Paper gold market defaults loom ?

[walenk]

Re: Paper gold market defaults loom ?

it is so obvious that to think otherwise is to have blinders on.

GLD is paper.

Perth is paper.

CEF is paper.

Paper is fine but paper is not GOLD.

C'mon...quit fooling yourself. The reality is that paper is paper. There is a degree of convenience, and perhaps speculative advantage. But having paper is NOT THE SAME IN ANY WAY with owning buillion and having it buried someplace where only you know where it is.

This is a question, not a polemic.
IF the US government once again made gold ownership illegal as they did in 1933, would you rather have Bullion Vault paper gold in Switzerland or physical in the US and become a "criminal"?

[ASH]

Re: Paper gold market defaults loom ?

My thoughts are "if it's not Physical, IT'S CRAP" and "If I don't hold it, I Don't own it".

The advantage of your strategy is that you will weather any calamity from mild dyspepsia through full-on zombie invasion, at the expense of a rather limited opportunity cost if we get the tummy ache rather than the zombies. Although I don't think paper is crap, I certainly can respect your position.

[jtabeb]

Re: Paper gold market defaults loom ?

This is a question, not a polemic.
IF the US government once again made gold ownership illegal as they did in 1933, would you rather have Bullion Vault paper gold in Switzerland or physical in the US and become a "criminal"?

Patriot with a gun would be the correct term, let me correct you. Just because the Gov can commit crimes agaisnt its citizens does not make these citizen victims, criminals. Quotes or no quotes. The reason that you have a legal justification for non-compliance comes from the constitution itself. The remedy for an illegal law is to declare that law is unconstitutional. That happens a lot in our country.

I'll quote Molder from X-files, "trust no one." That's my adivce and perspective.

[due_indigence]

Re: Paper gold market defaults loom ?

I hope I'm not passing hearsay, so take with a lump of er salt, but in the Great Crash I recall reading somewhere that gold stocks went down in equal part with the rest of the market, that is, they behaved like financial assets first and foremost.

[walenk]

Re: Paper gold market defaults loom ?

I don't mean to be argumentative, but you do know the 1933 act was declared constitutional by the Supreme Court, right?

[phirang]

Re: Paper gold market defaults loom ?

I don't mean to be argumentative, but you do know the 1933 act was declared constitutional by the Supreme Court, right?

Of course, since justices ARE appointed by the president... aka JP Morgan (back then).

[Supercilious]

Re: Paper gold market defaults loom ?

This is funny, it seems that somebody in the MSM had time to read what was said here on iTulip about ETF-ETN pair architecture for leveraged crap-grade structured paper...

http://www.thestreet.com/_yahoo/fund...FREE&cm_ite=NA

Obviously they haven't finished yet reading the whole thread and the other places where ETF-ETN's were discussed

[jtabeb]

Re: Paper gold market defaults loom ?

I don't mean to be argumentative, but you do know the 1933 act was declared constitutional by the Supreme Court, right?

And Supreme Court Decisions are NEVER reversed, right?

[walenk]

Re: Paper gold market defaults loom ?

Of course Supreme Court decisions are reversed. Still, 1933 act is a precedent, a now 75-year-old precedent. And the Court does give lip service to the concept of stare decisis.
I trust no one on the Court to see the issue differently. :cool:

[Kcim67]

Re: Paper gold market defaults loom ?

Very plausible.

More and more, people seem to be understanding the purpose of precious metals - an escape from the financial system in the midst of a systemic financial crisis, even in a negative interest rate environment. Paper silver is good for gamblers, chartists, and the like. Physical silver is a hedge.

I heard an analogy that I like: Somebody buys a gun for home defense. They do not buy "Lehman Bros. Gun Certificates," and deter bad guys with a paper receipt. You either have it in hand or you've been had.

COMEX, ETFs, Perth mint certs, Kitco pool accounts, etc. are in my opinion frauds. Miners are stocks for unprofitable businesses. Investors who buy paper might as well buy GOOG or pets.com.

People are waking up, as the price manipulations in silver have become increasingly obvious in the face of overwhelming demand and shortages in the real world. We're just starting to see the same thing in gold, although several months after the silver shortages and not nearly to the same extent.

Ultimately, this will be the undoing of the swindles at COMEX for silver and for gold, to a lesser extent. Unfortunately, all of those who wanted to be cute and hold paper may be burned.

There is an ad for BullionVault.com on this very website, I opened an account but have held off investing for the very reasons you state above, do any of you have any knowledge of this organisation?

Thanks Kcim67

[Basil]

Re: Paper gold market defaults loom ?

It is 5.20 pm EST in Aus right now. I sent an email placing an order for gold this morning at 9.30 am with the Perth Mint. I have sent 2 emails and have now just phoned them. After the phone had rung for about 3 minutes at my dealers number, teh switchboard answered and explained to me that all the dewalers were busy and there were 10 callers waiting in line in front of me.

I have spoken with several dealers over the past few weeks. All say that they have never seen it this tight, and many have only one or two forms of bullion available. When I called Northwest Territorial Mint, the operator said that I was lucky to get through and that she would not put me on hold because the wait would be too long. I asked how long it had been this way. She said for the past two weeks, and that was about two weeks ago. Many of my friends who know I dabble in PMs have asked me how to do this in recent weeks. This all anecdotal, but does point to a physical market that is growing tighter by the day. Has me thinking it is time to buy a bit more.

[serge_oc]

Re: Paper gold market defaults loom ?

