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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Lionhead's picture

First thanks to TD for retracting the incorrect headline of this post. Second, I agree with ZKplate on Wed, 04/07/2010 - 12:58 #290010 . Go back folks & listen carefully to the King Worldinterview a few times around the part where they discuss Stefan Spicer of CEF. You will not hear any connection with Scotia bank, only that he was extremely upset that his friend who demanded delivery at Scotia could not get it. Moreover, he was willing to assist the principals from GATA regarding the incident. This does not sound to me like a man who is caught up in the fraud. I hope all take the time to listen again to the interview & hear what was actually said.

KidHorn, CEF did not fly any gold or silver in for anyone. Listen to the interview & it will make sense.

bigsapper's picture

First comment here and yes I'm a financial dweeb.

But isn't this article just describing fractional reserve banking?

SDRII's picture

maybe that is why coin demand is cratering

SV's picture

Didn't know it was cratering... and I don't think that is a logical deduction of the problem.  In fact, most of their holdings should be deliverable bars, not coin.  Coin is the realm of the smaller holding and shouldn't have a relational impact.  If anything, people knowing that CEF is a "shell" would increase demand in all stripes.

Gold...Bitches's picture

Didn't know it was cratering...

It's not.  You are absolutely correct.  In fact, sales of eagles from the US mint are literally flying compared to last year and last year was a big increase from the year before that, etc...


Hephasteus's picture

Ya out of stock, out of stock, out of stock. It's cratering on the supply side.

Internet Tough Guy's picture

Demand is very high; witness the high premiums on coins. Also, the US mint has stopped supplying many coins, fractionals, buffalos, etc.

dumpster's picture

more gas mouth reply , where is this demand for coins going down lol

DoChenRollingBearing's picture

Well, well, well.  Twice a week now we get more hints of what looks to be the biggest fraud of all time.  If all the gold really is "gone", we have had plenty of warning.  At least those of us who pay attention.

Owning physical gold is the only solution to cover the wealth preservation and insurance- against-government-induced-calamity functions. 

ANYONE reading now from this point on who does not physically own gold should not cry later when the GLD, JPM, COMEX, etc. all go down and the gold is gone.

MarketTruth's picture

ASK YOURSELF: do you really trust that these ETFs have the gold they claim and GLD's counterparties that store said gold are not leasing it out or creating/forming/leveraging some other paper gold on top of their paper gold. As an example, GLD can hold NOT GOOD bars for proper delivery to the market and they do not insure their gold holding. Add to that, there are many other serious situations one should consider before choosing GLD or other ETFs.

Read GLD's 10-k filing at and pay special attention to pages 54 to 62.

Bottom line, if you want to invest in gold i would do as GLD's largest shareholder did about a year ago.... they sold their GLD holdings and purchased physical metal and took delivery. In this day and age counterparty risk is to be avoided imho.

Quintus's picture

Within the terms of their prospectus, GLD could have a vault full of marshmallows instead of gold and you would not be able to do anything about it because "It's all disclosed in the prospectus".

The Disappointed's picture

Within the terms of their prospectus, GLD could have a vault full of marshmallows instead of gold and you would not be able to do anything about it because "It's all disclosed in the prospectus".

Marshmallows....yum! So if one puts it between 2 FNRs, is it a S'more?

Assetman's picture

I'm sure that the Canadians have the remaining gold/silver bullion stored at their disaster recovery facility under a salt dome somewere in central Saskatchewan.

And we can be well assured that the 60k ounces that were available were not tungsten-cored. 


Dr. No's picture

Note to self: Develop side-drilling gold mining equipment to steal burried gold reserves much like stratigic oil reserves.

Al Huxley's picture

Pretty sure all the gold thats in Canada is now owned by Sprott.

Shameful's picture

Well not sure this is the biggest fraud of all time... I mean what it's probably what 10-20 trillion tops (if they were forced cover their frauds which they won't), is that even big money anymore?  I'm sure there are bigger frauds out there look at the Federal Reserve.  The problem with saying biggest frauds is there are so many epic ones that defy imagination it will be hard to find the biggest of them all. 

Of course everyone should take possession, otherwise they are just donating their money to the holding company.

dumpster's picture


Gold’s window is still open here because those that know what is coming are still accumulating. Expect it to be closed by year end. That means if you don’t have any, don’t expect to be able to get any.

Shameful's picture

Hope he's wrong.  I happen to think they will keep the ball in the air for a while longer, but that may be blind hope.  I need till at least Jan, preferably Feb.  Prices going up stings but I will need to turn in Fun Buxs for PMs around that time.

DoChenRollingBearing's picture

New Jim Willie article at  Jim is always good for a smile.


Gold is $1150, up $16 as I write.  Bite the bullet Shameful.  Pull the trigger!  Go buy some gold already! 

Yes you can!


