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The Gold "Rehypothecation" Unwind Begins: HSBC Sues MF Global Over Disputed Ownership Of Physical Gold
That paper gold, in the form of electronic ones and zeros, typically used by various gold ETFs, or anything really that is a stock certificate owned by the ubiquitous Cede & Co (read about the DTCC here), is in a worst case scenario immediately null and void as it is, as noted, nothing but ones and zeros on some hard disk that can be formatted with a keystroke, has long been known, and has been the reason why the so called gold bugs have always advocated keeping ultimate wealth safeguards away from any form of counterparty risk. Which in our day and age of infinite monetary interconnections, means virtually every financial entity. After all, just ask Gerald Celente what happened to his so-called gold held at MF Global, or as it is better known now: "General Unsecured Claim", which may or may not receive a pennies on the dollar equitable treatment post liquidation. What, however, was less known is that physical gold in the hands of the very same insolvent financial syndicate of daisy-chained underfunded organizations, where the premature (or overdue) end of one now means the end of all, is also just as unsafe, if not more. Which is why we read with great distress a just broken story by Bloomberg according to which HSBC, that other great gold "depository" after JP Morgan (and the custodian of none other than GLD) is suing MG Global "to establish whether he or another person is the rightful owner of gold worth about $850,000 and silver bars underlying contracts between the brokerage and a client." The notional amount is irrelevant: it could have been $0.01 or $1 trillion: what is very much relevant however, is whether or not MF Global was rehypothecating (there is that word again), or lending, or repoing, or whatever you want to call it, that one physical asset that it should not have been transferring ownership rights to under any circumstances. Essentially, this is at the heart of the whole commingling situation: was MF Global using rehypothecated client gold to satisfy liabilities? The thought alone should send shivers up the spine of all those gold "bugs" who have been warning about precisely this for years. Because the implications could be staggering.
Probably the core primary consequence of this discovery, which obviously has a factual basis, or else it would not lead to an actual lawsuit between two "reputable" firms (aka ponzi participants), is whether gold in the GLD warehouse, supervised by HSBC, is truly theirs, or has it all been hypothecated from some other broker who never really had the asset or the liquidity, and so on in what effectively can be an infinite chain of repledging one asset to countless counterparties. Because if there is on cockroach...
Suffice to say, expect either a prompt settlement in this lawsuit, or a fervent denial by all parties involved that any gold was misplaced. Because here is the punchline: each physical gold or silver bar has a unique deisgnator that should never be replicated, yet this is precisely what happened to lead to the lawsuit! In a non-banana world, there should never be any debate over who owns a given physical asset, as replicated ownership (note - not liens) effectively means someone stole the gold (or there was counterfeiting involved) and was never caught... until MF Global finally expired of course.
So in other words, is this the eureka moment when everyone realizes that any gold, be it paper or physical, is either a irrelevant electronic binary claim held in some semiconductor, or at best an asset in some vault, that the brokerage next door suddenly also has claims over?
The end result is that the biggest loser is Joe Sixpack who bought the gold, and decided to keep it in a bank warehouse for "safekeeping" only to realize said gold will never be seen or heard of again.
From Bloomberg:
Five gold bars and 15 silver bars underlie eight Comex contracts between the brokerage and client Jason Fane of Ithaca, New York, London-based HSBC said in a court filing yesterday. Both parties have asserted claims to the bars, creating difficulties for HSBC, which is storing them, the bank said, asking a judge to decide who the rightful owner is.
“HSBC has received conflicting instructions regarding ownership and disposition of the property,” it said. “Accordingly, HSBC is exposed to multiple liabilities with respect to the disposition of the properties.”
According to Fane’s letter, the five Comex gold contracts are for an average of 99 ounces of gold each.
Giddens, who is liquidating the brokerage, has transferred about 38,000 commodity accounts to other firms. Three transfers of collateral made and pending will give commodity customers more than $4 billion of their assets, according to court filings.
The punchline:
The judge handling the bankruptcy said today he would deal in January with issues about distributing physical goods, such as gold and silver bars, after lawyers for some customers said they couldn’t get their share of the payouts because bars can’t be broken into pieces.
...indeed there is a reason why people say gold can not be diluted.
As for our advice: move any gold out of the LBMA or CME warehouse system immediately. And only treat any GLD investment as a day trading vehicle that can and will be lost the second there is a global liquidity or solvency freeze, because that particular asset will be wiped out as easily as "C:\format C:"
The brokerage case is Securities Investor Protection Corp. v. MF Global Inc., 11-02790, U.S. District Court, Southern District of New York (Manhattan). The parent’s bankruptcy case is MF Global Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Update: as reader D points out, none of this should come as a surprise: after all the UK financial regulator, the FSA, already warned about each step of this unwind back in March 2010.
3.1 In this chapter we consider restricting two practices we believe pose an unacceptable risk to protecting client money and assets, and financial stability.
a) Restricting the placement of client money deposits within a group
Scope
3.2 Please note that our policy proposals in this section apply to UK authorised firms that place client money in client bank accounts held with a group bank, credit institution or qualifying money market fund. These requirements will not apply to incoming EEA firms conducting investment business, as under MiFID regulating client assets is a home state responsibility. We will consider extending these proposals to general insurance intermediaries when we begin reviewing CASS 5 – Insurance Mediation Activity in the first quarter of 2011.
