Swiss Banks Struggling to Make Good Delivery of Gold

Reports are mounting about banks in Switzerland unable to deliver on client gold holdings when those clients decide they want to take delivery of their precious metals property.

Gold that's really there...

Wealthy individuals increasingly seem to feel worried about their gold or silver held in third party vaults, very often large Swiss banks. The story of a high net-worth individual is telling a scary story: When the gold owner demanded to take delivery of a sizable volume in gold, the bank apparently got into real trouble. This gold owner told, “It took lawyers, it took threats of publicity, it took a lot of pressure.” Instead of settling the affair within two or three days — the amount of time you’d usually expect for taking delivery after proper advance notice had been given — the bank did not deliver for approximately thirty days. Says that source: “It is obvious that the gold was just not there”. The bank appears to have issued a receipt against empty vaults and, when the owner of the deposited gold wanted to take delivery, obviously had a very hard time finding a place to cover themselves for the amount owed. The bank had, essentially, run up a short position against that client and was hesitant covering it. The money, it appears, had long been spent by the bank (or burnt on some of those ingenious ABS deals). Not a good way of doing business (and expensive when that “short position” needs to be covered at current high prices).

Not exactly the kind of “security” you’d expect from a Swiss bank either.

Typical of “modern” banker thinking though: Similar examples have also surfaced from silver owners. Therefore, the problem goes beyond just gold. Even a person who is a “low roller” in comparison and wanted “just” $550,000 worth of silver delivered has to fight to get hold of their property. The metal owed is just not there.

Mark Twain once famously said: ” A goldmine is a hole in the ground with a liar standing on top.” It appears, Swiss banks are not much different either.

The bottom line of these stories is this: Buy gold, buy sliver, but take delivery of the physical metal immediately. You never now if future prices might break the bank before you they finally release to you what they owe you.