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iShares COMEX Gold Trust Message Board

  • kcdallas23@sbcglobal.net kcdallas23 Oct 30, 2008 9:21 PM Flag

    IAU Gold to Default???

    I came across an article called "Upcoming Gold Default".
    It's rather interesting and a little frightful if this is true.

    Does anyone have an interpretation of this article as a high possibility?
    Other than shorting the dollar, how would one play the gold default??

    Article can be found below on goldseek.com

    http://news.goldseek.com/GoldenJackass/1225389600.php

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    • Good reading but, too much self interest on this board to believe any of this information.

    • I'm probably missing something here, but if this is a problem, isn't it more a concern of ETFs investing in futures than ETFs taking physical possession of gold?

    • Buy the GDX instead.

    • nancy.hawley@sbcglobal.net nancy.hawley Feb 6, 2009 8:08 PM Flag

      There is a guy on youtube that had declared this dating back to October last year.

      The claim is that the comex doesn't actually have the physical gold for delivery and the Purchase/sales are only hypothetical while comex makes the transaction fees.

      To further the claim, it is that a series of investors are considering allowing contracts to expire and require delivery that is not possible due to the failure of actual inventory.

      On the other side of the coin, I am long on gold, but be cautious with stop losses for an upcoming last breath from the latest printing of currency. Expected rate of inflation beginning year end '10 is 20%

      I'm no fortune teller but after the false rally, buy buy buy Gold- preferably on the swiss or london exchange. Also, you might look at Powershares symbol DGP

    • Both GLD and IAU have external audits performed every year. The audited financials should be out mid-March. As part of Generally Accepted Auditing Standards, the CPA's are required to perform substantive tests to validate both the physical existence and the proper valuation of all material assets. Further, both management and the external auditors are required to maintain (and attest to) proper internal control policies and procedures, as prescribed by Sarbanes Oxley Sections 302 and 404. False representations, or failure to disclose material internal control deficiencies, carry severe penalties, including imprisonment.

      In this economy, especially considering the likes of Bernie Madoff and the incompetence of the SEC, the risks of malfeasance are, of course, heightened. I do nonetheless take some comfort in the audited financials. I worked in public accounting for years, and I can assure you that the Big 4 external auditors are more conservative than ever given the critical risks of issuing an erroneously "clean" audit opinion. The Big 4 would rather walk away from a client before issuing an improper audit opinion.

      While external auditors have certainly screwed up in the past (a-la-Enron, WorldCom, et al), the probability that they would not verify the physical existence of hundreds of tons of gold, whether in third-party custody or not, is highly, highly improbable.

      Last year Deloitte (on GLD) and PWC (on IAU) issued clean opinions on both funds. Personally, I have fairly tight stops on all of my gold positions, and am counting the days for the year-end EDGAR filings. If there are ANY opinion qualifications, footnote disclosures, or account balances indicating a significant amount of outstanding contracts receivable (on undelivered gold), I will issue immediate sell orders.

      Hope this helps.

      http://us.ishares.com/content/stream.jsp?url=/content/repository/material/iau_report_10k.pdf&mimeType=application/pdf

    • Comex gold doesn't have gold to back it up,
      worthless paper just like the u.s. Dollar,

      buy gld, fully backed fund, only safe place to be, gold will make a huge move up soon,

    • Well I guess the most straightforward way would be to go long the physical, but according to what I have been reading bullion etc. is in short supply. Any of you have an idea of the notional value of the paper market vs. physical?

      • 2 Replies to lbspedersen
      • There's plenty of bullion -- in 100 to 1000 oz bricks -- sitting in vaults in London, Canada, and New York. It's the 1 oz coins -- the stuff that the retail investors have been hoarding -- that's been in short supply. If there was a run on the Comex, there would be adequate supply to cover -- and if not, I wouldn't be surprised if the US government opens up Fort Knox to provide an emergency loan to stabilize things.

    • Also wondering about this. Potentially too many owners of the gold supposedly held for stock (paper) holders????

      Solution is to sell the ETF's and buy miners. Selling etfs short could be dangerous as presumably the price could reset upwards if the default didn't drive them out of business. Dunno what happens to shares in case of default/ bk. Presumably tied up in courts??? for months???
      or

      Just another manipulation to scam us off the pot??Lets have some more thoughts on this.

      • 1 Reply to dvorakey
      • disconnect; ETF plan doc states that it is buying certain futures (next month forward etc). Just need to time the buying schedule of the ETF and the move in the underlying commodity. Not all assets held in the commodity itself, but in forward contracts. It is the expected move, not the current "hard value" price of the gold. Some might be thinking that gold is due for a turn down for a bit. We are getting near the past highs.

 
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