Intra-group client money deposits
3.3 CASS contains guidance requiring firms to conduct an appropriate level of due diligence on institutions with which client money is held and to ensure deposits are appropriately diversified. We currently allow firms to hold client money with a deposit taker within the same group as the firm subject to appropriate due diligence and diversification.
3.4 There is no standard market practice for depositing client money within a group structure. For example, a number of investment firms take an explicit decision to hold client money deposits outside of the group, while other firms deposit significant amounts intra-group. Existing handbook provisions seek policy outcomes that ensure an appropriate level of diversification is achieved to protect clients’ money.
3.5 CASS contains provisions regarding a firm’s selection of a bank, credit institution or qualifying money market fund. A firm must exercise all due skill, care and diligence in selecting, appointing and periodically reviewing the institution where the client money is deposited and arrangements for holding this money. Handbook guidance also provides a list of matters a firm should consider in the process.
3.6 The money deposited at a group bank is held on trust by the firm for the firm’s clients, but it is treated as an ordinary banking deposit at the bank. Put another way, all client money at the end of a chain will eventually be held as a deposit. There is always a risk that a bank with which the deposit is held will enter insolvency proceedings and at this point it becomes possible that not all money deposited in client bank accounts as client money will be available for return to the underlying clients. Accordingly, the regime does not envisage a 100% return to clients in the event that client money is lost due to a bank’s insolvency, with CASS providing that clients will generally share rateably in the loss.
3.7 The issue under consideration is not that the funds are held as a deposit, but that when held within a group, there is an increased contagion risk that both the investment firm and the group bank or affiliate will fail simultaneously (or one will fail shortly after the other).
3.8 The resulting risk is that a firm will place an inappropriate amount of client money intra-group, usually as a source of liquidity, which has a lower cost of capital than external sources. Furthermore, as a group’s financial position deteriorates, there is a risk that firms within the group will deposit more client money intra-group to fund operations. This may give clients an inappropriate level of exposure to the bank’s credit risk. It also may lead to clients unfairly bearing the risk of the group as a whole, rather than just the individual firm. The existing sourcebook provisions which address this mismatch of firms’ and their clients’ incentives can be strengthened so the risk to clients is mitigated in the event of a firm’s default.
3.9 Imposing a hard limit on the proportion of client money which can be held intra-group is attractive and will mitigate concentration risk. However, limiting the level of client monies held within a group may increase overall credit risk where outside options are less highly rated. We have considered consulting on the basis of a 20% limit in order to fully identify stakeholders’ concerns, particularly if there is a knock-on effect on liquidity.
3.10 We have worked with firms during 2009 to reduce the concentration of client money held intra-group. During pre-consultation firms estimated that the proposals would result in an increase of approximately 10–25 basis points for additional costs, together with removing stable funding and increasing compliance and operational overheads.
3.11 Accordingly, we propose limiting the amount of client money held by a firm which can be deposited in intra-group client bank accounts to 20%. We understand firms may require some flexibility in holding money intra-group (for example, where a firm’s client specifically requests their money is held with that specific institution) and propose to address this on a case by case basis. We also propose changing existing guidance into a rule to provide a clear basis for our expectations.
3.12 We take this opportunity to highlight that our proposal to re-introduce a client money and asset return to the FSA (see below) which includes content regarding intra-group client money deposits.
b) Prohibiting the use of general liens in custodian agreements
Scope
3.13 Our proposals apply to all UK authorised investment firms and overseas branches of these UK firms. These requirements will not apply to incoming EEA fiirms conducting investment business as under MiFID regulating client assets is a home state responsibility.
3.14 Some firms in the UK appear to have inappropriately allowed custodians and subcustodians to include general liens covering, for example, group indebtedness to the custodian or sub-custodian in contractual agreements, or they have failed to pay due regard to this issue. As we have observed from LBIE’s insolvency, liens have contributed to significant delays or obstacles in an IP’s ability to recover assets from depots not under their direct control.
3.15 CASS 6.3.3G requires a firm to consider the terms of its agreements with third parties with which it will deposit a client’s safe custody assets. As part of this guidance, the firm should consider restrictions over the third party’s right to claim a lien, right of retention or sale over any safe custody asset in the account, as well as identifying client assets separately from assets belonging to the firm.
3.16 We believe the sourcebook can be enhanced with hard rules rather than guidance in this regard. This would enable us to effectively monitor compliance and take enforcement action where appropriate.
3.17 Accordingly, we are consulting on the basis of changing the existing guidance into a rule. We propose creating a rule that prohibits using general liens over client assets which are held under custodian agreements, except to cover the situation when a firm (or if the client has a direct relationship with the custodian, the client) does not pay custodian fees and charges to the third party holding the custody assets.
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http://en.wikipedia.org/wiki/Rehypothecation#Rehypothecation
Cute. But isn't it more like ...
rehypothecation = hypothecation1($collateral) + hypothecation2($collateral) + ... + hypothecationn($collateral)
long
rehypothecation ( long bux )
{
return rehypothecation ( bux );
}
Segmentation fault (core dumped)
these guys buying gold without delivery are the stupidest people in the room. since it was already obvious the whole futures and etf market depended upon very few people taking delivery and the leverage was used to manipulate the market how can anyone be so stupid as to think there was a real market without risk of losing the right to take delivery or in mf's case no money to pay in kind?
as it is i have hedged my pm coin stash with silver and gold jewelry in case .gov decides to confiscate all coin and bullion.