Shameful's picture

I just bought 3 weeks ago, and mixed it up with Philharmonics. :)  I'm looking at my account and I could only scrape together enough for 1 oz (and be tapped out)...but I prefer to order at least 2 at a time to duck the shipping cost (CNI is a good shop).

My worry is back to my folks.  They are going into gold with their savings and excess cash but still looking at their 401k as the possible time bomb it is.  They couldn't even grab without 10% hit right now, another reason my dad wants to wait for the new year (though he could pull in August without the hit).  Better or worse they won't go into metal till Jan, at least I have them convinced about the future of paper money.  They were gold bugs back in the day but stopped buying in the mid 90s, to many expenses and they thought their 401ks would be enough.

Burnbright's picture

I don't know a lot about retirement acounts so please for give me for prying but I have noticed a lot of cites like apmex offer IRAs in precious metals. Can't really say more than that cause I am not all that sure how an IRA works.


Other than that I would buy silver if I were you. Silver is going to go up at least 3-4x as much as gold.

Shameful's picture

IRA would be willing to look at, but right now they are both employed.  Now APMEX does not hold it another company does and I have not researched how secure they are.  However if there is a run on gold or silver my concern is they would just take it and give you paper.  But that is a problem when they retire.  I know my mom is hoping for a layoff package.   They offered my dad a pittance for early retirement for last year, now he is hoping they do so again.  But as long as they work no 401k access.  My mom might IRA to duck the withdrawal hit, it will depend on how much they are eyeing accounts and how likely it is that accounts are seized.

I'm in both.  I went way overweight in silver when it was down around 13, now pushing gold up, parents have more silver then I do.  For me I'm looking at gold because when I expat out I don't want to have to haul multiple bags of silver out with me.  Though I suppose it would be amusing to show up in a strange exotic land, loaded to the gills with metal :)

DoChenRollingBearing's picture

Before you go, try to get an idea of how corrupt Customs is in your target country.  You do not want to donate all your savings to the Jefe de Aduanas.

I did not bother to declare my gold upon arrival.

Shameful's picture

Will do.  Right now top of the heap is Singapore and Hong Kong which both have good ratings for not being corrupt but I'll look into it further, and I may end up elsewhere if I can hook up with a multinational on the way out.  Which looks good I did a net search and there are jobs I'm qualified for and plenty of them at the moment.  Would be funny to go work for Shanghai. 

I'm probably going to see if my mom wants to trade out my silver for her gold.  She wants to get more silver now that she is going to stick around, since she can just use that money to buy more gold to swap with me anyway instead of buying the silver direct.  Besides I'm paranoid enough to want it as carry one, and the silver would be intresting.  I would it rather sit on my lap the whole trans-Pacific flight then trust it to the throwers :)

Airline Attendant: "Sir are you alright?"

Shameful: "No...I have 50lbs of silver on my balls...4 hours down 6 more to go..."

DosZap's picture

"But as long as they work no 401k access."

Have them check with their PLAN provider.

If the 401k holder is 59.5yrs old, it can be rolled into a Traditional IRA (a block from home), and NO hit ( 10% penalty).

The only amount most PLANS will not let you remove is the contributions the company matched.

Otherwise there's an excellent chance they can get closer to it.(2-3 days,or less, conversion to cash, or 2-3weeks + from the 401k).

Any funds in CD's,IRA's, and 401k's, WILL get nailed..just a question of when.

As Schiff said, YOU should already have all your dollars OUT of dollars....and that was a year ago.

As for Silver, IF we were in normal times, due to supply ,I  would agree heavy on the Slvr to Gld at this point.

Since we are far from normal, Gld is universally accepted,far easier to move large $$ amounts(size/Wt ratio) and as Sinclair said, you do not need a U-Haul to move it.

Attitude_Check's picture

Have your folks take out a loan on the 401K, and buy gold with it.  There are potential complications with this so do your homework.

THE DORK OF CORK's picture

Bought some harmonics in November when gold was going parabolic - paid 785 Euro + a massive premium.

I was thinking something big was going down at Christmas - apparently insuring the entire debt of the Fannies was no big deal !

I was pissed off with myself at the time but now I am more comfortable with my decision - sometimes panicking can be the right emotion

uraniuman's picture

It's a small world - bought the same 2 coins, the same week, from the same company. Only been hanging around a few weeks, but I'm learning!

Shameful's picture

CNI is good, was pleasantly surprised.  I like APMEX but to be honest I will probably not order with them again for most things.  Tulving is awesome if you have the bankroll for the minimum, and CNI is solid, good prices and free shipping to sweeten the deal.

Gold...Bitches's picture

Just an observation, but if they consider it a time bomb, call the 10% loss the cost of the insurance of no harm from any explosion in paper products.  Is the possibility of a big loss better than 90% now?

Mr Lennon Hendrix's picture

Seriously, NOMINAL numbers are just illusions.  Think in REAL terms.  Then you can be happy, or at least a little relaxed.

berated's picture

I've asked around but still haven't gotten a consensus. Is it better to buy coins with 'name' recognition (eg, maple leafs, philharmonics, eagles) or plain rounds (or even the very small bars)? The plain rounds are much less expensive than the name coins but what's the long-term value of each?

