If you want to invest in gold as a hedge against inflation, the following story is another reason to actually purchase physical gold and keep it close. Buying gold ETFs or having your gold stored for a nominal fee in a “secure” location is not a guarantee that your “gold” is your property. There have been rumors that gold is being sold multiple times to unwary investors who trust their metal brokers. This fiat gold may extend up to government depositories as even the gold stored at Fort Knox cannot be physically audited.
If you do not physically have your gold in your possession, get it. The worst case is that a run on gold depositories will increase the price of gold and you will not become one of the investors who will be left out in the cold.
David DeGerolamo
HSBC Sues MF Global Brokerage Over 20 Bars of Gold, Silver on Deposit
HSBC Holdings Plc (HSBA) sued the MF Global Inc. brokerage trustee to establish whether he or another person is the rightful owner of gold bars worth about $850,000 and silver bars underlying contracts between the brokerage and a client.
Five gold bars and 15 silver bars underlie eight Comex contracts between the brokerage and its client Jason Fane of Ithaca, New York, London-based HSBC said in a court filing yesterday. Both parties have asserted claims to the bars, creating difficulties for HSBC, which is storing them, the bank said. HSBC asked a judge to decide who the rightful owner is.
“HSBC has received conflicting instructions regarding ownership and disposition of the property,” it said. “Accordingly, HSBC is exposed to multiple liabilities with respect to the disposition of the properties.”
Bullion is selling for about $1,717 an ounce on the Comex in New York, up about 21 percent this year, as investors bought the metal to protect their wealth from Europe’s escalating debt crisis, and reached a record $1,923.70 in September. Treasuries returned 9.3 percent, a Bank of America Corp. index shows.
‘Bars Are Mine’
“These bars are mine,” Fane said in an e-mail today. “We had a letter from HSBC that they were on the loading dock to be shipped to our warehouse contractor when there was some action taken by a third party to stop or delay shipment.”
The trustee, James Giddens, expects this “relatively minor and not unusual dispute” to be successfully resolved, his spokesman, Kent Jarrell, said in an e-mail.
Fane wrote HSBC after the bankruptcy, asking the bank to transfer the bars to his account at Brink’s, according to a copy of his letter filed in court. The trustee wrote HSBC saying the gold and silver was “customer property,” and the bank shouldn’t turn it over to Fane, HSBC said in the filing. Brink’s provides vaults and other services for the safekeeping of valuables.
The judge handling the bankruptcy said today that in January he would address the matter of distributing physical goods, such as gold and silver bars, after lawyers for some customers said they couldn’t get their share of the payouts because bars can’t be broken into pieces.
According to Fane’s letter, the five Comex gold contracts are for an average of 99 ounces of each.
