Silver Fractional Reserve System?

  1. 3,816 Posts.
    You can read a very interesting piece about silver certificates by Ted Butler at the following web address:

    http://www.investmentrarities.com/10-01-02.html

    I suspect that there may be some truth to Mr Butler's fractional reserve allegation for silver certificate programs, given this exerpt from a .pdf describing the Perth Mint Certificate Program. It seems to imply that only allocated bullion is stored in a physical form.

    · Allocated (segregated) Coins or Bars – You own title to specific coins and/or bars,
    which are placed in a physical form in the PMCP storage facility, which is guaranteed by
    the payment of a cash equivalent by the State Government of Western Australia under
    Section 22 of the Gold Corporation Act 1987. You pay the quoted precious metal cost,
    fabrication charges and storage fees at the time of your purchase.
    · Unallocated (unsegregated) Coins – You have title to precious metal deposited in a
    metal account and deliverable in a fabricated form, delivery of which is guaranteed by the
    payment of a cash equivalent by the State Government of Western Australia under Section
    22 the Gold Corporation Act 1987. You pay the quoted precious metal cost and
    fabrication charges at the time of your purchase. You pay NO storage fees on this
    option.
    · Unallocated (unsegregated) Bullion – This option is available only if you are
    investing in excess of USD 25,000 (AUD 10,000 for Australian residents). You have
    title to precious metal deposited in a metal account, delivery of which is guaranteed by the
    payment of a cash equivalent by the State Government of Western Australia under Section
    22 of the Gold Corporation Act 1987. You pay only the precious metal cost at the time
    of your purchase. You pay NO storage fees on this option.

    It may be that some of these establishments dont even physicaly back most of the certificates in the first instance. They charge you $50 to issue you with a certificate, get ~4% on your money and tell you what a great deal you are getting because you pay no storage fees! And what is it exactly that they store for you? And if the price of silver rises appreciably they declare bankruptcy and the certificate holders get paid off at a silver price well below what it ultimately attains!

    As an aside, how many people, to some degree, believe the arguments for silver manipulation by Mr Butler and other silver bulls? I cant understand why this hasn't been asked as yet, as the logistics may only be as simple as requesting emails titled 'count'. The accuracy may be uncertain, but I believe it a question that is worth trying to answer.

    While the internet is an incredible source of information, it provides little insight as to whether you are part of a large crowd or alone in the wilderness. People can become emboldened in the former case.


    What a con job!

    Billy
 
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