Comment Text:
10-005
COMMENT
CL-02608
TO: Secretary .:~f...:the Commission
Commodity ~ut~ure.s Taading Comissi0n
Thre Lafayette Center
1155
2.~.St Stree~,NW
Washington,DC:-,20581
i~onday April 19,2010
FROM: Bruce G.Robinson
835 NE 2rid Ave
Grand Rapids,MN 55744
(noranch@paulbunyan,net
(218-999-9305)
SUBJECT: ETF's GLD & SLV (are they properly backed with real
metal?)
To Whom~ it may concern,
Enclosed are two articals,that I want to bring to your
attention. One is a reminder about our Financial system & it's
flaws. The other artical taken from "NUMISMASTER.CO~ makes strong
referance toshort positions on the CON~X that may not be proper.
Can you tell me if I am in a risky place with the GLD & SLV
shares I own? I would very much appreciat your openion on the
subject material. Thanks in advance,
Reguards, Bruce G.Rob~'~nsonNumismaster.com
"
10-005
COMMENT
CL-02608
Page 1 o
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One of the lesSer reported comments be, fore the Commodiiy Futures Trading Commlsslon
Marcl~ 25 headngs about the tropes}Ben o~ possible tradth¢] limits for 9o~d and s~iver could
end up having the strongest
Impact
in thefuture.
At one pohrt during the testimony of Individual Investor Harvey Organ, analyst Addan
Douglas wan allowed to
share
I~fs expertise on the nalure of gold trading by the London
Bullion
Market Assoclation,.The Londo8 ~= ket is the wodd's targesl exchange for
g0k|,
There a I contracls are In theory, fo(Ptt~/~ eel delive[y of the commodity,
This is much different than the smaller COMEX market tn New York City, where almost all
activity Is
to
net purchases and sales to avoid having to take phystcat delivery. For
Instance, an Investor with a long position witt tend to sell the contract before meludty or
exchar~ge it for another with a longer term, Those with short positions, likewise, normally
b~.back their COMEX positions or roit them ave~ Into short contracts with maturities
further In the tuiura.
Othet" New~& Ai~ete~
Gold_
Time to laflaence Cultural
Prooertv Issues
_How Should YOu Examtl)e
Coins?_
However,
the
Iheore~ical operaIl0n ,of the London ma~ket does not match what actually
happens, As on the New Yo~k COMEX, a high percentage of the trades on the London
market are between parties th..a~ ~aye no_Intention of delivering or of taking delivery of the
physicalgneds.
"Eqe exlent of the paper trading on the London exChange Is what AdMan Douglas discussed. From his analysis, Douglas thinks
thai the'ratio el gold in the vanlts to cover commitments versus the amount o! open contracts Is tess than 1 to 100. In other
words, one ounCe of gold Is the only Inventory available 1o cover contracts totaling more than 1OO ounces of gold.
This news appeared to so shock the CFTC commissioners that they asked another speaker, Jeff Christian, for his opimon on
tt~is point, Chdsgan
r~a'li~y
agree.rl with the figure, and lhsr~ ~ed td downplay its impedance because the market has traded in
ihi~
fashion fore tong
The London Bulllou Market A~Ocia?;on contracts s~1phaslze that Ihose who buy gold contracts through it are nol .fealty,, buying
gold. Instead the3. are b~com~ng ~n unsecured oredite.r of the' LBM~, In any kind of run to raise delivery on canasta,' almost all
parties
will
be out of
luck,
The efforts by central banks in the Far East and Middle East Io remove physlcst gold from London to
futfl[I
their long contracts
must be w~'eekfng havoc for the LBMA. Be. if you think you own gold when you own a gold contract in London for physical
deliver,/of gold upon rcatudty, you probably don't.
