It's Going To Implode: Buy Physical Gold - NOW

Gordon_Gekko's picture

For previous articles by the author go to: Gordon Gekko's Blog

 

Evidence seems to be mounting that we are headed towards some sort of implosion in the paper Gold market, and perhaps the currency/bond markets in general. Let’s take a look:

Jacksonville, FL based EverBank – a bank with approximately $8 billion in assets and 1800 employees according to the company website – recently sent this notice to customers (courtesy of Warren Bevan):

"Non-FDIC Insured Metals Select Changes" -

 

Section 6.3.7. General Terms: We have added language clarifying our right to close your account. We may close your Metals Select Account at anytime upon reasonable notice to you. If we believe that it is necessary to close your account immediately in order to limit losses by you or us [GG: We really don’t give a s**t about you; it’s us that we care about], we may close your account prior to providing notice to you. Notice from us to one of you is notice to all of you [GG: the nerve of these people!]. If we close your account, we reserve the right to convert your Precious Metals to U.S. dollars and tender the balance to you by mail [GG: I am willing to bet my entire Gold stash that when you receive these "converted" dollars, they will be nowhere near the market price of physical. What did you think that whole "limit losses" thing meant?] .

If you have a "Non FDIC Insured Metals Select" account with these people, you can pretty much say goodbye to any chances of ever seeing your metal. This is a clear sign that the (already tight) availability of physical metal at the manipulated Comex futures paper price is in danger of vanishing altogether. Think about it. What is the scenario in which they avoid catastrophic losses while at the same time sending you the US dollar value of the metal? When the official or Comex price has fully decoupled from the physical price. Expect to see more such notices from banks offering Metals "Investments".  

Citibank recently issued this notice to its checking account (remember the type of account where you thought you could withdraw your money whenever you wanted? Well, not anymore) customers (via Market Ticker):

Withdrawal Notice:

 

We reserve the right to require seven (7) days advance notice before permitting a withdrawal from all checking, savings and money market accounts. We currently do not exercise this right and have not exercised it in the past.

 

Hmm…let me see. Why would a bank need to impose withdrawal restrictions? Has this kind of a thing happened before somewhere? Could it be because of the danger of a bank run/capital flight from the United States?  Why would Citibank fear bank runs? Why would money flee the US banking system/US? Could it be because the entire US banking system and the US Government is INSOLVENT and people - fearing a collapse in the dollar’s value (in terms of real goods i.e. for all you Prechterites out there) - rush to withdraw money convert it into real goods such as precious metals? You tell me. Also, could they maybe increase this notice period from seven to whatever the hell they want whenever they want? What will you do then? Even if you don’t buy Gold with it, withdrawing your cash from America’s insolvent banks is a very wise strategy at this point.

One of Mish’s readers Construction Insider recently sent him this little nugget:

Hi Mish

I work in the construction business and something has been creeping to the forefront of my attention for the past few weeks and now it seems to be moving full steam ahead.

 

Banks are forcing developers/builders (especially smaller ones) to give up their properties (unsold homes and lots).

 

Banks say the reason is that the properties in question are no longer performing assets. I am sure there are some loans out there that are not performing and the owners are going under. I am equally sure that there are plenty of developers that are still selling homes - just not at the pace originally planned on the pro formas.

 

Having inside information on one of these scenarios that happened today, I cannot help but wonder what is really going on? The bank told a small developer/builder I work for that they were taking back his ongoing subdivision.

 

He is selling houses and updated pro formas would indicate that the current sales pace would exhaust all remaining lots within 33 months. Yet the bank stated they would only give him until April 15 to find alternative financing. The bank is also willing to let him buy the subdivision at a 33% discount to what is currently owed.

 

If he is unable to obtain this backing, the bank will let him walk away without penalty or consequence so they can write it off.

 

I have been on the phone trying to put some of these pieces together. It seems there are many banks doing the same thing. However, there is apparently no interest [or ability - Mish] from anyone wanting to pick up land/lots at 30% - 50% discounts to today's prices.

 

Another interesting point is that the banks all state that they must have these situations written off or taken care of by the end of Q2.

Looks to me like DaBoyz are calling in the loans while the currency still has some value. Does the government plan some type of overt currency devaluation or expect the dollar to collapse on the currency markets of its own sorry weight? The cracks are already appearing in the Bond market. Foreigners are increasingly fleeing the Treasury auctions. The only thing keeping them going is manufactured "deflation" fears from time-to-time. A recent 30 year auction (10th February, 2010 to be precise) practically failed. This is what Mr. Denninger had to say about it:

Bad.  Actually, let's go worse than bad and call it what it is - by any definition this is just one step off from "Failed."