Well said, but I bet you have funds in an IRA, pension or some other fund out of your control. What makes you think that paper is safe? Portugal raided 30% of some private pension funds this week. Think two or three moves ahead in this chess game. MF Global is a beta test to see if the demons can get away with outright theft of Americans accounts. Guess what. They will succeed. Good luck!
Is PHYS a paper play here?
YES!!!!!!!!!!!
Edit: by "yes" I mean that it is a PAPER play, and will cause you to lose everything, just the same as any other form of paper.
This really is getting to absurd.
rm -rf /
You might take the perspective that subscribing to options contracts on the futures markets for physical delivery of gold means that you are trying to get something for much less than you would otherwise pay for it. Its your right, after all, but most people would not think about taking risks like that and personally hand over cash for a gold bar.
The whole problem with gold is that is just doesn't appear magically on the futures markets. It has be mined and refined and sold into the markets before it can be swapped out.
And gold along with silver is routinely sold several times over to different parties with ownership claims.
So I would say that part of what MF Global is about is that traders became very adept at trading the price with options and merely stood for delivery, not realizing that their money might have been employed in the bond markets without their knowledge.
The way I understand the story there was a contract between MF global and their customer and physical Gold and silver bars were underlying this contract. HSBC stores these bars and now both the client and MF claim the ownership of the bars. While the story is, indeed, disturbing I do not see any reason to blame HSBC for that. The author is trying to present all financial institutions as equally evil but this is far from the reality. The institutions are clearly of different quality and I feel pretty safe to keep my assets with HSBC no matter how the author tries to misrepresent the story. If the author would try to be objective, his articles would definitely make some sense. In the present form it is just a piece of misleading garbage.
The author is likely implying your bank account at HSBC, MFGlobal, or any other institution has a very good chance of being wiped out and that physical metals(gold) will be the only worthwhile currency. The fight is on.
if you don't understand the banks' interests are not your interests then you deserve what you get when they let you know the score.
You sound just like the typical virgin trying to be "sensitive" in hopes of getting a mercy fuck out of a drunk girl. If HSBC balance sheet blows up (and it's in the same danger as all the other moneylenders), all your faith and hope and semi-anonymous internet love notes won't prevent you from getting a rough trade cornholing from which you may never come back.
They don't give a shit about you when their bonuses are for the chop. What do think will happen when they existence is threatened?
Good, after the smoke clears HSBC will have one customer. Anybody else volunteering?! Bueller!? Bueller?!
‘Has any of the gold held at any of the central banks been rehypothecated’ is a question I would like answered.
The gold isn't rehypothecated, just the contract.
How ironic...
"the GOLD just hit the fan!"
So if the USD continues to move up, and gold is obliged to move down, all those rehypothecated gold margin calls are going to bring the house of cards down?
Who would'a thunk.
I always figured the EU debt crisis was too obvious to be the trigger.
It's going to have to be something no one see's coming, such as the AIG fiasco.
Fix "there's on cockroach" to "where there's one cockroach"....makes a big difference!
Chilling story....you do a much better job standing impartial to all these stories than does the great Ken Donglicker.
"Dere's way too much rehypothecatin' goin' on out dere!"
-Zombie Hon. Sen. Hollings.
GTU is the alternative to GLD. 100% physical gold bars in a Canadian bank, audited, insured, managed by the Spicer generations who have done this (via the sister gold/silver fund, CEF), since the 1960s.
Board of Directors are gold bugs all.
Best paper gold available (GTU= closed end fund, not an etf or open end fund).
Sure, physical is better, but GTU is the best for IRA funds, where holding physical is all but impossible.
P.S. Sprott has a lesser track record than these folks, by decades.
I heard that Canada's central bank is way behind the pack in its acquisition of gold reserves. That's dangerous for any Canada holdings. I'm not saying they will take those reserves, but it's possible.
In the 30s, most of the gold was at the regional banks, so that's what got confiscated. Today, it's held in funds, and whether the managers of those funds are honest or not, the government is not.
Disclosure: I've had money with Sprott for years.
Canada reduced the tax burden on gold mining companies that produced gold as long as they spent at least a third of their revenue on development. This probably applied to Dome and Hollinger, because they were clearly the biggest mines going.
The Canadian government also resorted to buying gold out of the market to bolster central bank coffers. There was no gold confiscation, that only happened in the U.S.
Gold mines in Canada such as Hollinger and Dome both realized above fixed gold prices when they began to market gold agressively after the U.S. gold confiscation prior to devaluation.
The gold price achieved a high of $41.32/oz. U.S. sometime after devaluation, despite the fixed gold price, due to aggressive marketing of gold out of the mines. Speculation was that another revaluation of the gold price would occur, but did not materialize.
Smaller operations with parsimonious processing rates labouring in penury and barely profitable suddenly became profitable on overwhelming free cash flow.
Didn't the beloved Canadian Government run a sting on KITCO and accuse them of everything short of child kidnapping. Canada is becoming a police state as planned in the "North American Union" Treaty signed in Texas in 2005. Look it up.
Wrong.
The Province Of Quebec has jurisdiction over provincial legal matters, which might differ markedly from Federal policy.
