Friday Humor: "JP Morgan Has Insurance To Cover Custody Of The Metal"

Tyler Durden's picture


In the aftermath of the Cyprus deposit confiscation, everyone can be excused about feeling a little bit concerned about their deposits held at a European (or any other) bank. Everyone can certainly be excused about feeling concerned about their (rehypothecated) precious metals holdings, Cyprus or not, with any financial counterparty anywhere in the world (because in matters such as those, we don't need Diesel-BOOM to tell us that Executive Order 6102 is "the template"). Recently one reader put two and two together, and in the aftermath of the Zero Hedge expose of JPM's London gold vault and the Cypriot deposit confiscation, decided to express his concern to Blackrock about the safety of his ishares physical gold ETF backed by gold held in the abovementioned vault. To his comfort, Blackrock promptly replied that there is "no risk" (perhaps this too means there is "no plan B"), and that the gold in the vault, unlike the cash in assorted European banks, is safe. Why? Read on...


From: "___ " <___>
Date: 25 March 2013 11:59:57 GMT
To: "" <>
Subject: RE: GB Private Investor - Contact BlackRock Message: iShares




Thank you for contacting iShares.


The vault is extremely secure.


In the extremely unlikely case that the vault is broken into, JP Morgan has insurance to cover custody of the metal.


Kind regards,


The iShares Team


The information provided does not constitute an advertisement or an offer to sell, or a solicitation of an offer to buy, any fund referred to in this presentation nor shall any funds referred to be offered or sold to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. Any investment in any funds mentioned is made subject to the terms of the fund Prospectus, relevant Supplement(s) and other relevant documentation of the funds, which should be read in their entirety. Certain information provided has been taken from trade and other sources BlackRock considers reliable but does not guarantee as such. Any opinions expressed reflect BlackRock’s judgment at this date and are subject to change. The funds mentioned may or may not be suitable for all investors. BlackRock does not guarantee the performance of the funds. Please take independent legal and tax advice before making any investment decisions.




-----Original Message-----
From: []
Sent: 18 February 2013 21:35
To: iShares Feedback
Subject: GB Private Investor - Contact BlackRock Message: iShares



Company: Individual Investor



Message follows:




I hold shares in the ishares physical gold ETC (SGLN). I read that the location of the London vault of the custodian JP Morgan is now public knowledge.


Is the iShares gold held by JP Morgan in London still securely protected, and how does this affect the value of my iShares SGLN?


Yours sincerely

And now you know: no risk... "it's insured"

Your rating: None

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Fri, 04/05/2013 - 21:07 | 3415047 Yen Cross
Yen Cross's picture

      Send in the; quote: Whales. end quote/

Fri, 04/05/2013 - 21:08 | 3415060 TheFourthStooge-ing
TheFourthStooge-ing's picture

Any insurance claims are payable in shares of GLD.

Fri, 04/05/2013 - 21:14 | 3415075 Stackers
Stackers's picture

Is said insurance from AIG ?

Fri, 04/05/2013 - 21:25 | 3415119 AndrewJackson
AndrewJackson's picture

Must be. Only a tbtf would underwrite such a policy where they could not possibly payout if said event happened. 

Fri, 04/05/2013 - 21:28 | 3415135 Van Halen
Van Halen's picture

Next letter, can you folks put a copy of aforementioned insurance poiicy up on your site? Kindest regards...

Fri, 04/05/2013 - 21:38 | 3415151 fonzannoon
fonzannoon's picture

So a very well informed ZH reader apparently has a decent amount of dough in a paper representation of gold. 

I wish he would have sent us an email of them responding to him/her asking for delivery instead. 

Fri, 04/05/2013 - 22:17 | 3415253 markmotive
markmotive's picture

According to Societe Generale, the gold bull market is dead. They made a decent case.

However, Sprott bounced back with a wicked rebuttal:

Fri, 04/05/2013 - 23:12 | 3415347 knukles
knukles's picture

Read the prospectus.  It says that there is insurance.  Then it paints an incomplete picture by some fairly loose language that some might interpret, paint their own picture as to the gold being  insured.

Fucking false.

The trustee, ETF managers, etc., are insured for events surrounding the losses, but it is standard business insurance.


No carrier does it. 
Steal the bars, melt them resell them and voila... its gone.
The insurer cannot insure against an event like that.
The goods are nonrecoverable and therefore subject to fraudulent acts

It is not insurable, any more than cash in a vault is insurable.

Do your own serious due diligence and you will find that the gold is not insured.