 

The more-worrying factor here is that we've got this "mystery" direct buyers out here again taking nearly 25% of the offered amount (who is bidding for that undisclosed?) and another 11% taken down by The Fed for the SOMA account.

 

Yet even with this Treasury had to pay up to get it to go and the bid-to-cover was anemic at best.

 

Given the Primary Dealer system we have in this country, any BTC under 2.0 is an effective fail.  To get an auction that behaves in this sort of fashion, complete with mystery direct bidders and heavy SOMA (Fed) participation, yet Treasury has to pay up in the form of a significantly higher coupon is not a good sign at all.

And this is what happened on 23rd February, 2010 for a 4-week $37 billion Treasury Bill auction (Per Graham Summers):

There are times in life when one witnesses something so outside the scope of normal experience, that at first you don’t see it.

 

Captain Cook’s diaries tell us that upon first seeing his ships offshore in Australia, the aborigines expressed “neither surprise nor concern.” Cook notes that it was not until he and his men approached the shore in smaller, more familiar vessels that the villagers reacted, arming themselves as “the sight of men in small boats was comprehensible to them: it meant invasion.”

 

Well, I had a similar experience during yesterday’s bond auction.

 

Roughly, 27% of the auction took place at the highest rate. This means nearly one third of the demand from competitive bidders (those who care about yield) came at the HIGHEST yield that was accepted. In plain terms, this alone tells you that investors want higher yields from Treasuries since nearly a full third of the debt issuance took place at the highest REQUIRED yield.

Of the competitive bids (meaning those bids coming from folks who care about yield), roughly 70% went to Primary Dealers (investors who HAVE to buy the debt and who usually turn around and try to sell it afterwards). To put this number into perspective here is the percentage of competitive purchases made by Primary Dealers in the last four 4-week Treasury issuances:

 

 

...yesterday’s auction featured MORE buys from Primary Dealers than almost any of those occurring in 2010. Remember, Primary Dealers HAVE to buy Treasuries. So to see them buying a high percentage of Treasuries at debt auctions means that few investors who can pick and choose what to buy are actually looking to buy US debt.

 

Of the remaining competitive buys (about $8.86 billion), only 32% came from Direct Bidders or those who bought debt directly from the Treasury: orders that can easily be tracked. The other 68% ($5.9 billion) came from Indirect Bidders: folks who we cannot track.

 

Even more bizarre, only $5.9 billion in Indirect Bidder competitive buys were ACTUALLY OFFERED. So we had a 100% acceptance rate for Indirect Bidder competitive buys.

Let’s put this in perspective:

 

 

This means that the Treasury took up EVERY single cent of competitive bids coming from indirect buyers. Remember, indirect buyers are usually assumed to be foreign governments (even the Treasury website admits this).

 

If this was the case yesterday, then foreign governments barely bought much of anything in yesterday’s auction (only 19% of total debt issued). Moreover, it implies that Primary Dealers (those having to buy) had to gorge on the auction to make up for the fact that few if any foreign governments are interested in buying our debt anymore (including even short-term debt).

So basically the demand from the indirects (i.e. foreigners) for US Debt is drying up and the Treasury is taking all of whatever miniscule amounts they are offering. As if that was not enough, we had another similar auction on 9th Match, 2010 (via zerohedge):

Two weeks after the indirect hit ratio in the 4 week auction came at a record 100%, today it was once again at almost at the all time possible high, with Indirect Bids of just $6.744 billion taking down $6.683 billion, resulting in a 99.1% hit ratio. The chart of the recent Indirect hit ratio in recent 4 week bill auctions is attached:

What’s more, the yield doubled from two weeks ago. What we are witnessing here, in my opinion, is the beginning moves of a complete and total repudiation of the US Bond market, and indeed, all dollar denominated paper financial assets.

 

Jim Sinclair recently had two gentlemen from Poland and Russia speak up at his Toronto meeting. This is what they had to say (in Jim’s words):
Dear Extended Family,
 
I believe the most important event at our Toronto CIGA meeting was the testimony of two attendees.
 
Two men spoke independently. One is a Canadian resident from Russia and the other from Poland.

