Thursday, May 6, 2010

Physical Bullion vs. Paper: Get Your Paper Bullion Converted to Physical ASAP

Below is an email that went out from a Canadian bullion dealer:

"Sold almost a half tonne of silver on Friday. Bought 3,000 maple leafs in two orders over the last couple of days to replenish shop inventory...I am doing my best to add to my personal holdings but so much is coming in I can't really afford to buy it all. I don't have any personal bullion but I try to keep all the silver dollars offered to the shop. We have full page newspaper ads as well as radio ads running so a great deal of material is coming in.

On Friday I sold over 150 gold maple leafs as well as the silver I mentioned. I am seeing more affluent buyers who are cashing out certificates and converting to physical. The banks are getting weird about bullion here in Canada. They are refusing to buy bullion unless it is fully documented. I get the feeling they are trying to imply your specie would be worthless if you loose the documentation so stick with certificates which are registered. One client tried to convert certificates from Scotia Bank into bullion but the bank said the type of certificate did not allow for that. He sold it and found the premiums to buy physical there to be prohibitive so came to me. It's very easy to do well when your competitors are the banks

I am also selling lots of silver over the last few weeks. With the current lower prices I am seeing many people add to positions which is very unusual. In the past many sold corrections."

GATA has always warned for over a decade that eventually the physical bullion market would blow up the fraudulent paper market. If you have ANY paper/certificate/leveraged account "investments in gold/silver - GET OUT OF IT NOW AND BUY THE REAL THING. This includes GLD, IAU, SLV, Kitco, Monex, BMG or any Wall Street bank cerificate products. Even Perth Mint certificates. And especially if you have ANY exposure to Bank Nova Scotia/Scotia Mocatta, HSBC, JP Morgan or Barclays as a custodian.

"Alea iacta est - Let the die be cast"  - Julius Caesar upon crossing the River Rubicon with army.  Today was just a taste of what is to come with the markets.


  1. Today's action will send more people to the golden safe haven.

    Euro crash, market crash..and gold looking better than ever

  2. "They are refusing to buy bullion unless it is fully documented"

    Do you mean bullion certificates or physical bullion? If the latter, that would seem contradictory, as they would like as much bullion as possible, especially given how much gold Scotia removed from the COMEX last week. Am I missing something?

    Also, why do you say BMG is/could be in trouble? I thought they were allocated and segregated gold holdings? Is it b/c their gold is held with Scotia Mocatta?

    What are your thoughts on Central Fund of Canada(CEF) and the Silver Bullion Trust(SBT.UN) ? Aren't these run by the same folks? Fully allocated and segregated too, I believe.


  3. It depends on the products from BMG, and I wouldn't trust any of it because they use Scotia. I'm not saying BMG is in trouble, I'm saying their producsts are not to be trusted. If you go to their website and read thru the prospectus for their funds, you'll see how their custodian agreement w/Scotia is written. I was going to do a post on it and compare it to the PHYS prospectus but don't have the time right now. My view is that BMG was reckless with its custodial agreements and Scotia is not to be trusted. I have been informed of more than one first-hand account of people having trouble getting their bullion out of Scotia.

    CEF/GTU/SBT are the only paper bullion products I would trust.

    What the coin dealer is saying is that banks will buy not bullion from anyone unless it comes with appropriate paperwork which documents the serial number and assay. I'm assuming it refers to bullion bars, not coins.

  4. It's really telling that the best performing "gold stock" today was PHYS. LOL!

  5. WOW. You're right. The premium on PHYS blew out from 11.5% yesterday to 17.5% today.

  6. the only bank that i know buys physical is scotia and they have always asked for the documentation for years now that i remember when selling. here is the link

    i am pretty sure this goes for all types of bullion, coins or bars.

    1. receipt original
    2. canadian social insurance number
    3. more identification

    there are so many PM shops now that i dont even know why you would go to a bank, you can sell and buy everything for cash easily especially if you live in toronto. buy $15 over spot in person. one reason people buy bullion is for hiding wealth, not to leave a paper trail behind. then just buy mining shares if thats the case.

    scotia is the biggest rip off to buy bullion from, at least $150 over spot, check out all there fee's for buying on there site.

    a big supplier i know told me the last time i was there that 1oz coins/wafers are very tight and he sells a lot of 1oz scotia wafers.

    canada last january also made it mandatory for places that sell over 10k in a transaction to report it.

  7. Flight to the safety of th US dollar, home of the exportation of the financial crisis as well as computer trading "errors" (yeah right) that can drop a market 10% in a few minutes. No this was not an Onion headline! The wheels are getting very loose.

  8. gyc: ROFLMAO - you mean you don't believe the "pushed the wrong letter" story?

    Mike: good color. Thx. The best way to buy/sell bullion is craigslist - it's done with all cash and privately.

  9. Perth Mint hasn't seen a big pick up but demand is generally strong. If people want to take delivery of Certificate that is OK, but we consider ourselves safter than other storage facilities so clients don't have to worry.

  10. Fat fingers

    When is the last time you enetered a dollar or share amount on a trade and spelled out the quantity? The 1950's?

    Was this individual writing out a cheque? Or was it a sell ticket and he spelled 'milllion' incorrectly?

  11. I love how the dealer says "I don't have any personal bullion." Talk about not believing in your own product! When I was a bullion dealer I definitely ate my own cooking.

  12. Here's what he said: "I am doing my best to add to my personal holdings but so much is coming in I can't really afford to buy it all. I don't have any personal bullion but I try to keep all the silver dollars offered to the shop."

    I think in the first paragraph he is referring to people who are selling bullion to his shop. It sounds like he doesn't have personal gold but he accumulates silver dollars (maple leafs, eagles).

    A lot of coin dealers are just like any other "broker." As long as there's buy/sell movement, and a lot of it, they don't care what the product is.

    I posted that commentary because I find the parts in bold and underlined to be of significance and reinforces my views on what's happening with buyers switching to physical and eschewing paper.

  13. Hmm, I interpreted "silver dollars" to mean ones with numismatic value like Morgans, but no bullion coins like Maples. Maybe I misunderstood.

  14. That could be too. Like I said, the commentary of interest to me was the stuff in bold/underline

  15. I trade Spot Gold (XAUUSD) through a Forex broker that uses both Barclays Commercial and HSBC as its custodians for client I exposed?

  16. Nah. Paper assets they can just print more of. It's the physical bullion where the huge exposure is.

    Make sure you have a core position of physical gold and silver the you keep "under yer mattress."

  17. I would about 99% certain the gold leg of your forex trading is "held" by HSBC as unallocated gold. OK to trade/speculate on gold via forex broker, but not for buy and hold.

  18. Gold sovereigns seem to have performed pretty well.
    You can buy any old sovereign post 1817 as an investment, so long as it's legit, which will be ~ 8 grams of 22K gold.
    Or you can buy collectors' proof coins with COAs.
    Since sovereigns are still legal tender, transactions and profits are tax free too :)