“Gold Ponzi Schemes” Revealed - Physical Gold Favored Over Derivatives

Tyler Durden's picture

From GoldCore

“Gold Ponzi Schemes” Revealed - Physical Gold Favored Over Derivatives

Today's AM fix was USD 1,616.50, EUR 1,306.05, and GBP 1,028.57 per ounce.
Yesterday’s AM fix was USD 1,603.50, EUR 1,306.74 and GBP 1,021.34 per ounce.

Silver is trading at $28.19/oz, €22.94/oz and £18.03/oz. Platinum is trading at $1,460.50/oz, palladium at $587.30/oz and rhodium at $1,025/oz.

Gold rose $9.90 or 0.62% in New York yesterday and closed at $1,614.00/oz. Silver surged to a high of $28.275 and finished with a gain of 1.37%.

Gold continued gains on Friday receiving a boost from Angela Merkel’s comments saying she supported ‘Super’ Mario Draghi’s pledge “to do whatever it takes” to save the euro.  

While this sentiment lifted markets and some investors hope ECB action is sooner rather than later - it is also creates the risk of currency debasement and could lead to further falls in the euro.

At the beginning of August, the European Central Bank said that it might buy Spanish bonds if the government first applied for the European Financial Stability Facility (EFSF) support. The ECB has said that specific committees within the bank would design the appropriate mechanisms for the bond purchases in the coming weeks, suggesting a possible green light within a few weeks. 

EFSF bond purchases require the vote of all member states, including ratification by the German Parliament.  Many investors are waiting on the sidelines until more concrete news from the ECB and US Fed is conveyed. 

Certainly any more monetary stimulus is positive for gold as policy makers’ favourite choice for bolstering sagging economies risks devaluing currencies.

Barrick Gold Corp, the world's top gold miner, is currently in negotiations with China Gold Corp, China’s top gold producer, about selling part or all of its holdings in its African business. This shows how China is eager to secure a greater source of global supply in order to be able to supply the voracious Chinese market.

Mark O'Byrne, executive director of GoldCore, talked about the outlook for gold prices and the merits of purchasing the physical metal over derivative products with Linzie Janis on Bloomberg Television's "Countdown" today.

He warned regarding the various “gold ponzi schemes” that have come to light recently and advocated owning physical gold and if storing to own gold in an allocated or segregated manner.

The Bloomberg video ‘Physical Gold Favored Over Derivatives at GoldCore’ can be viewed below.

Cross Currency Table – (Bloomberg)

For breaking news and commentary on financial markets and gold, follow us on Twitter.


(Bloomberg) -- Standard & Poor’s Warns Re South Africa Violence Spreading 

Standard & Poor’s is “concerned” about violent clashes between labor union members and police at South African platinum mines, which added to negative perceptions of the country, Business Day reported, citing Konrad Reuss, managing director of S&P South Africa.

S&P has no plans to revise its negative outlook for the country in the near term, Reuss told the Johannesburg-based newspaper. S&P reduced the outlook on South Africa’s BBB+ credit rating to negative from stable in March, following similar actions by Fitch Ratings in January and Moody’s Investors Service in November.

(PTI) -- China set to overtake India in gold imports in 2012

China is likely to overtake India as the largest importer of gold this year on the back of huge demand for the precious metal for jewellery and investment in the world's second-largest economy, World Gold Council (WGC) said today.

"In the first half, China's demand for gold stood at 417 tonne surpassing India's 383.2 tonne in the same period," WGC Managing Director (India and Middle East) Ajay Mitra told reporters here.

Looking at the current trends, WGC expects China to overtake India as the largest importer of gold.

In the first quarter of 2012 (January-March), China's gold import stood at around 136 tonnes, lower than India that imported 209 tonne in the same quarter.

"China is a much bigger economy than us and their demand, especially for jewellery and investment, is growing. The country's own supply will not be able to meet this demand growth and the imports will rise," he said.

