Legendary gold trader Jim Sinclair has turned his sights from warning
investors to protect themselves with gold to urgently warning them to
exit the financial system immediately, and take possession of physical
gold held in your own possession. Sinclair,
who Friday warned investors that the US will be Cyprus’d and gold will reach $50,000/oz sent an email alert to subscribers Monday night warning that
merely owning gold and storing is not enough, and that:
How you own and store becomes of critical and possibly
terminal importance. Investors with significant deposits at in the
system banks and brokers are in the dead center of harm’s way.
Retirement accounts are also in the cross hairs of central planners.
Sinclair urges readers not to become a casualty of the central
planners via the coming bail-in deposit confiscations, but to protect
yourself by owning physical gold held outside of the financial system.
Eric King: “Maguire spoke on KWN yesterday about the fact that one
of his clients went to the LBMA to get the metal from them and could not
get it. They told him he would be cash settled. This is what you have
been talking about is the failure of the physical markets.”
…
Sinclair: “A person that I know with significant deposits in
one of the primary Swiss banks, in allocated gold, wanted to take out
his gold and was just refused on the basis of directives from the
central bank….
Beware: “Allocated” Gold May Not Really Be There
In 2007, Morgan Stanley paid
out $4.4 million to settle a class-action lawsuit by its clients after
Morgan Stanley charged them to buy and “store” precious metals for
them, but neither bought or stored the metals.
(Similarly, a 2011 class-action
lawsuit filed in federal court in New York accused UBS Financial
Services of misleading silver investors and charging them storage fees for metal that was never actually purchased, segregated, and stored for them.)
Avery Goodman points out that Morgan Stanley has once again just launched a similar scam, offering “allocated” metals, but
gaming the definition so that the holdings are not really allocated.
On May 21st, Matterhorn Asset Management’s Egon von Greyerz
alleged that Swiss banks are trading physical gold bullion which is being held in special “allocated” accounts for its customers:
We are stressing to investors to take their gold out of
the banking system, not only because there are runs on banks that will
continue, but the risk of being in the banking system is major. So you
should take the additional step of not just owning physical gold, but
also owning it outside of the banking system.
We (just) had an example of a client moving a substantial amount (of
gold) from a Swiss bank to our vaults, and we found out the bank didn’t
have the gold. This was supposed to be allocated gold, but the bank
didn’t have it. We didn’t understand why there was a delay (in our
vaults receiving the gold), but eventually we found out why there was a
delay (the bank didn’t have the gold). It’s absolutely amazing, but not
surprising.
This confirms what I’ve always thought. Not only should you not have
gold in banks or even unallocated gold, but even allocated gold. It
seems that some banks don’t even possess that. So the risk of having
gold in the banking system is major.”
On May 23rd, John Embry – Chief Investment Strategist of Sprott Asset Management, with
$10 billionunder management – added:
When the customer finally got his gold, it was 2011
minted bars. This made no sense because he had been holding the
allocated gold for years. That’s just another example that even the allocated gold in the banking system has probably been loaned out. Many of these customers will wake up one day and realize they entrusted their gold to the wrong people.”
Jim Willie
claims that:
Swiss face hundreds of $million lawsuits, for refusal to deliver Allocated gold.
Similar reports have
come from Canada and other countries.
Indeed, Jim Willie
alleges today:
Allocated Gold accounts across the Western world have
been confiscated, sold, and replaced with shabby paper gold certificates
illegally…. The account raid practice has been widespread in Europe,
London, and United States.
Seizure of Allocated Gold to Pay for Other Debts
Another danger of letting big banks or other large financial
institutions hold your gold: the gold might be seized to pay for their
other debts. For example, Barron’s reported last December that MF
Global’s trustee
raided “allocated” gold and silver accounts … while continuing to charge storage fees:
It’s one thing for $1.2 billion to vanish into thin air
through a series of complex trades, the well-publicized phenomenon at
bankrupt MF Global. It’s something else for a bar of silver stashed in a
vault to instantly shrink in size by more than 25%.
