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The Latest Gold Fraud Bombshell: Canada's Only Bullion Bank Gold Vault Is Practically Empty

Tyler Durden's picture




 

Continuing on the trail of exposing what is rapidly becoming one of the largest frauds in commodity markets history is the most recent interview by Eric King with GATA's Adrian Douglas, Harvey Orgen (who recently testified before the CFTC hearing) and his son, Lenny, in which the two discuss their visit to the only bullion bank vault in Canada, that of ScotiaMocatta, located at 40 King Street West in Toronto, and find the vault is practically empty. This is a relevant segue to a class action lawsuit filed against Morgan Stanley, which was settled out of court, in which it was alleged that Morgan Stanley told clients it was selling
them precious metals that they would own in full and that the company
would store, yet even despite charging storage fees was not in actual possession of the bullion. It appears that this kind of lack of physical holdings by all who claim to have gold in storage, is pervasive as the actual gold globally is held primarily in paper or electronic form. Lenny Organ who was the person to enter the vault of ScotiaMocatta, says "What shocked me was how little gold and silver they actually had." Lenny describes exactly how much (or little as the case may be) silver was available - roughly 60,000 ounces. As for gold - 210 400 oz bars, 4,000 maples, 500 eagles, 10 kilo bars, 10 one kilogram pieces of gold nugget form, which Adrian Douglas calculates as being $100 million worth, which is just one tenth of what the Royal Mint of Canada sold in 2008, or over $1 billion worth of gold. As Orgen concludes: "The game ends when the people who own all these paper obligations say enough and take physical delivery, and that's when the mess will occur."

Also note the interesting detour into what Stephan Spicer of the Central Fund Of Canada, said regarding his friend at a major bank, who wanted access to his 15,000 oz of silver, and had to wait 6-8 weeks for its to be flown in from Hong Kong.

It is funny that central bankers thought they could take the ponzi mentality of infinite dilution of all assets coupled with infinite debt issuance, as they have done to fiat money, and apply it to gold, in essence piling leverage upon leverage. They underestimated gold holders' willingness to be diluted into perpetuity - when the realization that gold owned is just 1% of what is physically deliverable, you will see the biggest bank run in history.

Link to full Eric King interview.

 

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Wed, 04/07/2010 - 13:02 | 289998 Riley Wilde
Riley Wilde's picture

I have a few questions:

Why was Lenny Organ granted access to the vault and under what capacity?

Do we have a guess as to the amount of outstanding gold certificates/promises from Scotia Mocotta? Even if we do, should Scotia Mocotta necessarily be expected/required to hold physical against certificates?

Could they be holding their physical deposits elsewhere? For instance, elsewhere in Canada or abroad (as the article suggested storage in HK). The COMEX warehouse data (http://www.cmegroup.com/trading/energy/files/Gold_Stocks.xls) indicates they have 4.776 million ounces (I assume at their NY depository).

Ultimately, it seems as though a single Scotia Mocotta vault has been casually inspected by an outsider found to have less than $100M in specie, and is followed by dramatic headlines of "Fruad Bombshell" at Canada's "only" bullion bank (how many are there in the world? is one realy so few for a country like Canada?) and an "Insolvent" ETF.

Where are the details on the Central Fund of Canada part? The custodian is listed as CIBC, not Scotia Mocotta so I am not sure how these relate.

I am very long gold and want it to do well, but I think it will do better if we have a calm, reasoned debate as opposed to gold bugs looking like over-the-top hypochondriacs. Does anyone else feel that the drama-to-fact ratio is a bit too high at times?

Wed, 04/07/2010 - 13:05 | 290022 Cheeky Bastard
Cheeky Bastard's picture

Do we have a guess as to the amount of outstanding gold certificates/promises from Scotia Mocotta? Even if we do, should Scotia Mocotta necessarily be expected/required to hold physical against certificates?

 

Depends on the underlying contract that is the main part of the service which they offer. But AFAIK rarely does the value of certificates equals the value of the actual bullion held in the vaults. It's not called fractional gold market for nothing. Try to find the prospectus on their web page or something, that should help.  Here is the FAQ from their site, try to find the things you need there. But just to mention, they probably have a high percentage of bullion which matches the certificates but no way in hell is that percentage 100%.

http://www.scotiamocatta.com/products/faq.htm

Wed, 04/07/2010 - 16:18 | 290515 Riley Wilde
Riley Wilde's picture

But AFAIK rarely does the value of certificates equals the value of the actual bullion held in the vaults.

As far as I can tell (I looked at this issue a long time ago), there is nothing in the documentation which makes me believe the issuing bank has any obligation to hold physical against gold certificates. I understand it to be a cash settled contract only --  with some high fees you can convert to physical if stocks allow.  I'll try to find a supporting statement for this shortly.

So Scotia Mocotta not holding much bullion against certificates, even if true, is no giant "fraud".  The relevant question for certificate holder is whether the credit quality of Scotia Mocotta is sufficient to support the certificates and not how much metal is in the vaults.  Granted, contracts on physical metal are another issue entirely.

Wed, 04/07/2010 - 16:21 | 290520 Riley Wilde
Riley Wilde's picture

P.S. http://www.scotiamocatta.com/products/faq.htm

How secure is a "gold certificate"?

Scotiabank gold certificates are backed by the assets of The Bank of Nova Scotia.

What is the difference between "Allocated" and "Unallocated" Gold?

Allocated gold is bullion held by a bank on behalf of the owner. The gold is separated from other metal that may be held by the bank and is identifiable by its unique bar numbers.

Unallocated gold is a claim on The Bank of Nova Scotia for the ounces entitlement to a specific quantity of gold bullion.

Note: Not backed by gold but by the bank.

Wed, 04/07/2010 - 16:52 | 290580 Riley Wilde
Riley Wilde's picture

It's not called fractional gold market for nothing.

Exactly. So why are readers so distressed that Scotia Mocotta is operating a fractional system?  Should all derivatives markets be banned for that matter?  Or should all naked shorts be banned?

That might be a more relevant set of questions.  COMEX gold contracts are derivatives -- not allocated claims to a specific bar.  The delivery mechanism allows for a price link to the metal. Do we want a derivatives market without naked shorts in which all shorts have metal in storage?  Or do we want to allow fractional reserves so that the short side of the market can provide additional liquidity to the market?

We have (or the market can provide) both systems. ETFs with appropriate auditing and conversion to physical features provide the fully reserved system of gold.  If you don't trust the Gold ETFs on offer then GATA and others shold put their efforts towards creating the gold standard in gold ETFs. The futures market provides a fractional reserve system in gold. But why is that wrong?

Only in one way, as I see it.  In a fractional reserve system there is a potential for a run on the market. In that case, perhaps we need to set position limits on excessive naked shorts or we need a clear set of cash settlement procedures in the event of a delivery crisis. This, I think is what is missing from the COMEX contract -- not whether it should be a fully reserved system. 

Should we really be insisting that the gold (or all) market(s) be fully reserved?  Or should we be fixing the contracts in fractional reserve markets to cleanly deal with the delivery problems should it occur?

Thu, 04/08/2010 - 04:20 | 291239 i.knoknot
i.knoknot's picture

you are not nuts in your questions. but you gotta understand the *real product* in the various situations:

e.g. while options buyers are buying a *right* to exercise a purchase. that's all, gold buyers are trying to buy freedom from counter-party risk.

at least that's what they think they're buying... and like a fake gucci bag, it feels right until it falls apart.

these gold proxies (GLD, GTU, etc.) are vehicles that enable convenience at the risk of empty vaults... limitations in 401ks. IRAs, brokerage accounts, etc., all let you easily 'buy' gold in one form or another. But GG will rightly argue that unless you have it, there is the risk that it's a scam.

a round of gold coins in your hand has no such risk (there are others, to be sure...), but gold coins are much less liquid (neighbors? pawn shop? coin shop?). i buy and trust CEF in my IRA. i may have real gold somewhere too. but i know why i buy gold, and what i am buying gold for. the profit means little to me. the insurance is the game for me, and there are many things to insure against these days. i'm not only lacking faith in the dollar, but the whole damned system. maybe i spend too much time in here... :^)

FWIW, i would never ever buy gemstones. i don't know why, but i don't understand gemstones or their buyers. many critics in here feel the same about this silly yellow metal. i am comfortable enough that i will find other like me who like this silly metal in the future... so i buy. same for those who buy gemstones.

maybe we're all insane, but insanity amongst peers seems to work... so far... hell, look at CONgress...

