Canada's Only Bullion Bank Gold Vault Is Practically Empty, Is The Central Fund Of Canada Insolvent?

[dbarberic]

Re: Canada's Only Bullion Bank Gold Vault Is Practically Empty, Is The Central Fund Of Canada Insolv

As someone who is sitting on a lot of CEF shares, the iTulip community has reassured me.

Thxs.

[radon]

Re: Canada's Only Bullion Bank Gold Vault Is Practically Empty, Is The Central Fund Of Canada Insolv

If you go back to ZH the CEF-slamming headline has been pulled and there is serious backtracking in the comments section....

These guys have been crying wolf since the beginning. They decided long ago to favor sensationalist tripe and shun credible information. I guess it sells more webpage hits. Be very careful about mistaking anything you see on there as actionable. 90% of the time it is someone talking his book or an authentic wacko with a political agenda. Seriously, the SN ratio is horrible over there.

[radon]

Re: Canada's Only Bullion Bank Gold Vault Is Practically Empty, Is The Central Fund Of Canada Insolv

ZeroHedge is to Investing as The National Inquirer is to Science.

Hah

Well put!

[Camtender]

Re: Canada's Only Bullion Bank Gold Vault Is Practically Empty, Is The Central Fund Of Canada Insolv

Jesse's take, where there is smoke - but how big is the fire????????????????????????

07 April 2010

"My Son..Went Inside There And Basically Saw that the Vault was Empty."


Every day when I think I am going to get a day off of this story, some shocking revelation seems to be coming out, each as compelling and suspicious as the others, but all fitting together in what looks like a nasty picture developing.

Apparently some banks and brokers have been selling gold and silver bullion which they do not have, and even charging storage fees for it to unsuspecting investors. Do they not have auditors? Are the regulators continuing to sweep this sort of thing under the rug? Are the insiders and their spokespeople correct in just dismissing this as a problem, as was done with the subprime market even by Ben Bernanke himself before it collapsed into a bank run?

Now, we have to carefully distinguish between allocated metal, in which one holds a certificate and are assured of a firm ownership of actual metal, and an unallocated holding in which you hold basically a paper claim on metal, for which you may be an unsecured creditor, even if you are paying regular storage fees. But in the cases I am hearing about it is a firmly stated ownership of something that does not exist, and cannot be obtained at current prices.

This is important because although there is always shorting, and some fractional reserve aspect to all banking , even in the case of bullion banking, in this case the proportion or leverage of the selling of the assets, reputed to be as high as 100:1, starts to look more like a Ponzi scheme than a rational and efficient market. There is a point at which 'speculation' becomes fraud, and the fraud becomes large enough to start risking the health of the bank.

And in our under-regulated and excessively leveraged financial system, that becomes a problem because it all looks to be a pyramid scheme of sorts. JPM alone is holding derivatives with notional values approaching a very large portion of World GDP.

The banks seem to be pointing to bullion supplies elsewhere, such as the LBMA in London, or in this case Hong Kong, and saying, "See if certificate holders demand their bullion, we can easily fulfill their requests." The problem with this is that it appears that they are ALL doing this, overleveraging their supplies, becoming counterparties and potential sources of supply to each other, with few having a full supply of what they say they have.

King News World Interview Regarding Lack of Physical Bullion at Large Canadian Bank

Make what you will of this. I am sure more will be coming out, eventually. But for now this information is barely penetrating the radar of the mainstream media. These fellows may be wrong, but so far no one is denying specifically what they are saying with any persuasive proof. They just seem to be hiding behind secrecy and opaque transactions, saying 'Prove it, prove it.'

As I have stated before, the problem I have with this is the lack of transparency and auditing in these markets, which makes them absolutely ripe for fraud and excessive leverage by the usual suspects in the TBTF banks.

This seems to be exactly what caused the subprime crisis and the bank run in 2008: a lack of liquidity and the mispricing of risk. How can one not be suspicious? We have just seen it happening, even though the herd behaviour is to simply ignore it because it is too alarming, too inconvenient.

Let the truth come out. Let justice be done.
Have we learned nothing? What time is the next bailout?

[jmaxey]

Re: Canada's Only Bullion Bank Gold Vault Is Practically Empty, Is The Central Fund Of Canada Insolv

CEF sold off and ended the day barely above water while GLD, SLV were fairly strong. Central GoldTrust GTU is similar to CEF and it wasn't adversely affected by the ZH article either. From the research that I've done, I believe that both CEF and GTU which are closed end funds, actually holds the metals that they claim to but I suggest all would be investors visit their sites at:
http://www.gold-trust.com/
http://www.centralfund.com/Nav%20Form.htm
Should this story get legs there may be a general sell off in all funds and that will represent an golden opportunity for the informed, prepared and steeled investor.

[Starving Steve]

Re: Canada's Only Bullion Bank Gold Vault Is Practically Empty, Is The Central Fund Of Canada Insolv

I would NOT lose any sleep over the minute risk of holding gold in a certificate at the Bank of Nova Scotia or at the Royal Canadian Mint or in the Central Fund of Canada or in an ETF of gold at any brokerage firm.

There are indeed risks in everything. One can not eliminate all risk. But I wouldn't lose sleep over a prudent amount of very minute risk.

Maybe worry about your spouse and what his/her hidden agenda may be. Maybe worry about gangs, especially in California or Mexico. Maybe worry about health risks..... Your time might be better spent attending to insuring against really possible risks like divorce, heart-attack, hold-up, law-suits, the door falling-off of your safe deposit-box, the hidden agendas of your kids, stroke, Alzeimer's disease, living too long, nursing homes, do-gooders, etc.;)

[ThePythonicCow]

Re: Canada's Only Bullion Bank Gold Vault Is Practically Empty, Is The Central Fund Of Canada Insolv

ZeroHedge is to Investing as The National Inquirer is to Science.

Thanks Camtender and Pascal for your investigation into this.

Munger - from what I've seen today, you insult The National Inquirer unduly .