Africa's Largest Refinery Finds 2.7 Tons Of Gold "Missing" After Computer System Upgrade

Tyler Durden's picture




 

It's one thing to implicitly admit that there is a physical gold shortage and as a result nations - such as Germany - are unable to repatriate their physical gold held in the safe and trusted confines 90 feet below the NY Fed, gold which may or may not be there and has likely been leased out exponentially to cover paper shorts by virtually every BIS-overseen central bank (and the BIS paper gold selling team itself of course). It is something totally different to corzine, as in vaporize, 87,000 ounces of physical gold, some 2.7 tons, and blame it on a computer upgrade glitch. Which is precisely what Rand, Afrrica's largest refinery and processor of about a third of the world's gold since 1920, has done after it "discovered" that $113 million in precious metal was missing after "adopting a new computer system."

Bloomberg reports that the refinery in Germiston, a town 20 kilometers east of Johannesburg, has 87,000 ounces of physical gold less than the amount present in its accounting records after “implementation difficulties” with the new system, the company said in a statement today. That’s worth about $113 million at today’s price of $1,296 an ounce.

Taking a page out of China's infinite rehypothecation scheme, the South African refiner essentially told its investors, most of whom are gold miners, to step up and replenish the missing metal or else investors may come asking questions about their own reported gold holdings. And, it succeeded.

Rand Refinery’s shareholders, including AngloGold Ashanti Ltd. (ANG), Sibanye Gold Ltd. (SGL) and Harmony Gold Mining Co. (HAR), agreed to lend the company 1.2 billion rand to help make up the difference.

Laughable excuses aside, those curious where the gold may have gone should probably ask the former CEO: "Howard Craig resigned as chief executive officer in May and has been replaced by Mark Lynam, who is being assisted by management consultant Accenture Plc in sorting out the issue."

However, just like in China, it appears nobody has any interest in actually digging deeper:

The miners, customers of the refinery, have received the prices they were expecting, leading them to conclude it’s most likely an accounting problem rather than theft, James Wellsted, a spokesman for Sibanye Gold, said by phone.

Perhaps it is normal when nearly 3 tons of physical gold goes missing for nobody to care. Alternatively, perhaps it means that just like the entire financial Ponzi system, which can sustain the lies only as long as everyone agress not to "defect" and admit Janet Yellen is a "naked (and very much clueless) emperor", the rot within the gold space has now shifted away purely from the commercial and central banks and is now impacting the miners and refiners. If so, anyone who owns gold is encouraged to take physical possession of it asap because if, as this incident suggests, the Chinese rehypothecation experiment has gone global, when everyone does demand their deliverable be, well, delivered, it will be too late.

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Fri, 07/25/2014 - 15:40 | 5004848 icanhasbailout
icanhasbailout's picture

I gotta get me a computer system like that

Fri, 07/25/2014 - 15:46 | 5004870 nuclearsquid
nuclearsquid's picture

Not surprised.  This is the curse of the ERP.

Funny story... I was consulting for a MAJOR big name firearm manufacturer.  Their operations were a mess:

-all kinds of scrapped inventory

-WIP lying around all over the place (boxes, parts, and yes, even stacks of finished or near-finished automatic firearms.

-rework

-all kinds of inaccuracies / missing inventory / lost parts / etc.

They also had problems with their ERP.  Pay millions of dollars a year to saddle yourself with unmanageable headaches.  Great business, isn't it?

 

Fri, 07/25/2014 - 15:48 | 5004884 nope-1004
nope-1004's picture

Old computer = Traditional honest accounting.

New computer = FASB-Geithner-Bernanke-Dimon-Blankfein-Feinstein-COMEX-LBMA accounting.  "Look what I found under the sofa cushions....."

 

Fri, 07/25/2014 - 15:48 | 5004902 kliguy38
kliguy38's picture

Who da foch cares.....its a barbarous relic........load me up with bitcoin now there's a store of wealth

Fri, 07/25/2014 - 15:53 | 5004930 Anusocracy
Anusocracy's picture

Just from personal experience, they should search all the nearby lakes.

Fri, 07/25/2014 - 15:55 | 5004948 whotookmyalias
whotookmyalias's picture

Is it in the basement of the NY FED?

Fri, 07/25/2014 - 16:02 | 5004985 Pladizow
Pladizow's picture

Aaaaaaaaaaand it's gone?

Fri, 07/25/2014 - 16:09 | 5005010 knukles
knukles's picture

Somebody's having tons of fun!

Fri, 07/25/2014 - 20:37 | 5006020 NoPension
NoPension's picture

Lois Lerner. And she ain't talkin'

Fri, 07/25/2014 - 16:43 | 5005191 CPL
CPL's picture

BreX'ed actually.

Sat, 07/26/2014 - 06:59 | 5006729 GetZeeGold
GetZeeGold's picture

 

 

You just won yourself one helicopter ride.

Fri, 07/25/2014 - 17:32 | 5005400 NoTTD
Fri, 07/25/2014 - 19:59 | 5005888 logicalman
logicalman's picture

Either it exists, physically, or it doesn't.

