Tuesday, July 30, 2013

People Don't Read Contracts

How many people in the gold market – whether it’s LBMA standard contracts, forward gold, allocated, unallocated, Comex – think of all the players who would raise their hand and if you say to them do you own gold, they say yes I do, and then when you press them you find out they don’t own physical gold – at all. Not even close. They own some claim of some kind. People don’t read contracts, they don’t read the exchange rulebooks – I actually have.

‘People don’t understand leasing,’ he adds. ‘They somehow think that if the federal government leases gold to JPMorgan, that JPMorgan backs up a truck and drives away. That is not what happens. The gold stays where it is. The gold doesn’t go anywhere. The gold’s in Fort Knox, the gold’s at West Point, the gold’s at the Federal Reserve.

‘When you look at all this, it’s very clear that the losers are not going to be the banks and the government. The losers are going to be the institutions and the individuals who think they own gold and don’t.’

- Source, Jim Rickards via Money Morning: