The smoke from Australia continues to billow today as more investors globally begin to figure out the difference between "allocated" and "unallocated". Will these embers become a full blaze and bank run? We're still a ways from that moment but it's certainly not out of the question at this point.
With prices still in the tank and under the Bullion Bank thumb today, let's focus instead upon this growing conflagration. Again, it has not yet reached a crisis point, but it's really just getting started, too, so no one can say for certain where this will lead.
Earlier this week, we focused upon the worsening case at The Perth Mint. Australian economist John Adams has been all over this story and here's an interview he recently recorded with that Maneco guy:
But, of course, it's not just The Perth Mint. There are unallocated account schemes being run around the globe from Zurich to London to Montreal. Here's just one that's being exposed today...and it's in Australia, too. Below is a note posted to Reddit followed by an email from the author that was supplied as proof of her ordeal.
Now as you know, we've been railing against this scheme for over a decade. The picture that accompanies this post was created by Pining way back in the day. Yes, that's me in the middle being flanked by Ned and Andy. Speaking of Andy, here's a guest post he wrote for us in 2012 that describes in detail how and why The Banks "flywheel" metal into and out of the shams GLD and SLV:
And the best way I've found over the years to put this into a real world perspective is this analogy:
Suppose you own a car in New York City. It's nice to know you have one so that you can get away whenever needed. However, it's also a major pain to park (store) and insure it...and very expensive, too. So you find a garage (trusted car storage company) that promises to hold your car for you at a sharply reduced fee. You park your car there with the promise from the garage that you can take your car out for a spin whenever you need it.
The garage soon figures out that there are lots of other NYC residents that would enjoy this arrangement and that many of them will never have any immediate use for the car. So they make the same promise of "immediate vehicle availability" (an unallocated car) to about 50 other people using your car as the bait. All 50 people now feel safe and secure knowing that they have a car at their disposal but they are also very happy to have reduced the costs normally associated with owning a car.
This arrangement is all fine and dandy for you and the other 50 owners of your car and, it's all great fun and very profitable for the garage, too. Until it's not.
What happens when, one day, you show up expecting to take your car for a spin and you find out that the car isn't there? Instead, it has been loaned out to one of the other "owners". You demand immediate delivery of your car because your bags are packed and you're ready to roll but the garage claims that they need 60-90 days to secure your car for you. The best case scenario for you at this point? You decide to patiently wait for your car but, when it finally comes, the car looks similar to the one you remember owning but the VIN number doesn't match.
The worst case scenario for you? The other 50 owners of your car get word of the scam the garage has been playing and they all appear at once, demanding immediate delivery of the car they've been led to believe they own. At that point, the garage simply closes its doors and the scam operators leave town...and all of the people who thought that they owned a car for investment or emergency purposes are left holding the bag.
Again, either you own it and hold it or you don't. There are a few other trusted alternatives like allocated storage with our advertisers, other select bullion dealers and OneGold but that's it. If you own "unallocated" gold or silver, you are simply playing with fire and taking your chances.
So what to do about this? Get in line today and demand immediate delivery of your unallocated account. As in the example above, if you're the first person at the garage demanding your car, there's a chance that you'll eventually be delivered a car. However, if you're number 42, you're going to be out of luck.
Just one other item today...
For months, we've been waring you about the pending "stagflation". It will take years for the global economy to fully recover from the Covid Crisis...if it ever does. In between, massive money printing and direct stimulus payments (helicopter money) will eventually lead to price inflation, even at the CPI level. This combination of zero/low growth with steep inflation is called stagflation.
The last period of significant stagflation in the US was in the late 1970s. This was also a period of sharply negative real interest rates. This was also a period where Comex gold moved from $100 to $875 in about 3.5 years.
We'll dispense with a chart update this morning and save that for today's podcast because, as I close, not much is happening. I guess, if anything, we should be glad that Comex silver isn't down another 50¢ today...given that it was smashed for 50¢ both Monday and Tuesday.
Several members have asked for a public post this week so, as I close, just a notice that this is a free, public thread. Please take the link and post and paste it anywhere you'd like. Perhaps we can help to spread the word a little regarding the danger of "unallocated".
Have a great day!