Both said the same thing, "All the signs that preceded our inflation of more than 100% per year are here now in the West."

What more do you need to know?

Regards, 
Jim

Any unbiased observer who knows how to put two and two together will be able to tell that something very fishy is going on. The urgency with which trillions in debt is being shoved down the market's throat at the worst possible time for the US Economy has the distinct smell of the government trying to extract every last bit of money from those stupid enough to buy the bonds before it all blows up. Rest assured, a huge chunk of this money is being funneled to the insiders who are most likely covertly using it up to buy real assets for themselves while keeping the crowds distracted with the stock market circus.
 
The bond market is the backbone of the US Ponzi Finance system. When it goes – and the day is not far in my opinion - the whole enchilada will come crashing down. Any type of financial asset that has a counterparty – which is pretty much all the paper assets in the world – bonds, futures, any and all derivatives and yes, even the paper currency – will crash. What will they crash against? Yes, that’s right - Gold. All the world’s capital – trillions, perhaps quadrillions of it - will come rushing into the very tiny physical (NOT paper) Gold market. Remember, the world’s real physical capital – real assets such as land, oil-refineries, mines, infrastructure, etc. will not vanish, only it will be re-priced in terms of Gold and its ownership transferred to those who hold it. Since everything stays on this planet, it is a zero-sum game and the winner will be Gold. In other words, an ounce of physical Gold will command a lot more in real purchasing power than it does today. Just like a national currency is a claim on goods and assets within that country, Gold will be a claim on global goods and assets worldwide.
 
Paper Gold Will FAIL
 
Today what you think of the price of Gold is nothing but the price of paper Gold. "What is the difference between the two? We are still getting the metal at the price we see on the COMEX, are we not?", you may ask. Sure, but the key word is still. Even today you have to pay "premium" to the futures price to get physical ranging from about $50 for some coins to about $10 for bars. When it all blows, these “premiums” will skyrocket and the price of physical WILL decouple from the official paper price (this is what the guys at EverBank are scared s--tless about), as we already witnessed in 2008 – and this is the good scenario. Indeed, we may have a situation where there is no physical available at any paper price. 
 
1. The GLD ETF
 
The problems with the GLD ETF are too numerous to enlist here but why bother when they have already mentioned 'em all in their prospectus! It is simply another Wall Street scam designed to rip off the retail investor and rest assured, when the SHTF, you will be the last in line since the insiders need somebody to hold the bag in order for them to get bailed out. YOU will be the one left holding the bag. Unless you have a direct line to Ben Bernanke, I suggest you get the hell out of any paper ETF’s such as GLD, SLV, etc. Remember AIG? It’s all good until it isn’t.
 
2. The Gold Futures Market
 
The futures market is nothing but a tool for the dollar managers (US Government/Fed/Bullion banks) to manage/control the price of Gold. Any rational observer with an iota of brain who has watched the gold market for any reasonable length of time can tell that the price is intentionally driven down during the Comex trading hours. If you don’t believe this, either you’re in denial or worse – collusion - and IT WILL end up costing you big time. Given the massive, concentrated and long-term (the entire past decade - they haven't been net-long - not once - during that time period) nature of their short positions, it really isn’t that hard to deduce that the banks do not nearly have enough metal to cover their shorts and that the sole intention of the massive short position is to control the price. Whenever the price rises (or threatens to rise) the big bullion banks ala JP Morgan create massive naked shorts introducing fake supply of Gold in the market, thus driving the price down. “But the price has been rising for the past decade, hasn’t it? So how can you say they are driving it down?”, many people ask. Well, the constraint on the bullion banks has been the availability of the physical metal. If the metal is not available, the fraud of the paper market is exposed and they lose their price managing ability. So they allow the price rise to a level at which there are some weak hands willing to sell and then they hold it there till all the sellers have been exhausted (I am assuming the Fed has already sold all the US Gold during the past decade). So strong are Gold’s fundamentals that despite the massive rigging, all they have been able to do is slow its rise. The weak hands who sell the physical metal at every price rise have helped them in this endeavor. But soon, as the bond market implodes, they will run out of sellers. Treat the availability of real metal at today's paper price a gift and buy as much as you can.