Thu, 04/08/2010 - 06:08 | 291265 Riley Wilde
Riley Wilde's picture

but you gotta understand the *real product*

I absolutely agree.  Whether it is GLD or COMEX futures or Canadian Maples the buyer needs to really understand what it is he is buying (none without their own risks). Sometimes these articles, however, are trying the change or re-define what the product actually is or how it should work instead of understanding it. So what if Scotia Mocotta has very little gold in their vaults?  So what if COMEX exists as a fractional reserve system?  A certificate isn't a claim on actual gold but a claim on the bank to pay you a value referenced to gold.  Similarly, a futures contract is not ownership of a specific bar but a claim on the counterparty to make delivery under normal market conditions.  Both subject to the solvency of the counterparties.

So I don't think that empty vaults (even if this is the case) is some giant fraud as much as unrealistic expectations by the holders of the contracts.  Instead, if one wants physical they should buy physical -- and not try to turn paper into gold.

Thu, 04/08/2010 - 15:26 | 291947 i.knoknot
i.knoknot's picture

spot-on

consider that i've *never* seen/held a stock certificate for the various stocks i've owned, and somehow that's ok. yet, an empty gold vault isn't? an attentive skeptic might ask "what gives"?

my angst with the gold 'not being there', is based on my wondering if it was *ever* there, and/or if it was moved/leveraged between 5 or 10 vaults for their website pictures (see the GLD website...) then quickly leased/moved/sold again.

if this is the case, then the price is unnaturally low, because the product has been made available multiple times (inflated supply). all to create doubt. which favors the purveyors of FIAT finance. who are a pretty powerful group. who i don't believe have an interest in *my* better interests...

multiply sold assets are both a lie, and a source of serious distrust in the system at large. pages have been written about the value of trust in markets... do we put money in a bank we don't trust? and this is the foundation. but bankers cannot seem to let a pile of someone else's gold just sit in their vaults. they just cant! so they just sort of 'lend it out' and then they still charge you storage fees... lol. try to get a DDA checking account any more.

until we get reform that we can trust - which to me implies complete transparency in all regulated market transactions (even if those transaction records were/are released a few months after-the-fact) - we are at least as vulnerable to the market *managers*, as we are to the actual investment *decisions* we're making!

i cannot handle that many risk variables in my little mind, nor do i trust the humans that get first dibs on the game (HFT folks, market makers who can see the limits/stops, etc.) so...

i will pay the premium for the metal in my hand. sure it's a "complexity cop-out", but with no embarrassment i concede my seat at the table. too many variables, and too many unnecessary complexities that seem to exist only to hide real price-discovery from me. usually at my expense.

i seek stuff that humans need that survives long-term storage. my asset value doesn't have to grow, but i will fight tooth and nail to hold onto what little value i have :^)

to rework a famous quote: "give me transparency or give me gold"

ironically, the current gold market is probably one of the least transparent out there... so this a long-term bet on 3500 years of history of gold vs governments, isn't it...?

Wed, 04/07/2010 - 13:18 | 290061 Hulk
Hulk's picture

Does anyone else feel that the drama-to-fact ratio is a bit too high at times?

Absolutley, but due to the prevalence of fraud and corruption, we will never know many of the facts until it is too late.So we have to go with our best guess estimates on the facts as they are presented before us, despite their incomplete nature.

In the meantime actual decisions HAVE to be made and physical PM purchased and delivered. PM simply will not be available for physical delivery when you will need it or want it most

Wed, 04/07/2010 - 15:02 | 290291 tomdub_1024
tomdub_1024's picture

Looks like I should build a bigger sluice than I was planning...

Wed, 04/07/2010 - 15:03 | 290294 Jessica6
Jessica6's picture

Why was Lenny Organ granted access to the vault and under what capacity?

That was the first thing that made me suspect this article was rubbish. Banks hardly let random people into their vaults period. It's as silly as Sprott asking the IMF if he can buy all their gold.

Wed, 04/07/2010 - 19:14 | 290784 dumpster
dumpster's picture

jessica6

another to lazy to look up the real reasons.

do some research on sprott and lenny .. lenny was not some fly by night he had the gravitas to see the inners

of course you must have been thinking of your 55 dollar balance in the credit union

Wed, 04/07/2010 - 19:39 | 290810 Crime of the Century
Crime of the Century's picture

Banks hardly let random people into their vaults period

Considering that Harvey (Dad) was one of the few invited to speak at the CFTC metals hearing, I wouldn't call them "random people".

Thu, 04/08/2010 - 06:10 | 291266 Riley Wilde
Riley Wilde's picture

Yes, they may be experts in the gold field and invited to speak to the CFTC. But that still does not explain why they were allowed into the Scotia Mocotta vaults -- especially if there was some "Gold Fraud Bombshell" to discover.

Wed, 04/07/2010 - 12:57 | 290004 b_thunder
b_thunder's picture

 Wrong conclusion. The game ends when major world powers (USA included) issue something similar to the Executive order 6102 of 1933.

And those who still demand their gold, will be placed in the same vaults where they thought their gold was. 

Wed, 04/07/2010 - 13:19 | 290067 CookieMonster
CookieMonster's picture

Yes, it is called "Global Governance", the penultimate end game - just before they stick the bar code in our bodies so we will be allowed to eat. It (the planned failures of the system) is all going nicely to plan.....

Wed, 04/07/2010 - 12:58 | 290006 THE DORK OF CORK
THE DORK OF CORK's picture

I am sure the zero hedge community owns far more physical silver then the Bank of  Nova Scotia - maybe we even have more gold then the Bank.

Truly astounding - the reserve for gold may be only a few % and the silver maybe a fraction of 1%

Wed, 04/07/2010 - 12:58 | 290010 ZKplate
ZKplate's picture

Listen to the interview. At roughly 13 min mark, they tell the story of Spicer.  Seems he had a friend who had silver on account at an unnamed bank and had difficulty getting his hands on it. This has nothing to do with CEF or GTU---

Thu, 04/08/2010 - 08:40 | 291316 Riley Wilde
Riley Wilde's picture

In the interview, this story has to do with silver certificates at the bank and not allocated metal.

Wed, 04/07/2010 - 13:00 | 290011 primus
primus's picture

The 'Biggest' Fraud?

That is overstatement. No one will every top the Federal Reserve Banking System in the fraud department.

Isn't the currency due for a make over?

First it was PM based coins, then it was notes backed by PM, now it is 'legal tender' that is 'backed by the full faith and credit' of the US government.

I think we need a more accurate, honest FRN to match the times. It is time for a new $1k federal reserve note. Put a picture of Ben Bernake fucking a sheep on the front and label it 'Backed by the full faith and credit among a small cabel of fraudster, white collar, criminal gansters.'

Uwe're all fucked, America!

Gold, bitches.

Wed, 04/07/2010 - 13:21 | 290070 digalert
digalert's picture

Perhaps a currency guaranteed by MBS'.

Wed, 04/07/2010 - 15:00 | 290286 tmosley
tmosley's picture

You're right.  Never say never.  This is the biggest fraud "yet".

Wed, 04/07/2010 - 13:11 | 290034 dumpster
dumpster's picture

more sinclair

The euro is under pressure due to the liabilities of their states. The US dollar will come under severe pressure for the same reason.

Gold has NO LIABILITIES attached to it and has been a currency since the beginning of written history.

Regards,
Jim

Wed, 04/07/2010 - 13:15 | 290052 Tense INDIAN
Tense INDIAN's picture

hey AMericans ...the ROTHSCHILD gang and other JEWISH central bankers have stolen all the GOLD of this country as u can see for urself....

 

i m sure the GOLD in FORT KNOX are all fake....

Wed, 04/07/2010 - 13:23 | 290076 Cheeky Bastard
Cheeky Bastard's picture

Hey, shit for brains, learn how to fucking spell and develop other necessary cognitive abilities if you want to be taken seriously.

Oh, yeah; twas the Joos and The Commies and Nixon and Baba fucking Ganoush.

Tell me; do you also believe God created you, Jesus told GWB to "liberate Iraq" and do you jerk of to Kirk Cameron poster from Growing Pains.

 

Wed, 04/07/2010 - 13:46 | 290133 Confused
Confused's picture

do you jerk of to Kirk Cameron poster from Growing Pains.

 

Hahahahahahahha! Classic!

 

This may seem like a crazy question. Does this even matter? I would imagine that the powers that be can make this problem go away. I realize they can't create more silver/gold, but if things were to get really crazy, would it matter?

 

Wed, 04/07/2010 - 13:59 | 290161 trav7777
trav7777's picture

He didn't say it was "the Jews," he said those who did it were jewish.  The latter is a factual statement.

