Trump, Apmex, and Goldilocks

Michael Victory's picture

via TVR

From Robbie Whelan of the WSJ and BMG:

In the latest development in the growing surge of support for a return to some form of gold standard, Donald Trump has decided to accept gold bullion as a deposit on a commercial lease. This follows a news story reported on earlier this year where Utah became the first state to legalize gold and silver coins as currency.

On Thursday, the newest tenant in Donald Trump’s 40 Wall Street, a 70-story skyscraper in Manhattan’s Financial District, will hand Mr. Trump a security deposit worth about $176,000. No money will change hands, rather three 32-ounce bars of gold.

The occasion will mark the first time the Trump Organization has accepted 99.9% pure gold bullion, rather than cash, as a deposit on a commercial lease. The tenant, precious-metals dealer Apmex, will sign a 10-year lease for 40 Wall’s 50th floor at a leasing rate of about $50 a square foot, according to Apmex Chief Executive Michael R. Haynes. The company is promoting the use of gold as a replacement for cash in some situations.

“Gold has been a valuable asset class for the last 10,000 years, but the world has drifted away from it,” Mr. Haynes says. “I figured, Trump is a smart guy, and he’ll realize that taking gold is a better idea than taking cash.”

Mr. Trump said he sees the deal as a repudiation of the Obama administration’s economic policies, of which he has been a vocal critic.

“It’s a sad day when a large property owner starts accepting gold instead of the dollar,” Mr. Trump said in an interview. “The economy is bad, and Obama’s not protecting the dollar at all….If I do this, other people are going to start doing it, and maybe we’ll see some changes.”

To view the entire Robbie Whelan article: Trump’s New Gold Standard

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Vendetta's picture

Roubini would have suggested 17
6k of spam

Ned Zeppelin's picture

Trump (whocouddaguessed) and Apmex publicity stunt. Move along,people with any brains. 

honestann's picture

Consider what happens to two people who rent or lease a property for 5 years.

#1:  Hands over 96oz of gold as his deposit and receives 96oz of gold back after his lease expires in 5 years.  The returned deposit buys just as much or more than when the deposit was made.

#2:  Hands over dollars for his deposit and receives the same number of dollars after his lease expires in 5 years.  The returned deposit can buy a candy bar.

Hmmmm.  I find it extremely difficult (psychologically and rationally) to part with my gold when I buy something.  However, a security deposit is another matter entirely as this example shows.  While it would intuitively seem easier to give fiat paper for a deposit, the obvious facts show the opposite.  Interesting.

franzpick's picture

There's several other problems: people who have entrusted their gold to other person's keeping already know, or may soon find out, that the metal has been loaned out for someone else to sell.  Loan your gold out and 10 things can happen, 9 of them bad.

honestann's picture

Yup, the agreement would need to require allocated storage and return of the original bars with the original serial numbers.  Otherwise, forget about it.

Even then, the whole point of physical gold is... TRUST NO ONE.

So good point.  1 out of 10 is pretty terrible odds.

NuYawkFrankie's picture

Only problem with scenario #1 is that the returned deposit might well be a gold-plated lump of lead or tungsten, "The Donald" didnt get to be a serial bankrupt for nothing.

RealFinney's picture

Sounds like he doesn't understand why it's good; it's just to grandstand over Obama's performance, so I don't think the Reverse Donald applies in this case.

jbc77's picture

I don't know about anyone else out here, but if someone offered me gold or dollars for my goods or services I'd take the gold. Gold has become fairly liquid these days and one would assume it's going to get even more fluid going forward.

My whole premise right now is storing my monthly savings in either sikver or gold. It makes no sense to just hold cash that your not going to use knowing what the world faces. We have confirmation the oligarchs will print to try to save their dying system. Utah, Trump, people are taking notice.

There is No Spoon's picture

Comes to about $1833.33/oz of gold, pretty close to spot. As long as gold is priced in dollars, instead of dollars backed with gold, the medium of exchange remains dollars. Nothing happened here except a possible indicator of a short term top in gold. Fade the Donald.

mayhem_korner's picture

I'll wager you 5 oz gold (to me) v. $9.5K dollars (to you) that gold is not at a top.  That's a 4% premium at today's spot.

Taker or talker?

Jasper M's picture

If I thought you were findable/good for it, I would cheerfully take that, as I am already short gold.

Since I gather you are long, let us agree that we are 'virtual counterparties'. I have similar arrangement wtha  guy on SA, where we are on either side of my puts on Berkshire hathaway. 

And I think the embrace of Anything by The Donald is pretty topy.

mayhem_korner's picture

You got yer signs mixed...I'm taking the gold in the exchange.  If you're short, you cannot partake.

There is No Spoon's picture

I agree that gold is nowhere near a major top but my point is that it could be ready for a correction. Nothing goes straight up or down and gold is no exception. I'm not selling here, but I'm certainly not buying. Just holding. Gold will go on sale and I think it will happen soon. Are you buying gold at these prices? I would take your wager if I could afford to.

mayhem_korner's picture

"Top" in traderspeak is a short-term notion.  I'm not a trader, but an accumulator.  I don't buy gold to sell it back and earn a profit.  So my definition of "top" is relative to where it might be anytime in the next, say, five years.  It's all about time horizon.

