Nick, first let me say that I am not (in any way) suggesting there is any deficiency in your OWN, internal accounting.

That said, you are portraying an ILLUSION of certainty with your characterization of "allocated" bullion accounts. Yes, an "allocated" account is obviously a BETTER claim on bullion than an unallocated account. However, it is still a "custodian agreement" and thus the validity and security of that bullion is 100% dependent on the good faith of the banker who has custody.

You talk about "audits" when in fact NONE of the bullion-banks are EVER fully audited. Instead, they are never subjected to more than PARTIAL audits - covering only a TINY portion of their overall bullion obligations.

The most obvious example is the massive, short positions of the bullion-banks - which are NEVER audited. These positions are equal in size to the equally massive (equally dubious) holdings of the giant (fraudulent) ETF's: GLD and SLV.

Your OWN bullion accounts are only secure IF Scotia Bank decides honouring its custodian agreement with your company is more important to it than covering its own short positions. Given that covering these short positions could potentially result in INFINITE losses for the bullion-banks, you are making a HUGE assumption that the bullion-bank will place a higher priority in honouring its contract with you than protecting its own solvency.

You acknowledge, yourself, that all indications are that these bullion-banks regularly engage in "naked" trades - so this is a risk which you KNOW exists, yet you have no way of protecting yourself or your investors from that risk.

Keep in mind Jeffrey Christian's testimony at the CFTC that "cash settlement" is a perfectly fine method of dealing with "bullion default". You and your clients may own bars TODAY. This does NOT guarantee that those bars will be there tomorrow, and IF they are gone, your only recourse is to sue for "damages" (i.e. paper).