Members of the Tribe have been running scams like this since they started making their surnames derivatives of precious gems and metals.

Wed, 04/07/2010 - 15:18 | 290346 Blindweb
Blindweb's picture

Of course you classifying it as a scam is based on your own tribal morality...

Wed, 04/07/2010 - 23:49 | 291106 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

They are not Jewish they are "Jewish".  Get it straight.  And what "religious sect" doesn't have some of its members run a scam?  The "Church"?  What religious group doesn't have some screw ups at some point?  We have to blame the poor people of the whole sect just because they were born into the Jewish family, and the Rothschildes are greed soaked "Jews"?  Semantics in this case will get us nowhere!  CMON PEOPLE!  Stick to the program!  We hate the banksters because they are banksters!  We hate Wolfawitz because of what he did, not because he says he is "Jewish".  This whole point is a charade set up for us to focus on some bullshit!

Thu, 04/08/2010 - 00:37 | 291151 delacroix
delacroix's picture

they are really khazars, eastern europeans, who converted to judaism, in the 7th century. possibly ancestors, of the edomites. the tribe of esau, has been at odds, with the tribe of isaac, since old testament times. king herod was an edomite.

Thu, 04/08/2010 - 00:53 | 291172 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

BLAM! 

"And you can all collect your tests on the way out the door.  Your score is at the top of the page." -delacroix

Thu, 04/08/2010 - 01:34 | 291188 CookieMonster
CookieMonster's picture

Thank you for that esoteric bit of info - it explains a LOT if it is true. Then again, if it is not true, it is probably completely meaningless.....

Thu, 04/08/2010 - 08:35 | 291307 boiow
boiow's picture

whatever. either way they are very very naughty.

Thu, 04/08/2010 - 00:25 | 291094 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The Rotheschildes are not Jewish...they are "Jewish".  Same with the other bankers, even the "Christians".  It has nothing to do with religion, only control and power.  They worship Lucifer, and other dieties, but also drink the blood of virgins.  So ok, sure, whats your point?  There are "Muslims" in their clique as well.  And Chinamen.  And the Japanese Emperor.  AN INDIAN...or two!  And an African (the African is told to sit in the corner during ceremony).  And a Mexican named Slim.  Mostly however, their skin is white.  But once again, they are "Jewish", and "Christian", etc, etc. 

If you go on thinking it is a religion you are up against you will wind up angry at the wrong people.  Religion was originally meant to prescribe hope.  As I feel hope is complacent, I do not ask anything from the gods, other than for what they give me.  As for my brothers and sisters, I ask they stand up with me.  For together, we may defeat the banksters and such.  If we aggressively address cliche topics such as yours, we will be walking in circles.  The sun is setting my friend, whose team are you on?

Other than that misstep, you are preaching to the choir.

Gang Starr Feat. Jadakiss - Rite Where U Stand:


http://www.youtube.com/watch?v=W6_tHXqnhYI&NR=1
Wed, 04/07/2010 - 13:39 | 290110 jerseyredd
jerseyredd's picture

I learn so much by reading the comments. Maybe that's the plan from the start, brilliant!

Wed, 04/07/2010 - 17:35 | 290644 hedgeless_horseman
hedgeless_horseman's picture

Laugh, yes.  But learn?  God help you. 

Truly, I think Tyler's plan is to eventually cause us to get ourselves off of our collective asses and get in a fight.  All this is just training and motivation.

Wed, 04/07/2010 - 13:41 | 290119 OutLookingIn
OutLookingIn's picture

The US mint report showed monstrous increases in sales of both gold and silver eagles. One ounce gold eagle sales jumped by 37,000 to end the month at 102,000. In silver eagles, the mint reported selling a gargantuan 1,481,000 to end March with total sales of 3,381,000.

Year-to-date end of quarter figures for both:

One ounce gold eagles sales... 271,000.

Silver eagle sales... 9,023,500.

Gold is no longer held captive by a fixed parity with the dollar. It is trapped politically in parity with a price discovery futures market leveraged at 100:1.

Wed, 04/07/2010 - 13:53 | 290149 shenni
shenni's picture

Stop the madness!

Guys, you are barking up the wrong tree with CEF.  This is from a friend that knows Stefan Spicer (who is the CEO of CFC):

For the record, CEF sources NONE of its silver and gold from Hong Kong, and stores NONE of its metal in the bank in question, Scotia Mocotta of Toronto, which is part of the Bank of Nova Scotia, Canada’s only official bullion bank.  CEF has done all of its equity offerings with CIBC, and stores all of its metal in the CIBC warehouses in Toronto, Vancouver, and Regina.  All are in Level 10 vaults (the most secure in the world), and the bullion assets of CEF, GTU, and SBT are all audited bi-annually by Company officers, with third party inspection by Ernst & Young.

 

There are no securities that I feel more safe about (other than actually holding physical gold and silver personally) than CEF, GTU, and SBT.   In fact, the Chairman of GTU is none other than John Embry, in my view the most famous (and honorable) Precious Metals investor in Canada, as well as a leader in the fight against gold and silver manipulation.

 

Wed, 04/07/2010 - 14:25 | 290215 schoolsout
schoolsout's picture

Didn't E&Y have a problem recently?

Thu, 04/08/2010 - 05:14 | 291254 theprofromdover
theprofromdover's picture

About time we had some sanity on this thread.

(This baloney gold story was embarrassing, did zerohedge no credit at all)

Wed, 04/07/2010 - 13:55 | 290156 OutLookingIn
OutLookingIn's picture

Much larger premiums on gold coins and bullion are building. The trend is for higher priced gold and under priced derivatives. Recent actions prove this as CBs are forcing any demand for delivery, to trade out for liquidation, then go to the cash market to buy gold. The dollar based gold derivative markets have grown so large and become so integrated into hedging dollar assets, that CBs will band together to crush any delivery demand - forcing cash outs only.

Wed, 04/07/2010 - 13:55 | 290157 trav7777
trav7777's picture

All the EVERYTHING is gone, guys.

Do you REALLY believe that OPEC actually cut production or is it simply more plausible that they peaked?  Their reserves are vastly overstated, so is their historical production.

In ponzi math, 9 real = 12 claimed.  Same as gold and everything else.  If you can't believe your lyin eyes, not my fault.

All the trust funds, all the promises...all the real shit, looted.  Bankster clan members have been selling shit they didn't own for centuries.  Hell the entire INSTITUTION of banking is lending something you don't even have against someone else's REAL collateral that they do have and finding a way to take possession of it.

The ULTIMATE con.

Wed, 04/07/2010 - 14:42 | 290255 buzzsaw99
buzzsaw99's picture

Well said.

Thu, 04/08/2010 - 00:26 | 291139 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

+1

Wed, 04/07/2010 - 14:02 | 290162 Comrade de Chaos
Comrade de Chaos's picture

default b___z!!!

 

 

Wed, 04/07/2010 - 13:59 | 290165 hound dog vigilante
hound dog vigilante's picture

If true, this is HUGE news...

These past 24 months, I've been waiting for two (2) specific (and inevitable) news events...

1) non-delivery or "missing" physical gold, and...

2) sovereign currency launch(es) & developing economies de-pegging from $USD

 

The "slow-motion trainwreck" that is our global economy/recovery is re-accelerating towards another head-on collision with reality. ZH is spot-on with their coverage here... the f-ing planet is spinning off it's axis and the MSM is 100% distracted by the latest overhyped overpriced shiney object...  the planet could be burning like a bonfire and the MSM would still be editing their Dow 11k stories... and traditional media worders why they are obsolete ?!?!?!?

Wed, 04/07/2010 - 14:20 | 290203 schoolsout
schoolsout's picture

Question....

 

I am a 27 year old, small-time player with most of my physical in my posession....that said, I have about 3/4 oz of gold at Bullion Direct in my "online portfolio."  I buy as I get money and bought another 1/4 oz maple today after reading this story....do y'all think it is relatively safe while at BD?  I plan on buying more within the next month so I just haven't had them ship it to me yet.

What says you?

Wed, 04/07/2010 - 14:56 | 290279 CookieMonster
CookieMonster's picture

Don't know who Bullion Direct is. They say they are in Texas. Best to take delivery and keep physical close to home or safe deposit box. Had an account once with Bullion Vault (a reputable company overseas). Took me a couple of weeks and sent them copious information before they would send me a check for closing my account. Turned me off to the whole idea of "online" gold accounts. But that's just me.....

Wed, 04/07/2010 - 15:14 | 290336 chumbawamba
chumbawamba's picture

If you don't have the gold in your possession, you do not own it.