To those who think that the Comex shorts will be crushed one day and the price of paper Gold will do a moonshot, to them I will say that you are dreaming. The Comex shorts will be crushed, but not in their own casino! If and when a majority of paper Gold longs demand delivery a force majure (who do you think the US Government will side with?) will be declared with cash settlements and/or offers of equally worthless GLD shares (don’t tell me you didn’t know about this). By some accounts, this is already happening. What will happen to the paper price then? That’s right – it will utterly collapse even as the physical’s price is rocketing. Paper gold holders will dump it all to buy the physical – which, unfortunately – will most likely not be available at all. Yes, yours truly has been trading the paper [Gold] markets himself, but only with the objective of converting the paper profits onto the metal. Having said that, in light of the sum total of the recent developments mentioned in this update I think it is too risky to be trading right now and one should just sit 100% in physical Gold and some currency for day-to-day needs. 

Additionally, there is increasing evidence that the Europeans have withdrawn support from Wall Street’s paper Gold market (COMEX and the LBMA, which also operates on a fractional reserve basis as documented here) and are in favor of setting up a physical only Gold market (this is quite a long story - for details, I suggest you go through FOFOA’s blog). Jim Willie had this to say in a recent piece (he’s been accurate on many things so far, so I at least pay attention when he has something to say): 
Fast approaching is the event of GAME OVER for London, a condition that has already reached critical level, according to a key reliable source of information with London connections and direct experience with its market events. How long can a major metals exchange sell contracts but have miniscule supply of gold in their vaulted possession? The paper gold market and the physical gold bullion market have finally separated in a practical manner, meaning actual gold has almost no role anymore in London paper contract settlement. The absence of gold in London requires extraordinary tactics to settle contracts and to obtain gold bullion. Red tape procedures delay delivery for individuals, and bribes accompany gold delivery demands as standard practice. The London Bullion Market Assn has almost zero gold, its supply having been drained in high volumes since early December, a process currently in acceleration. The opportunity to convert fiat money into precious metal at prices considered reasonable is also vanishing. The London gold banker said,
 
"There is going on a lot more than meets the eye. The physical system is actually consolidating bigtime and is organizing itself with lightning speed, totally hidden from pretty much anyone, even the so-called insiders. The paper precious metal market and the physical precious metal market have defacto disconnected. The paper and physical gold markets currently operate in parallel universes. The outflow of physical metal from bank vaults is happening at a mind bending pace."
Wall Street and the US Dollar are being increasingly marginalized at the global level with China having instructed its companies to renege on Wall Street’s derivative contracts last year; Russia, Middle-East and China setting up their regional currency blocs; Germany calling for an end to the CDS casino and the recent exclusion of Wall Street banks from European Government bond market. For obvious reasons, none of this is getting much play in the lapdog US media.
 
Physical Gold in your personal possession is the only thing that will survive the coming financial Armageddon. What we are witnessing right now is nothing but the calm before the storm. Keen observers are hearing rumblings beneath the ground signaling an imminent volcanic eruption. Once it blows it will be too late to take action. Trading paper markets for paper gains is like picking up pennies in front of the steamroller. It’s time to stop trading and just buy the physical metal. The window of opportunity to convert your casino chips (fiat money) into real money, i.e. Gold, is getting smaller by the hour. He who panics first, panics best.
 
GET. GOLD. NOW.


Disclaimer: Nothing in this commentary should be construed as investment advice or guidance or any recommendation to buy or sell any financial instrument. It is not intended as investment advice or guidance, nor is it offerred as such. It is solely the opinion of the writer, who is NOT an investment counselor/professional. All content of this commentary is solely an expression of his personal interests and is posted as free-of-charge commentary and is subject to error and change without notice. Please do your own due diligence before investing in ANYTHING. The presence of link to a website does not indicate approval or endorsement of that website or any services, products or opinions that may be offerred by them. 

 

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Anonymous's picture

You obviously haven't heard of the Milgram experiment which proved that given the right circumstances that the vast majority of people will kill their fellow countrymen. This is not the only experiment that proves this.

http://en.wikipedia.org/wiki/Milgram_experiment

Milgram summarized the experiment in his 1974 article, "The Perils of Obedience", writing:

The legal and philosophic aspects of obedience are of enormous importance, but they say very little about how most people behave in concrete situations. I set up a simple experiment at Yale University to test how much pain an ordinary citizen would inflict on another person simply because he was ordered to by an experimental scientist. Stark authority was pitted against the subjects' [participants'] strongest moral imperatives against hurting others, and, with the subjects' [participants'] ears ringing with the screams of the victims, authority won more often than not. The extreme willingness of adults to go to almost any lengths on the command of an authority constitutes the chief finding of the study and the fact most urgently demanding explanation.

