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Part 2 - Deposit Confiscation Poses A Real Risk To Investors, Savers and Corporate Depositors

GoldCore's picture




 

Today’s AM fix was USD 1,234.00, EUR 907.69 and GBP 754.79 per ounce.             
Yesterday’s AM fix was USD 1,213.00, EUR 892.57 and GBP 741.13 per ounce.

Gold climbed $20.70 or 1.69% yesterday, closing at $1,243.40/oz. Silver rose $0.62 or 3.24% closing at $19.74/oz. Platinum climbed $20.75, or 1.5%, to $1,375.00/oz and palladium was also up  $13.97 or 2%, to $727.47/oz.

Gold bounced sharply higher yesterday as traders went long, leading to a bout of short covering. Gold looks very oversold according to the relative strength index and other indicators. Gold was also supported by the emergence of Indian demand as jewellery, coin and bar providers stocked up at these lower prices for the ongoing marriage season.

Ongoing speculation that data tomorrow may reinforce the case for the Federal Reserve to cut back on its radical $20 billion per week bond buying programme is making traders hesitant to go long.

This is leading to a lack of bullishness and animal spirits in the paper gold market. But the global physical market is seeing a different dynamic with continuing robust global demand and gold demand set for new records this year - particularly in China and Asia.

Indian gold premiums hit another record today, driven by low supplies to meet firm demand for weddings, which will continue until May. Local prices were $150 to $160 per ounce higher than London prices, compared with $125 earlier this week, traders said as reported by Reuters.

Shanghai gold closed at $1,259.88/oz, a premium of $22 over COMEX prices showing Chinese demand continues. Chinese New Year is on January 31, 2014, and we would expect to see renewed Chinese buying on this latest dip in prices.


Annual Chinese Gold Net Imports - 2001 to 2013 YTD

Chinese imports through Hong Kong alone are set to top 1,000 tonnes this year and this does not include other gold imports into China ex Hong Kong. Therefore, total Chinese gold demand could be as high as 2,000 tonnes. Total annual gold supply is expected to be around the 2,700 tonne mark. Therefore, China could swallow up nearly 75% of global gold mine supply.

It is important to note that the huge demand in tonnage terms, 1,000 tonnes and possibly as high as 2,000 tonnes, is only worth roughly $39 billion and $78 billion in dollar terms or nearly what the Federal Reserve is printing every single month since late 2012.

Why Bail-Ins Are Important To Investors, Savers and Corporate Depositors
‘From Bail-Outs to Bail-Ins: Risks and Ramifications’ is a research document about one of the most important risks facing investors, savers, corporate and all depositors today - bank and financial institution bail-ins.

Preparations have been or are being put in place by the international monetary and financial authorities for bail-ins of both banks but also other financial institutions. The majority of the public are unaware of these developments, the risks and the ramifications.

In March 2013, the EU and IMF spearheaded the restructuring of the troubled Cypriot banking sector. Although the terminology of bank ‘bail-ins’ first entered public consciousness during the Cypriot financial crisis of March 2013, the idea of bail-ins as a central bank rescue mechanism has been openly discussed for a number of years amongst international central bank policymakers.

Cyprus became the defining event since it revealed the preparations and planning of international banking regulators and governments at the highest levels for the coming ‘Bail-In Regime’.

The market’s expectation was that Cyprus would be similar to previous Eurozone rescue packages applied to economies such as Greece, Ireland and Spain, where banks had their losses ‘bailed-out’ by governments, with the bail-out cost and risk transferred to the sovereign nation and funded by the taxpayer.

However, the backlash from taxpayers and certain political parties and a vicious circle of sovereign bank-induced debt was leading to recessions and the possibility of an economic depression. This may have contributed to the international monetary authorities, central banks and governments altering the approach to burden sharing, pushing the losses onto bank depositors.

The important shift from bail-out to bail-in had not been signalled in a very public way. The market’s expectation was therefore confounded when Eurozone finance ministers imposed bail-ins on Cyprus. This forced bondholders to convert into shareholders, and critically, imposed an element of bank deposit confiscation and the forced conversion of these deposits into bank equity.

Never before in the public’s perception had bank deposits been countenanced as potential financing sources for the rescue of insolvent banks. The public was shocked by the freezing and confiscation of deposits and the use of them in a desperate attempt to prevent banks from failing.

