UPDATE-5: Deutsche Bank is Stalling
Summary of DB's own statement as Sponsor, Guarantor and custodian of the Gold in the Xetra-Gold ETF
- They Guarantee the Gold
- If the Gold is not given when asked for they will work it out on a case by case basis
As one of the sponsoring financial institutions, Deutsche Bank fulfills the obligations specified in the Xetra-Gold sales prospectus as a matter of course. This includes fulfilling claims to the delivery of physical gold certified by Xetra-Gold. This must take place through the investor’s principal bank where the investor’s securities account is maintained.
Deutsche Bank accepts such orders for delivery from its clients. The investor incurs the costs described in the sales prospectus, for example, for the forming, packaging and the insured transport to the place of delivery.
For this reason, we recommend in each specific case an individual review of the economic efficiency of a physical delivery. Should an investor’s request for the handover of physical gold not have been complied with immediately in individual cases, this will be reviewed and an individual solution will be found with the client.
Does that sound familiar to you? Imagine you are one a phone and need a solution to a problem. Do you ever find yourself hitting the "0" on the keypad trying to get through the electronic prompts? Or perhaps constantly repeating to a voice prompt: "Suprevisor, Supervisor, SUPERVISOR"
Then you understand what is going on here. Now imagine speaking with a DB rep in person trying to get your Gold:
- Db is listed as custodian and guantor of my Gold, So you make delivery on the contract yes?
- DB guarantees your Gold. Yes. Absolutely.
- Great, I'd like delivery now please
- We don't have any Bullion here. Our safe is too small
- Which Branch if not this one please?
- Now let me see which branch can handle that for us? Nope not that one....
- Listen, do you really need the Gold?
- It seems the other offices managers are out. Can we try this Monday?
- Do I have a choice?
The above is not crazy. It underlines the difference between ownership and Control. You own a contract. They control the Bullion
Here is a real life example involving Nickels. In which we tried to MAKE delivery of money to a bank and were refused. A bank refused its own country's currency because it was inconvenient.
We tried to make delivery of a large sum of change AND THE BANK REFUSED OUR CASH
- every bank said NO. They could not take that volume of change
- They all told us to contact an outside change service like Loomis, Brinks, or any other firm they had a contract to deliver with
- Loomis actually refused nickels in its own wrappers saying it had to be counted at the bank- Bank doesn't have room, see loomis. Loomis needs bank to count it, see bank.
Get it? All services disguising themselves like products sold are designed to be like Roach Motels. You can easily get in, but you'll lose an arm and a leg getting out, if you do. The Product here is the ETF. The value added service is not having to sell your paper Gold and go across the street and buy physical Gold with it.
Remember Blockbuster? The layout was a funnel to get you deep in the store. And if you tried to leave, the labarynth directed you to the walls where the higher priced new releases were. That was no accident. And it is the template for all service business. Gold ETFs provide a service that may not be reliable. If you want precious metals and intend to take delivery, ETFs are not the way. Even the physical ones.
- Soren K.
For full chronicling of events, read these posts
- Full view of players and events here> Update-3: Deutsche Boerse responds to Xetra-Gold Delivery Allegations
- Deutsche Borse's Response and non-explanation of what happened> Update 4: Deutsche Bank- Gold not delivered "For Reasons of Business Policy"
Update 4: Deutsche Bank- Gold not delivered "For Reasons of Business Policy"
That is not hyperbole. At best it is a mistake. At worst it is true. If a mistake, the retraction or denial should be coming 30 minutes ago. And the chairmen of all involved firms should be making simultaneous statements. They are not. That is because right now they are likely squabling and surrounding themselves with lawyers trying to figure out who the patsy is. The patsy is us.- Soren K
- Logistics errors were compounded with Bureaucratic responses- from our experience (see below), that is possible, but the structure and division of control vs responsibility is no accident. It is set up to bottleneck things if there ever were a delivery issue. Throttle demand when a rush comes. Similar to being able to subscribe to a mailing list but it being near impossible to remove yourself. A hallmark of Fractional Reserve Banking BTW.
- Deutsche Bank doesn't have the Gold available or doesn't want to give it up
Thus far we've gotten no real answer from DBE or DB that wasn't designed to throttle efforts at uncovering truth. So we asked Oliver Baron of Godmode to answer a couple questions. He did and also pointed out errors on our part
First our question:
What were the actual reasons that DBE would/could not provide you with another delivery point? Do you fel that DVBE was running a roadblock for DB. Orthat DBE representatives were inept in theri handling ofthe situation? or something else?- Sorenk
Here is Olver's response in full. Errors on ourpart have since been corrected. One of which was our delusion that this could have been in fact a buraeucratic or administrative "mix up" as Deutsche Borse's Patrick Kalbenn would have us believe:
It is no Longer Possible to Take Delivery "For Reasons of Business Policy"
The Risk is in Assuming you will Get your Gold now
While officials at Xetra, Deutsche Borse, and Deutsche Bank are right now getting their story straight, putting out backroom fires, we the public that were sold on this product as being backed to the ounce by Gold are choking on the smoke.
Make your own decisions. Absent more information, we would think twice before placing money in an ETF that has an open issue. Further we are keenly aware of the division of control and responsibility in these situations. For us, counterparty risk is the only risk in owning gold someone else houses for you. Make sure of the chain ofresponsibility, and bigger is better. Get familiar with Fractional Reserve banking as it refers to Gold aka rehypothecation. Then we'd pick.
As to other products, We are sure that if this spreads they may begin tracking Gold at a discount to price, much as cash settled swaps trade under physically settled ones.
Paper gold is looking to be just that. Who do you trust?
Be Careful, now more than ever
- Update-3: Deutsche Boerse responds to Xetra-Gold Delivery Allegations
- Oil Report: Break under $40 in the Cards
- Technical Update: Gold Holding $1290 gets you $1349
Read more by Soren K.Group