What they were after Kitco for was presumed unpaid taxes. Kitco buys and refines gold out of jewellery. The vendors of gold to Kitco were not paying their sales taxes to the province after Kitco bought their gold, so the province turned around and baselessly charged Kitco with evasion. This allowed the province to go through Kitco's statements submitted to the receiver and persue each gold vendor individually.
No other province has experinced these problems. There was an obvious tax scam going on, which drew Kitco in. Quebec is a very corrupt province, so there is no doubt in my mind that there was widespread evasion.
That was this year. The discussion in this thread regards gold mines during the depression era, some 70 years ago.
Canada is in worse shape imo.
"Engaged in hyperhypothecation have been Goldman Sachs ($28.17 billion re-hypothecated in 2011), Canadian Imperial Bank of
Commerce (re-pledged $72 billion in client assets), Royal Bank of Canada (re-pledged $53.8 billion of $126.7 billion available for re-pledging), Oppenheimer Holdings ($15.3 million), Credit Suisse (CHF 332 billion), Knight Capital Group ($1.17 billion),Interactive Brokers ($14.5 billion), Wells Fargo ($19.6 billion), JP Morgan($546.2 billion) and Morgan Stanley ($410 billion)"By no small co-incidence, the CIBC is mentioned after the were involved in scandal post ABCP.
So the Royal Bank, known in the financial sector as RBC/DEXIA is up to its neck. Surprise.
These are just two banks. No mention of how FRENCH BANKS are backing the housing bubble, and the Canadian central bank is providing liquidity to prop them up.
It is said that, "a fool and his money are soon separated", but in your case the separation has already occurred! Nice move!
Royal Canadian Mint Exchange-Traded Receipts (IPO this week - apparently the lowest cost)
http://www.bloomberg.com/quote/MNT:CN
Sprott Physical Gold Trust (Sprott has agreements in place to buy physical metals out of the mines)
http://www.bloomberg.com/quote/PHYS:US
Central Fund Of Canada
http://www.bloomberg.com/quote/CEF:US
My Intera Gold Corp share took a hit today but that Krugerrand I bought this afternoon seems to still not have lost a grain of gold...
Doesn't 2005 bankruptsy law states derivatives get paid off first? (Including client assets). Read that on MarketTicker and I do not fully understand it. Could mean that anything left that isn't eaten by the trustee is going to holders of derivatives?
You read it correctly. The new law shuffled where in line the differing groups were in terms of who gets paid first. If the money runs out before they get to you, you lose everything. Apparently they pulled bond holders down a notch and put derivatives holders at the front of the line, effectively putting Wall Street ahead of the public. Account holders get what's left over (nothing).
So the banks that recently bought up the derivatives market (JPM,GS, BOA, Citi) also own the FED and most other Central Banks.
So the double down print stratagy (which rarley works) is hedged by that they will currently own what is left. Assuming no one (ie foreign banks figuring out the derivative game) starts writing a shitload of derivatives for insurance.
I believe I read on ZH that the derivative market is indeed increasing. At some point a big bank is going to have to crash the market to pull the trigger on the derivatives they have, rather than having assets diluted by other banks writing derivatives. Its a theory....
Anyone knows whether DTCC's owners are shareholders of the Fed's Primary Dealers?
If so, does that mean that the company is essentially owned by the Federal Reserve, making therefore one of the two entities regulating it, the other being SEC, its actual owner?
Here's its Board & Governance - http://dtcc.com/about/governance/board.php
"The end result is that the biggest loser is Joe Sixpack who bought the gold, and decided to keep it in a bank warehouse for "safekeeping" only to realize said gold will never be seen or heard of again."
I bet it is safe to say that anyone that has been here at Zero Hedge for more than a few weeks does not have any gold with any squid, scum or other broken bank.
yup, my gold is burried in an undisclosed location. but my cordinates are in a safe deposit box at a bank, HAH! jk.
Nice move. I would't leave my umbrella in a bank, much less coordinates to my gold. Duh! Me fears Darwin cometh:)
Unfortunately, Joe Sixpack don't know nuthin bout no gold. He gots a 401k statement.
Not only out of Banks or other crooks, but in physical form under lock and key in multiple locations. It's starting to feel like 1342-45.
Encased in cement around one of the footers of my deck. Kidding, please don't disassemble my deck.
The Gold Anti-Trust Action Committee must be pretty smug today and telling everyone that mocked them ‘we told you so’.
GATA is "...pretty smug today..."
As they should be !
"A NINCOMPOOP could see how contrived the financial markets are at this point … and that is what we should all take comfort in on Planet GATA. The financial world in Europe and the US is in such bad shape, the only way the big shots are dealing with the problem is market manipulation and behavioral finance rhetoric. BECAUSE the markets are an illusion, it is leading the way to gold and silver price explosions when what is going on actualizes and investors (the public) realizes they have been duped."
www.lemetropolecafe.com/james_
Great word: Nincompoop
Earlier (1676) nicompoop, possibly from Latin non compos mentis (“not of sound mind”), although the lack of the second n in the early form and the original meaning of “fop” cast doubt on this origin. Although this theory has support, there is no evidence of the word being used until the 1900s.
Hi fures !
"Even serious nincompoops like Jon "The Nitwit" Nadler and Jeff "Potty Mouth" Christian of the CPM Group ought to have a tough time explaining what is so good for the DOW goose is so bad for the gold gander."