Take possession.  Now.  Not tomorrow, not in an hour, now.

I am Chumbawamba.

Wed, 04/07/2010 - 15:15 | 290338 tomdub_1024
tomdub_1024's picture

Chumba was faster...

Wed, 04/07/2010 - 14:25 | 290213 exportbank
exportbank's picture

"Counter Party Risk" - that is where the pain will come from. When the music stops, your counter-party won't have a chair for you. Everything is Fractional - even stocks - you think you own a share but call them in and see if anyone can send you an actual "Share Certificate"..

About three years ago we moved to a policy that we call "Protect the Principal" - we stopped worrying about return - we just didn't want to lose everything.

 

Wed, 04/07/2010 - 17:39 | 290650 hedgeless_horseman
hedgeless_horseman's picture

You will also get to learn about legislative/political risk and interest rate/inflation risk.  Study before the test.

Wed, 04/07/2010 - 14:26 | 290218 Popo
Popo's picture

Here's my question:  Who is both capable of starting the run on gold, and would not be hurt by the ponzi's collapse?

 

China?

 

 

Wed, 04/07/2010 - 15:12 | 290325 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Jimmy "Bowtie" Rogers.

Wed, 04/07/2010 - 16:09 | 290493 Mad Max
Mad Max's picture

Soros.

Wed, 04/07/2010 - 14:56 | 290269 Jessica6
Jessica6's picture

deleted/moved - meant to be a reply to earlier comment

Wed, 04/07/2010 - 15:11 | 290321 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

1st repost ever, but this is important to me.

So Max Keiser is killing it and he cleared some shit up for me.  We have until $20.92 to buy silver (this is its nominal high), because that is when JPM should be done unloading their shorts (more specifically the shorts they inherited from Bear Sterns).  Once that happens, the whole market should capitulate, and then silver to the MOON (we have our own Argonaut, GET THE FUCK IN THE BOAT PEOPLE!) followed by gold and oil.  By my calculations we will reach $20.92 at mid summer, then the market should capuitulate for 2-6 weeks, depending on how bad peak oil is right now, and then KABOOM!  Anyway, my two sense...I could be wrong. MB anyone?

Also, a low of $8.88 during the "crisis".  They are saying something.  They are saying 'We will run this town for infinaty'.  I cry ISIS!  Then I go to war with these damn JPM "M"arket "M"anipulators.  Join me!  BUY SILVER!

War Is My Destiny:

http://www.youtube.com/watch?v=JRLl2yVrJzE

Wed, 04/07/2010 - 16:00 | 290477 Cheeky Bastard
Cheeky Bastard's picture

+infinity for the song

 

Wed, 04/07/2010 - 22:06 | 290996 Hulk
Hulk's picture

I think Keiser and Gilbert Gottfried are related...

Wed, 04/07/2010 - 23:00 | 291048 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Yeah, and I blame his voice for why my Mama won't listen to him.  I say, "Then mute him, but please listen to Stacy."

Wed, 04/07/2010 - 15:22 | 290361 GoldSilverDoc
GoldSilverDoc's picture

(to the tune of "Where Oh Where Has My Little Dog Gone")

Where, oh where have the paperbugs gone?  

Oh where, oh where can they be?

Are they sitting at home

Chilled right down to the bone?

Burning their paper for me?

Wed, 04/07/2010 - 15:42 | 290435 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

This is why we need a + button!

Wed, 04/07/2010 - 15:57 | 290470 rich_maverick
rich_maverick's picture

I think you fail to understand something.  Scotia Bank is the only Canadian bank that is affiliated with the LBMA.  That does not mean they are the only Bullion Bank.  CIBC holds gold for institutional (clients like CEF).  But, is not part of the LBMA.  Scotia Bank may claim that it does not need possession of significant gold on their premises as most of their holdings are currently in London.  Scotia Bank simply needs sufficient gold on premise to handle short term demand requirements they may get.

Don't get me wrong, I'm one of those who believes the physical market is a big fat scam.  But, one guy's observations from 1 vault does not prove the conspiracy is true.  What needs to be proved is that the gold does not exist in any of the vaults that make up the LBMA banks.  Until then, the LBMA can play a game of moving the gold to any vault to ensure that double (or 100x) counting continues.  

If Scotia Bank's vault is symptomatic of all other vaults, then the observation can be extended.  But, until that is proved, Scotia Bank can easily just claim they have much, much more gold and silver, but that it's in London.

 

Wed, 04/07/2010 - 16:41 | 290567 SRV - ES339
SRV - ES339's picture

+1

Just GATA "feeling their oats" (and justifiably so) after the Maguire story... I'm afraid this one will not pan out though... but the time is near, of that there is no doubt (IMO).

I hope GATA holds back a bit to vet these stories before they go public... in danger of losing the credibility gained in the CFTC hearing (didn't hurt my Sprott fund holdings though... not a bad days return at > 3%).

Wed, 04/07/2010 - 15:59 | 290473 no cnbc cretin
no cnbc cretin's picture

If you're going to buy gold, buy the real thing. Say that, there really isn't all that much gold left on this planet, and there never has been all that much. So, it's funny to think how going back to a gold standard would do any good, especially with a world pop. of 6 billion+. Those who are pro gold should beware just how much is physically out there.

Here's a paragraph from a National Geographic article: For all of its allure, gold's human and environmental toll has never been so steep. Part of the challenge, as well as the fascination, is that there is so little of it. In all of history, only 161,000 tons of gold have been mined, barely enough to fill two Olympic-size swimming pools. More than half of that has been extracted in the past 50 years. Now the world's richest deposits are fast being depleted, and new discoveries are rare. Gone are the hundred-mile-long gold reefs in South Africa or cherry-size nuggets in California. Most of the gold left to mine exists as traces buried in remote and fragile corners of the globe. It's an invitation to destruction. But there is no shortage of miners, big and small, who are willing to accept.

Read the full article here: http://ngm.nationalgeographic.com/2009/01/gold/larmer-text/1

So, to use the word fraud is correct.

Wed, 04/07/2010 - 16:04 | 290483 CookieMonster
CookieMonster's picture

An old web page touting gold prospecting when gold was hitting bottom (2001). Why buy when you can find it yourself:

http://www.marciesalaskaweb.com/prospecting2.html

:)

Wed, 04/07/2010 - 16:15 | 290506 tomdub_1024
tomdub_1024's picture

Exactly! I am getting impatient waiting for the spring snow pack melt to bring me new goodies down from up high to my favorite creeks and rivers...:)

Wed, 04/07/2010 - 17:02 | 290598 cocoablini
cocoablini's picture

Don't blame CEF-they had a contract with the bank to hold their bullion. The bank loaned or sold it out from underneath them.
All these banks, as we have learned, are naked on gold. Naked shorting, naked storage-just flat out naked.
Which is why the Chinese or someone can come in now and short squeeze the banks like JP and frack them over for good.
If a big player knows they are naked, the squeeze may go exponential.
At a certain point, force majeure will be in effect. The USG will illegalize ownership as national security.
If you have the gold, great.
If you don't have it, good fracking luck getting it out of Soros' hands.
I'm buying junior gold miners by the truckload as they have to mine all this paper shit the banks have been screwing around with.
As we know, this happened in Great Britain when the government had to sell 1/2 of it's bullion to save short banks. Gold has gone up ever since...

Wed, 04/07/2010 - 21:16 | 290930 hamurobby
hamurobby's picture

...and GB gave the other half to the US during ww2, and have been lending out (WHAT?) ever since (not that the US hasn't been selling it since then).

Thu, 04/08/2010 - 05:48 | 291259 i.knoknot
i.knoknot's picture

sigh,

listen again... CEF's gold was not involved in this. none. nada.

CEF's boss was asked for advice, and that's part of how we got the story.

an earlier commenter metnioned that sprott said 'the gold's all there...'

again... CEF's gold is not related to this story, merely one of it's managers was called when a friend's 15K oz of silver took 6 weeks to arrive...

6 billion strong... and growing?

Wed, 04/07/2010 - 17:06 | 290604 cocoablini
cocoablini's picture

CFTC says paper gold provides liquidity. Its just counterfeiting with government collusion. China should come in and buy and assload and request physical and blow the whole thing skyhigh. The US deserves it.

This little farce called fiat currency has been abused for years-counterfeiting, derivativizing everything, creating money supply out of worthless assetization.

Keynes was out of his fracking mind.

I don't even own gold-the government will have to remove it from private hands soon and rectify this with "cash" or worthless vapor.