While bail-in generally refers to a bank restructuring where shareholders and various unsecured creditors such as bondholders are forced to share the rescue costs, after Cyprus, the term ‘bail-in’ became synonymous with possible deposit confiscation, where uninsured depositors were seen as unsecured creditors of the bank and liable to share bank restructuring costs.

The coming bail-ins regimes will pose real challenges and risks to investors and of course depositors - both household and corporate. Return of capital, rather than return on capital will assume far greater importance.

Evaluating counterparty risk and only using the safest banks, investment providers and financial institutions will become essential in order to protect and grow capital and wealth.

It is important that one owns physical gold and not paper or electronic gold which could be subject to bail-ins.

Owning a form of paper gold and derivative gold such as an exchange traded fund (ETF) in which one is an unsecured creditor of a large number of custodians, who are banks which potentially could be bailed in, defeats the purpose of owning gold.

Physical gold, held in secure storage conferring outright legal ownership through bailment remains the safest way to own gold. Many gold investment vehicles result in the buyers having very significant, unappreciated exposure and very high counterparty risk.

Retail investors, retail savers, high net worth individuals, family offices, pension funds, charities, companies, corporations, corporate treasurers, financial advisors, accountants and anyone who manages money on behalf of clients need to consider the risks and ramifications of bail-ins.

Many in the financial services sector have paid lip service to diversification in recent years. This has led to many investors experiencing sub par returns and returns below the market rate of return. Those who have achieved real diversification involving owning international equities, high credit bonds, property, cash and gold have been protected from the recent volatility.

If there is a failure to observe the fundamental tenet of investing in the coming years – real diversification – we may be subject to further financial pain.

Conservative wealth management, asset diversification and wealth preservation are of paramount importance today.

Gold will again have a fundamentally important role to play in order to protect, preserve and grow wealth in the coming bail-in era.

Download our Bail-In Guide: Protecting your Savings In The Coming Bail-In Era(11 pages)

Download our Bail-In Research: From Bail-Outs to Bail-Ins: Risks and Ramifications (51 pages)

 

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Fri, 12/06/2013 - 06:08 | 4220726 dunce
dunce's picture

Large companies could build their own vaults and do daily ETFs with a regulated bank to fund operations. Since they would not be banks they would not be regulated as banks with onerous reporting requirements or reserves. They could own gold and silver as well. They could in some cases by pass banks with direct payments between each other. Banks are really just conveniences that can with our current systems be replaced in many instances. Their credit ratings might improve if their cash assets were not subject to government confiscation.

Fri, 12/06/2013 - 01:59 | 4220571 CheapBastard
CheapBastard's picture

MFGlobal.......lets not forget.

Thu, 12/05/2013 - 23:38 | 4220279 darteaus
darteaus's picture

FTA: India gold $150+ over COMEX and China gole $22 over?

Maybe gold isn't worth more in India and China, maybe the dollar is worth less...

Thu, 12/05/2013 - 18:52 | 4219409 drdolittle
drdolittle's picture

easily bail in pms. They are watching what we're doing for sure. I ordered some gold online (local dealer is a pawn shop with outrageous mark ups) and the bank (wire transfer) told me the had to "key it through the fed". What a crock of shit.

I also put six months of mortgage payments in another bank that has my mortgage (great rate, less than 3%) and the teller there told me that it would take about a week. They can only move 5k at a time. Those fuckers are keeping a close eye on us.

Took the first step in finally getting my pension. Had to get trustee to sign paperwork so I can roll it into an IRA, which I will then pull out. I can't believe I left it there as long as I did but, well, normalcy bias. I'm sure I made some list with the few transactions I undertook yesterday. Don't know if I should bury the gold or not. I'm sure they could waterboard it out of me. Maybe just keep it close by so I can hand it over when the M 16 toting IRS agents drop in. "We know you have it"

Counterparty risk avoidance. Out of the casino, it's rigged. Real stuff only.

Oh, and fuck the vampires

Thu, 12/05/2013 - 16:46 | 4218949 Hongcha
Hongcha's picture

Enslave; which is why Singapore is at work opening an honest exchange; and why China is buying bullion, and why Asia is edging away from the great whore.