Ordinary people, simply doing their jobs, and without any particular hostility on their part, can become agents in a terrible destructive process. Moreover, even when the destructive effects of their work become patently clear, and they are asked to carry out actions incompatible with fundamental standards of morality, relatively few people have the resources needed to resist authority.[3]

Shameful's picture

Hope I am wrong!

But you would be surprised what propaganda can do. You start beating the drum of White Al-Quida and that these farmers are helping terrorists then you might get a few marines to do it. Have a few incidents where these people attack and shoot marines and then maybe a few more marines would be on board(whether real or stated). What about mercenaries? Can always bring in contractors who might have less then pristine moral code. They are simply not going ot order marines to murder Americans outright, they would finesse it a little. And of course it would start with the cops and IRS trying to seize it and then the mil would be brought in when the others were killed or repulsed. And God knows the CIA is more then willing to use drones on innocent civilians, and there is no defense that people have against that.

"We have to go in men, they have been killing Federal agents! We think they are terrorists and secessionists. Now I know you won't want to shoot Americans but we need this food to feed Americans, and the needs of the many outweigh the needs of the few!"

Anonymous's picture

In Rhodesia when the farms were seized the farm owners went and practiced their golf swing rather than cultivate crops. The farmers aren't going to work for free.

Anonymous's picture

My sister-in-law's parents had 20,000 acres of ranchland in Rhodesia...they lost it all.

Mad Max's picture

You can buy from a dozen or more mail-order places, which ship via USPS or FedEx, often included in the sale price.  There have been various options posted.  FWIW, the more a place advertises, the less likely you want to buy from them.

For storage you will have to decide for yourself.  But you might start by researching "TL-30 safe" to get one set of ideas.  Obviously safety deposit boxes are an option, but if things start collapsing, or if government steps in, the contents may be gone forever.

Anonymous's picture

At $1,100+ per ounce, I am too poor to buy gold. Could I buy silver or palladium to protect against a dollar meltdown?

Anonymous's picture

I prefer silver, for lots of reasons. Yes, silver will protect you during hyperinflation, and is a better metal if TSHTF. Silver will become comparatively scarcer than gold over the next 30 years, and stands to gain if the economy improves. And silver costs are low enough that they are approachable. You can buy a few ounces here and there. Use Apmex.

35Pete's picture

+31.1034768

Agreed. HOWEVER, if you can buy both then you should, IMO. 

Gold's primary role is a store of wealth and it does it better than silver in that it is less volatile. So if you're looking for highly portable wealth storage, gold it is (unless you're Master Bates, then Negotiable Greek Bonds are the way to go). 

But I do like silver. It's fundamentals are sound for a long-term investment. The downside risk is if a huge reserve is discovered. If so, then it's value industrially will stagnate and gold will win out as the wealth storage vehicle. 

What's nice about Ag, silver, Argentum, is that it's denomination is small. If you need to use PMs for transactions, then Ag is a nice way to go. IF the geological data regarding Argentum holds (i.e. no massive reserve discoveries, China's not lying about it's holdings, ect) then silver could skyrocket due to re-pricing once the manipulation is broken. 

Of course, on a day-to-day investment schedule, other downsides are the nerve-wrecking volatility and the possibility of global industrial decline.  

 

perchprism's picture

 

If you can't afford gold, buy silver.  Go to Americangoldeneagle.com and buy some Mercury dimes.

Gold...Bitches's picture

you can buy 1 gram bars (1/31 of a troy ounce).

Mad Max's picture

Gold is divisible.  You are not thinking about this very well.

Anyway, silver is good too.

Palladium seems like a bet on future production of catalytic converters.  It's a specialty item.

10044's picture

AWSOME post Gordon, really fantastic. I just bought more gold eagles, and cleared my bofa bank account, TAKE OUT your cash and hide it NOW.
LBMA and crimex are gonna blow up very soon.

Anonymous's picture

I could not agree more with the financial implosion thing.

Anonymous's picture

OK, the whole system comes crashing down, now what? Do you really think TPTB will sit back and let a few "hoarders" control wealth in the form of physical gold? Hell no, they will either outlaw it or tax the transactions to make widespread use meaningless. And if we ever get to true Mad Max territory, the people with guns will simply kill you and steal your food and gold.