Everything else is accounting.

Fri, 07/25/2014 - 16:03 | 5004988 Save_America1st
Fri, 07/25/2014 - 16:05 | 5004993 Anusocracy
Anusocracy's picture

Maybe it's in Scrooge McRothschild's money bin.

http://www.livescience.com/19919-gold-recreate-scrooge-mcduck-gold-coin-...

Fri, 07/25/2014 - 16:09 | 5005013 debtor of last ...
debtor of last resort's picture

No, there's only Yellen, the naked emperor.

Fri, 07/25/2014 - 16:02 | 5004983 SHEEPFUKKER
SHEEPFUKKER's picture

Wouldn't the bigger farce have been if their computer system had been upgraded and they had suddenly found an extra 3 tons?....you know, to then lend out 1000x to drive the paper price down and keep the ponzi going full tilt. 

Fri, 07/25/2014 - 16:12 | 5005032 knukles
knukles's picture

Audits.
Anybody ever heard of a fucking audit FFS?

Fri, 07/25/2014 - 18:17 | 5005554 logicalman
logicalman's picture

Paraphrasing....

It matters not what is being audited.

What matters is who is doing the auditing.

Fri, 07/25/2014 - 20:48 | 5006044 knukles
knukles's picture

    - J. Stalin & Co., Auditors, Judges, Juries and Executioners

Fri, 07/25/2014 - 16:10 | 5005018 SheepDog-One
SheepDog-One's picture

That 'Sons of Guns' reality show got busted by the BATF early on (the dad) for a bunch of missing automatic weapons and parts, that's why they needed that guy to marry the daughter, he was the only 1 with a legit Class3 license.

Fri, 07/25/2014 - 16:36 | 5005161 twh99
twh99's picture

This has absolutely nothing to do with their ERP systems.  I have been instrumental with managing, purchasing and implementing ERP systems for manufacutring companies over the years.  This is just a convenient excuse to blame what has probably been sloppy controls of their warehousing for years.  

I would bet mangement knew about this but just kept sweeping the losses under the rug until they no longer could.

Fri, 07/25/2014 - 17:06 | 5005292 Uber Vandal
Uber Vandal's picture

My experience of going from AS400 to JD Edwards / Peoplesoft was slightly different.

For example, with AS400, I would spend about an hour entering paperwork, and our inventory would be dead on.

With Peoplesoft, I would spend about an hour cycle counting (doing inventory) for the system never quite pulled the correct amounts off the inventory from the bill of materials.

I took a bill of materials sheet, weighed up the component parts and found there was a large discrepancy between what the bill of materials was calling for and what the scale was telling me. Which made perfect sense as to why our counts were consistently off on certain components.

I brought it up to the chain of command, but it only went so far, until Mr. I. Am. Somebody did exactly what I did and had a Eureka moment.

 

Fri, 07/25/2014 - 18:20 | 5005564 NotApplicable
NotApplicable's picture

As a programmer/analyst who just broke a critical web-page today after three days of testing/debugging/comparing old to new files line by line, all I can say is this, complexity is a bitch. Too many moving parts will get ya. Especially when they're distributed across various servers/business units/software components. At least I was smart enough to back up the old files.

Now, I guess my ZH break is over, and I should go find the bug that produces no error.

Fri, 07/25/2014 - 19:00 | 5005698 Crawdaddy
Crawdaddy's picture

Nobody ever wants to fix a $500 problem. They must wait until it is at least a 5MM problem.

Sat, 07/26/2014 - 01:27 | 5006520 Antifaschistische
Antifaschistische's picture

I've not seen this in a refining business but this happens often in ERP projects when organizations take the opportunity to actually verify (cleanse) data before "loading" into their "new" system.

Because once the ERP is in place, you at least have the tool to track the lifecycle of an asset from requisition to disposal.   In fractured application environments, it's easy for assets to get "lost" in the cracks of disjointed business processes.

 

Fri, 07/25/2014 - 15:45 | 5004871 nuclearsquid
nuclearsquid's picture

<deleted>

 

.... Sorry, i got the ZH double-tap.

Fri, 07/25/2014 - 15:45 | 5004876 john39
john39's picture

just an accounting problem. damn, same glitch hit MF Global's cash vaults.  must be spreading.

Fri, 07/25/2014 - 20:41 | 5006032 NoPension
NoPension's picture

..... and every day, he would push by with an empty wheelbarrow. The guards would check it, and nothing. They figured he was just an old fool, pushing an empty wheelbarrow........they knew he was stealing something, but they just couldn't figure it out.

Fri, 07/25/2014 - 15:46 | 5004881 Postal
Postal's picture

Put back the old system, and the gold magically reappears!

Fri, 07/25/2014 - 15:49 | 5004912 ForWhomTheTollBuilds
ForWhomTheTollBuilds's picture

This is why you only want to hold gold in paper form. /sarc

Fri, 07/25/2014 - 15:55 | 5004947 Zirpedge
Zirpedge's picture

Doesn't matter paper or physical..it's just a bad store of wealth. Money needs to be invested and circulate to do good in the economy.