Thu, 12/05/2013 - 15:35 | 4218669 squid427
squid427's picture

Hey meelion, I just watched the cycles video in your bio, and I can't stop smiling now, thanks.

And just to be clear no sarcasm here.

Thu, 12/05/2013 - 15:06 | 4218545 y3maxx
y3maxx's picture

Bail In Precious Metal contracts....TBTF JPM walks off Scot Free.

Thu, 12/05/2013 - 15:12 | 4218576 scrappy
scrappy's picture

What a scam, demand deposit.

They gamble and we lose no matter what.

Get out.

 

Thu, 12/05/2013 - 14:45 | 4218453 F em all but 6
F em all but 6's picture

I would rather be the bitch in an ass to mouth free for all with a train of 18 inch shit stained dicks than keep one dollar in the US banking system. Moreover, the only safe gold is that which is physically possessed. When SHTF, and the ruling class elite become violently desperate to hold onto power, dont believe for one second that ANY asset within their reach will not be siezed. Public saftey will demand it.

I wonder what the kool aid will taste like in the FEMA Camps

Thu, 12/05/2013 - 23:18 | 4220230 TheReplacement
TheReplacement's picture

The kool-aid will taste better than your alternative.  It'll probably hurt your tonsils less too.

Thu, 12/05/2013 - 18:47 | 4219370 drdolittle
drdolittle's picture

I'd rather keep a dollar in the US banking system but, you can have your pick

Thu, 12/05/2013 - 14:42 | 4218435 unemployed
unemployed's picture

Well this is certainly a warped viewpoint,  of the author...  In this very same world,  why even this very same country the US,  the confiscation of depositors equity to make up for bankers' defaults was the very norm until the FDIC was created.   Why just not so long ago in 2008 there were widespread pictures of the IndyMac bank run,  for all the good it did them,  as depositors above the FDIC limit took a 50 percent haircut.

http://www.fdic.gov/bank/individual/failed/IndyMac.html

Thu, 12/05/2013 - 13:26 | 4218027 SAT 800
SAT 800's picture

So right now; for instance; a 1000oz. bar of Silver is 20,000$; which of course you can finance if you wish; and it will be registered as your property in London; but nowhere else; certainly not here; and you can sell it again when you find it convenient. wwww.bullionvault.com I have no interest in this matter; I'm just trying to be helpful.

Thu, 12/05/2013 - 17:24 | 4219065 RafterManFMJ
RafterManFMJ's picture

it will be registered as your property in London

^This guy just doesn't get it.

Thu, 12/05/2013 - 15:52 | 4218735 Escapeclaws
Escapeclaws's picture

The trouble with Bullionvault is that they give no evidence in the form of a paper certificate of ownership of your holdings. Everything is bits and bytes. Doesn't that bother you? If the internet goes down you are left with nothing.

Thu, 12/05/2013 - 15:19 | 4218605 scrappy
scrappy's picture

London?

Sure bud, you first.

Let us know how it works out for you.

%^&&*(()*^&%

Thu, 12/05/2013 - 13:14 | 4217973 SAT 800
SAT 800's picture

Of course it's important that you own physical gold, and not paper; I take that to be self-explanatory. I'd like to say one more time, though. this "meme", of if you don't hold it in your hand, you don't own it; is really not true. there are honest responsible people in this world who just want to run their business and they make their little percentage, a very little percentage, and they take care of the bookeeping for you; and there's nothing to steal at your house, and these are important things to consider. bullionvault.com is on google and you can read all about it on there; it's one hundred percent real; it's not some kind of elaborate paranoid joke; the guy who runs it does not want to steal your gold, or silver, he has his own, I've met him; he's an honest and very intelligent person. There's also the Perth Mint in Australia; who use Kitco as a business agent in North America; you don't have to like Kitco, I don't; they're just a business front end for the Perth Mint. But that is a real business; when you get a deposit certificate from them it means exactly what it says; so and so much gold is yours. it belongs to you; no one else is involved in any way. and when you sell it again; whatever's being used as money at the time comes back to you, not somebody else. And if you go to Austria on a tourist Visa; you can look around and find a small private family owned bank in a medium sized town and make arrangements with them. You'll have to figure this out yourself; but it can certainly be done; the great majority of business people in Austria, certainly in Banks, speak English serviceably. Better than they do in Switzerland, for instance. Austria has absolute bank secrecy laws and private numbered accounts are available. All private banks in Austria and most other European countries offer custodial accounts denominated in Gold. When you form a relationship with a private bank they will buy bullion for you and store it either in their own vault or a rented one. Austria is a little different country. it has an attitude problem with America; their basic idea is fuck off; we like to do things our way.