The fastest-growing major economy in the world consumed roughly 761 tonne gold in 2011.

In the April-June quarter this year, China's jewellery and investment demand declined 7 per cent to 144.9 tonne from 156.6 tonne in the corresponding quarter of 2011, due to lack of direction of gold prices and slowdown in domestic GDP growth. However, steady growth in Chinese gold jewellery demand is expected to resume in the third quarter as economic growth is expected to pick up following monetary easing implemented during the second quarter.

China is the world's largest gold producer and mines about 350 tonne of the precious metal annually.

Gold Prices/Rates/Fixes /Volumes – (Bloomberg)

(Bloomberg) -- Turkey Raises Foreign Exchange, Gold Banks Can Keep in Reserves

Turkey’s central bank increased the proportion of required lira reserves lenders can keep in foreign exchange to 60 percent from 55 percent and the part that can be kept in gold to 30 percent from 25 percent.

The change for the foreign currency portion of lira reserves will be effective from Aug. 31 and the gold portion from Sept. 14, the bank in Ankara said in a statement on its website today.

The changes may add as much as $7.3 billion to the central bank’s foreign exchange reserves and supply up to 5.6 billion liras of liquidity to the market, it said.

Gold Poised To Advance For Third Day On Stimulus Speculation - Bloomberg

Gold rises for 3rd day on hopes of ECB action - Reuters

Gold CEO Departures Fastest In Decade On Stock - Bloomberg

China National Gold considers big push into Africa - Reuters

Bloomberg: Physical Gold Favored Over Derivatives at GoldCore - Bloomberg

Puzzled investors should put some silver, wine, art and gold into their SWAG bag – The Independent

“Large buyers continue to accumulate ...providing fundamental support to gold above $1,500-$1,600 level” - MarketWatch

Keiser Report: Frankenmarkets and Austrian Economics – Max Keiser

Staring Down the Barrel of Bad Debt – Daily Reckoning

The Portuguese Run Out Of Gold To Sell – Zero Hedge

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diogeneslaertius's picture

Actual Money > Pretend Money

Snidley Whipsnae's picture

Who woulda thunk it?   Physical gold favored over derivatives?  Dag nabit, what ill they thunk up next?

Maybe someone dusted off an old copy of Exeter's Pyramid?

BaBaBouy's picture

GOLD $50K Bitchies, Believe it ...


South African police say they were forced to fire on striking miners, killing 34 South Africa's police were forced to open fire on striking miners with live rounds because they were charged by armed men and compelled to “defend themselves”, the national police chief said on Friday.

Riah Phiyega said that 34 miners were killed on Thursday and another 78 wounded when her officers used “maximum force” near Marikana mine, owned by Lonmin, the London-listed company.

They did so when a gang of “heavily armed” miners rushed towards them, armed with firearms as well as clubs and machetes. “Police retreated and were forced to use maximum force to defend themselves,” said Ms Phiyega.

Snidley Whipsnae's picture

You neglected to say how many police were killed or injured...

malikai's picture

Well that's funny see, because I don't remember seeing them with any weapons in the video..

CrockettAlmanac.com's picture



Prior to Thursday, 10 people - including two policemen - had died in nearly a week of fighting between rival worker factions at the mine, the latest platinum plant to be hit by an eight-month union turf war in the world's main producer of the precious metal.

The Marikana strikers have not made their demands explicit, although much of the bad blood stems from AMCU's challenge to the two-decade dominance of the National Union of Mineworkers, a close ally of Zuma's ruling African National Congress.

Before the police advance, AMCU president Joseph Mathunjwa, whose organsiation has been on a big recruitment push in South Africa's platinum mines, said there would be bloodshed if police moved in.

"We're going nowhere," he shouted through a loud-hailer, to cheers from the crowd. "If need be, we're prepared to die here."



Tinky's picture

Tell you what: if it hits $5,000, I'll sell you mine, and you can enjoy the dizzying ride to $50k.

