Re: Turk and the ETF gold storage kerfuffle etc.
I predict that if the ETF Turk fiasco gets any more high profile and other credible parties or news services are brought into the picture that damage will be done gold bullion ownership proxies.
I am not interested much in owning bullion but because of these threads, I'm vaguely aware of several vehicles that appear to provide bullion ownership whereby I don't have to carry and store bullion.
All those plans out there confuse me and truthfully make my eyes glaze over. There's GLD and ETF's. Theres gold money and e-gold. Any publicity about impropriety and danger makes me run for the exits. It appears that the very thing I would achieve by holding gold (ultimate security) is the very thing that I would have to worry about now. I don't want anything to do with it.
I'm old enough to know that bad stuff happens. Been there and seen it. Maybe Turks flailing will ensure that the following item gets resurrected in the newspapers and then the entire retail gold market can abandon proxy bullion ownership.
I consider this a threat if ETF gets high profile bad press.
C
Consider the following, I remember it well:
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In - Depth -- Investment Fraud
October 13, 2003
By Monte St. Amant
WINK-TV -
With the price of gold soaring near a two year high many people are buying gold for the first time and adding to their portfolio.
Experts believe the precious metals market may be ripe for investment fraud.
Mark Mathosian and Pablo Trejo from the Florida Department of Financial Services explain how crooks have taken advantage of past bull markets in metals to rip off unsuspecting investors.
Mathosian says the gold scheme occurred in the late 1970's during an economic recession.
"Two brothers from Ft. Lauderdale operated a precious metals brokerage business named International Gold Bullion Exchange (IGBE). IGBE published colorful sales brochures, hired telemarketers and sold precious metals investments to the public. The concept was simple. Buy gold or silver today at attractive prices and sell your metals later, after the stock market started moving up," Mathosian says.
"This idea made so much sense that thousands of investors purchased precious metals through IGBE. IGBE made it easy for you to buy the metals and easy to protect your investment. At least that's what they said.
"Let's assume you wanted to buy $10,000 worth of gold bullion. You would contact IGBE and inform them of your intentions. IGBE would promise to buy the metals for you in the open market and ship the metals to you in exchange for your money. But wait, IGBE had a better idea. Instead of taking possession of the gold why not leave it with IGBE for safekeeping? IGBE would store your gold under lock and key in the company vault in Fort Lauderdale. That way, when you were ready to sell you just telephoned IGBE. They would broker the transaction and mail you a check. "
After customers mailed in their money, IGBE would send a "certificate of ownership" to prove you actually owned precious metals.
"You could then deposit this paper certificate in your safe deposit box until you were ready to sell. A few years passed and the stock market started rising. It was time to sell gold and reinvest in the stock market. The telephones on the desks in the IGBE offices in Ft. Lauderdale began ringing....and ringing.... and ringing. Then, the telephones at the State Comptroller's Office began ringing. Nervous investors wanted to know what happened to GIBE and their gold," Trejo said.
"An investigation commenced and when it was concluded IGBE was found to be a fraudulent enterprise with investors losing $140 million. There was only a small amount of gold in the company's vault and most investors lost all of their money," Trejo continues. "One of the brothers was sentenced to a long prison term and the other was stabbed to death before his trial
www2.winktv.com
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NON-EXISTENT INVESTMENTS
This is the pure kind of scan. The criminal separates the victim from his cash with a promise of riches from a fabulous investment. The only problem is that the investment does not exist. The forms that the investments can take are limited only by the con man's imagination. The collapse of Bullion Reserve of North America (BRNA) sent shock waves through the hard-money investment community. Alon Saxon, the president of BRNA, killed himself on September 26, 1983, and his company filed for bankruptcy on October 3rd. Missing were US$ 60 million worth of investors' assets that were supposed to have been sitting in BRNA's vault in the form of gold bullion.
BRNA had become one of the biggest bullion dealers in the country because of its ads that promised gold at 3-1/2 percent over the spot price and free storage. Apparently, most of the investors' funds were not used to purchase gold at all but were used for other investments. The impact of this collapse was magnified because almost the exact same thing had happened earlier in the year with the International Gold Bullion Exchange.
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