Wed, 04/07/2010 - 17:09 | 290607 augmister
augmister's picture

Boy, talk about PM's around here and it is like pouring gasoline on a match!  I love it!  Best entertainment on the net and you cannot beat the price.   Somewhat of a contrarian,I think the metals will have the gas let out of their bags (manipulation) and we will see lower prices.   Reason: somebody's want to get in. How, when, where...who knows?   Keeping my powder dry for lower prices ahead.

Signed,

Sheik Bajouttie  

Wed, 04/07/2010 - 17:10 | 290610 Bow Tie
Bow Tie's picture

cool story but it does actually say in the scotiabank prospectus that the certificates are backed by the bank's assets. also says 'storage fees' are in fact certificate admin fees.

not sure why this dude ever thought that what he owned was not a gold derivative??? certainly found out the long way...

Wed, 04/07/2010 - 17:12 | 290612 TooBearish
TooBearish's picture

Does anyone on this blog trade the paper stuff?

 I am a CTA and regularly trade Comex futures and have noticed a real change in market behavior since the CFTC hearings.  Has anyone else noticed this shift?  The London AM fix has been lower than the NY close for a significant number of sessions and the market seems to be trending, if it can sustain >1150...  Silver has been manhandled in the last session or 2, as the GC/SI ratio is out again today after touching 62 ealier in the week; but we haven't had even a good 10$ rinse in GC for a while - perhaps Gary G has told the boyz to back off the collusive trading activity until the heat cools off....any serious trading comments?  thanks.

Wed, 04/07/2010 - 17:44 | 290659 RockyRacoon
RockyRacoon's picture

Nice cow avatar -- or is that a water buffalo?

I'd like to hear more from someone who is in the mud wrestle, like you.

I don't trade paper anything other than FRNs for groceries.  That's bad enough.

Your input would be appreciate whenever the subject arises.

Thu, 04/08/2010 - 08:41 | 291320 boiow
boiow's picture

might be true that they have been told to cool off. will still see a big rise in the price though.

my moneys on the big bust. why waste it. its just sitting there on the table.

Wed, 04/07/2010 - 17:42 | 290656 cocoablini
cocoablini's picture

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/4/7_An...

 

Interview on gold,fractional reserve scam. The world knows there is no bullion now

Wed, 04/07/2010 - 17:46 | 290664 RockyRacoon
RockyRacoon's picture

...and, here is a primer for those who may be new to the concept of gold reserve banking:

http://www.fgmr.com/fractional-reserve-aspects-of-gold-etfs.html

Wed, 04/07/2010 - 17:44 | 290660 cocoablini
cocoablini's picture

The banks have to cool it now. Gold wasn't slammed today as usual on a bond/down day. I think the Soros people have to get their gold cheap-it may fall again but then the race is on

Wed, 04/07/2010 - 17:47 | 290667 cocoablini
cocoablini's picture

There's fractional and then there's FRACTIONAL.
The canadian bank does not have CEF metal-and wanted more money for storage fees! They were paying storage fees on NOTHING!

Wed, 04/07/2010 - 18:20 | 290718 DoChenRollingBearing
DoChenRollingBearing's picture

Back from my gold run.  The bank's ATF was not working!  But, the bank was open.  So, I withdrew even more than $500.

Then I bought gold.  Then I bought more ammo.

Then I came back to my virtual home: ZeroHedge.

Wed, 04/07/2010 - 18:49 | 290754 dabug
dabug's picture

HELP, just bought 3oz in 3 x 1oz bars, here's the problem; two are easy as pie to bend, the other had to be put in a vice to bend, should I be worried about the 3rd?? none are magnetic...

Wed, 04/07/2010 - 20:19 | 290847 Crime of the Century
Crime of the Century's picture

Got a scale? Whats the marking on the bars? Assayed? Do they sound the same when dropped? Worst case, get a crucible and a torch.

Wed, 04/07/2010 - 20:31 | 290861 dabug
dabug's picture

They are internet bought bars, Canadian mint...so all the usual markings.

Wed, 04/07/2010 - 20:54 | 290896 dabug
dabug's picture

ps. sound from dropping does not work if u have bent them

Wed, 04/07/2010 - 21:07 | 290916 tmosley
tmosley's picture

Cut it apart and see (since you have already bent them).  If there is tungsten in there, you either won't be able to cut it, or you will be able to see the shot.  Cut open one of the easily bent bars for comparison.  If it were solid tungsten, you could not have bent it with a vice unless you had mechanical support, and then it probably would have snapped rather than bent.

Please report back.  I may have to do this for my own gold if there is tungsten in 1oz bars.

Wed, 04/07/2010 - 21:28 | 290945 hamurobby
hamurobby's picture

Please buy a cheap digital gram scale off ebay for $20 and please buy 1 ounce COINS, easy to measure and easy to weigh, I sleep good....

Wed, 04/07/2010 - 23:14 | 291066 tmosley
tmosley's picture

I hate to tell you, but if your coins have tungsten in them, that scale ain't gonna tell you.  W has the same density as gold, which is why it is good for faking it.  The only way to tell is to explore for tungsten's other properties which are very different from gold, namely its incredible hardness and stiffness.  If he had trouble bending a gold bar, that is pretty disconcerting.  If it isn't 99.9%, a copper alloy might make it harder (like AGE's and Kugerrands).

Wed, 04/07/2010 - 21:32 | 290950 dabug
dabug's picture

Been trying to bend it back and forth by hand all evening often with brute force, fingers are hurting and not much bending, when I bend the other two I am suddenly gentle as they bend very easily. Will slice & dice no.3 and will get back 2 u.

Wed, 04/07/2010 - 21:48 | 290969 dabug
dabug's picture

Well looks like the missus is getting some new jewellery; unless they have derived a golden coloured replacement metal, I now have two pieces of 1/2oz gold...as and engineer I am of course still not convinced, the physical properties were not even close (E-value, or modulus of elasticity).

Wed, 04/07/2010 - 21:59 | 290982 dabug
dabug's picture

both 1/2oz pcs failed the bite test...brass alloyed with gold?

Wed, 04/07/2010 - 23:18 | 291069 tmosley
tmosley's picture

Are they all from the same manufacturer?  Does the stiff one say .999 fine gold?

If it does, you should get a scale.  Cutting it should have made it real apparent if there was tungsten (it's a different color, and you probably wouldn't have been able to cut it.  Precisely measure the weight, and precisely measure the volume (use water displacement).  If it isn't the same for the hard gold and the soft gold, then you need to escalate, and get it assayed.  Save your reciepts for this stuff.  You will need them when you sue your supplier.

Wed, 04/07/2010 - 19:01 | 290769 sailortony
sailortony's picture

The ScotiaMocatta empty vault should contained at the very least the Gold & Silver bullions of Claymore Investments Inc.

They list on their website,( http://claymoreinvestments.ca/commodities/ ), the bullions they are alleging to have stored there; This, as of yesterday, was $472 millions of gold (GLV) and $77 of silver(SVL.UN) for a total of say $550 m.

Adrian Douglas estimated at only $100 millions what was inventoried in the vault.

This is more than a shortage and Claymore is the smallest bullion fund in Canada.

I own a chunk of these fund and for the last 3 months, I have been asking Claymore for the Ernst & Young audit report of Claymore holdings of this facility and the last response from Claymore was:

"The actual bar audit list is not a public document – E&Y does not allow us to release it for public viewing. The data that is posted on the website is essentially the information attained through the audits."

NOW HEAR THIS:

I am a co-owner.
My depository is Scotia Bank.
My agent is Claymore.
and my auditor is Ernst & Young.
The auditor is paid to confirm to me that what Claymore and Scotia Bank are claiming are facts.

They all claimed the I cannot have access to an audit I paid for from an agent I pay to hold my gold which is apparently not there....

What a racket! I am not sure I will be able to sleep tonight!

Wed, 04/07/2010 - 20:20 | 290849 Crime of the Century
Crime of the Century's picture

I would drop them like a bad habit...

Wed, 04/07/2010 - 20:44 | 290886 nuinut
nuinut's picture

Cash out asap, and buy physical.

Wed, 04/07/2010 - 19:51 | 290798 tigerbaby
tigerbaby's picture

if all fiat currency collapses, wouldn't the world economy shrink to such a degree that there is not much you will be able to trade with gold? ie. the buying power of gold actually reduces (compare to now) because other goods will increase in price due to scarcity?

also in the case of worldwide fiat currency collapse, wouldn't there be a good chance of communist resurgence (gasp) as existing governments collapses (or severely weakened/diminished), in that case one may have to trade all the gold in one's possession for a boat ride at some point ... (doesn't matter how well you hide your gold, they only have to get YOU)

scary thought but communist mobs have a good record of defeating warlords with vast armies, never-mind households ...

