Venezuela plans to transfer billions of dollars in cash reserves from abroad to banks in Russia, China and Brazil and tons of gold from European banks to its central bank vaults, according to documents reviewed Tuesday by The Wall Street Journal.
The planned moves would include transferring $6.3 billion in cash reserves, most of which Venezuela now keeps in banks such as the Bank for International Settlements in Basel, Switzerland, and Barclays Bank in London to unnamed Russian, Chinese and Brazilian banks, one document said.
Venezuela also plans to move 211 tons of gold it keeps abroad...
Could this start a stampede of investors demanding physical delivery of gold? If so, there could be big trouble ahead.
Both GLD and the comex gold futures seem pretty quiet in the after hours trade right now... I'll check back later.
ReplyDelete[I knew that tag would come in handy... ;) ]
I certainly cuold not fathom 'owning' gold when all you have on hand are certificates of ownership.
ReplyDeleteWhen society crumbles, are you going to drive across country to retrieve gold that has probably already left the building with the people who worked there?
I remember in a previous link to Zero Hedge from Lewy where in the comments there was intense discussion about the subject of physicality of gold. As I do agree DWT... what is the difference between 'good faith' of one sort versus 'good faith' of another sort as to actually having something worthwhile in your hands.
ReplyDeleteLuther said...
ReplyDelete... what is the difference between 'good faith' of one sort versus 'good faith' of another sort as to actually having something worthwhile in your hands?
Yeah, like a bad attitude, good weapons, and copious supply of ammunition. :D
I have one eye on the markets this busy Thursday morning. Trading has been halted on the Russian exchange, and trades on certain Urp banks have been suspended, even with a ban on short selling.
ReplyDeleteOur NYSE? Rule 48 is in effect for the opening. Gold is up overnight. The FTSE is tanking. Asian markets are in the crapper.
I think it's impossible to actually understand (or even predict) the ramifications of all the above; too many shady players, including govt's and "regulatory" entities.
I'm just sittin' here on my sack of seeds, counting my boxes of ammo. Heh. :D
The Dow is in freefall.
ReplyDeleteDown 383+, 3.6% of value.
ReplyDeleteIt seems I am still not up to snuff from my stomacxh flu (shameless plug, see the comment on the Tomato thread) as I am sweaty, feverish and achey again.
Still going to do the inside portion of the kitchen drain, and hope that it cures the problem so the crawlspace portion is unnecessary.
Someone at Hot Air quoted a lengthy piece about Chavez, moving his cash and bringing home his gold out of fear that all his nationalizations of industry would lead to judgements against him in international courts, and the freezing of assets in cooperative institutions (which of course those in Russia & China are not, but I thought Brazil was still at least nominally a part of western civilization).
ReplyDeleteYeah! It seems that curling up under the kitchen removed the need for crawling down in the muddy crawlspace.
ReplyDeleteThe drain is draining, without gurgles or backup. I can't believe that, in all the years they've owned this place, and all the times they've removed the traps for cleaning, NO-ONE noticed that the dang thing ran uphill!?!?!?
Ari/Luther/DWT
ReplyDeleteWhen the phys gold/ paper gold spread blows out, the short gold / long lead trade is going to win big.
Which is why I hold paper. I don't kid myself that I'll last very long when the shooting starts, so what's the point.
Dances. The uphill bullshit is the toughest. I mean, it has to be, right?
ReplyDeleteLewy. The point, has a long spread just now.
For some damn reason I'm reminded of the swamp fighters of South Carolina during the rebellion. They had nothing. Except a musket, powder and shot.
Yet they held on, more than held on, kicked ass.
Even in my most pessimistic moments I believe that spirit still exists. I know it does... I guess it is just a matter of numbers at this point in time. Or, does tenacity still count.
Lewy, is there enough physical gold to satisfy the existing paper?
Luther, depends on the paper.
ReplyDeleteLots of folks think the GLD ETF is bogus - I don't think it is. Could be wrong, but I doubt it. They maintain lists of numbered bars in allocated accounts. Like I said, I could be wrong, but I'm betting (literally) that GLD is OK.
Sprott physical gold trust - highly verified, but buying in is tricky, because it often trades at a premium to physical gold.
COMEX gold futures - the day could come when a ton of long positions demand settlement in physical - and that could be a problem. I believe the open interest generally exceeds the inventory registered. I have also heard that comex will sometimes offer to settle futures in cash, at a premium.
Be very careful of "gold accounts" at banks - often you are buying nothing more than a paper derivative, and are effectively an uninsured depositor in the bank - you own gold to protect against a bank collapse, not participate in one.
My local coin dealer has plenty of inventory of eagles and maple leafs, and can get plenty more.
I still see Glenn Beck's smug mug on internet ads promoting Goldline - so they have gold to buy, too.
This doesn't speak to me of a huge breakdown in paper gold - when you can't find anyone to sell you physical - sell your paper!
If Hugo El Chav gets his bullion, and the markets don't hiccup, then I'll breath easier.
"If Hugo El Chav gets his bullion, and the markets don't hiccup, then I'll breath easier."
ReplyDeleteBut why, exactly? Could it just be that 'movers' deal with the larger players to keep up the facade?
But thanks for the answer and explanation.
Though really, and not wanting to sound like an asshole, I don't feel my question was fully answered. You still made mention of a lot of hopeful paper.
Forgive my obtuseness, please.
Luther, no worries.
ReplyDeleteChavez' delivery is one that's going to be hard to fake. But you're right, maybe they dont't stiff him for fear of panicing the herd.
My trust in some kinds of paper gold over others is based on seniority of legal claim. I can owe the mortgage company, I can owe the credit card company. The mortgage company is secured; they can repossess my house. The credit card company gets nothing, I can discharge my debts in bankruptcy - they're at the end of the line when it comes to recovering from me.
My point is that some kinds of paper gold are more like the former (mortgage) than the latter (credit card). In the worst kind of paper gold, you are not dealing with title to a chunk of gold somewhere, you are dealing with the credit of a bank or an exchange (in the case of futures).
My view is that the best kinds of paper gold are as good as the best kind of paper anything - land title, deed, etc. Of course, the day comes when all paper is torn up, then, well...
I think a bigger risk is that even if all the paper gold is "real", it can still get confiscated - most of all gold everywhere is in vaults. One friday evening the government can simply announce that it's all being confiscated - you will be paid out in electronic credits based on Friday's close, thanks for playing. Gold coins become contraband, you have a week to turn them in, after that, we send out the SWAT team if we show a judge probable cause that you're in possession. There would still be a black market of course but it would trade at a substantial discount to world spot prices.
War On Gold, anyone?
As for black gold - Ms Bachman makes a profoundly unwise promise...
ReplyDelete