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gold Some Banks Unwilling To Hand Over Client-Held Physical Gold And Silver?

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For some time some of the more outspoken gold commentators, like GATA, have been suggesting that title is held to far more gold and silver supposedly stored in bank's vaults, than is actually there - indeed they even have been questioning Central Banks' holdings of physical bullion - even in Fort Knox.  Now there is some anecdotal evidence emerging on the internet and news programmes that may serve to back up some of these claims, at least as far as some commercial banks are concerned.

The theory that physical gold and silver may be in short supply comes about because there appears to be more gold, in particular, supposedly held by the banks than is in reality in existence.  While banks do not hold the amount of cash on hand that is owed to depositors at any given time (hence the serious consequences of a run on a particular bank), the premise is that the same may well be applied by these banks to stocks of bullion.  In this case, so the banks may say, that if push comes to shove, they would be able to lay their hands on the actual metal fairly quickly - or at the very least provide cash in lieu, although this may not be wanted by the metal owner.  It certainly has been assumed that ‘allocated' gold (or silver) is actually kept on hand, but ‘unallocated' bullion may be loaned or sold, but returned or repurchased should the need arise.  However the analysts will also tell you that the amount of gold or silver traded in virtual transactions exceeds the global holdings by a large multiple and if everyone insisted on physical delivery of their metal, this would be completely impossible to provide.

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If a bank holds physical gold or silver on a client's behalf, storage fees will be being charged, but if that gold or silver is not actually being held in the vaults, but has been say leased out to a third party, would it be fraudulent to continue charging for this ‘storage'? - a point which probably has yet to be challenged legally.

But such days may be close.  A couple of days ago King World News of the U.S. quoted Jim Rickards, a long term proponent of gold market manipulation by banks and governments and extremely well respected - as saying that he knows of an investor in physical gold who had to haggle with a Swiss bank, which was supposedly storing gold for him, for a full month to achieve physical delivery of his own owned bullion - a considerable amount - $40 millions worth.   And the gold was only returned to him after threats to resort to legal action and give the story to the media.

Subsequently, Gold Money founder James Turk, told the same news progamme that he has already come across a number of similar cases and recounted a specific one showing that investors in even relatively small amounts of physical bullion have experienced similar problems.  In this case the investor held some $550,000 (20,000 ounces) in physical silver, also supposedly held on his behalf in a Swiss bank, and has been negotiating with them for two months so far without being able to take delivery of his own silver.  The bank had apparently been suggesting that he take the cash value, but he was holding out for delivery of the physical bullion.

Both these instances, and the other unquoted ones referred to by Turk, could be taken to suggest that the banks did not have the investors' specific allocated gold or silver in their vaults, despite charging fees for its ‘storage'.  Rickards also went so far as to suggest that holders of physical bullion store their metal in privately run vaults rather than within the banking system.

So far all these reports have been anecdotal with neither the specific investors not the banks involved being named.  But if this is endemic in the system and the banks are not holding even the ‘allocated' bullion they say they are it can't be too long before more detailed cases come to light.  This could really throw the precious metals markets into turmoil and precipitate the short squeeze to end all short squeezes if holders of physical metal lose confidence in the banks which are holding their bullion - if indeed they are!

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