Thursday, April 8, 2010

Are The Gold Vaults Really Empty?

This article from Zerohedge is alarming, but not surprising really.

Unless you have physical gold (or silver) in your hands you could be getting swindled.
Unfortunately, it wouldn't be the first time investors would be screwed.
if this story is really true, then this makes Bernie Madoff look like a choir boy.

Zerohedge reports this:
Continuing on the trail of exposing what is rapidly becoming one of the largest frauds in commodity markets history is the most recent interview by Eric King with GATA's Adrian Douglas, Harvey Orgen (who recently testified before the CFTC hearing) and his son, Lenny, in which the two discuss their visit to the only bullion bank vault in Canada, that of ScotiaMocatta, located at 40 King Street West in Toronto, and find the vault is practically empty. This is a relevant segue to a class action lawsuit filed against Morgan Stanley, which was settled out of court, in which it was alleged that Morgan Stanley told clients it was selling them precious metals that they would own in full and that the company would store, yet even despite charging storage fees was not in actual possession of the bullion. It appears that this kind of lack of physical holdings by all who claim to have gold in storage, is pervasive as the actual gold globally is held primarily in paper or electronic form.

and as the article so simply states at the conclusion... "The game ends when the people who own all these paper obligations say enough and take physical delivery, and that's when the mess will occur.

.... when the realization that gold owned is just 1% of what is physically deliverable, you will see the biggest bank run in history.

Remember the game musical chairs - when the music stops and there are not enough chairs for all the people when the music stops?....

Meanwhile, these financial institutions/banks (like Morgan Stanley perhaps) are charging enormous storage and insurance fees for your "stored precious metals".

Link to the Eric King interview.

Related post.

Then there is this - and unfortunately GATA's Bill Murphy had only 5 minutes to summarize what he has been researching for years:

One commenter on this YouTube video wrote:
JP Morgan is being bankrolled by the Fed to keep fiat paper "alive" through the shorting of silver and gold, while the Fed prints its way out of this economic debacle caused by banks lending money to the indigent without financial portfolio to buy homes that went belly up and took the world with it. Its the fox guarding the henhouse. Naked shorting was banned, but not commodity futures. It's next. When that happens, it's gold to $3000, silver to $60.