Bill Murphy
"To all Schwab account holders:
11... Pledge of Securities and Other Property -
We may pledge, re-pledge, hypothecate or rehypothecate, either separately or together with Securities of other customers, all Securities and Other Property that you, now or in the future, carry, hold or maintain in your Margin and Short Account. The value of the Securities and Other Property we pledge or re-pledge may be greater than the amount you owe us, and we are not obligated to retain in our possession and control for delivery the same amount of similar Securities and Other Property"
From the FIdelity Account Customer Agreement:
Note that property in a margin account may be pledged or repledged, hypothecated (loaned) or rehypothecated, either separately or in com mon with any other property, for as much as your obligation to us or more, without our having to retain a like amount of similar property in our control for delivery. Also, we may at any time, and without notice to you, transfer any property between any of your accounts, whether individual or joint, or from any of your accounts to any account you guarantee.
So even if you have a non-margin account Fidelity still has the authority to transfer holdings to your margin account if, for example, there was an unexpected increase in margin requirements. Not that something like that would ever happen...
Guess I needed to keep reading:
Fidelity can loan out (to itself or others) the securities that collateralize your margin borrowing. If it does, you may not be entitled to receive, with respect to securities that are lent, certain benefits that normally accrue to a securities owner, such as the ability to exercise voting rights, or to receive interest, dividends, or other distributions. Although you may receive substitute payments in lieu of distributions, these payments may not receive the same tax treatment as actual interest, dividends, or other distributions, and you may therefore incur additional tax liability for substitute payments. Fidelity may allocate substitute payments by lottery or in any other manner permitted by law, rule, or regulation. Please note that any substitute payments Fidelity makes are voluntary, and may be discontinued at any time.
Have a nice evening.
SCOTTRADE 62. Pledge of Securities, Options and Other Property
All securities and other property now or hereafter held, carried or maintained by us in or for your Account may, from time to time without notice to you, be pledged, repledged, hypothecated or re-hypothecated by us, either separately or in common with other securities and other property. The values received may be greater than the amount you owe us. Any losses, gains or compensation resulting from these activities will not accrue to your brokerage Account. We are required under SEC rule 15c3-3 to retain in our possession and control all fully paid-for securities. Securities used as Collateral for Margin Loans are not fully paid for and therefore are not subject to the same obligation.
They've stolen me gold!!!!!!!!!!!!! (immortal line from the Leprechuan series)
All squabbling over pieces of tungstens.....
I was trying to find a way to explain to my wife what hypothecating and re-hypothecating was and how it's going to cost us maybe millions......I finally got through to her when I said....."Think of it as if I was pimping you over and over again" Like the bankster "re-hypothecates" (really meaning pimps over and over) his assets (wife) over and over again. The problem is that after a while the asset (his wife) starts getting worn out....that's called the law of diminshing returns!"
I know now I struck home and she understood when she responded...."so that means we're fucked, honey! So why save anything? Let's go on a spending spree right now! We need to spend our selves out like re-hypothecated medicated whores!"
I'm going to get drunk and medicated since I'm re-hypothecated.....at the jewelry store
all that sex talk, and your wife wanted to go shopping? sad
JP Morgan Crashed MF Global to Avert COMEX Failure, European Derivatives Implosion
Jim Willie
We had a COMEX system failure in November. COMEX was ready to default on gold and silver in November. Rather than honor delivery demands in gold and silver- JP Morgan simply stole the money in the accounts that were going to stand for delivery. They had their pockets picked while they were standing in line at the delivery window. Notices of delivery were replaced at stolen accounts!
JP Morgan averted both a COMEX default and a European sovereign debt implosion, and notice that JP Morgan increased the amount of silver in their registered vaults by precisely the amount that was supposed to be delivered!
I have one contact who they confiscated his entire account- I think he had over $100,000- it's missing. He made a complaint a few days ago that the receipts that prove his account- they were just seized by the receivership committee! They confiscated the evidence of his account! We have JP Morgan trying to sit on the board making decisions on stolen money, when they did the stealing!
http://www.silverbearcafe.com/private/12.11/implosion.html
The mad dash for the physical metals (gold) is on ... if I could give your note 100+ I would. It is now obvious to me what happened with MFG is what is outlined above and this shows the desperation and the ends to which the banks and brokerages will go to get hold of the physical because there is a helluva lot less of it than people think right now.
You will no doubt be right when physical is unavailable and/or the paper price goes vertically down (decouples) or up. Then the jig is up.
Right now, we have the equivalent of the Greek haircut being defined away as something that did not constitute a default. This news will be ignored in the media that matters and the gold vendors will open for business on Monday. There's lots of fiat to print and rumors to churn so that the gold buying and can kicking continues.
You are right, but early.
I've often wondered why the Jackass doesn't get more play here.
what a nice day race to the high and sit there for the last 2 hrs of the day...algos worked great...look at the volume in ES nothing
Gold Paint and lead bars .... problem solved.
CNBC has been doing the same thing for years. Painting lead bars with Gold verbiage......all is well.... really.
Physical bitchez!
@ e-man re: http://www.cnbc.com/id/44701381/The_Fed_Wants_to_Be_Your_Facebook_Friend
that is one scary article, wow, what has this country come to.? i mean wtf???????
I was wondering when this would start. It is unreal how clueless and downright hostile people get when you try to explain this to them. The more degrees and certifications they have the worse it is, the topic turns into a personal mission to prove the infidel wrong. Next Christmas Party I promise to drink more and talk less.