In-duh-vidual investors are being gamed big time. The only wealth we can really count on anymore is the knowledge between our ears, or for some, the slippery spot between their legs. Everything else is subject to confiscation or loss.

Crime of the Century's picture

The only wealth we can really count on anymore is the knowledge between our ears, or for some, the slippery spot between their legs.

Based on your screed, I can tell which one you're counting on...

A Nanny Moose's picture

A) Laws only keep the honest people honest.

B) There is alsways silver...in legal tender form.

C) Zombies want brains, not gold

D) Many people investing in physical AG/AU are also the type to invest in brass/lead

Anonymous's picture

Can anyone offer their opinion on the safety of CEF, the big gold fund in Canada? (I switched to it from GLD last year because of the fears expressed in this article.) TKS!

nuinut's picture

Keep away from all paper.

Buy physical.

If you want some paper gold for future leverage, buy it later, when the price of paper gold drops. Same $$ will probably get you many more shares then than now.

GGs' metaphor of picking up pennies in front of a steamroller seems bloody accurate to me.

I ditched all my paper a few weeks back, and bought more physical. I may buy a small dollar value of favourite mining stock back if/when they dip with paper gold, but only a small value, and only for shits n giggles. May pay off; if not, who cares? Got plenty of the real deal while it was being given away. ;)

 

Anonymous's picture

CEF is Silver and gold.

Look int 'PHYS'. It is Eric Sprott's 100% allocated gold bullion option. YOU CAN EVEN TAKE DELIVERY if you like - of a 100(?) oz bar.

Maybe you can trust this guy when it comes to gold. Do your own homework though.

lawrence1's picture

However, I believe that CEF does not offer the option of taking delivery. Also you must purchase through a broker, not directly from them. In a crisis, your broker and thus you may have a problem, therefore, I decided to withdraw from CEF, not because of their integrity, but because of these possible problems. Please correct me if Im mistaken.

obewon's picture

@ Anonymous:

CEF is far safer and far superior to GLD or SLV; all of the investment banks on Wall St. are experts at fraudulent activity. At least the custodians of CEF are not also short-sellers of either metal.

 

GLD & SLV are Fractional Reserve Frauds:

Most people do not realize that the biggest shorts of these paper gold and paper silver ETFs are the custodians of these ETFs!!!

Custodian of the SLV ETF: JP Morgan

JPM is currently holding approx. 300 million oz of "net" short silver on the COMEX. Additionally, they hold approx. 70% of the paper gold shorts! A pure conflict of interest here; yet it has US government approval, because our government wants the price of gold and silver to be depressed (so that money which leaves the stock market will flow into bonds, instead of into gold & silver, which are the true Safe Havens).

Custodian of the GLD ETF: HSBC

HSBC has the second largest short positions in silver, and is one of the leading shorts in paper gold. Another pure conflict of interest here; yet is also has government approval.

 

Bottom Line:

These facts alone should constitute "ample warning" for the astute investor.

 

SgtShaftoe's picture

Sprott also has a new fund that would be worthy of a look.  Also, Goldmoney.com should be an option as well.

35Pete's picture

I thought HSBC was the primary gold shorter? 

JPM is definitely known for fucking with the silver markets, but I haven't heard about them being deep into gold. 

bigkahuna's picture

The only concern I have with CEF is that from time to time they do additional share offerings. I have not tracked it for a while though. It may be of no concern but it is noteworthy.

Anonymous's picture

They only offer new shares when the share price trades at a premium to net asset value, ensuring no dilution of existing shareholders.

They do this to reduce their overall operating expenses by increasing their total metal holdings:

http://www.centralfund.com/pressrel_files/2009/CFOC%20PR%20-%20Closing%2...

The underwritten price of U.S.$13.56 per Class A Share was non-dilutive and accretive for the existing Shareholders
of Central Fund. Substantially all of the net proceeds of the offering have been invested in gold and silver bullion in
international banker bar denominations, in keeping with the asset allocation requirements in the constating documents
of Central Fund and the policies established by the Board of Directors of Central Fund, with the balance of the net
proceeds reserved for working capital purposes. The additional capital raised by this underwriting is expected to
assist in reducing the annual expense ratio in favour of the Shareholders of Central Fund.

NB. I have around 33% of my net worth in gold, and a third of it physical and 2\3rds of it in Central Fund. The fund was founded in 1961. The founder is a gold bug.

