Chill out dudes
Then we have the ABN Amro story with John Embry claiming that “the Dutch Bank ABN AMRO came out and literally said that if you have allocated gold with us, you can’t have it. That, to me, is a default”. Sorry, not true, thanks to About.Ag who found this link to the English translation of the conditions of those accounts and on page 6, section 4.3, it says:
“1. You have no right to the physical precious metals which you invest. However, under certain conditions, you can physically obtain the precious metals. … 3. You cannot always physically receive the precious metal. … In that case, you therefore have no rights or receivables vis -à-vis DBN or the bank.”
Sounds like a classic bank unallocated account, which unlike the Perth Mint’s, is not necessarily backed by physical. So it is not a case of default.
Final example is Bill Downey’s claim that “the London physical platform that buys and sells physical gold gets locked up. The system freezes”. When I told Dan at The Fundamental View that there was no “the” London platform, he followed it up and discovered that:
“The screen shot in the article is not of a “physical” market but just a trading platform from a bank (one of many, each BB has their own platforms) for trading spot unallocated XAU/USD FX pair. The post made it seem (to the unaware) that this was “the” London platform. – Mr. Downey acknowledged this error in his email to me. … His articles made it seem as though the system “shut down and locked people out from placing orders”. To his credit, Mr. Downey admitted to me that this could not be proven and that this was simply speculation on his part. He did admit that orders could still be phoned in.”
Simply speculation on his part. This price drop seems to have resulted in a lot of that. Look, it is great news that retail investors have gotten a bit smarter and are buying on price drops rather than chasing the price up like they have in the past, but it does not portend the end of the (paper gold) world, yet.
If you want to be a little smarter, consider what I said to Ed Steer today, “buyers really need to go for the cheapest physical they can and be a bit more flexible on who makes it…or go from coins to bars. Paying high premiums just because you want a certain brand or bar size, just means your money buys less ounces, which takes less ounces off the market.”
I note that Sprott’s gold trust is trading pretty much at spot. So if you are a suspicious goldbug, which is why you want physical, then doesn’t it make a lot more sense to buy the trustworthy PHYS at spot and then when this rush dies down, to sell your PHYS and buy physical coins/bars at more reasonable premiums? Funny how none of the physical pumpers mention this. That’s because they can’t make money off exorbitant fabrication premiums if you buy PHYS rather than their coins.
Like the post title says, Chill Out, and think a bit deeper about the memes being pushed on you. To help with that, suggest reading this speculation that Andrew Maguire is a US Federal Reserve double agent. That site is a joke by the way, for those without a sense of humour, although the question of why Andrew hasn’t produced a CV to stick in Jeff Christian’s face is valid and something that puzzles me and some on this Kitco forum thread.
“My personal blog on all things precious metals. This blog is not endorsed by the Perth Mint (who I work for) in any way. For more background on me and this blog see About This Blog and my LinkedIn Profile.”
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