Did anybody catch on how bad the MF Global bankruptcy is affecting the remaining small farmers (under $50 million) that haven't been put out of business.
Frankly don't give a shit about explaining such things to other people anymore.
Uh huh conspiracy theory ufo took our gold doomer blah blah.
Unfortunately, I trod the same path and wish I hadn't given my advice so freely.
I will just have to comfort myself in the future by spending absolutely nothing of my vast PM fortune and living well into my 90s, driving my impoverished relatives crazy and making them crawl.
Then I'll leave everything to my cat, Mr. Dingles.
Compared to ZHers I know I'm an idiot, but this site is funny!!
/Did I ever tell you how much I love cats?
cats....phfff
we're talkin' ultimate fightin' squirells baby
Yep those guys are idiots. But be nice, you may not want to keep them around, but their wives and daughters should make nice companionship. Or be an asshole who cares either way they're fucked. Do be careful about mixing your genetic code with inferior stock. You don't want to risk being the progenitor of livestock.
No what was that?
It is tearing there ass up..............
Try counterfeiting.
http://www.youtube.com/watch?v=C21l29hurRI&feature=related
http://www.youtube.com/watch?v=_qO66Rmi1Mw
Under the pillow, right next to my gun, is where i keep my gold. Happy Friday boys and girls, keep it close and keep it physical.
Anyone who is not holding at least a small portion of his wealth in Bitcoins is an idiot.
Gold and other money commodities are going to be manipulated into a new state run currency scheme after the implosion.
Screw the bankers and put your money into a currency that litterally can't be manipulated, stolen or fractionally reserved.
Dude, are you insane? Bitcoins over physical gold? Really?
Where does one even start to refute such an aberation??
I started with the little red down-arrow.
"Literally can't be stolen".
lol, what about that guy that had tens of millions of dollars worth of bitcoins stolen from him, and never got caught, and the resulting crash in the value of the remaining ones, as everyone saw that they were NOT safe.
Dumbest idea ever.
I agree.
Having tracked the amount of fraud and abuse that was unleashed on bitcoin, it isn't a viable MMO currency (WoW gold, for instance, holds more value) let alone a proper currency.
I shit you not.
I have looked at it closely and conclude that bitcoin is the real thing. Not that I give two shits about convincing any of you.
And you have the temerity to use Magnificent Murray as your avatar?
I've got a beautiful paisley patterned gold buttoned pink chiffon fringed couch on Webkins I'll sell you for ONLY $999!
You might want to try another marketing approach.
Can.
http://tinyurl.com/bitcoin-hacked
If there isn't as much gold as we thought there were, shouldn't the price of gold go up instead of being trashed any time an info like that comes out?
Just my novice guess...once a panic out of papergold begins, price will fall while all the junk gets flushed. Demand for physical will reverse the plunge, and I expect abruptly. That's if the ratios are as outlandish as reported, and when that fact slaps the public in the face.
Selling begets selling in all security types. However, you don't want to sell your physical metals no matter the price.
Do not hold paper metals(etfs) if this is all being exposed as it appears in that there is not enough physical representing the paper version. Some of it is at the very least double counted in other words. At least that appears to be the fear.
the physical supply, could dry up faster than a drop of sweat, on the hot pavement
Or a tumble weed blowing through the bowels of hell!
Not when the demons have the paper markets and trillions at their disposal. They could take silver to $5 Monday morning, hop on board and go to the moon. "Flash crash" in metals straight ahead!
The problem is that there is 100x the gold in existence on paper.
The paper market has to crash before gold can have true price discovery. As it is now, it's just a EURUSD correlation that has a physical analog.
It's just a couple of contracts...am I missing something?
Yes. The legal concept of PRECEDENT.
Also, there is NEVER just one cockroach.
Anyone else suprised at how few bars are at stake?
Anyone know what % MFG was of COMEX volume? This might provide some insight into what the current paper:phys ratio really is; I tried googling but couldn't turn anything up.
You put a human face on a legal claim like this, it's easier to adjudicate. It's a lawyer trick. The same issue likely applies to thousands of accounts worth millions or billions, or who knows? It could be trillions. When you are fractional reserving every fucking thing on the planet, it gets complicated and abstract. Makes a judge's head hurt. Make it a simple conflict between our "J6P" (w/ 1mm in gold bars, lol) and a trustee. That's clear.
GAME OVER BEN
Not yet it isn't. They still have the printer and plenty of remaining margin hikes. It isn't over yet. Anything that blows up will be legally defined away as something other than a default, or otherwise swept under the carpet. MF Global blew up on Halloween. That's how powerful ownership of the media, the government, and the printing press is. This is definitely not over yet.
Class is in session. If you do not have gold and/or silver in your physical possession, you don't own it. As we see in the the case of MF Global, all forms of fractional banking do not work with gold and silver. This is why governments love fiat currencies. They don't have to dig miles of ground to get the paper.
http://georgesblogforum.wordpress.com/2011/11/02/the-daily-climb-2/
Hypothecate this, pal.
I guess I am surprised after reading the article on re re rehypothecating
I never thought you coyld sell something or use it as collateral if you borrowed it from somebody who borrowed it from another somebody.