I agree with ASH that MadMax is not likely.

I also agree with Jim Rogers that plenty of bullion holders are reluctant to sell. That explains why some producers and dealers are taking longer to fulfill or not taking orders.

Look at the UK selling massive gold when its price bottomed (around 2000). Now that move is ridiculed as a complete idiocy.

It is clear that some significant inflation is coming. If you had a ton of gold, would you sell it? Or wait for price to go up? And if you did sell it, what would you buy with the money as an investment?

That partially explains delivery delays. Production cost doesn't follow increase in price of the metal. So if you are a miner, mint or some other entity, it pays to deliver later: mine at lower cost, sell at higher (as opposed sell now, mine at lower cost). This implies that gold they hold is used to fund mining, which most of them do. It's not the same as derivatives, loaning or some such scheme. It's something that should be disclosed and audited. The worst case scenario is that there is no more gold to be mined. We're probably not there yet for another decade.

As for SHTF, everything is in details. Look at how some entities and their creditors were saved in the US (shareholders as usual wiped out). Government guarantee is worth something, probably more than insurance itself.

Gold market (and silver too) is small. So small that it could be monetized entirely at taxpayers expense in no time. Even insurance companies could actually take it on their sheets.

Unless gold hits $20,000 or something, I don't see that any insurance or especially a government guarantee (such as from Perth) wouldn't hold.

Having said that, it's good to have physical. I have some, but most of my gold is now in Perth and the next step is diversification in Switzerland.

Settlement in money at COMEX, rather than gold is indication that such monetization is taking place.

The difference in price though is a different story. That is a question I have no answer for.

EJ or someone more knowledgeable could answer that: will spreads between paper and physical grow, or is it a temporary phenomenon?

I would imagine temporary because if not, all gold-holding companies would go under the feet of investors stampeding out .... It's much easier to pay street price.

[rj1]

Re: Paper gold market defaults loom ?

Ever wonder why Kitco is based in Montreal, Canada?

Because PMs pool accounts are NOT allowed in the US; the way it should be.

Only in Canada...land of the free or whatever. I forgot. pfff.

PS: Again, Jim Rogers thinks that vendors are sitting on a lot of bullion but do not want to sell it. I find that hard to believe. Lets see what happens next shall we?

Look at the bright side, if Mr. Rogers' point of view is correct, that's bullish for gold.

[labasta]

Re: Paper gold market defaults loom ?

I agree with ASH that MadMax is not likely.

I also agree with Jim Rogers that plenty of bullion holders are reluctant to sell. That explains why some producers and dealers are taking longer to fulfill or not taking orders.

Look at the UK selling massive gold when its price bottomed (around 2000). Now that move is ridiculed as a complete idiocy.

It is clear that some significant inflation is coming. If you had a ton of gold, would you sell it? Or wait for price to go up? And if you did sell it, what would you buy with the money as an investment?

That partially explains delivery delays. Production cost doesn't follow increase in price of the metal. So if you are a miner, mint or some other entity, it pays to deliver later: mine at lower cost, sell at higher (as opposed sell now, mine at lower cost). This implies that gold they hold is used to fund mining, which most of them do. It's not the same as derivatives, loaning or some such scheme. It's something that should be disclosed and audited. The worst case scenario is that there is no more gold to be mined. We're probably not there yet for another decade.

As for SHTF, everything is in details. Look at how some entities and their creditors were saved in the US (shareholders as usual wiped out). Government guarantee is worth something, probably more than insurance itself.

Gold market (and silver too) is small. So small that it could be monetized entirely at taxpayers expense in no time. Even insurance companies could actually take it on their sheets.

Unless gold hits $20,000 or something, I don't see that any insurance or especially a government guarantee (such as from Perth) wouldn't hold.

Having said that, it's good to have physical. I have some, but most of my gold is now in Perth and the next step is diversification in Switzerland.

Settlement in money at COMEX, rather than gold is indication that such monetization is taking place.

The difference in price though is a different story. That is a question I have no answer for.

EJ or someone more knowledgeable could answer that: will spreads between paper and physical grow, or is it a temporary phenomenon?

I would imagine temporary because if not, all gold-holding companies would go under the feet of investors stampeding out .... It's much easier to pay street price.

I agree, that the mad max scenario is not likely, but not likely does not mean one in a million. To me it's 10 or 15% of a semi-anarchy situation. A little higher for a short-lived LA riot style event.

Now, rolling the dice and hoping "1" doesn't come up is too much of a risk for me to take so I am starting to hedge in a practical way and hope that if it does happen I will have prepared enough.

[ltullos]

Re: Paper gold market defaults loom ?

I'm holding a position of GLD within my IRA as this is the only practical way that I know to invest in gold through this account. I'm well aware of the warnings against holding paper, but have rationalized that so long as I leave the party early and don't get trampled by everyone rushing to the exit I'll be OK (sure I'm the only one thinking this). Anyway, I not so comfortable with this decision, but just feel it is better alternative than leaving these funds sitting in gov't bonds. Can someone lay out a credible scenario has how GLD defaults might go down and leading edge warning signs to watch?

I appreciate your replies to this, but at the risk of being labeled dense or an idiot for not listening to jtabed, or both; I'm going to ask again ...

Can someone lay out a credible scenario has how GLD defaults might go down and leading edge warning signs to watch?

As this is IRA funds, I don't have the flexibility to be able sell and pull out of IRA to invest in real stuff! On the other hand, I am buying what I can from BV with non-IRA funds.