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DON'T Store Bullion with Bank of Nova Scotia

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Thanks to several Bullion Bulls members for passing along the link to another intriguing issue relating to the legitimacy of the global gold (and silver) market. A follow-up interview from the “King World News” site took aim at the bullion-storage of Bank of Nova Scotia – or more particularly, what they weren't storing: silver.

To provide the context to readers who haven't already absorbed all the relevant issues, there are two other “stories” - one old, one new – which closely relate to the revelations from the Bank of Nova Scotia's bullion-vault.

The first item was Morgan Stanley's bullion-fraud: where it only pretended to buy-and-store bullion for its own clients. Regular readers will already be familiar with this news, as I covered it in July of 2009 (see “Morgan Stanley pay damages for Precious Metals Fraud”). The other blockbuster news that ties in to this issue was the careless revelation by Jeffrey Christian of the CPM Group – yet another Goldman Sachs Stooge actively involved in the banksters' nefarious deeds in the precious metals market.

During the recent CFTC hearings, Christian blurted out that “the gold market was a hundred times the size” of the actual amount of “physical” bullion held by the (so-called) “bullion banks”. While I have long alleged that the banksters didn't have sufficient bullion to cover their gigantic “short” positions and their equally gigantic “custodian agreements” with the fraudulent, “bullion-ETF's” (most notably, GLD and SLV), the revelation that the banksters had leveraged their real bullion by (at least) 100:1 was a shock to everyone.

This sets the stage for the “King” interview with Harvey and Lenny Organ (father and son) along with Adrian Douglas – one of GATA's valiant directors. As a last detail, the Bank of Nova Scotia operates the primary bullion-storage vault for all of Canada and is the Canadian bank which is most active in the infamous “gold-trading” of the anti-gold banking cabal, which is rapidly losing its “grip” on this market, after a quarter century of ruthless price-fixing.

Lenny Organ had been repeatedly requesting access to the Bank of Nova Scotia's bullion vault, in order to verify his own, personal holdings – which he had chosen to buy and store through that bank. He finally obtained his invitation in September 2008, just before the most-massive spike in bullion-buying in decades (after the Wall Street-induced “crash” of 2008).

What he saw inside that vault was that (especially for silver) the “cupboards were bare”. The entire “working supply” of silver for the BNS was sixty 1,000 oz bars, with each of those bars equaling roughly $15,000 of silver apiece (at 2008 prices). In other words, the total amount of bullion held by the Bank of Nova Scotia (including what it was willing/able to sell) was worth less than $1 million.

Upon seeing that the bank didn't even hold their own bullion (which they paying “storage fees” for), the Organs demanded that BNS produce (and then store) the bullion which it already claimed to hold for the Organs. Incredibly, the BNS demanded additional storage fees and still required more than six weeks to make good on their contractual obligations.

Apart from the enormous time-lag for one of the world's largest bullion-banks to produce the bullion it was already contractually obligated to store, it appears that the banksters have two sets of storage rates for its “bullion customers”. There is the “regular” rate it charges for chumps – i.e. those clients for whom (like Morgan Stanley) the Bank of Nova Scotia only pretended to buy and hold bullion, and a second fee structure for those clients who insisted that the bank buy-and-hold real bullion on their behalf.

This is a close parallel to the bullion-ETF market, where investors can invest in the fraud-funds: GLD and SLV, and pay near-zero fees to have these funds store paper on behalf of its unit-holders; or, you can pay much higher management fees to funds like the “Central Funds” group of Canadian bullion-ETF's, or the new, physical gold “trust” from Sprott Asset Management – and know that you're holding real bullion. However, I plan on saying much more about that market in an upcoming commentary.

The gold-holdings of the BNS were not quite as sparse. There was roughly 100,000 ounces of gold storage, with a market value (at that time) of less than $100 million. However, as Adrian Douglas quickly pointed out in the interview, the Royal Canadian Mint had (by itself) sold more than a billion dollars of gold, in 2008 alone. Thus, when Canada's largest “bullion bank” has a cumulative total of bullion (acquired over years and decades) that amounts to much less than 10% of Canadian demand for one year, you don't have to be Sherlock Holmes to conclude we are witnessing yet more bankster bullion-fraud.

The obvious advice to any and all Canadians who think that the BNS is storing bullion on their behalf is to immediately demand to see your bullion, to immediately convert your BNS gold (and silver) “certificates” into real bullion, and then to personally make arrangements to store your own bullion – where your own banker can't sell it to someone else.

One has to wonder if we are about to witness our own “class action suit” on bullion-fraud, similar to when Morgan Stanley was sued in 2005, or perhaps a wave of class-action suits. In the 100:1 world of bullion-leverage in which the banksters dwell, those bank clients (all over the world) who think they own bullion are most likely only holding paper. Indeed, the most-hilarious moment in the “King” interview was Adrian Douglas' observation that the “gold certificates” of the BNS state they are “backed by the assets” of the BNS – but make no claim to actually “back” those certificates with any bullion, at all.

However, while the certificates themselves make no reference to representing actual bullion, the storage contracts from the BNS explicitly discuss fees relating to the buying/selling (and holding) of “metal”. Thus, assuming that the BNS “bullion dealers” understand the distinction between “metal” and “paper”, and assuming that any/every judge is also capable of making that distinction, the case of fraud against the BNS is “open and shut”.

Gold-sector veterans like Jim Sinclair have been urging people (in the strongest terms) to hold their own bullion. Yes, it is somewhat inconvenient and/or costly, but investors have a very clear choice, thanks to the inherent dishonesty of global bankers in dealing in bullion: you can bear with the inconvenience of storing your own bullion, or enjoy all the “convenience” of having bankers charging you to store paper.

As Bullion Bulls members have heard on this site many times in the past, the only “paper” relating to the gold and silver market which investors should hold are the shares of quality gold and silver miners, or they can seek-out the small minority of bullion-ETF's (and related vehicles) which do hold real bullion, but also charge significant management fees.

There are some more, juicy anecdotes in the interview, so I recommend that those who have not listened to it take the time to do so. If nothing else, it helps to verify that the assertions of gold commentators (like myself) are accurately representing the facts which have been dug-up in recent weeks.

In the meantime, while you won't read about any of these events in any “mainstream” media outlet, awareness among the investing public is clearly rising rapidly. This can be seen in the comments which are made any/every time some branch of the propaganda-machine publishes more precious metals “spam”. Articles recommending fraud-funds like GLD and SLV are being greeted with open derision by readers.

While clearly these individuals represent the more sophisticated segment of precious metals investors, their numbers appear to be enough of a “critical mass” to spread the word on what is really taking place in the precious metals market, in general, and inside bankster-vaults – in particular.

Comments (3)Add Comment
Brian Boutilier
written by Brian Boutilier, April 10, 2010
I think this message was worth repeating too. I linked it to a few places in hopes that the message will be heard by a larger audience. Boot
Jeff Nielson
written by Jeff Nielson, April 09, 2010
Yes, I'll probably have to wait until tomorrow to catch-up on that one. Thanks again, Sailor!
written by Claude, April 09, 2010
Great analysis Jeff.

Here is an other very detailed recap in audio form.

It is a bit longish, more than an hour, but could be a good time investment for some over the weekend.


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