Thu, 12/05/2013 - 20:47 | 4219781 honestann
honestann's picture

IF... and that is a very big fat IF... there are a hundred "honest" people in this world, they are not in the business of holding your precious metals.  You think I'm kidding?  I'm not.  Probably some of those people actually imagine in their dreams they are "honest", but they are not.

Why do I say this?  Because every single one of them will hand over your gold and silver to the predators-that-be as soon as those predators-that-be demand it.  POOF... your gold is gone.

AND THESE "honest people" KNOW THEY WILL DO THIS.

In other words, there are exactly ZERO known actually honest people in the business of storing your precious metals.

I mean, seriously.  Most (though not all) humans will hand over their own gold when the government demands (much less appears with guns a pointing).  As the pee runs down their legs, the "story" they planned to tell in this situation will be completely lost in their fear.  So do you imagine someone is going to hide your goodies, and lie at the point of those guns FOR YOU and their other customers?  FAT CHANCE.  One in a million, and not in that business.

Furthermore, anyone who even utters the notion that some fictitious entity owned, controlled or guaranteed by predators-DBA-government will protect your gold and tell your government to screw themselves... you must have positively drowned in the kool-aide years ago, because that's delusional beyond description.

Anyone who trusts ANY fictitious entity (government, corporation, organization) might as well shoot themselves, because then they will most certainly suffer less pain in the months and years to come.

I can't believe how naive human beings are.

How much evidence do they need?

Evidence is worth absolutely zero?

And broken promises are gold?

The gravestone for humans:
CONTROLLED BY WORDS
BLIND TO REALITY

Things are getting worse FAST these days.  Anyone with half a brain better start taking actions at least 5 steps ahead of where they imagine they need to be.  Otherwise they'll get caught up in the meat grinders, and they are revving up their engines now, and they are a coming, much sooner than you imagine.

If you're serious about precious metals, they need to be burried deep in the boonies in some foreign land, and the GPS coordinates of their location must be formulated as "phone numbers" (in reverse or scrambled order) in a long list of other phone numbers, or some other even more impossible to recognize form.  Only then do you have a good chance to retain your savings when the predator-locusts come to town.  And make no mistake, they are coming, they've already had apetizers in Europe and elsewhere, and anyone who can't hear their buzz already is hard of hearing, because their ears are completely full of frozen kool-aide.

Thu, 12/05/2013 - 23:26 | 4220253 TheReplacement
TheReplacement's picture

Disagree.  In the scenario you give the holder can give up the goods for confiscation.  As the customer you have to understand the holder will abide by the laws of the land.  It's up to you to understand the implications, as you do.  I'm certain that if you read any terms or contracts you will not find a clause where they promise to have a gun fight with the government to protect your property from being legally confiscated.

Fri, 12/06/2013 - 03:19 | 4220624 Element
Element's picture

Look around. In my own country the State immediately confiscates your vehicles for a significant traffic infringement. They'll take your house and land if you're late on land taxes. They'll take your children on the basis of anon reports from urban-spies living across the street or next door. The govt knowingly ALLOWS criminal financial organisations, who are totally non-productive, to setup shop in the very center of our cities and business districts, to steal from us, like digital vampires. The state steals anything they want, they'll use conscription to steal teenagers the moment they come of age, and have them butchered damaged and traumatized to feed the whims of corporation and tax man. The state has done all it can to consistently dismember and undermine the notion and sanctity of property-law. The thug state will just freeze and steal what's in your bank account and give it to a TBTF, or to state revenue. they'll freeze your licenses for non-payment of some trifling petty-claim by a shitty Govt agency who asserts you 'owe' them a cut, so that you can't even work or operate until you comply with these filthy mongrels, always holding the sword of abusive punitive actions over your family whilst they claim to be protectors, preserving the peace, safety and good-order of society, and acting in all of our best-interests.

And they even dare to fine us if we refuse to vote for the scummy vermin and their wretched political system, because they want our implied co-opted 'agreement' to their 'political democratic' system process of formalized tyranny, thievery and oppression, by a state Govt. The difference between a dictatorship and a democracy is that every three to four years we get to vote for a new corporate dictator, that fronts a organized-crime organization called a political party.

And all the time I hear these ultra-left thieving 'progressive'-useless-degenerates (who are literally too retarded and dishonest to admit that's exactly what they actually are), especially within the state-funded media, saying, "ooh, the govt should do something about that [insert some inane topic], they should regulate and pass new laws about that."

And thus our private work, our business, our property, and all our assets are endlessly infringed on, pilfered at will, damaged and wrecked, to the cheering progressive degenerate morons and the crooked masses who pretend to be all 'civil', 'nice', 'educated' and oh so 'thoughtful' of others, and their needs-'n-stuff.

 

(Perhaps I now better understand why Pol-Pot did it)

Fri, 12/06/2013 - 04:26 | 4220674 honestann
honestann's picture

Yup.  Perhaps a good case in point is what happened in Cyrus, and is now being planned by just about every pack of predators-DBA-government on the planet... namely, just GRAB the contents of bank accounts.  Gads, this stuff is so obvious, someone really should look into the massive defects in human consciousness!  Of course "they" won't, because "they" are the ones that promote all these nonsensical rationalizations for the modern world of predators-gone-wild.

Fri, 12/06/2013 - 05:55 | 4220711 Element
Element's picture

Distraction is the best cover for predators to operate. People are robbed in plain sight, because they make the blatant stealing look like something else. Everything has to be 'socialized' today, every action, every 'event', has to be turned into a cheesy circus. It's truly the Age that all dignity abandoned. Everyone has to act as they've been conditioned via movies and hideously banal TV programs (they don't call it a programming for nothing). And if we don't join-in with one or other of the mass distractions, we're seen or deemed very uncool, judged 'suspicious', a 'threat' of some kind, to something quite indistinct that's being threatened. The very act of having nothing to do with it is regarded almost as Orwell's thought-crime. The contrary thought or wider view is the nature of the 'crime' being committed. How dare we not socialize everything, like all the other idiots.

The young caught-up in this actually deeply anti-social process, never actually grow-up. They just gradually turn into geriatrics pursuing daft cults of personality, or something equally vile and socialized. I'm pretty sure William Herschel and Isaac Newton would have rejected and critiqued this absurd culture of socialized distraction and fawning respect for stupidity.

But after haphazardly breeding another generation of deeply dishonest assholes, who completely pretend to themselves to be good, interesting and thoughtful, when they're really the worst sort of feral degenerate ... and finally they cark-it ... oh mercy of mercies!

That's 4.6 billion years of planetary and biological development.

I figure the most constructive thing I can do at this point is reject and pour scorn on every dumb thing these people come up with.

 

what? ... oh sorry ann, must run, there's a lame fawning shallow-emotive and very, very warped 'special-report' tribute to Nelson Mandela on the idiot box, so must go wallow in the profound stupidness of it all for a few hours ...

Fri, 12/06/2013 - 04:53 | 4220692 Ghordius
Ghordius's picture

Cyprus? Bank accounts? do you know that a bank account is legally only a loan between two private parties - you and the bank - where in case of a bankruptcy it's the first to "go"? And this since centuries? what are you advocating, bank bailouts? by the state? which state? don't believe agit-prop only because it sounds like truthiness

yes, bank accounts will be hit in the "proper way" (instead of a "don't scare the masses" sugary way) in many countries - in case of bankrupcies. so?

Fri, 12/06/2013 - 06:34 | 4220712 Element
Element's picture

What's a bankruptcy then?

Obviously not applicable to banks.

Loans usually return on the investment, rather than return record low interest rates, (that are set by the Private Central Bank Cartel, same one that that took the savers 'loans', as 'deposits') and well below the rate of currency debasements (imposed by that same Central Bank system), and the allegedly non-existent inflation (produced and lied about by that same Central Bankster system).

Only the "proper way" is allowable for you and the banks though, eh?

