45 | 1206752 fellatio is not...

$53 a coin seems a bit high as of today, may be a steal in4 weeks, but I would wait or offer $880

Mon, 04/25/2011 - 14:49 | 1204592 Big Ben

Suppose Tom has 1000 oz of silver in an unallocated account. Then this is loaned (probably without Tom's knowledge) to an investment bank (call it BS), which sells it to Dick and invests the proceeds in mortgage-backed securities that it thinks will appreciate faster than silver. And then BS can repeat the process by borrowing the silver from Dick and selling it to Harry. So we have a situation where Tom, Dick, and Harry each think they own the same 1000 oz of silver, But actually only Harry owns the 1000 oz. Tom and Dick really just own promises of delivery on request. And these promises cannot be honored if Harry refuses to sell his physical silver.

So shorting can cause 1000 oz of silver to appear to be 3000 oz (or 5000 oz or 10000 oz, depending on the degree of shorting). But when the shorts unwind, it will become clear that there is actually much less silver in the world than everyone thought and silver will become much more expensive. Some people are claiming that the total short position by various banks amounts to about 10 years of current production. Or course, the short interest at the Comex is much smaller than this, but it is still considerable.

So buy physical silver. If you don't have physical, you probably don't have jack.

Mon, 04/25/2011 - 15:24 | 1204807 AC_Doctor

Great explanation for the weak-minded metal bashers...

Mon, 04/25/2011 - 14:43 | 1204607 carlpewterschmidt

has anyone seen this?

We are interested in further pursuing the investigation re Silver Storage Fees. We would like to speak with people that own physical silver and are paying to have it stored. Please contact Adam Frankel, Esq. at afrankel@grwlegal.com or 203-622-6001.

Mon, 04/25/2011 - 15:06 | 1204721 Youri Carma

Precious Metals Storage Scam: ‘Sorry, Delivery Is Not Possible’ http://youtu.be/KVtDyAwRY8w

Mon, 04/25/2011 - 15:37 | 1204846 Ned Zeppelin

let me get this straight: pms for sale. Just not delivered. You buy the "idea" of precious metal, not the real object. Isn't that enough?

Mon, 04/25/2011 - 15:39 | 1204850 ian807

And this we have the fundamental problem of intangible assets. Their possession and price are controlled by a third party. Unless it's real estate or other real property such as gold that you physically possess, you don't own it. They do.

Mon, 04/25/2011 - 15:45 | 1204878 earlthepearl