…and THAT’S not even the half of it, folks. It is indeed looking more and more like there’s no gold in that pot at the end of the rainbow–just a pile of worthless paper. The Swedes no longer accept the American dollar and [H/T to Bones for bringing to light Seeking Alpha’s “Seems Like Mexico’s Purchased 110 Tons of Gold That Didn’t Exist, by Avery Goodman] apparently, Mexico’s attempt to bolster their position with the purchase of 110 tons of gold purchased from a British bullion bank have failed disimally, leaving them with only a faint promise of any hope to collect their purchase. The problem is that they did not take physical delivery, and thus subjected themselves to one of the oldest scams in the history of humankind:
They now own nothing more than a gold “bond” issued by a commercial bank. They have been tricked into buying a debt instrument that will never pay one penny in interest. They’ve been sold a “pig in a poke”.
It is, on one hand, unbelievable that this kind of major fraud continues to be perpetrated in this day and age, when people–and governments, one would think–should be more circumspect. But, sadly, fraud and corruption have become the operative words in the current world, where, now more than ever, criminality with impunity apparently rules supreme.
Avery’s article is most notable because it has a silver lining–one of illumination, and of another truth telling hero in the army for transparency: one
Guillermo Barba…[who] posed a number of questions to the Mexican Central Bank about the gold purchases… Mr. Barba is apparently very persistent and, finally…they gave him the answers he sought.
the Bank of Mexico has become an unsecured creditor of the bullion bank that sold them on the deal. Like so many other institutional and private investors, Banxico has made the mistake of trusting the London bullion bankers. It was duped into buying what is essentially an unsecured “bond” giving a claim not on gold, but rather, merely upon the general assets of the selling bank.
Selling imaginary gold to an emerging market central bank in a quasi-fraudulent unallocated storage scheme is a gutsy move. By doing so, the bullion bank defeated the very purpose for which the Bank of Mexico was buying the bullion. Instead of owning a valuable asset (gold), free of counter-party risk, Mexico owns nothing. It appears to merely be an unsecured secured creditor of a London mega-bank that is probably insolvent like most of them.
Many of the LBMA banks were kept alive solely by the grace of bailouts from their headquarters’ national government. If one of these banks eventually does officially go belly-up, they will all go belly-up, and Mexico’s gold will be lost forever.
The only way to be sure of ownership is to take physical delivery, and as a central bank, Banxico should certainly do that. Mexico should tolerate nothing less. Once it is clear that someone has misled you, you don’t give them a second chance if you’re smart.
Clearly, Mexico–as well as many, many others who sought solvency through the purchase of precious metals–fell victim to the ultimate fraud by not insisting upon physical delivery. Make sure you do not do the same. And, do not make yourself a victim of the pernicious plethora of *gold buyers and sellers* out there. Do NOT send your metals to someone who advertises on television by promising to send you a check if you send them your gold; do NOT purchase any metals from any entity that does not guarantee physical delivery. If you’re in doubt about whom to trust, Colorado Gold is, IMO, the best company with which to deal. Discreet, personal service, guaranteed physical delivery and the utmost of integrity are their bywords. Their site also has real time price and currency updates. www.coloradogold.comThe President, Don Stott, has been in the precious metal business for nearly 40 years, and writes a twice weekly column, the most recent of which is the Sept. 27 piece–a good commentary on what COMEX* is up to, how metal brokerage works, and what has been happening recently in the precious metals market. http://www.coloradogold.com/archive/The_COMEX_Did_It_Again-1094.html
So, take heed, Mexico–caveat emptor! (You should have gone with Colorado Gold;)
Stay awake, pay attention, listen and learn, do your own Due Diligence and only deal with REPUTABLE businesses–in ANY sector!
Yrs in liberty,
but C# or you will Bɓ ;))
* a gold trust owned by iShares