A backwards country imposing an ineffective law. This won't have any effect on XOM.
This is true even though GLD parties have keep this incident relatively under wraps. I hope none of the newer investors overlook this red flag.
This is the very same farfetched excuses I've heard directly from State Street's representatives when I asked them about GLD's insurance. They made outrageous examples like loss of gold caused by war, terrorist attacks or physical theft. How about a more reasonable example like FRAUD?
I'm not referring to your downplayed example of "If an employee steals a bar of gold, I'm sure State Street will self insure and pony up the money." I'm referring to a large scale operation of bullion lending. This might be very lucrative for State Street but carries significant counter party risks to investors. There is already evidence that State Street is not acting in good faith. I'd point towards the Bob Pisani visit if you need a refresher outside of sketchy insurance issues.
"And I seriously doubt a single one of them owns a single share of XOM." Most of them probably wish they own a share of XOM.
Don't forget when CNBC had Bob Pisani visit the GLD vaults to prove gold was actually there. This visit turned out to be a huge red flag when the gold bar held up by Bob Pisani had the serial number ZJ6752 and did not appear on the most recent bar list at that time (dated Aug 31). Zero Hedge who first noticed this also mentioned that the GLD tonnage was relatively flat over the previous weeks so its very unlikely that many bars have been removed up to the time of the visit.
"In any event, shortly afterwards people noticed that the gold bar he held up on air actually wasn’t even on GLD’s gold bar list. But wait it gets even better. It seems that Ned Naylor-Leyland of Cheviot Asset Management has discovered that the famous Pisani GLD bar was actually owned by another gold ETF! Yes folks, fractional reserve gold investing. I’ve said it before and I’ll say it again. You’d have to be a complete fool or totally irresponsible to own GLD as a money manager or investor."
For years there has been the GLD question of loaning bullion against futures contracts, a lucrative process but with counterparty risks as you point out. I've always suspected GLD of gold hypothecation but saw no real evidence until that visit.