Snidley Whipsnae's picture

If you sell at 5K and gold goes to 50K you might need a pay day loan to buy a cart of groceries...

Tinky's picture

If it goes to $50k anytime soon, then we'll be living in a Mad Max world.

I rather doubt that will happen.

Chump's picture

Maybe not a barren desert waste land, but "Mad Max" is indeed coming.  Three days of supply chain interruption and you won't even recognize your nearest town of decent size.

And PMs are for what comes after.  Dollar price is irrelevant except for purchasing.

NotApplicable's picture

The efficiences of JIT inventory management are about to collide solidly with the Laws of Entropy that govern its complexity.

Guess I need to start brewing some beer. That always helps.

Chump's picture

Very succinct and well put.  Good luck with the batch; I'm envious.  I keep saying I need to start homebrewing.  Maybe one more crappy porter will be the spark I need.

Snidley Whipsnae's picture

For many people and towns it's already Mad Max world; the entire rust belt, large sections of E Penn and N Jersey, many of the mill/factory towns of New England, many coal towns of W Va, Ohio, Penn, etc... and I didn't get to the South and West.

Of course, I don't know what Mad Max world means to every individual... but, when a town no longer has a supermarket, like Trenton NJ, and no longer has a city police force but has outsourced police services to the county or combined with another town... or has declared bk... well, you tell me what Mad Max is?

silverserfer's picture

mad max is a syndrome where you find wet dog food to be delicious.

pies_lancuchowy's picture

The world is mad NOW. Gold going to 50 000 will make it LESS crazy and MORe real.

Alpo for Granny's picture

Next think you know people will actually be favoring physical thread over derivatives. Bunch of damned barbarians..all of you!

AlphaDawg's picture

How will you know when it is time to sell?

People give numbers like 5k, but I think you need a better indicator than price, some kind of event mabey?

EnslavethechildrenforBen's picture

When you find a nice farm you want to acquire.

Melin's picture

when circumstances force you to sell or when someone offers a sound alternative that's easier to use and store than phys.

RockyRacoon's picture

It's not a trade, AlphaDawg, it's a store of value... real money and all that.   Bone up on the facts.  Understand the concept.

Start here and work your way back chronologically:   http://fofoa.blogspot.com/

NotApplicable's picture

Just ignore all of the silliness about the Euro. They've got some hefty blinders on that subject. So much so that FOFOA's response has distilled down to "Westerners just don't understand!"

Of course it's simple to understand "the Euro can't hyperinflate because it's marked to gold." But that's hardly the crux of the dilemma, and no matter what other aspect of monetary destruction is being discussed, that's the only rebuttal offered.

It's just like watching Spinal Tap's logic on making all of the amplifiers go up to eleven, "because it's one louder."

Back when Another originally started writing, perhaps his logic had more to it, but these days, it's turned into established dogma with the addition of FOA and now FOFOA.

“Rebellion to tyranny is obedience to God.”-ThomasJefferson's picture

Is the capital gains tax on gold profit the same as or is it very different from the profit of other commodities?

Be careful!  If enough gold is hoarded by the unwashed masses, the same crony capitalists, banksters, and scum bag politicians will greet you at the door of the local goldsmith, while taking back from you what is rightfully theirs.  They will either take it outright, or tax you 99.99%.

Tinky's picture

It is – outrageously – classified by the IRS as a "collectible", and is taxed (long term profits) at 28%.

Axenolith's picture

Only if you're selling more than 10K at a time and are making profit.  I don't consider paper devaluing versus the purchasing power of my gold remaining stable as being a "profit" or "income".

Realistically, if you sell before the inflation adjusted high of the early 80's you should be taking a loss on it for tax purposes... (Good luck with that with respect to the FED's collection agency though.)

NotApplicable's picture

I classify it as money, therfore there's no such thing as a "gain."

But hey, I'm old fashioned.