Wed, 04/07/2010 - 21:18 | 290931 tmosley
tmosley's picture

Goods and productive capacity don't just disappear.  Gold and silver will simply be repriced.

Have a little faith in the free markets.  They are infallible to the extent that they are free.

Wed, 04/07/2010 - 22:03 | 290989 tigerbaby
tigerbaby's picture

capacity will degrade gradually if trade does not pick up, as goods are consumed steadily ... but if all trade are settled in physical PM then it would certainly contract a great deal ... as without paper money and credit wouldn't the speed of money be back to the age of bartering? (albeit bartering with PM)

Wed, 04/07/2010 - 23:27 | 291076 tmosley
tmosley's picture

Not unless you consider 1971 the end of the age of barter.

Gold worked fine for thousands of years, and allowed for pretty much all the financial chicanery we have today, but imposed a limit on leverage.  The leverage is what has gotten us into trouble.  When gold is used in an unregulated free market, it actually works a lot better than the current system (see scottish free banking, and US banking 1840-1900 minus the Civil War years and Reconstruction).

The rate that money changes hands isn't important.  That is a figment of Keyne's imagination.  What is really important is how much productive labor goes into the system, and having an honest, automatic method of determining society's savings/consumption preference (this happens automatically under a gold standard absent a central bank and other government interventions in the markets).  Money is merely a medium of exchange and a way of saving.  So long as you trade your labor for money, that labor remains in the system, and the longer you refrain from using it, the more production it will produce, leading to lower prices in the future.  That is, so long as some dude doesn't start printing money and taking the "savings" (ie the input of production) and using it for himself.  This is what the government does by printing fiat money.

Thu, 04/08/2010 - 01:36 | 291153 tigerbaby
tigerbaby's picture

so you would trust paper money if governments claim it's backed by gold or silver? it seems if you do not settle with physical PM then you will have to trust paper in some form?

like I said if all trades are settled with physical PM then commerce will contract greatly (commercial settlements would incur great transportation and verification costs)

but more importantly, wouldn't going back to gold standard result in significant deflation as global productive capacity can increase much faster than gold production? (given increases in population and education these days, where as in the old days global productivity gain and gold production are more in line with each other) it seems that this would result in everybody hugging their gold instead of using it ...

in any case it's not like bubbles and other financial disasters never happened before 1971 ...

Thu, 04/08/2010 - 02:27 | 291209 Haywood Yablomi
Haywood Yablomi's picture

oh, noes.  Not deflation.

Thu, 04/08/2010 - 12:08 | 291616 tmosley
tmosley's picture

1971 was the end of the partial gold standard, during which time the government had been printing more notes than it had gold.  Before ownership of gold was outlawed in the 30's, dollars were redeemable for gold at any bank.  It is the redeemability that enforces limits on spending.  It's nice to be able to do business by simply moving numbers in a ledger around, but if you can't get at the gold that supposedly backs the money, it's of no use, and it causes more problems than it solves.

Deflation is NOT a bad thing, despite what the Keynesians tell you.  If it were, no-one would ever buy computers, since they are always getting cheaper and better.  That in and of itself disproves the theory that falling prices halt spending.  You see, the money isn't really worth anything, except as a claim on labor.  There must be labor in the system for the money to have any value.  Labor, once it has entered the system, will build on itself the longer it remains in the system, and as such society benefits the most when people simply sit around "hugging their gold".  The gold doesn't cause food to fall out of the air, nor does it cause machines to run of their own accord.  It's people that do that.  When someone buries their gold, which they have bought with their labor, the rest of the gold in the system becomes more valuable (deflation), meaning that those who are spending are able to command a greater amount of productive capacity.  This is like loaning money to everyone on the planet.  You get paid interest when THEY save, allowing you to consume more.  All the while, productive capacity continues to increase, forever pushing the prices of goods and services down, until it reaches a point where, like George Jetson, we can go into work for ten hours a week and push a button, and have the rest of out time spent on leisure.

When the government intervenes by printing and spending money, it robs people of their automatic appreciation, forcing them to take ever greater risks in order to increase their purchasing power.  99% of people ultimately fail at this.  In the mean time, the government grows and grows, "employing" people who have no productivity (ie they don't add any capital to the system), but instead only take away from the system.  Effort that should have gone toward creating greater efficiency instead goes to feed the people who then turn around and persecute those who dare to produce with regulation after regulation.  In effect they are parasites, and hostile ones.  Imagine if they were instead productive workers.  With regulatory burdens gone, with a larger productive work force, and with a lesser tax burden, rather than having an average 80 hour work week for a family (ie we are forced to have two income earners to make up for the government workers drain on society) we would instead have a 10 or 20 hour workweek, as efficiencies continue to improve.  Just a tiny amount of human labor is all it takes to produce a bounty of resources in an "old" free market (ie one that has been in place for a long time).

Wed, 04/07/2010 - 19:39 | 290811 Moneygrove
Moneygrove's picture

dirt bags want to lock me up for owning gold I say bring it on, I am waiting for you !!!!!!!!!!!!! p.s. I have something for you and I can`t tell you what it is !!!!!!!!!!!!!!!!!!!!!!!!!!!!

Wed, 04/07/2010 - 21:06 | 290907 hamurobby
hamurobby's picture

Those who dont have a clue, and are scared to protect themselves dont understand the nice feeling of cold steel, and elevate pure existence over true freedom.

Wed, 04/07/2010 - 20:14 | 290843 Moneygrove
Moneygrove's picture

If you want gold just move to mineral,ca !!! you can still pan for it in the local streams !!!!!!!!!

Wed, 04/07/2010 - 20:39 | 290873 belogical
belogical's picture

I can envision gold and silver skyrocketing because of the fraud not fiat currency collapse.

 

 

Wed, 04/07/2010 - 20:59 | 290906 hamurobby
hamurobby's picture

 BUT whats on fox news?  I used to think they were much on top of things until today, when the red head said .. Im surprised to see oil prices drop considering the large storage of US supplies, whats going on? and im thinking, you really didnt mean to spin that did you? OR, did you mean that inflation has taken the upper hand, and you were surprised to see oil go down for one day, regardless of the oil storage data? Im convinced at this point, that I am being lied to by the media and I demand my politicians tell me what is going on, just you wait until 2012, I will make my voice heard...till then...got gold in your hands biotches? :-)

Wed, 04/07/2010 - 21:56 | 290979 wang
wang's picture

and his son, Lenny

Wed, 04/07/2010 - 22:01 | 290985 rich_maverick
rich_maverick's picture

PHYS up 2% and CEF flat.  Got to love it when the NAV premiums are being taken down on irrational fears.  Personally, I'll stick with CEF.  If you listen to the audio, the President of CEF tried to help a guy out.  Nothings was said to imply that the missing silver was CEF silver.  If you get to the point of not trusting any bank to hold your metal, then get the hell out of everything and take physical possession.  The only money I have in CEF is my 401k.  All other metal is held in personal possession.  Moreover, if you believe that CEF is at risk, then you have to believe that many of the bars out there are Tungsten filled, so you will have to stick with government mint issued coins with currencies on them (making them legal tender and technically counterfeit if not 99.9% gold as claimed).  You would also have to "suspect" the coins.  But, that is easy enough to test.  Technically, you can't trust PHYS either as you still have counter-party risk.  In the PHYS case, you that the risk that the government and the regulators will someone repossess the PHYS assets in some sort of crony takeover.  If you read the PHYS prospectus, the gold is held at the Canadian Mint.

Wed, 04/07/2010 - 22:14 | 291004 cocoablini
cocoablini's picture

I suspect CEF, GOLDMONEY and Sprott have honorable intentions, but if they are storing gold with london,NY or any of these government controlled banks then in case of default,meltdown or what have you the government is just going to "take it" and hand you toliet paper-at a nice discount for themselves.

This is basically a national security issue, as the whistle-blower mentions.

The gold banks are naked and can be squoozen like lemons at any time by medium size buyers who want physical delivery.

I can tell you I bet gold is being choppered in and rouletted around to show and tell auditors all over the place.

Hong kong has their Tungsten factory on 24/7 overdrive-got to keep the ponzi rolling and fool auditors.

The CEF people are saying their are weighing shit-but that's not good enough.

Wed, 04/07/2010 - 22:19 | 291012 GoldmanSux
GoldmanSux's picture

Yes, thanks for pointing out some facts. Here are more.