"I would take your wager if I could afford to" is exactly the response I expected.

Shineola's picture

These are just two entities, doing business, that don't trust fiat anymore.   Like...... most holders of Bennie Bucks around the world. 

 

Oh yeah, silver, that other metal that nobody has heard of, well it is in a bubble.   :)

FEDbuster's picture

Wonder if Trump is taking lease payments in gold, too?  I would have loved to written a couple of my commercial building leases (5 year terms) in one oz gold eagle lease payments.

Motley Fool's picture

Since most of the population is as stupid as Trump I take this as a good sign. :)

Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Wait, wait, wait!  I thought gold was NOT money!!!!!!!???????

mayhem_korner's picture

Gold stores the buying power of whatever you converted to it.

AdahPrice's picture

Aristotle: money must be durable, portable, divisible, consistent, and intrinsically valuable.  As far back as the Sumerians, gold was money.

DoChenRollingBearing's picture

Green!

Trump may or may not be stupid, but I doubt very much that his accepting gold for such a tiny part of his wealth means anything.  Poster above said it was publicity for both Trump and APMEX, that would make sense.

Just because Trump took some gold does not mean that any BEAR market in gold has started.

theXman's picture

Trump got himself a very good deal -- in a few years, the $$ worth of the same gold bars will at least double.

NotApplicable's picture

It's a security deposit, so short of Apmex trashing the place, he won't get any of it. Of course, this does raise the question, how will they calculate any damages to deduct? Dollars, or grams?

MachoMan's picture

Which would probably mean apmex would be in less of a position to be unable to pay its lease...  I'm sure it's hedged either way to a certain extent, but still...

If I were apmex, I'd be worried that piece of shit would end up losing the bars to another creditor along the way or that they'll have to duke it out in BK court to get them back...

Mariposa de Oro's picture

An Obama-Bot needs to tell Mr. Trump that gold is NOT money......

hunglow's picture

You're a good man Mariposa.  See you over at SHTF plan.

DoChenRollingBearing's picture

GREEN for the LOL, Mariposa!  Yes, indeed.

 

Au to $0.02

Ag to $0.01

Bitchez!

(above attributed to T. Geithner or J. Nadler, I keep forgetting which)

Temporalist's picture

I hate how that fraud Trump is going to take credit for institutions/companies accepting PMs as collateral.  What an asshole.

DoChenRollingBearing's picture

Green for telling an important truth about Trump.  He is a businessman who has screwed people and companies that have bought his bonds.

xtop23's picture

Gold stores wealth Silver is used by the common man in day in day out transactions. 

Both are money.

DoChenRollingBearing's picture

+ 1

My view exactly.  Silver for spending if it comes to that.  Gold is to preserve wealth until you get to the other side.

So, yes, both are money.  And it is smart to have both.  But, the BULK of my PM $ value is in gold.

NotApplicable's picture

And when the G/S ratio is favorable, silver can be used to buy gold.

xtop23's picture

Exactly. Or eventually real estate when its finished tanking.

GFORCE's picture

BEN, YOU'RE FIRED!!

TradingJoe's picture

The "supersucker" got creamed with BAC so now he's going for gold instead, hehehe, never ceasing to amaze me! The Don!

Calculo Ergo Sum's picture

One of the basic laws of judging animal spirits is that if a taxi driver starts talking about an asset category, it is time to dump it.

Isn't the Donald in the same category?

JohnG's picture

Personally, I don't know of any billionaire taxi drivers.  You?

SteveNYC's picture

If Donald truly is a billionaire, then Ben Bernanke is not a money printer.

CompassionateFascist's picture

I know one (m)illionaire cab driver quite well. I have been enthusiatic about PMs for over a decade, and will hold mine right thru System Collapse. Then, 1 oz. of silver will buy 2-3 days of groceries at a green market. Well and good.

JohnG's picture

1 oz. will get you A LOT more than 2-3 days worth of food friend.

SuperRay's picture

Gee, he finally did something that wasn't totally stupid.  Miracles can happen, after all

Gecko Junior's picture

This development has far larger implications that meets the eye.  If someone as high profile as D Trump gets on the gold train, that will accelerate matters tremendously. 

SuperRay's picture

"high profile" - only as a shallow, narcissistic, ego centric moron that nobody takes seriously

NotApplicable's picture

An image, which of course, will be used to smear everyone else who dare hold PMs vs. dollars. The lefties will chalk it all up to greed, never attempting to understand why it matters so much.

Scrooge McDuck, FTW!

Sutton's picture

Why is APMEX giving up bullion instead of Benbacks.  Are they bearish gold now?

MrSteve's picture

In the world before Al Gore invented the internet, such a deal was called "barter exchange". It's when one company trades its old inventory for another company's old inventory or in this case, unused real estate space.

Barter exchanges keep track of deals in dollars which the IRS fusses about as being under-reported transfer costs. Ampex exchanges 3 bars which have been kicking around on the books since gold was priced at $89 an oz.

Generally, these barter deals mean both businesses don't have cash and agree to exchange value at their internal costs, so the trade is "fair"

Ultimately there are only two kinds of money: cash and all others. FRNs are part of "all others", not cash. Ampex paid in real cash which is why The Donald accepted it. He is smarter than his hairpiece lets on.