Fri, 04/05/2013 - 23:53 | 3415434 palmereldritch
palmereldritch's picture

Simon says, "Your insurance just left in a dump truck."

Sat, 04/06/2013 - 00:03 | 3415451 Lore
Lore's picture

+1 to Mark and Knuk for valuable posts. Thanks

Sat, 04/06/2013 - 07:38 | 3415774 s2man
s2man's picture

That link can not be valid, Mark.  There is no plan B.

Fri, 04/05/2013 - 21:38 | 3415169 Pool Shark
Pool Shark's picture



I hear the underwriter is a subsidiary of MF Global


Fri, 04/05/2013 - 21:34 | 3415154 Ignatius
Ignatius's picture

Skip to 16:01 "It works...!"

Fri, 04/05/2013 - 21:47 | 3415193 rlouis
rlouis's picture

Love the Firesign Theater albums - thanks for the link!

Fri, 04/05/2013 - 21:28 | 3415129 Stuart
Stuart's picture

This whole metals market is one total scam, we all know it, yet no one that can blow the lid off of it does. 

Fri, 04/05/2013 - 22:16 | 3415252 Midas
Midas's picture

Especially true of silver, I think there are individuals with enough personal wealth who could bring down the illusion if they stood for delivery.

Fri, 04/05/2013 - 23:10 | 3415352 Manthong
Manthong's picture

Let's all just chip in and hire Simon Gruber.

Fri, 04/05/2013 - 23:13 | 3415353 knukles
knukles's picture

The Hunt Brothers tried it once and were liquidated out by the Clearing House.
Summarily told to Fuck Off

Sat, 04/06/2013 - 00:35 | 3415502 Midas
Midas's picture

I'm no expert, but I think they didn't have enough money to do it.  You know what happens when you half-way corner a market? 

Sat, 04/06/2013 - 07:38 | 3415775 fiftybagger
fiftybagger's picture

Back then the goobermint had 10 billion ounces to dump on the market if it needed to.  Today they have 10 billion less than that.  Big difference no?

Silver For The People

Sat, 04/06/2013 - 01:17 | 3415540 noless
noless's picture

Look in the archives for the may2011 margin hikes and delivery attempts. They were given diminished shares in the holding. They don't have the metal on deposit. Maybe this time they are solid off margin, but who knows. Longer than you can stay solvent what? But yeah, i would love to see it.

Sat, 04/06/2013 - 02:28 | 3415593 debtor of last ...
debtor of last resort's picture

That's why they don't do it. They would be left holding the bag.

Sat, 04/06/2013 - 08:49 | 3415828 Downtoolong
Downtoolong's picture

Insured a 100 times value by AIG, and the policy is held by Goldman.

Fri, 04/05/2013 - 21:21 | 3415104 DeadFred
DeadFred's picture

If you read the prospectus for GLD though, it has no coverage for theft or fraud. They basically say in such an event you are SOL. It made me feel warm and fuzzy to see it in print. Really. Honesty is hard to come by these days.

Fri, 04/05/2013 - 23:26 | 3415388 CompassionateFascist
CompassionateFascist's picture

To the extent that anything can be "insured" in this world...3,000 fps lead insures gold/silver. Nothing else will do.

Sat, 04/06/2013 - 00:20 | 3415483 snr-moment
snr-moment's picture

You guys always forget the clear line of site.

Sat, 04/06/2013 - 00:18 | 3415479 cynicalskeptic
cynicalskeptic's picture

No recourse if the 'gold' turns out to be tungsten or God knows what either... no assays conducted on holdings     If it turns out that they got conned and bought foil covered chocolate, you're SOL - odds are the chocolate is stale too.


The prospwctus for these things has language that exempts the trustee and all others involved from ANY liability for ANYTHING.     You're as secure as buying the Brooklyn Bridge from a guy on the street.

Sat, 04/06/2013 - 11:01 | 3416026 varnelius
varnelius's picture

What?!?  I just bought that bridge last week.  Does this mean this wringkled napkin entitles me to exactly nothing?

Sat, 04/06/2013 - 00:19 | 3415486 Yamaha
Yamaha's picture

Sorry - no gold - it was stopped in Switzerland boarder yesterday....

Fri, 04/05/2013 - 21:10 | 3415065 ihedgemyhedges
ihedgemyhedges's picture

Jamie's good for it.  It'll be just fine. AIG wrote the policy, Goldman Sachs securitized it and the risk now lies in a small town in Iceland.......SOLID!!

