Friday, August 27, 2010

GLD Managing Director Jason Toussaint Does Not Own ANY GLD Shares...

BUT he owns physical gold and mining stocks. Greg in Chicago alerted me to a blog post by Jeff Nielson on It regards an interview of Toussaint on Canada's Business News Network (BNN). As Nielson points out, Touissant admits at the end of the interview that he owns physical gold but does not mention that he owns any GLD. Here is the link to interview - I've linked part 2: Toussaint = The Big Whiff The relevant comment starts at the 5:44 mark. The 10-K I've linked below confirms that Toussaint indeed does not own ANY GLD shares.

But there's so much more if you listen to both parts of the interview. Let's get the basics out of the way.  Jason Touissant is the Managing Director the GLD Trust and a principle executive officer of the World Gold Trust Services, the sponsor of the GLD Trust.  All of this information can be gleaned from the GLD 10-K, which I've linked here:  GLD 10-K

Note that on page 76, as Jeff Nielson picked up on from the BNN interview, that NO officers and directors of the World Gold Council or of the GLD Trust own ANY shares.  No insiders own shares.  Why would that be the case?  If GLD is as good as owing physical gold, and is fully backed by physical gold, why would Toussaint admit to owning his own physical gold, but not express confidence in the fund that he oversees by owning some the stock in GLD?  We would NEVER own any mining stocks in our fund in which insiders did not own a meaningful amount of shares.  In fact, with our junior mining stock holdings, insiders typically own 10-20% of the company.

Now let's get to other interesting aspects of the interview that Nielson did not cover.  At the 4:25 mark in Part 2, Toussaint makes the statement that the bar auditor of GLD audits the bars twice a year and physically handles each of the bars once per year.  HOWEVER, the auditor, Inspectorate, only looks at the bars in the HSBC vault.  As per the prospectus, HSBC has subcustodians with which there is no formal contractual agreement and the prospectus specifically states that no one can have access legally to the subcustodian vaults.  Here is the latest inspection report from Inspectorate, the inspection firm:  LINK  This particular report describes the semi-annual random sample audit. 

This is great that an inspection firm goes into the HSBC vault and samples the bars for authenticity and serial numbers, but what about the bars that are at the subcustodians?  And you are asking me to believe that Inspectorate counts all 104,325 bars (the number of bars that would be in the vault as of 8/26) and verifies serial numbers and stamps and reconciles them with the Custodian's records?  I refuse to believe that. I would bet that the annual audit is another statistical sample BECAUSE no one is allowed to have access to the subcustodian vaults.  In fact, now that I think about it, there have been articles in the recent past which have demonstrated dozens of inconsistencies at GLD and SLV between the actual serial numbers on many of the bars and records kept by the Custodian of each Trust.

Finally, Toussaint makes the statement that the bars are held in allocated form, meaning that within HSBC's vault, all of the GLD bars are placed in a separate holding area and the shareholders of GLD have direct claim to those bars.  If HSBC blows up, something that is within the realm of possibilities, the GLD Trust gold is not part of HSBC's asset/liability list.  HOWEVER, the prospectus specifically states that gold which is being transported in and out of the vault and the gold which is being held for redemption by an authorized participant exchaning a minumum of 10,000 shares for bars in the Trust, sit in unallocated form.  And the bars at the subcustodian are in unallocated form. 

The significance of this is that if HSBC blows up, any unallocated bars become part of the claim of the general creditors to the HSBC bankruptcy proceedings, and the GLD Trust has to stand in line with all of the other unsecured creditors to receive payment, if any, on its claims.  The Prospectus specifically states that, in the event of an HSBC bankruptcy, unallocated bullion bars could result in material loss to the Trust. 

Perhaps this is why no World Gold Council officers and directors, and specifically Jason Toussaint, the Managing Director of the GLD Trust for the WGC, do not own any personal shares of GLD.  They know the Golden Truth.

Remember, this is real 400 oz. gold bars: 

                                                                 This is NOT:



  1. LOL. Not as classic as your rib contest entry!!


  3. Thanks man!

    I stopped talking about it on my blog because so many get all bent about the metals, but I added to the physical silver stash last two months big time.

  4. Thanks Hopium - I saw thatyesterday and thought about blogging it.

    GYC, who gets bent out of shape about the metals? Just buy 'em on the dips like you do and ignore the day to day volatility.

    Seriously, myself and the people I've been doing this whole thing with for the last 9 years all have the view that we are on the verge of a very big move. The current set-up has all the trappings that we have in last 2005-May 2006. Gold made a 35% move. The HUI was up over 50%. This could be huge.

  5. Thank you so very much for your insights into the truth around the GLD Ponzi Scheme or at the very least the insecurity that GLD Gold really represents.

  6. This is classic! All these ETF managers and custodians run around saying their product is bullion, but better because you don't have to pay for storage. It tells me they know this is a Ponzi scheme and they don't want anything to do with it.