Ruh Roh! Fed can't print Bullion!
lQQk!
here comers the truck from the texas longhorns, to pick theirs up, too!
most inventories taken for things of value which may have not been properly secured end up as follows:
p.s. BIS, Bank of England, Fed reported to have sold gold today | Gold Anti-Trust Action Committee
Joe Public is more concerned with his fantasy football!
Our wives are still decorating with the latest Chinese trinkets!
TPTB have many trades to unwind. The list is amazing.
Is it the worst it's ever been, or is our information access better?
I'd say it's pretty fracked up!
Corzine better hope he didn't hypothicate any of Chavez gold .....
funny how Chavez just got his first delivery last week. Coincidence maybe but I doubt it.
Is it possible for a bancrupt company to defend itself if there is no money for legal fees..??
Maybe Corzine should have taken the 12 million exit fee he publicly declined..??
Would buy a lot of legal time...
And she's buyyyyying a stairwaaay to heavennnnnn..
This could be the beginning of the greatest "I told you so" opportunity of all time, as well as the catalyst for $10,000 physical gold. And wouldn't you know - right before the weekend. As Ralph Kramden used to say "Pow! To the moon!"
"Right in the kisser!"
the world is run by highly educated criminal minds whose iqs don't surpass a well aerated philodendron's....
a godless society produces barbaric criminality....apparently gold isn't such a barbaric relic after all with so many ravenous hyenas after it....
as i have stated often enough, gold is in severe and permanent backwardation regardless of the paper market's protestations contrariwise...
fuck the fed, plutocrats, and rockefeller-mic-yale-cia cabal of terrorists....
Model 700 XCR Tactical Long range. Good rifle for the price. If you don't have the funds for a M1A.
http://www.remington.com/product-families/firearms/tactical-families/tactical-centerfire.aspx
IMHO, Steer clear of the new M1A's, last 8yrs+, have been made using imported shit parts,nothing close to originals using surplus USGI.( except if lucky maybe the bolt),Op rod is weak link.Plus way too many moving parts.(still a good weapon, w/plenty of spare parts).
Rem Stick is cool......with good optics,( severely limited on firepower) but, in this climate suggest a Bushmaster 16" MOE, or 16" ORC ( CL tubes,chambers, heavier barrels than the DPMS AP4's,almost ALL parts interchancge w/DPMS, barrel is made to BM specs, AP4's is not CL.
Not good on a semi, unless it's SS.
Both use PMAGS..............as well as DPMS steel ones.
Armalites mags are their shortcoming......plus price sucks.
Hehe.
I got a pre ban M1A with removable flash suppreser and one hundred percent USGI parts before I even knew what that was.
Even a blind hog finds an acorn now and then. Less than 400 rounds fired through it.
For new 308 guns I recommend FNFAL
So MERS & Robosigning issues are the results of banks not following the appropriate protocols of title transfer when the mortgage casino was in full swing, therefore, instances exist whereby true title of ownership of a specific mortgage prevents banks from foreclosing on a given property...Now it appears that the most recent revelations of 're-HYPO-THECATION' obscure the true title of ownership for a given security or commodity by virtue of London's FSA (lack of) rules related to hypothecation...Another blog participant 'EVERYMAN' asked about the upcoming unwind & a timeline...I will ask a naive question - May a brokerage client request delivery of their securities/assets? I understand that this may not be possible in many cases, however, if the circumstances regarding this activity remotely reflect the HYPER levered projections even a small percentage of account holders requested their security certificates that should be enough to promote significant unwinding....time to call the Ol' Brokerage house & like the single most annoying tag line promoted by the Schiesters at JG Wentworth - "It's my certificate/commodity & I need it now!"
salient point............if the banks cant find your mortgage note, what makes anyone think the banks can find your gold bars..............
Appears HSBC is getting shanghaied
Where are the Hunt brothers to put the Knife in....
Oh i would love there to be a default at the comex, everyone would foreget about the euro when JPM and HSBC disapear over night. In fact thinking about it may even help some of the countries in the euro alevate the strangeling grip that banks have on those countries.
JPM and HSBC will not disappear. Both are partial owners of the privately held Federal Reserve.
again - 10,000 tickets have been sold for a flight with just 100 seats
Jim Willie thinks that MF Global clients silver was actually seized to prevent a COMEX default. The sh*t has hit the fan folks.
We checked today, and E*Trade, Scottrade, and Fidelity ALL REHYPOTHECATE YOUR COLLATERAL IN YOUR MARGIN ACCOUNT!
Listen to Jim Sinclair, DONT TRADE ON MARGIN, PURCHASE PHYSICAL AND HOLD IT IN YOUR OWN POSSESSION!!!!!!
Tough to make money on cut rate trades. The money is made rehypothicating client securities. No wonder you can't get physical share certificates. The physical holder of the certificates is the owner.
Fidelity statement notes on a 401-k -
"If you have a pension plan account, it is not actually invested in the investment choices you have selected for the account.
Instead, the pension plan is credited with the same return that would be received if the account were actuallly invested in those investment choices."
So, all the cash you pay into your 401-k goes to who knows where; they will settle you with some cash from somewhere, later.
Holy shit. That is headline worthy right there.
Schwab also re-hypothecates in margin accounts - Section 12 of your Schwab One broker agreement. You don' t have to have any securities on margin in the account - if it is a margin account all your assets are vulnerable. Only good news is that Schwab and the others mentioned are not primary dealers - cold comfort when TSHTF in my opinion.