Sat, 04/06/2013 - 10:25 | 3415921 Monedas
Monedas's picture

Break a leg, Yen ! Your big show biz break .... oops ? I down arrowed you for comedic effect !  We're still friends !

Fri, 04/05/2013 - 21:07 | 3415048 Bay of Pigs
Bay of Pigs's picture

iShares Team, what we would really like to know is whats in the extremely secure vault.

Fri, 04/05/2013 - 21:15 | 3415079 dark pools of soros
dark pools of soros's picture

Foosball, shag carpet and popcorn machine

Fri, 04/05/2013 - 21:26 | 3415126 CaptainObvious
CaptainObvious's picture

Beds with women in them telling you that it will cost $100 an hour, and little mirrors with lines of mysterious white powder running across them.

Sat, 04/06/2013 - 00:08 | 3415465 MsCreant
MsCreant's picture

Those are some cheap hookers.

Sat, 04/06/2013 - 07:41 | 3415776 jeff montanye
jeff montanye's picture

but if in 1913 dollars we are clearly in spitzer territory.

Sun, 04/07/2013 - 09:51 | 3418238 dark pools of soros
dark pools of soros's picture

that's the going rate at the Del Rey in Costa Rica

Fri, 04/05/2013 - 21:10 | 3415049 Wakanda
Wakanda's picture

"JP Morgan has insurance to cover custody of the metal."

Insuring Tungsten is cheap.

Fri, 04/05/2013 - 21:57 | 3415222 Peter Pan
Peter Pan's picture

I think you meant that insuring tungsten can be profitable.

Sat, 04/06/2013 - 00:21 | 3415489 cynicalskeptic
cynicalskeptic's picture

Only if it's lost in a boating accident...... and was labeled 'Gold'.    

Have you heard that it wasn't the Titanic that sank but the Olympic? - The latter was badly damaged in a collision with a RN warship and otherwise worthless and uninsurable.   They switched names and sank the newly built and highly insured 'Titanic' - collected in full.  Which may explain how the supposedly fatally damaged Olympic continued to serve up into WWII without a complete rebuilding.

Insurance fraud can be very profitable.

Sat, 04/06/2013 - 19:24 | 3417321 jimmytorpedo
jimmytorpedo's picture

Don't forget that they drowned half of America's elite while doing it.

The half that didn't like the NWO.

Fri, 04/05/2013 - 21:07 | 3415051 SandiaMan
SandiaMan's picture

Pay you Back in Bitcoins

Fri, 04/05/2013 - 21:25 | 3415121 krispkritter
krispkritter's picture

Pay you back in 'Shiat' in 'Holy Shiat! I got's paper!'...rofl.

Sat, 04/06/2013 - 06:27 | 3415721 Svendblaaskaeg
Svendblaaskaeg's picture

Pay you Back in Golden Showers

Fri, 04/05/2013 - 21:08 | 3415055 holdbuysell
holdbuysell's picture

"Blackrock promptly replied that there is "no risk" (perhaps this too means there is "no plan B")"

Is that Timmay-esque 'no risk'?

Oh lordy. Time to get the hell out of dodge.

Fri, 04/05/2013 - 21:08 | 3415059 butchee
butchee's picture

AIG: the leader in the field of rehypothication reinsurance.

Fri, 04/05/2013 - 21:10 | 3415062 stopcpdotcom
stopcpdotcom's picture

Vice President Joe Biden calls for the creation of a "new world order" at the Export Import Bank conference in Washington on April 5, 2013. He also said the U.S. jobs figures for March are "disappointing."

This is why America is being destroyed.


Fri, 04/05/2013 - 21:12 | 3415070 newengland
newengland's picture

Joe Shill. It will not be the new world order that he imagines. He has outlived his purpose.

The BIS understands self-preservation, and dislikes failures.

I look forward to him losing kudos and money, for all his vanity and fakery.

Fri, 04/05/2013 - 22:32 | 3415284 NoDebt
NoDebt's picture

He really is, man.  Everyone around Wilmington, DE has dealt with him or knows him.  Wilmington, DE is a very SMALL orbit of people.  Everyone knows everyone.  He's a jackass and always has been.  My father dealt with him decades ago.  First question from him on the deal presented was how it would help him (politically speaking, not in the way a normal businessman asks that question). 

The Sonofabitch charges the Secret Service FULL RENT on the small guest house on his property where they have a local HQ.  These are guys who are there to PROTECT HIS LIFE EVEN AT THE COST OF THEIR OWN, IF NECESSARY.  He charges them full rental price to use the joint.  He really needs that money bad.

Yeah, he's a class act all the way.

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