Which would be to steal the savings, and hand to the 'savers' a giant (unaffordable, and thus unrepayable public debt, that leads to regional instability and combat) as a tax bill for the 'nationalization', to avoid any chance of a suggestion that the criminal infested banks are totally bankrupt, and trading insolvent, for years on end.

One law for the saver and the business proprietor/employer, who actually produces, and no law, or at least no justice - at all - for the banks and the banksters.

That's the "proper way", is it? ... well ... it seems a bit ... naive ... jus sayin

Fri, 12/06/2013 - 10:36 | 4221173 Ghordius
Ghordius's picture

element, are we still talking about Cyprus? imo you are mixing too many things in one (I agree on the "rape of savers" theme, btw)

with "proper way" I meant the option that the Cypriot Sovereign did not take:

not changing it's laws, not asking for a Norther European Sovereign bailout, and let those two Cypriot banks default, in which case all those bank account funds would have... gone into different hands. completely. total loss for bank account holders

the option was there. all the bitching on ZH and elsewhere was about Cyprus not taking that option, the rest was agit-prop, for the usual various reasons

Fri, 12/06/2013 - 12:43 | 4221609 Element
Element's picture

Sorry, I must have missed this whole area of the discussion, as I remember Germany (Schauble, etal.) basically said accept the bail-in terms we offer by the time we say (only Dr-Strangelove-as-FinMin was a lot blunter, and demanded a lot more of Cyprus, at the time, which was the main initial reason why they so strongly objected) or default and lose it all. What makes you think northern Europe had any other bail-OUT solution to offer, at that time, that Cyprus could call on?  Or that a change of laws would make any difference?

(and incidentally, as I remember, 'European' TPTB encouraged Cyrus to buy the GGBs)

Fri, 12/06/2013 - 00:47 | 4220430 honestann
honestann's picture

Pahleez, don't take us as fools.  No matter WHAT are the "laws of the land", the people who operate those "businesses" will do whatever they are told by the predators-that-be.  I mean, this is so far out of hand that it's beyond the point of offensive.  99% of what cops in the USSA do today is overtly "breaking the law of the land", which is the constitution.  So to pretend that the laws of the land have anything to do with anything is just a joke.  The barrel of the gun (and the fear thereof) is what controls all.  Period.

No, the contracts don't itemize the steps they will take to protect your gold from theft.  The implication is, your gold is safe from theft in their vaults.  But the fact is --- and they know so --- they will NOT refuse to comply with orders that VIOLATE the law of the land.  Will they?  See, you agree.  Case closed, and my point stands.

Fri, 12/06/2013 - 00:31 | 4220368 Tall Tom
Tall Tom's picture

Why will I pay you to work as an agent FOR THE GOVERNMENT?

 

What is Legal and what is Moral are two different concepts. If the Government declared that Physical Ownership of Gold was illegal then you will surrender all of your client's Gold? 

 

Nope. I will keep my Gold. Thank you. And I strongly suggest NOT doing business with ANYBODY who offers a Storage as this is an example of the prevalent attitude of the Operators.

Thu, 12/05/2013 - 15:48 | 4218713 August
August's picture

One problem with holding PMs via an intermediary firm, is that the firm WILL comply with any law restricting, reporting or seizing PMs. 

FWIW Australia already has a law on the books pemitting government seizure of privately-held gold.   There is exactly zero probablity of Perth Mint disregarding an edict issued by the Aussie government.

Thu, 12/05/2013 - 20:41 | 4219824 honestann
honestann's picture

And it doesn't even matter whether predators-DBA-governments have "laws on the books".  They do whatever they decide to do.  Period.

Thu, 12/05/2013 - 15:21 | 4218620 scrappy
scrappy's picture

Too big a risk, the trust horizon is shrinking rapidly.

Even "honest" people who are under pressure tend to renig.

Honesty is HARD.

Thu, 12/05/2013 - 15:19 | 4218602 MeelionDollerBogus
MeelionDollerBogus's picture

there's nothing to steal at your house because the valuables are already at  the robber's house.
Look at Jon Corzine.
Look at Goldman.
Look at JP Morgan. They got sued (and lost) over silver storage fees while storing NO silver - it was stolen yet paid for.

My bank will store bullion: fee = 1/2 ounce gold PER YEAR. Not in dollars, in TROY OUNCES of gold.