That, in essence, is what’s happening to investors whose bars of silver and gold were held through accounts with MF Global.
The trustee overseeing the liquidation of the failed
brokerage has proposed dumping all remaining customer assets—gold,
silver, cash, options, futures and commodities—into a single pool that
would pay customers only 72% of the value of their holdings. In other words,while traders
already may have paid the full price for delivery of specific bars of
gold or silver—and hold “warehouse receipts” to prove it—they’ll have to
forfeit 28% of the value.
That has investors fuming. “Warehouse receipts, like gold bars, are
our property, 100%,” contends John Roe, a partner in BTR Trading, a
Chicago futures-trading firm. He personally lost several hundred
thousand dollars in investments via MF Global; his clients lost even
more. “We are a unique class, and instead, the trustee is doing a
radical redistribution of property,” he says.
Roe and others point out that, unlike other MF Global customers, who
held paper assets, those with warehouse receipts have claims on assets
that still exist and can be readily identified.
The tussle has been obscured by former CEO Jon Corzine’s appearances
on Capitol Hill. But it’s a burning issue for the Commodity Customer
Coalition, a group that says it represents some 8,000 investors—many of
them hedge funds—with exposure to MF Global…
At stake is an unspecified, but apparently large, volume of
gold and silver bars slated for delivery to traders through accounts at
MF Global, which filed for bankruptcy on Oct. 31. Adding insult
to the injury: Of the 28% haircut, attorney and liquidation trustee
James Giddens has frozen all asset classes, meaning that traders have
sat helplessly as silver prices have dropped 31% since late August, and
gold has fallen 16%. To boot, the traders are still being assessed fees for storage of the commodities…
Taking Matters Into Your Own Hands
Given the numerous reports of supposedly “allocated” gold not being
there, it should not be entirely surprising that wealthy investors are
taking matters into their own hands … literally.
Kirby Analytics
notes:
We are hearing anecdotal accounts that beneficial owners
of “allocated” gold bullion in London and other European centers have
showing up at bullion banks and demanding their physical metal be a]
viewed and assayed, and then b] withdrawn from the vaults of banks.
And as we
pointed out in 2010:
Omnis’ Jim Rickards, GATA’s Adrian Douglas and others have demonstrated that the big bullion dealers and ETFs don’t have nearly as much as physical bullion as they claim.
Should a substantial portion of investors in these vehicles demand
physical delivery at the same time, it could cause a panic in the gold
market which would cause a huge run up in gold prices.
Does this mean you shouldn’t own gold?
No … It just means that you should only buy physical gold, and store it somewhere you can actually
get your hands on it.
Signs of extreme physical tightness in the gold and silver
markets continue to intensify, with reports of banks and firms refusing
their customers physical delivery of their own bullion increasing
nearly by the hour.
The latest report comes from the CME’s former CEO Leo
Mahlamed, who reportedly was refused delivery of 2 gold contracts
Tuesday!
Mahlamed attempted to stand for delivery of 2 April gold contracts (a
measly 200 oz), and according to reports from the floor, the CME
reportedly refused to physically deliver 200 oz of gold to its former
CEO, and would only provide Mahlamed a warehouse receipt!
The music appears to be stopping, and the paper game is up!
The U.S. Will Be Cyprused & We Will See $50,000 Gold
“… Cyprus is in fact the blueprint in the United States for coming
financial failures…. The truth is that when we take out these futures
markets on a failure, gold is going to $50,000. Not $3,500. $50,000. We
are in the midst of a failure right here, right now. That’s what this is
all about. This takedown has been the ultimate can-kick. This has been
to stop the revelation of what the central planners are so panicked
about, and the fact that the US is going to get Cyprused. They have now
manufactured a situation right here at this point in time where it is
almost impossible to save yourself.”
Bull Market Thinking – by Tekoa Da Silva 
