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For instance, by now I
expected to be bringing you the story of one man’s realized
delivery of gold purchased on the Comex in December of 2008. I
have been following this transaction since last November, when
he told me of his intent to take delivery of two 100- ounce .995
or better gold bullion bars, as is his right in settlement of
two December Comex gold contracts.
I last spoke with him in mid-January, and at that time he was
keeping a time-lined diary of the continual delays, roadblocks,
and assorted hassles that he was experiencing in the simple act
of trying to get possession of that which he had bought and paid
for.
Finally, in early February, he received his promised gold. I’ve
asked him to write the story for us, and I hope to be able to
share all the gory details here soon.
Gold continues to fly off the shelf here, where we specialize in
delivering real gold bullion in a timely manner. The size of our
average sale continues to grow, as more and more money pours
into the gold market. Many of these purchases are by individuals
who are swapping out positions in an exchange traded fund for
gold.
Usually that ETF is GLD, an electronically traded unit which
represent one-tenth of a ounce of pure gold, stored in a London
depository. GLD has been such a success that its gold holdings
now exceed that of either the central bank of Japan or
Switzerland.
Many of our customers have noticed that GLD trades at a discount
to the spot gold markets. Although there is certainly price
correlation between GLD and real gold, the expenses incurred by
the exchange traded fund mean that a single unit of GLD is only
sort of a tenth of an ounce of gold, due to the constant storage
and administrative expenses.
So, our word to the wise is, take the GLD quotes with a grain of
salt – real gold in hand is simply worth more.
Electronic gold is, in our opinion (and some disagree – see Jim
Sinclair) all well and good, but what I am hearing from our
customers is a simple desire to have the shiny element in their
actual possession, rather than by proxy through a counterparty.
In this time of reduced trust in large institutions, the idea of
an electronic relationship to unseen gold bricks, held in
custody in the bowels of some guarded underground fortress in
London, just doesn’t cut it.
As you may already have noticed, we have restored many bullion
choices to our home page. No longer will you have to check
intermittent offerings on our ‘Specials” page for what’s in
stock. For right now, what you see is what we have - many gold
bullion choices are now in stock and most are available in large
quantities.
We will continue to use the ‘Specials” page for new and/or
unusual purchases and vintage coins or bullion that we consider
a good deal, often available in limited quantities, or sometimes
one-of-a-kind. If you’re already signed up for email
notification, you will still get timely notice of new inventory
and specials.
The gold market, most recently and encouragingly up against a
down stock market, simply looks stronger than dirt. I can’t help
but think that the era of three- digit gold prices is, after a
reign of several decades, about to be over.
The events of this week, including the rather
less-than-convincing public appearance of Mr. Timothy Geithner,
reinforce the view that there is still a lack of adult
supervision at the Treasury. The gold market will always
fluctuate, but being short gold right now seems to carry much
more risk than being long.
And if you disagree, we would be glad to purchase any part of
your holdings.
-Richard Smith, February 13, 2009
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