So if you leave it in long enough they'll keep it all.

May as well be stolen up front for the trouble.

Less paperwork.

You're also forgetting that the UK raided gold & other valuables just a few years ago from deposit boxes and of course in 1933 the US government closed & raided banks for gold stored there.
Anything in there: GONE, stolen, never to be returned, EVER.

Thu, 12/05/2013 - 13:58 | 4218189 JoBob
JoBob's picture

A depository receipt is still a piece of paper promising you that your good delivery bar, or roll of Eagles, or whatever else, is actually on deposit with someone else.  That "You have to trust them" is still counterparty risk.

They have the bullion and you do not. That is risk.

If it is not in your possession, you cannot be certain it ever will be.

If you don't hold it, you don't really own it.

 

 

Thu, 12/05/2013 - 15:58 | 4218748 August
August's picture

>>A depository receipt is still a piece of paper promising you that your good delivery bar, or roll of Eagles, or whatever else, is actually on deposit...

For those ZH worthies who find themselves complying with US law, a depository receipt also indicates a relationship (aka "a financial account") which is fully reportable under FATCA.

If you hold a key, or a shovel, your outside-the-USA PMs may remain legally unreported;  if you hold a receipt for outside-the-USA PMs, you have a foreign financial account, accompanied by severe penalties for non-reporting of the same.

Thu, 12/05/2013 - 11:19 | 4217549 the grateful un...
the grateful unemployed's picture

cash has several advantages over gold. it is readily identifiable without assaying. in the first depression gold was confiscated, banks had bail-ins and hard cash held by the individual turned out to be the best way to handle it. the new currency is ultrasafe from counterfeiting (except the governments efforts) and has the built in measure of exchange. an oz of gold represents an abstract notion, and you will have to bargain it depending on the use. just keep your money in a safe place (not a bank)

Thu, 12/05/2013 - 22:06 | 4220087 Al Gorerhythm
Al Gorerhythm's picture

For your consideration, have you ever heard of confiscation through interest payments? Have you considered the constitutional law that the state can issue interest free money from treasury and hasn't the right to delegate that task (Federal Reserve)? Have you considered why the Federal Government did this? Didn't you mean keep your currency in a safe place? If so, there is no safe place, it's being confiscated as you read this, through devaluation from printing and interest charges on borrowings. There's something wrong here and you aren't seeing it; completely.

Thu, 12/05/2013 - 15:20 | 4218618 MeelionDollerBogus
MeelionDollerBogus's picture

IS IT?
Everywhere I go there's machines to assay the papers called cash to see if they are real or fake, and many fakes get past them because those making fakes get better at it.

The governments have no better money or anti-counterfeiting technology that can't be beat by ANOTHER government, and the mafias of the world, who are the henchmen OF many of the same parties.

Thu, 12/05/2013 - 14:55 | 4218486 Hail Spode
Hail Spode's picture

Hard cash was the best bet during the depression you say?   If you refer to silver coinage, I'd have to agree with you, but that is not what you meant.  Too bad the ones they are churing out now don't meet that standard (except for ASEs and the like).   Yes, our cash is readily identifiable without assaying, all umpteen trillion of them.  The problem with fiat is not merely that it can be counterfieted, but that the "genuine" article itself can have its value stolen out of it by its issuers right before one's very eyes.  You may still have it, but you don't have the value that you thought was stored within it.

Thu, 12/05/2013 - 15:25 | 4218639 scrappy
scrappy's picture

Compounded with the wonderful "globalization" foreign goods will get a more expensive. Probably domestically as well, prepare.

Thu, 12/05/2013 - 13:24 | 4218011 SAT 800
SAT 800's picture

When you own bullion at a registered depository; there is no question of assaying. The commodity is called a "good delivery bar" and you can buy it and sell it; and it's no assaying. Spend a few minutes reading about bullionvault.com on the internet; it's unique. you'll find it interesting at least.

Thu, 12/05/2013 - 15:25 | 4218644 MeelionDollerBogus
MeelionDollerBogus's picture

due to discovered fakes there is A LOT of question of assaying. If you're not assaying you're not auditing and if you're not auditing it could be tungsten as HAS BEEN DISCOVERED.