~;
-"-,~i-n~iiady those who think they own gold because they own shares of gold or silver exchange traded funds (ETFs) may be in
a huge surprise, Gt.D, the symbol for the largest gold ETF, uses HSBC as its lead storage company. HSBC Is widely considered
to have the largest gold short position on the COMEX. It Is a possibilitY, though tI would be at least Imp=m~erif not Iltegg~, that
some of the G_~D gold holdings may be pledged as collateral against the COMEX short con!~e. The pro- spe~s f0~: GLD
discloses that sh°~'&rah.olders of the ETF are not actually owners of physlcal m~&ts, bu~ara actual
~"
~ly creditors of the fund,
The same problem exists with the largest sll~er ETF, trading under the symbol SLV, The head custodian Is JPMorgan Chase,
vd]o holds the wodd'a largest silver short position, Again, it is possible thai some of the ETF silver is pledged as collateral to
"k~hort commodity contrasts, with ETF investors left holding only a claim against the assets of the fund.
I~ou own gold by holding a ~~M~n~, ffffn~{]'~old your breath. The COMEX has adopted several rule changes
over the past year to allow the sellers of contracts to deliver shares of an ETF instead of the physical metal. Of course the
COMEX has long allowed contracts to be settled for cash Instead of the commodlly,
Maybe you think you own gold because you hold a -certificate" of Ownership. The
mosl
common of these programs inVolve gold
supposedly stored at Ihe Perth Mini in Australia and at the Royal Canadian Mint In Canada.
VCnile the auditors of the Perth Mint report that thane are suffiCient inventories on hand to settle all certificates, there was a
never-resolved lesue raised about two years ago, The Perth Mini is owned by Gold Corporation, which in turned Is owned by the
gov.erem.e.nt of the state_ of We~s.te~ Australia. Gold Corporation also has a ,10 percenl ownership Interest in the AGR Maithey
pat~ersmp, a major ret~nery, s~mpiy stated, the AGR Matthey operation defaulted on delivedng same gold or silver and appears
to have borrowed some metal from the Perth Mint to make good, So, Instead of necessarily having all the physical metal in
house, the Perth M~nt may have a receivable for signtticant quantities of physical gold and sliver from an entity that simply does
nat have the metal to deliver.
TI~e Royal Canadian Mint had Its own controversy over the audit of its 2008 ~inancial statements. The amount ef precious metals
t!wentory reflected on the flnandal statements did ~ot match the lesser amcont actually counted as being at the Mint. A
d~fference of morn than t7,5~0 ounces of gold was never fully explained, thought Mint officials think some Of it may have been
ac~denlally sold off as tow pudty slag from th6 Mint's operation, s. Although It looks like the Royal Canadian Mini n.ins a tighter
, operation than the Perth Mint, COMEX, or LBMA, they don't deserve a "Jean blit of health either.
Finally, fyou think you own gold in storage, check to see if your storage contract is for allocated or t~nallocated metals.
AIlocetec[ metals,mean that specific Inventory Is set aside with your name, on It. II Is your asset and not an aSse~ of the storage
comPany?0naflO~ated &cCountS means that your ho.ldthg.S am. lumped In with eyaryone.else's of the sama.des~pflon.lan.d.,you
don't own aw pa~o~41ar coin8 or Ingots. In fact the inventory ts actually owned by the storage company. This means me[ me
"owners
~
of" r~etal stored there are only creditors of the storage company, rather than owners of physical metals.
The safest ways to know that you
own
gold (and silver) Is to hold the physical metals directly in your own hands, In safe deposit10-005
COMMENT
CL-02608
It has .now been well over a year since the near collapse of our entire financial system that cost the
nation more than 8 million jobs. To this day, hard-working families struggle to make ends meet.
We've made strides -- businesses are starting to hire, Americans are finding jobs, and neighbors
who had given up looking are returning to the job market with new hope. But the flaws in our
financial system that led to this crisis remain unresolved.
Wall Street titans still recklessly speculate with borrowed money. Big banks and credit card
companies stack the deck to earn millions while far too many middle-class families, who have done
everything right, can barely pay their bills or save for a better future.
We cannot delay action any longer,
It is time to hold the big banks accountable to the people
they serve, establish the strongest consumer protections in our nation's history -- and ensure that
taxpayers will never again be forced to bail out big banks because they are "too big to fail."
That is what Wall Street reform will achieve, why I am so committed to making it happen, and why
I'm asking for your help today.