Newb in the house. I have always heard that GLD is risky. I get that, but I'm curious what do people here think of PHYS and PSLV. As far as I know those are the safest ways to invest in Gold or Silver without having to take measures to secure one's own physical. Thoughts?
Tell me you're joking, right ? Sarc on ? Ha ha ? You had me going ? Thoughts?: You are a troll or you're clueless ? Have you read any of the posts above ? Study your Avatar and see what comes to mind ! Good spoof....very dry, very innocent ! You should be in sales !
Westword,
Thoughts?
If you cannot hold it, you do not own it.
If they (PSLV/PHYS),think for one second their money, and clients phys is SAFE,they are nuts.
CEF, PHYS, PSLV have the cachet of Canadian Mint combined with the Sprott reputation.
They offer strict, transparent audits combined with a true management understanding of the importance of PM's.
For some who want to have a PM stake in a retirement account, IRA or 401-k,
this may be a way to try to avoid the obvious trickery involved with the US ETF's.
This may or may not be the safest course, but if you have funds in the tax advantaged account,
if you want to have the PM exposure, and you accept the risk of it all going down the toilet,
I would say these are the better vehicles.
Other choice is to cancel the accounts, withdraw current balances with penalties, and buy your own PM position.
isn't the head of the canadian central bank a goldman alumni? and harper, doesnt exactly scream, rule of law.
They are holders of your gold, after all that has been and written why would you ever recommend a course of action like this.
You take delivery or your die.
your call. They are all basically clearinghouses, you will not get your gold nor your cash.
GTU is the one to have...longest track record of management doing this (CEF, the sister fund is half gold/half silver, and has been around since the '60s). All the trust's assets are in gold in a vault in
a Toronto bank, audited semi-annually, insured. Sprott has not been around nearly as long (was he born yet in the '60s?). The Spicer family has managed the CEF and GTU funds for decades.
Westword
If you dont hold it You dont own it!
Did you not read the post?
Watch the MSM gurus and your skeptical relatives use this to wag there fingers and say: "See, Gold is a risky investment !" Hoarders have more fun ! Monedas 2011 Comedy Jihad My Brother Told Me There'd Be Days Like This !
Monedas
You ever wonder how many of those SUPPOSED MSM Media talking heads,HOLD the Phys?.
Don't listen to what someone say's, watch what they do. Ever think with all the Spurts they have on the PM subjects, and the show going on outside(World conditions), they are ALL so stupid as to not learn?, not smart enough to cover their bases also?.
Not "all" stupid, probably just 99%. I think you give them too much credit.
I do not know which of the following is the right word. Maybe all of them:
F*cked. Awesome. Unbelievable. Predictable. Insane. Tragic.
Also: Chaos.
I'm not sweating holding physical silver, my thought it taking a hack saw to a gold round to buy a loaf of fresh bread is much more difficult than doing the same to a 1oz silver bar. Anyone noticed the new 1oz bars being scored in eight's as if to break off smaller portions for some coming financial apocolypse? I thought it was odd and in 25 years of holding I've never seen this before.
warezdog
Been made that way by diferent vendors time and again over the years, usually in 1/4oz sections.
Not a lot do now.
I bought a couple hundred ounces of these puppies in 2009 https://store.nwtmint.com/images/products/2920__orig.jpg
Re Anyone noticed the new 1oz bars being scored in eight's as if to break off smaller portions
Yes, I find the new bite-size portions much more convenient for chewing while on-the-go.
western bankstering, having forged the weapons by which the rat bastards destroy themselves, fall into the abyss dug for others. I hear screaming, weeping, wailing, and gnashing of teeth. To hell with the lot'uv'em. Peace on earth and good will toward men after that vaporization.
What a classic class complainant in the form of Jason Fane of Ithaca New York. I wonder if the court will address regulatory arbitrage as a force to undermine specific aspects of US law?
screw all this... screaming from foxholes at ghosts like flippin morons...
Hey TrAV777 - here's frag... pull the pin and count to 8...
selling all my phyical Au and Ag tomorrow. Joining the DarK Side... you think Bernak and the gang can't keep the plates up on the sticks for couple more years...??
well rock suckers... I go with peace into the oblivion... my regards to Alf, Casey, JS, Butler and all the other benchsitters to history...
< sigh >
Just trying out my NEW Contraian viewpoint... what cha think?
cute, no doubt. thread getting a little lame, so yer goosing it for the second shift, huh?
Bring back Trav. In my best Brooklyn...."dahfoukin' guy can tauk shit"
Small world. I actually know Jason Fane.
POD ... IMHO ;-)
HSBC, that other great gold "depository" after JP Morgan (and the custodian of none other than GLD) is suing MG Global "to establish whether he or another person is the rightful owner of gold worth about $850,000
Now HSBC is a "he" instead of an it or is it another virtual "person??" Who stuck a dick on HSBC? The current supreme court? I hope that all virtual people are male - maybe they will die out sooner.
The individual, Jason somebodyorother, is attempting to take possession of gold and silver bars from HSBC which _he_ claims are his property yet there is also another claim (originating in the bowels of MF Global) on those same physical bars.
So it appears that not only in mortgage fraud but also in bullion fraud there have been multiple sales of the same physical bars...
I'm not tryin to cause a big sensation, just talkin about my rehypothication.
Please pardon me while I dance on the grave of this so called "system".