PHYS is held at the Canadian Mint. The mint is responsible for any loss or damage to bullion. Also, units can be redeemed for bullion monthly and delivered.  $455 million in recent IPO.

CEH bullion held at CIBC vaults. Not Scotia. Why are people freaking out because CEH bullion was not in Scotia vault? $3Billion in CEH.

Claymore Gold and Silver Bullion. $850 Million in the gold, $41 million in the silver. Bullion held at Scotia. Scotia has vaults all over the world, and as you point out, primarily London. Was this fellow in the London vault? I doubt it.

Thu, 04/08/2010 - 01:06 | 291184 delacroix
delacroix's picture

didn't the canadian mint, come up short, a bunch of gold last year, later to say, it was sold as slag?

Thu, 04/08/2010 - 05:50 | 291260 i.knoknot
i.knoknot's picture

heh, that was my recollection as well. confidence inspiring, don't you think?

Wed, 04/07/2010 - 22:03 | 290990 cocoablini
cocoablini's picture

Russia is probably trying to convince China to hammer us for the death blow on this short squeeze-but that's just flat out stupid since they basically own so many bonds.The Russians are predictably stupid on these matters as they tried this on the bond market before.
I suspect China is enjoying their position and are getting out the KY jelly on our esteemed and eloquent leader and his Goldman Stooge, Geithner.
Yields UP or we buy no more bonds.
Continue the dollar destruction, devaluation and we hammer the gold banks.
Kapitch?
Making the gold banks go belly up is bad for commerce-and China will play musical chairs with us as they are getting into their ponzi economy right now.

Wed, 04/07/2010 - 22:28 | 291009 justbuygold
justbuygold's picture

Central Fund does not store their gold and silver at Scotia Moccata. Furthermore their reputation is as solid as they come.

However Claymore Gold ETF as well as Claymore Silver Trust do store a decent portion of the gold and silver there.  The rest is in at NY Scotia Mocatta and London Scotia Mocatta.  

Claymore Gold ETF supposedly has about  $450 MM worth of gold in total.  This is down from $880 MM worth in less than 2 months as they have suffered massive redemptions.  There are a lot of questions regarding their gold sources since many of the bars are from Brazil and Mexico.  Hence the massive redemptions. There is also questions regarding unexpected fees, taxes. 

Claymore Silver Trust has about  $75 MM worth of silver or about 4.2 MM ounces.  Also stored at Scotia Mocatta.  They publish a bar list on their website yet a chunck of their holdings  are of UNKOWN origin. How can those be "good delivery bars" ?  

http://www.claymoreinvestments.ca/cef/fund/svr.un/portfolio

The bigger question here is , if this story is true then where the heck is Claymore's silver  and Claymore ETF's gold ?  60,000 ounces  of silver at Scotia's vault is quite short of 4.2 MM ounces.  The reported $100 MM of gold is only about 20% of their  $450 MM worth.

I also would question where Millenium Bullion Fund stores their gold and silver.  Scotia Mocatta as well ?

 

 

 

Wed, 04/07/2010 - 22:47 | 291013 hamurobby
hamurobby's picture

You know, with the consolidation of gold and silver, and all the shiot in the world happening....you could see this coming...right? oh, I'm sorry due to the recent volatility in price, your holdings have been closed out, here is your cash settlement...100 to 1 wow...

Wed, 04/07/2010 - 22:32 | 291024 Trifecta Man
Trifecta Man's picture

There's a certain gold bar on loan for a long time long time

What's its number?  I can't tell ya.  (Awww...)

"We can't reveal its number" is their line

What's its number?  I can't tell ya.  (Awww...)

I tried to get the gold bar for myself

Still the bank has nothing on the shelf

There's a certain gold bar on loan for a long time long time

What's its number?  I can't tell ya.  (Awww...)

 

There's a certain brick I've been wanting a long time long time

What's its number?  I can't tell ya.  (Awww...)

They can't reveal the number until they get it

What's its number?  I can't tell ya.  (Awww...)

Someday I'm going to wake up and say

Where's the gold you owe me today?

There's a certain gold bar on loan now a long time long time

What's its number?  I can't tell ya.  (Awww...)

 

What's its number?  I can't tell ya.  What's its number?  I can't tell ya.  What's its number?  I can't tell ya.  (Awww...)

 

 

 

Wed, 04/07/2010 - 22:48 | 291039 rich_maverick
rich_maverick's picture

So this is what this board has degraded into?  Poetry to express the toilet that is the financial industry.

Rich

Wed, 04/07/2010 - 22:37 | 291028 Bron Suchecki
Bron Suchecki's picture

Three pages of comments and no one could be bothered to do a simple check of the Scotia annual reports to get some facts. I analysed Scotia's annual report back in September 2009 after seeing a blog by ispeakofpeak on the issue. At that time the annual report revealed that Scotia only had 43% of its gold and silver certificate liabilities backed by physical metal. The table below updates that post with the most recent report (note: Scotia's financial year end is 31 Oct, figures in millions of dollars).

Year
Ending Liabilities Assets Physical cover
Oct 09 3,856 5,580 100%
Oct 08 5,619 2,426 43%
Oct 07 5,986 4,046 68%
Oct 06 3,434 3,362 98%
Oct 05 2,711 2,822 100%
Oct 04 2,018 2,302 100%

It appears that the physical backing was running down from 2006 but is now back to 100%+, with $5.58 billion of physical. This contrasts with Lenny Organ statement. Either Scotia have run down a lot of physical in 6 months or it is stored elsewhere.

I do find it interesting that the gold and silver certificate liability has declined from $5.619b to $3.856b in the past year, a year when most ETFs, GoldMoney and BullionVault and Perth Mint have shown increasing amounts of metal held.

They may be 100% covered as at Oct 09, but in the prior years they were not 100% covered, the balance I believe was covered/hedged by futures. I understand having some liquidity float to deal with client buy/sell fluctuations, but to be 43% backed is not right IMO if the marketing of it implies it is.

I agree with Adrian Douglas' statement in the interview that many storage providers "are very vague about what is backing their paper certificates and if they are vague I think you should not give them the benefit of the doubt". With this statement from Scotia about their unallocated:

"Scotiabank gold certificates are backed by the assets of The Bank of Nova Scotia. Unallocated gold is a claim on The Bank of Nova Scotia for the ounces entitlement to a specific quantity of gold bullion."

Harvey should have known his “metal” was not guaranteed to be 100% physically backed at all times. Excuse the plug, but contrast that with the Perth Mint's:

"With unallocated storage, also known as a metal account, clients purchase an interest in a pool of precious metal held by The Perth Mint. The Mint purchases an ounce of precious metal from the spot market for every unallocated ounce it sells to clients. Accordingly every unallocated ounce is 100% backed. ... The Perth Mint is not a bullion bank and does not provide project financing or bullion lending/derivative services to mining companies or other entities. It does not lend client's unallocated metal to support short selling transactions or other derivative activities. The unallocated metal is utilised solely to fund the Mint's operations."

Wed, 04/07/2010 - 22:49 | 291040 hamurobby
hamurobby's picture

well, I guess if everyone ask for, and gets their metal, there is no problem.

Thu, 04/08/2010 - 06:13 | 291268 Cognitive Dissonance
Cognitive Dissonance's picture

If you listen carefully to the audio, I believe you will hear him say his trip to the vault was back in 2008, which your numbers would seem to support.

But I would like to visit the vault NOW before I accept their assertion that they took delivery of all that Gold that quickly. I doubt it.

Wed, 04/07/2010 - 22:48 | 291034 Privatus
Privatus's picture

The cosmic honks of MSM protestation to the contrary, we are definitely on the highway to 'flation hell. The best insurance against this certain financial calamity is physical gold in your possession. Buy it in Bangkok, Jakarta, Singapore and Hong Kong, take delivery immediately, hide it and then shut your pie-hole about it. Banks are the fences of the fractional reserve plantation. Trust them with your money as you would a pedophile with your children.

Thu, 04/08/2010 - 00:47 | 291168 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

DAMN.....

Wed, 04/07/2010 - 23:38 | 291089 msjimmied
msjimmied's picture

Here's the rub...the only time I have shot a weapon was with a Smith and Wesson revolver with my father, who was as nervous as I was, firing into the air, 30 years ago. I don't want to have to use that on people! I don't want to reach that state of anarchy when lives don't matter, because it does. I will acculmulate what I must, I still have a son who lives with me at home.  How the heck do I launch him into a world that cannot sustain him? How do I teach him about the sharks to watch for? it will go against the worldview which was at one point my own..the world is a good place. It is not. It has become twisted and ugly. The battle is not just in the sphere of money, it is deeper than that. The confidence in the order is gone. Our values have been blown to smithereens, evidenced by the wikileaks video and the Abu Ghraib pictures. Who the hell are we? Do we have one system left we are proud of? Why the heck do we allow this to go on?

