Eric King: “Inside that
piece (“The Secret World of Gold”) you talked about gold leasing and the
mechanics of that. Jim Sinclair wanted me to bring that up to you, the gold
leasing, the mechanics of it, can you talk about that?”
Maguire:
“We did a piece on King
World News about it, about the LBMA bullion bank default. Stepping back, how
did they get to such a mismatched (trading) position where they had so little
gold and silver in their inventory to be able to back up people coming and
asking for their gold and silver? They never anticipated that this would
happen....
“But what had happened was, over
the years, basically what you would do is you would sell gold, sell silver,
financed almost for nothing, take that money and invest it. Then, obviously
incentive was there because it had built up to such a large (short) position,
they were so over-collateralized, that it was important to defend the price (of
gold and silver) from rising because they didn’t actually have the
physical.
What’s happened now is they are
in a position where that leased gold is being asked for and they don’t have it.
I know of a very large client who actually turned up for his bullion, was
refused his bullion, and told he would be settled in cash. I felt I should go
public with that (on KWN).
...(ABN AMRO) really was the tip
of the iceberg. What happened was that we saw that first bullion bank create
the first visible default of the LBMA fractional reserve system. I hear of
other clients who are now panicking, and what happens? You get an official
intervention. That’s what it (the takedown in gold and silver) was all
about.”
Eric King: “Andrew, you were getting contacted by
people all over the world after KWN did the interview with you regarding the
LBMA default situation.”
Maguire: “I must say I had some
really distressed emails. What they were asking is, ‘What should I do?’ All I
could say to them is, ‘If I had physical stored in any bullion bank related
warehouse, whether it be COMEX or LBMA, I would remove it right
now.’
We all know that ‘default’ will
not be called a ‘default.’ It will be settled with cash. I do not believe for
a minute that the Fed can’t print a few billion (dollars), whatever it costs, to
bail out the bullion banks for cash. Why wouldn’t they just bail them out with
cash? It’s just an electronic keystroke. People will be sitting on the
sidelines and they will not get any physical (gold).”
Maguire also added: “It’s been
several years since I’ve taken any delivery from the COMEX, or any of my clients
have. But I do remember on those prior occasions it was already difficult to
get your physical out.
Arranging to actually have the
audacity to back up a Brinks truck to the COMEX warehouse door, it just incurred
every defensive tactic you can imagine. There were unreturned phone calls.
There were questions as to, ‘Why do you want this physical?’
That was a few years ago, so just
imagine how many more obstacles there are now. And obviously we are at the
point of a critical default unfolding, so I would think think it’s going to be
difficult to get your physical out now."
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