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Author: yodaorange Big red star, 1000 posts Feste Award Nominee! Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 455742  
Subject: Re: Warm Fuzzies Date: 4/20/2013 10:37 PM
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Poz, I find it very difficult to sort out the gold market. I am convinced that many gold bars have multiple owners. Each owner thinking he has clear title to the bar.

One of the more puzzling developments in the gold market was when Germany decided to take physical possession of their gold held at the New York Federal Reserve bank. You would think it could be done in one or two days. You send a few Brinks trucks over and load them up. For some reason, Germany said it was going to take many years to accomplish the transfer. Apple can ship a few gazillion Ieverythings from mainland China to the US every day. I bet if Ieverything delivery depended on getting that gold moved in one day, it would be done. Unless of course, the gold is not really there ready for immediate shipment.

I also recall in the MF Global fiasco that many investors held "allocated" gold in their accounts. Yet, they were not able to take possession after the bankruptcy. I do NOT know how that situation got resolved.

If you can sell each bar of gold, 2X or 3X or 10X, it would be easy to manipulate the market. It might be manipulation on the long side or the short side. Think of "naked shorting" 10X the physical gold.

If everybody in the world demanded immediate delivery of their physical gold, I suspect the price would rise substantially as the "naked shorts" come clean.

With the HSBC's of the world running funds like GLD, WHY WOULD WE EXPECT ANYTHING DIFFERENT? Their track record of ignoring rules and laws is impressive. Rules/laws are for the "little people" to paraphrase Leona Helmsley.


It might be that GLD is a good proxy for physical gold ad infinitem. OTOH, I would NOT be surprised in the least if it blew up in a crisis when we all learn it does NOT have the physical gold backing it claims.
No black swans here. . .

Thanks,

Yodaorange
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