What keeps me up at night is the the malevolent spirit we have allowed into our consciousness. It is created to carve out a part of our soul to boost a malevolent spirit of divisiveness, the "other", the haves and the have nots. A caste system, if you will. The masters of the universe or the peons. How the fuck did this happen here? In the United States of America? Damn it! I came here to find the promised land!

Please...let the Aryan nation start up...see what I mean?

Thu, 04/08/2010 - 00:13 | 291128 arnoldsimage
arnoldsimage's picture

just fire up call of duty modern warfare 2 and quit your whining.

Thu, 04/08/2010 - 00:47 | 291165 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Peace is in your heart.  That is what matters most.  Your boy will be fine.  We will all be fine.  This is how it happens.  We must test ourselves to find the truth.  We have tested ourselves; now we find the truth.

Wed, 04/07/2010 - 23:44 | 291101 monmick
monmick's picture

508 comments! What's the record Tyler? Are we close?

Thu, 04/08/2010 - 01:10 | 291186 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

When will the Chinese start posting?  Aren't they able?  ZH could have 5,000 posts a night....

HUANG JIN SAN BAMEN!!

Wed, 04/07/2010 - 23:53 | 291111 cocoablini
cocoablini's picture

Its the end. It will take 20 years, but the US is done. Toast. Constitution is hosed. We are broke. European Socialism is next step-which is better than outright insolvency. High taxes, aristocratic hidden classes, ponzi finance. The gold standard has been gone for 40 years-and this is the longest fiat test in history. FAIL! Just remember, the people who own gold will have it confiscated in a few years-as deflation is uncontrollable and money supply will have to be increased with gold extraction from the earth. It's really sad, its an environmental disaster to mine gold. But since these scumbag governments have not a wit of restraint and 100% do not understand money,money supply,economics and human behavior we are fracked beyond belief. Please, before he dies, hang Greenspan from his toes.

Thu, 04/08/2010 - 05:27 | 291256 theprofromdover
theprofromdover's picture

Gold, Gold/Tungsten sandwich?

I bet you a tuning fork will prove if your gold is solid all the way thru.

The other way is to turn up your volume to 11 (eleven now, not 10) and place your gold bar on top of your heavy-duty Linn speakers; Put Yma Sumac -Ataypura on your turntable * at 45rpm, and Bingo!

You'll know it when you hear it. Tungsten sounds like a dead dawg.

* CDs, we no need no stinkin' CDs.

Thu, 04/08/2010 - 07:10 | 291278 Riley Wilde
Riley Wilde's picture

I have had a chance to listen to the interview. They are referring to two things in it: (1) that the Orgen's took delivery of COMEX contracts and was paying Scotia Mocatta for storing it in Toronto but in fact it was not being stored there and (2) that there is insufficient gold in the vault to cover the likely number of outstanding gold certificates.

Point 1 was only briefly discussed. I would be curious to hear more details as to whether their account was in fact on an allocated basis. It sounds like Scotia Mocatta may not have been holding up its part of the deal. So why don' the Orgen's sue (like the Morgan Stanley case)? But this was only briefly discussed and is the more relevant part of the story.

Point 2 is a joke. Gold certificates are NOT allocated gold. They are paper/cash settled claims only. You can pay extra (high) fees to then turn that cash into physical assuming the bank has available supply. But the certificate in no way suggests that metal is being stored or that physical supply is guaranteed.

The argument is made that because Scotia charges a per ounce administrative fee for the certificate then the bank is giving the "impression" that they are storing gold. Really? Because you have the "impression" they are storing gold it is a "shocking" "fraud" to discover that they are not? No, the certificate makes no claim that they are storing gold but there are costs to them managing their hedges to the contract and hence the fees. I think this is simply a case of the buyers not understanding their contract and being outraged by not getting what they "expected" because they didn't read the small print.

No "Fraud Bombshell" here.

Thu, 04/08/2010 - 07:26 | 291285 Riley Wilde
Riley Wilde's picture

P.S. I think the more important questions Scotia Mocatta certificate holders should be asking are:

(1) How much do you trust the solvency of the institution? How does this risk compare to the costs and benefits of holding certificates? (Personally, I think these certificates have very high fees for what they are).

(2) How are these certificates priced? That is, how does the bank set the bid/ask price on these certificates? Other than reputational costs, what forces them to offer a fair price to buy back your certificate? Should the paper and physical markets become dislocated, how will they be priced?

If anyone has a copy of the full terms and coditions on a certificate I would love to read it. Thanks.

Thu, 04/08/2010 - 07:34 | 291288 DoctoRx
DoctoRx's picture

I had a long discussion w Mr. Spicer of the Central funds yesterday.  He pointed out inter alia that the directors are not even protected by D&O insurance.  Thus they are personally liable for fraud.  He also asserted that all their bullion is produced and refined in Canada, thus never leaves the country.  I doubt tungsten, therefore.  CEF, GTU and SBT_U (TSE) appear best in breed along w PHYS, run by their ally Mr. Sprott.  Though PHYS has a tax issue if an investor takes physical delivery of his gold at a profit:  the fund books a gain and the tax comes out of remaining shareholders' pockets.

Thu, 04/08/2010 - 15:39 | 291972 i.knoknot
i.knoknot's picture

"the fund books a gain and the tax comes out of remaining shareholders' pockets."

as one who has no faith in GLD, much faith in the Central-Fund family (GTU/CEF - other than their periodic "acquisitions"), PHYS has been very interesting to me, as i trust Mr. Sprott's thinking/goals. That potential tax consequence of PHYS is a bombshell to me.

no free lunch, is there.

i wonder if they can restructure around that tax law.

Thu, 04/08/2010 - 08:38 | 291311 solgundy
solgundy's picture

Bullion Bank ,aka, ScotiaMocatta means an approved vault/warehouse for 'good delivery' gold et al....aka, the chain of custody.....of which there are 4 approved Nymex,now CME

approved 'vaults'.........CEF & GTU store their gold & silver at CIBC,,they have taken it

outside of the "paper market".  A 400 oz bar held by CEF is still 400 ozs of gold, but it has lost its "good delivery' status. To re-enter the 'paper system' it has to be certified by the approved "weightmasters".

current list:

http://www.cmegroup.com/trading/metals/gold-depositories.html

Thu, 04/08/2010 - 10:01 | 291444 mark456
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Thu, 04/08/2010 - 12:46 | 291687 cocoablini
cocoablini's picture

As I recall, Canada had lost track of a lot of gold too last year that was supposed to be there.

Its like Die Hard 3...

Fri, 04/09/2010 - 21:51 | 294074 endurion
endurion's picture

People need to immediately trade in their "debt obligations" for real wealth. 

When everybody owes everybody everything, we quickly find that the enforcement system is as insolvent as the system that has determined that all owe all everything. 

Its all just one big hoax!

You can't mortgage away reality. Anybody want to buy planet earth?

Anyway - since the FRN is the "bond of zero maturity" and is a claim on something of value guaranteed by nothing other than the worthless assets of the Fed (toxic garbage, toxic sovereign debt), people should really be thinking about the smart "Cash For Gold" program.

Trade in your FRNs for the real definition of money - you can't get closer to it that PHYSICAL Gold and Silver, while there are still people who are willing to provide you with such a service (crazy as an idea as it really is.) The day is coming when this arrangement will be OVER!

I work for a bullion company in Fargo, North Dakota that sold more Gold and Silver in 2009 than Scottia-Mocatta has stored in their vaults, nearly $200 million worth. We work with about a dozen other companies that do very similar numbers with regularity the last 5 years or so. I see demand saturating our entire industry and expect it to triple very soon, just before the jig is up.

The RETAIL precious metals industry endured severe strain in late 2008. Nearly every distributor of every size was unable to find precious metals for their customers without going to great lengths, thereby adding great costs translating to great premiums over spot. Settlement was on the order of weeks, and that is risky behavior for such dealers when a currency might become worthless overnight.

When the futures market pricing system which is propping up this charade of "pricing in dollars/paper", the only deals that will be able to be done will be those done "on the SPOT".

There will be no more promises of future delivery. 

Guess how much Gold and Silver your FRNs will get you then? Gonna be a pretty tough sell I'm thinkin!

Sun, 04/11/2010 - 21:33 | 295826 bigdad06
bigdad06's picture

This gold and silver ponzi is starting to get good! It should get real interesting from here!

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