This story just proves what a bad investment gold is, I imagine that over the next few days a 3-5% correction will take place only to preceed a return that is more in line with the commercial applications of the substance, which there are a few..

 

Fri, 07/25/2014 - 16:03 | 5004980 Pure Evil
Pure Evil's picture

Yep, much better to invest your Toilet Paper USDollars into the financialization schemes of the Wall Street Casino.

Especially now, time to buy the Mother Fucking All Time High in the S&P.

Fri, 07/25/2014 - 16:05 | 5004995 Save_America1st
Save_America1st's picture

So is this what caused the lift in paper PM's today?  Paper silver up like 30 cents and paper gold up like 14 bucks or so. 

Fri, 07/25/2014 - 16:08 | 5005004 Pure Evil
Pure Evil's picture

What a waste. Just think, they could've moved all that money into High Yield junk bonds.

YeeeeeeeeeeeeeeHaaaaaaaaaaaaaaah!

Fri, 07/25/2014 - 16:25 | 5005110 bonin006
Fri, 07/25/2014 - 17:34 | 5005409 NoTTD
NoTTD's picture

More like Cartman.

Fri, 07/25/2014 - 16:02 | 5004984 lordylord
lordylord's picture

Ignore reality all you want, but don't bring your nonsense on this site.

Fri, 07/25/2014 - 16:16 | 5005044 Seer
Seer's picture

So, your logic is that because some entity is unable to manage its books correctly that the thing that they "produce" isn't worth having, and that "the ecomomy," which is all about books and is rife with accounting errors, is the thing that is better trusted?

FAIL!

Ever consider that these folks really can't lose here, that suggesting that the amount of gold available is overstated wouldn't cause the price of the gold that IS available to go up?

Those late to the game always complain...

Fri, 07/25/2014 - 16:23 | 5005087 SheepDog-One
SheepDog-One's picture

Sure looks like they can't lose by losing $113 million worth of gold.....they immediately got handed $1.3 billion to 'aid in replacing it'! Dang I wish I could get a 1,000% return on my accounting book errors!

Fri, 07/25/2014 - 17:29 | 5005383 Zirpedge
Zirpedge's picture

Tomorrow they'll find the missing gold and keep the bail out money for a whoel year before they seel shares to the government. Are you guys going to learn form this or keep up the money ain't money, your a poopie talk. Take out a loan and start up a internet company before it's too late. Maybe a blog for funny money talkin degenerates who think shiney rocks are worth something.

Fri, 07/25/2014 - 16:17 | 5005054 orez65
orez65's picture

"Money needs to be invested and circulate to do good in the economy"

You, obviously, don't have a clue about what money is.

You are a casualty of your education system. For example, in the US public schools the meaning of money is purposely not taught.

Take a look at any US Dollar denomination, it clearly states: "Federal Reserve NOTE". It doesn't say "Federal Reserve MONEY".

They are fu..ing notes! Fu..ing pieces of paper signed by a couple of bureaucrats. They can be produced for practically nothing. They can be created by a fu..ing Federal Reserve bureacrat with a few computer keyboards strokes.

Money has to have intrinsic value. Many things have been used as money throughout the ages. For example, salt, pearls, dimonds, cows, copper, silver, gold ...

I give up, you are poop head!

Fri, 07/25/2014 - 16:22 | 5005074 Pure Evil
Pure Evil's picture

+1 for the Poop Head.

Aye Captain, we have a taste for booty.

Fri, 07/25/2014 - 18:26 | 5005582 NotApplicable
NotApplicable's picture

You should give up, as he's obviously trolling the ever-loving shit out of you. I'm impressed at how many bites he get.

Fri, 07/25/2014 - 20:31 | 5005999 Postal
Postal's picture

...women

Fri, 07/25/2014 - 16:25 | 5005106 FuzzyDunlop21
FuzzyDunlop21's picture

I dont really give a shit about the economy, I care about myself. And not in the narcisstic sort of way, but in the self-sustainable kind of way. Why should I spend my money owning shares of bullshit.com (or their product, but as we all know, few companies in the DJIA make anything anymore) if its just to give a bullshit.com employee a job? Fuck them, they should have found a job that actually benefits society. Then I would be glad to buy from them

Fri, 07/25/2014 - 15:53 | 5004929 Eirik Magnus Larssen
Eirik Magnus Larssen's picture

Not bad for a "barbarous relic".

Fri, 07/25/2014 - 16:28 | 5005122 daemon
daemon's picture

" I gotta get me a computer system like that  "

Easy, use Windows.

Fri, 07/25/2014 - 16:29 | 5005129 The Longest Call
The Longest Call's picture

Yet another example of digital gold gone wild...

Sat, 07/26/2014 - 10:51 | 5006990 Kirk2NCC1701
Kirk2NCC1701's picture

About that new Con-puh-duh system...

It's got the Ebola Goldman virus:  Once infected, it messes up things and starts leaking out The Precious.  95% fatal.

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