© UnknownFinancial Times advises readers to demand physical delivery of gold.
Last month Jens Weidmann, Bundesbank president, admitted that just 37 tons had arrived in Frankfurt. The original time scale, to complete the transfer by 2020, was leisurely enough, but at this rate it would take 20 years for a simple operation.
Well, perhaps not so simple. While he awaits delivery, Herr Weidmann is welcome to come and look through the bars in the Federal Reserve's vaults, but the question is: Whose bars are they?
In the "armchair farmer" fraud you are told: "Look, this is your pig, in the sty." It works until everyone wants physical delivery of their pig, which is why Buba's move last year caused such a stir. After all, nobody knows whether there are really 260 million ounces of gold in Fort Knox, because the US government won't let auditors inside.
The delivery problem for the Fed is a different breed of pig. The gold market is far more than exchanging paper money for precious metal. Indeed the metal seems something of a sideshow. In June last year the average volume of gold cleared in London hit 29 million ounces per day. The world's mines are producing 90 million ounces per year. The traded volume was many times the cleared volume.
The paper gold in the London Bullion Market takes the familiar forms that bankers have turned into profit machines: futures, options, leveraged trades, collateralised obligations, ETFs . . . a storm of exotic instruments, each of which is carefully logged, cross-checked, and audited.
Or perhaps not. High-flying traders find such backroom work tedious, and prefer to let some drone do it, just as they did with those money-market instruments that fuelled the banking crisis. The drones will have full control of the paper trail, won't they? There's surely no chance that the Fed's little delivery difficulty has anything to do with the cat's cradle of pledges based on the gold in its vaults?
John Hathaway suspects there is. He worries about all the paper (and pixels) linked to gold. He runs the Tocqueville gold fund (the clue is in the name) and doesn't share the near-universal gloom of London's gold analysts, who a year ago forecast an average $1700 for 2013. It is currently $1,260.
As has been remarked here before, forecasting the price is for mugs and bugs. But one day the ties that bind this pixelated gold may break, with potentially catastrophic results. So if you fancy gold at today's depressed price, learn from Buba and demand delivery.
Reader Comments
The old standbys for economic and financial collapse - gold and silver. The collapses are coming as the usuary based debt build up across the world means that the debt load can now only accelerate until the point at which the financial system and currencies collapse with the USA being centre stage for the most catastrophic of disasters.
It is now clear that the powers that be will do their utmost to prevent the oncoming collapse. It is a mathematical certainty in any system based on fiat currencies and usuary as the collective debt interest can never be repaid. The plans to prevent the inevitable include bail-ins, the confiscation of depositors money (in return for sharholdings in zombie banks) and one off capital levies (which will mutate into two-off, three off etc.). All of which must and will fail. These measures will however buy time. Time in which the massive debt build up can be converted into inflation and then hyper inflation wiping out the savings and pension funds of anyone invested in paper. Thereafter the system will be allowed (there is no other possibility) to collapse. Those who have converted their paper savings to inflation proof gold and silver will do well in the medium term and possibly very well in the long term as the usual course is to restart the financial system with gold and silver or gold and silver backed currencies. In the very likelyhood this occurs all the gold and silver in the world becomes equal to all the wealth in the world. There is about 1 oz of gold in the world per person and $241Tr in wealth leading to a gold only value of $41,600 (£25,000) per ounce, the amount of silver is very much less!
While it may not seem likely from a glance at the price charts both metals are currently selling for below all in production costs. The reason is the recent (2011) peak was in part due to the huge price increases for oil in the last decade. As ore grades for both metals have weakened considerably the cost of mining these metals has risen a very great deal. Over the past few months prices for both metals seem to have bottomed and started to rise. While there is no doubt that prices have been held down by manipulation in the paper markets this process is coming towards its end due in part to the loss of physical inventory. When the precious metals are finally liberated from the paper market, prices will very likely escalate dramatically even in constant dollars.
Gold and silver protect your wealth and have very great promise for increasing your wealth dramatically over the coming years.
The time to buy is now as shortages in the supply chain are becoming more frequent. This does not manifest in the spot price due to manipulation but in dealer premiums and lack of stock.
Save you wealth and buy now. Take delivery of physical OR consider Euro-Pacific Capital and buy and store your gold at the Perth Mint in Australia for 3% over spot and no storage charges (for gold). You can even get a debit card to use against your stack!
In the UK VAT is charged on silver (not gold) but if you buy coins from Liberty Silver, Estonia it is VAT free. Gold sovereigns and Brittanias are free of capital gains tax as are silver Brittanias.
Good UK on line dealers include:
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There is about 1 oz of gold in the world per person and an average wealth of $41,600 (£25,000) should read:
There is about 1 oz of gold in the world per person and $241Tr in wealth leading to a gold only value of $41,600 (£25,000) per ounce.
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Man Who Ran First QE Owns Gold & Warns Of Coming Inflation
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