Mr Lennon Hendrix's picture

It depends what you think will happen.  Mad Max scenario, will it make a difference, as long as the coin is REAL?  Or lets say America wakes up, audits the Fed, and backstops the currentsea (whatever the new one may be) with gold/silver, maybe the tendered coins (Eagles/Maples etc) will be worth most....I dunno.  I like 'em all.

Howard_Beale's picture

It would be interesting to see what Eric Sprott has to say about this.

Quintus's picture

I imagine he would say "You should have invested in my Sprott Physical Gold Trust' fund. :-)

non-anon's picture

Of course Sprott can't buy IMF gold: There isn't any!

Yes, simply a matter of protocol. The protocol is that the IMF never puts itself in a position that might disclose that it has no gold at all, might disclose that the IMF has only the most tenuous claim on the gold reserves of its members and that its supposed gold transactions are really only bookkeeping entries whose primary purpose is indeed to spook the gold market.

The Disappointed's picture


Only bookkeeping entries!

Who keeps the bookkeepers books, eh?


Mr Lennon Hendrix's picture

IMF is selling their Tungsten to Japan at $1125 an OZ...jesus I haven't said that in awhile.  When the hell are they selling that Tungsten anyway?  I hate you IMF.

Mr Lennon Hendrix's picture

"Hey Bill it's Eric."  "BUURP.  Hey Eric, whatstheyou doin?  Berp."  "Did you hear, another bank is not holding what they said they had!"  "What?  Thes eth [berp] great!  Want to come over to have a drink?"  "It's eight in the morning Bill."  "Yeah well I'm celebrating."  "But I thought I broke the news to you?"  "Yeah, well, I'm....celebrating my birthday."  "It's not your birthday."  "Yeah, well....just let me be happy."  "Ok, buddy.  I'll talk to you later."  "Hey Eric?"  "Yes Bill?"  "Want to come ver for a [berp] drink."  "You just asked me that Bill."  "I did?"  "Yes."  "Oh.  Ok.....did you say yes?"  "No."  "Oh...ok."

AR15AU's picture

Oil down, stocks down, gold up?  I've been expecting this to start happening for quite awhile...  is the *real* flight to safety finally taking place?

Cognitive Dissonance's picture

One would think that this kind of news, these revelations, would spook the market, particularly the Gold market. And this might have something to do with the Gold ramp over the past few days. But when the herd are all in the same boat headed down and no way out, it's comforting to know you are not alone. Many people don't panic in these situations though they might cry out in fear or emotional distress.

But intuitively they understand that if they break for the door with the last of the life preservers, they will start a panic, thus preventing them from getting to the door. So they make the mental calculation, sometimes unconsciously, that's it's best to remain seated and suffer with the rest of the herd.

Again, one must not look at this from an educated and informed point of view, for this wouldn't make any sense. It must be seen from the uninformed and self deluded perspective of the trend follower, the middle of the pack huddler, the go with the flow safety view that it's better to die with the herd than die alone and lonely.

My fellow ZHer's might find it difficult to adopt this perspective but it would be profitable of you were to wear those shoes every now and then. What I'm really saying is that the herd will ignore these stories for quite a while longer than you would think possible. BUT when the panic starts, there will be blood.

DoChenRollingBearing's picture

CD, ZeroHedge ought to promote you to Senior Author (or equivalent of General in the US Army).

When the panic comes there will be blood.  Touché.

ZeroHedge feels like home now.  Virtual home anyway.

Cognitive Dissonance's picture

"CD, Zero Hedge ought to promote you to Senior Author (or equivalent of General in the US Army)."

LOL. I assume you're pulling my leg. Or some other part of my anatomy.

They're afraid I might ask for compensation. As far as they're concerned, the chump (meaning moi) is already doing it for free. Don't put any ideas in his head. :>)

DoChenRollingBearing's picture

CD, no it was sincere, maybe overblown.  Not pulling anything, LOL.

Your take on things is so good that in my eyes The Tylers That Be (TTTB) really should be paying you.  Say $0.001 per post after any of your comments...

Meanwhile, we wait for the gold heavy-hitters (Gordon, Chumba, etc.) to sign in.  Sure have been a LOT of comments REAL FAST since this thread started.

Cognitive Dissonance's picture

Anything GOLD on ZH is like shit to the flies. It brings out the best and worst of ZH. At least I thought that until the Wikileaks article the other day with the video of the killing.

Quite frankly (my apologies for stating an opinion that might insult others) I was a bit ashamed by what I read in the comments from both sides. There was no middle ground, just instant fight to the bloody death and it was ugly.

No doubt there were trolls in there but I wish some of the more seasoned ZHer's would stop, think and realize they were being baited with month old meat. Even if they get hold of it, it was just going to make them as sick as their tormentors.