Count de Money's picture

It's actually classified as barter income with a 28% rate. No break for long-term. Whoever you sell to has to file a 1099-B with the IRS.

Although no 1099, no income on the books, no tax.

LoneStarHog's picture

"Physical Gold Favored Over Derivatives At GoldCrap" ... NO SHIT?

Inthemix96's picture

Well mind, I was at the bank yesterday and they assuerd me that paper money was infact real money.

Having said that, I was with a hooker at the weekend who had a cock.  I did say, thats not right, shouldnt you have a minge?  She said her cock was a minge.  I took her word for it and my arse is now on fire.

Dont believe what people tell you folks, it is normally bollocks.

knukles's picture

An olde wive's tale is you slide a roll of silver up your bung it'll help rid of the cruddies.


AlphaDawg's picture

Silver is a better investment

Snidley Whipsnae's picture

Any PM is a better investment than paper!

youngman's picture

I like both...does that mean I manage a trois......or am I just Pansexual

AlphaDawg's picture

Who doesnt like em both chief?

Gots ta gets urself some copper and platinum.


Buy gold chains and rings and get ur missus to wear them when u bang her, its the business

Snidley Whipsnae's picture

Yman... I agree. I like both too. I am always amazed that people argue over which is the 'best' PM to hold.

Did you read the historical account of the huge silver strike in California? It was a bunch of guys with pans and sluices looking for gold and their equipment kept getting clogged with a very heavy blue clay. One day a Brit mining engineer happened along and explained to the 'miners' that the blue clay they were discarding was almost pure silver.

I forget the name of the strike but the vein was wide and about ten miles long.

RockyRacoon's picture


 ...the Comstock Lode would not be known for gold, but rather, for its immensely rich silver deposits. Though silver had initially been discovered in 1857 in Nevada by brothers, Evan and Hosea Grosh, they died before they could record their claims. Though the miners rushed in after the discovery of gold, they were unable to get to it because of the heavy blue-gray clay that clung to picks and shovels. However, when someone had the good sense to assay the sticky mud, it was found to be worth $2,000 a ton – a very nice amount in those days.

Jason T's picture

The chinese know full well the perversion of paper money..they invented it!  

Read this Chinaman's quote from 1149 on paper money


EnslavethechildrenforBen's picture

What the hell took them so long? Now the Metals will have a chance to find fair market value. China will be able to run the price up or down at will, or simply peg their currency. That would be a form of Gold Standard. Interesting...

Munkey's picture

Looks like its finally game on between physical vs paper.

AlphaDawg's picture

lets hope not.


We all know by now its manipulated So the longer we can stack and pack phys at these prices the better

Getting Old Sucks's picture

I was reading the GLD presp the other day and had to laugh at how many times it warned that the gold they hold could go missing, unable to access or be stolen.   

Snidley Whipsnae's picture

Yeah, basically they say that they are not responsible for anything that may happen.

At least they are telling customers before the fact, unlike MF Global... and some others.

Tinky's picture

When stored in banks, obviously. But storing in non-bank vaults is a different – and safer – story.

Not without risks, but neither is storing at home.

Snidley Whipsnae's picture

Nothing in life is 100% safe. I believe that it's best not to have all the eggs in one basket... or even in one hen house or one kitchen.

I have a couple of safety deposit boxes and they contain paper... like, insurance policies, copies of med records, birth certificates, etc... and I don't even trust that stuff is safe.

apberusdisvet's picture

Gee, I wonder if all the gold plated tungsten bars at Fort Knox wound up in the GLD vaults.  Is the true hypothecation 1000:1, 5000:1???????

youngman's picture

The Best to the worst...

Gold in your hands...

Gold on you wifes neck or wrists

Gold in a secured location ..placed by you

Gold in a non bank account held by a fund ..Foreign(CEF)

Gold held in a non bank account by a fund ...USA

Gold held in a bank..safe deposit box or allocated

An ETF...( GLD)