Anonymous's picture

My understanding if CEF is 100% (or very, very close) physical, is not traded or leased (very important).

It is 100% unencumbered ! Just site there, in vaults. Just the way I like it !

I have half my net worth in gold of which 1/2 is physical (in my possession), 1/4 is CEF and 1/4 is levered ETF.

When gold takes off the ETF goes first, then CEF. I hold the physical until the "endgame" plays out.

Mad Max's picture

Check the website of Jesse's Cafe Americain - I believe he follows the Canadian fund options.

Anonymous's picture

Gold bugs to lose their jobs and puke gold for cash on the low in 3... 2... 1...

tmosley's picture

The current price is ANYTHING but a low.

My personal cost basis is about $800 for gold, and $13 for silver (including premiums).  Lots of people have a much better basis.

Also, 99% of those who lose their jobs own NO gold.  Just do like they do and get unemployment compensation.  I, for one, will never sell my gold or silver for dollars.  Instead, I plan to SPEND IT once it becomes money again, and gains that huge monetary premium.  Barring that, I will take it and flee the country, and trade it for a strong local currency AS I NEED IT.

DoChenRollingBearing's picture

Plus 93 (foreign keyboards...)

I plan to quietly give it away in the future.  Quietly.

SWRichmond's picture

Got it covered, pal.  I anticipate a forced sag to force the little guy to liquidate anything of value just to stay alive, and THEN we get a currency explosion.  Net result?  No job, no assets, and everything we need costs more than we can afford.  A perfect setup for implementing a new totalitarian state.

http://www.zerohedge.com/article/hand-hand-combat-options-pits#comment-2...

 

Anonymous's picture

Litter for glitter! That's awesome.

I've been shredding my fiatscos for my catbox anyway.

crosey's picture

Hyperinflation, here it comes?!

MsCreant's picture

Good post. That EverBank item is definitely eerie. Gold is dropping right now as we speak, but I expect some folks to be selling stuff (any stuff) to cover. They ain't been schooled better not to sell their gold!

Keep the Gold

Let the rest implode!

SWRichmond's picture

I agree MsC, paper gold sellers are wallpapering their asses with legalese.  Not a confidence-producing development, is it?

DoChenRollingBearing's picture

Ah, good.  We have most of our friends (pro-gold) and our friends who do not like it (MB).

Carry on the conversation!

But, I will buy MORE gold when I get back to the USA.

Gold is a bargain, IMO, at under $1500.  Physical possession only.  I will take the other precious metals (silver and platinum as well), but the bulk of new income for em is for GOLD!

fofoa.blogspot.com is a mine full of information on the surprising roles of gold now and through time.

Gordon_Gekko's picture

Thanks for your kind words MsCreant. Remember don't look at the paper price and keep buying the physical!

Anonymous's picture

GG - I agree with most of your points, any thoughts on silver? SLV? I understand that the same "game" is played there as well.

delacroix's picture

JPM administers slv, need I say more?

Mr Lennon Hendrix's picture

ishares silver trust a la Barclays; Barclays is the last remaining Bank officially owned by the deRotheschildes.  Warren Buffett (worlds biggest pawn) bought 90% of the silver off of COMEX in the early 2000s then turned and sold it directly to Barclays.  JPM does do their bidding.

Assetman's picture

Same sentiments here... I don't always agree with your positions, GG, but this is very good work indeed.

You certainly provide a whole lot of food for thought... and it's much appreciated!

doublethink's picture

 

If paper precious metals are at such risk, why do we read here at Zero Hedge about Paulson and Soros (among other "astute" investors) being long GLD?

 

Anonymous's picture

because a lot of times, a poker player never lets you know what he is holding. these men probably have been accumulating pm for a very long time. they don't go around broadcasting that fact because they derive their sustainence from the very system they are helping to bring down.

SteveNYC's picture

Because if the paper failed,

They are connected enough to get bailed,

While we the public are black-mailed,

Until we grow a set of balls and get the crooks jailed,

Before they arrive at their private island on their yacht having sailed,

All the while leaving our nation failed.

 

It's almost the weekend.......

David449420's picture

Your failed nation will still have a shitload of rather lethal weapons.

Do you really think their islands will be equipped with anti-missile defenses?

Or that you won't be able to find them?

Just saying.

faustian bargain's picture

I'm of the opinion that yes, their islands will in fact be equipped with anti-missile defenses, of one sort or another.