Nathan Lewis, a money manager and gold investor, has got a fun and scary mystery in the gold world.
Over at HuffPo he cobbles together some very circumstantial evidence to suggest that something may be amiss at the Comex gold depository, which holds customers’ gold bars for a small monthly fee. He notes that each 100oz. bar has its own serial number, indicating its owner and where the bar comes from.
Jim Sinclair of jsmineset.com, a legendary gold trader, reported that some of his contacts have told him that, when they request to withdraw their 100oz. bars from the Comex depositories, they have not received the proper indicted bars. They received a bar, but not one with the correct serial number or weight.
Why not? One possibility is that an honest mistake was made. The high demand recently has apparently kept the depository workers very busy. Wall Street veterans recall that delivery errors were chronic in the days of paper share certificates.
Another possibility is that the bar indicated on the warehouse receipt does not actually exist. The implications of that are rather dire.
So why does Lewis fear the latter?
This would not be so troubling if there were not already a series of very odd things happening down at the Comex. Delivery delays have been chronic. This could be a symptom of an overworked staff. Or, it could be a purposeful stalling tactic. In any case, it should not take weeks and possibly even months, and sometimes dozen of inquiries, to get the gold you already own out of the warehouse.
The Comex itself, however, has been reporting that business at the warehouse is very slow. The daily reports of warehouse movements show almost nothing happening, day after day. So which is it, busy or not busy?
He goes on with more glints of evidence, including some suspicious transactions at Deutsche Bank that were not recorded by anyone else. We really have no idea whether it’s legitimate or not, and for the moment, we don’t desire going down the rabbit hole of gold bug global monetary conspiracies. It’s much easier to just take the blue pill with this stuff.
That being said, it all speaks to the problem with gold as a currency. It’s got expensive carrying costs, and there’s a massive trust problem. Unless you actually have the gold underneath your mattress, you have to trust the party on the other end to hold it and account for it, and then deliver it when armageddon comes, and your gold coins are supposed to make you king.
So you can bet on gold, and hope one day for your windfall, but in the meantime, you’re paying a rather high price for this insurance, while stories like these are sure to give you ulcers.