Good delivery bars MUST be audited or they aren't good delivery anymore - that much we have SEEN for deliveries around the world of various sizes. Drilled 'good delivery' bars with TUNGSTEN in them. Not gold.

Thu, 12/05/2013 - 20:02 | 4219697 nwowatcher911
nwowatcher911's picture

Didn't you know that was to discourage people from buying gold??

People are selling their homes and buying 200k of physical gold at a time - which is why they came out on the news suddenly last year with fake tungstun bars.

Only the private fed has fake tungstun bars.

Fri, 12/06/2013 - 13:54 | 4221951 MeelionDollerBogus
MeelionDollerBogus's picture

of course those bars could turn up anywhere later to keep people scared.

Thu, 12/05/2013 - 14:17 | 4218300 the grateful un...
the grateful unemployed's picture

the terms gold and registered presents a problem.  (right now corporations are hoarding cash, which must piss off the Fed, so they offer incentives to buy stocks, which is QE, but unfortunately sometimes they buy gold stocks or etfs, which pisses off the Fed again) but the path to perdition goes through them, not us.

so yes they don't want paper gold, (QE has a direct correlation to gold prices) and all this taper talk makes gold cheaper but it also hurts the other stocks, so the Fed is confounded. that paper gold can be converted, but only by institutions in large blocks. so they feel they have a handle on the situation, because as an investment gold is really dead money. it just sits, the Feds worst nightmare, but so far its being manipulated at the institutional level.

if the guy next to you in the vault is an institutional buyer, then you are at more risk of confiscation. (they really can't go around looking for gold under peoples beds) that would be my only concern. in the meantime they are using their policy to punish physical ownership, which is their influence through paying interest on reserves and access to REPO windows and so forth

Thu, 12/05/2013 - 13:19 | 4217994 SAT 800
SAT 800's picture

there is however, a huge problem with fiat currencies; their value is at the caprice of the state politicians. If you were in a country when they anounced over the weekend that the "new" dollar was worth one tenth of what the old dollar was; you would never feel the way you do now. I was in Mexico when they did this; and it's quite remarkable. You have to remember that these notes you have are not money and the people who made them can do anything they want with their value.

Thu, 12/05/2013 - 10:32 | 4217401 Nothing but the...
Nothing but the truth.'s picture

I'm bailing out of cash , before any bail - in's.

Thu, 12/05/2013 - 14:21 | 4218317 Al Gorerhythm
Al Gorerhythm's picture

I'm of the opinion that if you are paying for the right to store something; gold, silver, art, wine, car, or currency, then you will want the thing that you saved, returned to you in the same condition that you stored it. The storage facility does not have the right to use your asset or property for their own purpose because a storage agreement does not confer ownership rights to the storage facility. You'd be an idiot to give that advantage to a bank or security facility because your gold will be shaved or rehypothicated, your art piece damaged, your wine open and sampled,your car trashed, or your currency used for risk taking purposes for the benefit of the bank. If your intent was to place your item into their hands for the purpose of profit, then you have to accept the condition of your asset on its return to you, fair wear and tear.

However, if you are storing any asset for safe keeping, you pay for the service and therefore do not confer ownership to the security firm you have placed it with for safe keeping, expecting on its return to you, that the gold to be the same weight and fineness, your art work still perfect, your wine unopened, your car with the same miles on the clock and your currency still holding the purchasing power it had when you stored it. Currency is an asset that depreciates in value over time, so paying to store a depreciating asset is madness. People seem to have missed that point.

 

Thu, 12/05/2013 - 23:46 | 4220269 Renfield
Renfield's picture

deleted

Thu, 12/05/2013 - 13:22 | 4218001 SAT 800
SAT 800's picture

Yes; why not be safe, instead of sorry? It's not like you were going to lose a fortune from the "interest" on your savings account. At $20/oz. Silver is a once in a generation special sale price; it will look very nostalgic in a couple of years.

Thu, 12/05/2013 - 13:39 | 4218065 Enslavethechild...
EnslavethechildrenforBen's picture

All paper money is counterfeit, all paper gold is counterfeit. There is no limit to the amount they can print of either. The paper / electronic price of Gold, Silver, Platinum, Palladium, Copper, etc can effectively be reduced to zero because it can be printed into infinity.

Decoupling will eventually occur.

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