| Author |
 Topic  |
|
|
redneck
1000+ Penny Miser Member
1273 Posts |
 Posted - 11/26/2009 : 09:14:01
|
??????????
Something doesn't smell right...
You must be logged in to see this link.
* NOVEMBER 24, 2009
A Mad Rush as Gold Bugs Get the Boot
By CAROLYN CUI
Fleets of armored trucks piled with gold bars and coins have been streaming out of midtown Manhattan in one unexpected consequence of the gold craze.
Amid gold's rise -- it has gained 32% this year and reached a record on Monday -- investors have been loading up on bullion and coins. One big problem now is where to store it. The solution from HSBC, owner of one of the biggest vaults in the U.S.: somewhere else.
HSBC has told retail clients to remove their small holdings from its fortress beneath its tower on New York City's Fifth Avenue. The bank has decided retail customers aren't profitable enough and is demanding those clients remove their gold to make room for more lucrative institutional customers.
An HSBC spokeswoman said the firm doesn't comment on its vault due to "security concerns."
HSBC's decision has created a logistical nightmare for both the investors and the security teams in charge of relocating the gold, silver and platinum to new vaults across the country. Many of those vaults are also feeling pressure from the surge in demand for space from clients that have stocked up on metal.
Investors have been loading up on gold this year amid worries about inflation and the stability of the U.S. dollar. The metal gained $17.90, or 1.6%, to $1164.30 an ounce on Monday. As gold has continued to set new records, other investors have flooded in. Many of them are taking possession of the metal, rather than just trading financial contracts linked to it.
Demand for physical gold, including bars and coins, is projected to rise 21% this year to 52.3 million troy ounces, the highest in history, according to CPM Group. Based on today's price, the total value would amount to about $61 billion.
The movement of gold from HSBC has created a stir not only among the bank's clients, but also among owners of warehouses and vaults around the country.
"I have never seen any relocation like this," says Jonathan Potts, managing director of FideliTrade, the parent company of the Delaware Depository Service Co., which has two warehouses in Wilmington. FideliTrade's two vaults have been filling up at an unprecedented pace, in part because it is taking in metal that has been ejected by HSBC.
Dealing with the fallout from HSBC's decision has become a full-time job for David Norris, executive vice president of GoldStar Trust Co., a Canyon, Texas-based retirement-account trustee, which organizes metal storage for its clients.
Mr. Norris says HSBC told GoldStar in July to immediately cease sending coins for storage. GoldStar, which had sent clients' holdings to HSBC for at least 15 years, is now figuring out how to get the coins out of the HSBC vault and down to the Delaware facility. "I can jump up and down and scream all day long about how much I don't like it. But it's their business decision," Mr. Norris says.
Moving the metal is like "a big military operation," he says. Precious metals are typically shipped by insured carrier services or armored trucking companies. Carriers sometimes ship the metals in plain boxes so as not to attract attention. Trucks are guarded by a team of two or three armed personnel.
Bradley Beyer, a GoldStar customer in Kewaunee, Wis., has 50 100-ounce silver bars stored with HSBC waiting to be moved. "My only concern is that the bars will be moved safely," he says.
HSBC is telling clients to either move their metal, or prepare for it to be delivered to their doorsteps. In a July letter, seen by The Wall Street Journal, HSBC said the precious metal "will be returned to the address of record... at your expense," unless instructed otherwise. HSBC recommended clients move their holdings to Brink's Global Services USA Inc., which has a vault in Brooklyn, N.Y. Brink's didn't return calls and emails seeking comments.
[gold]
Like Mr. Beyer, many investors have recently added precious metals to their retirement accounts. At GoldStar, more than 1,000 new accounts are opened each month to purchase coins in retirement plans, compared to about 100 a month in 2006. Sales of American Eagle gold coins jumped 65% so far this year, according to the U.S. Mint.
"Many facilities are overloaded," says Bob Coleman, director of customer relations at Gold Silver Vault, a depository in Nampa, Idaho. Mr. Coleman says his vault has taken in several HSBC customers, contributing to the 500% growth in new metal coming in over the past quarter.
Vault and warehouse owners say retail customers tend to be more expensive in part because of their diverse holdings. They usually buy American Eagle or Canadian Maple Leaf coins, and bars of various weights and sizes, all of which need to be categorized and stored separately. In contrast, institutions typically buy standardized bars of 100 or 400 ounces, making them easier to store. Institutions also tend to hold the metal for long periods.
Precious-metal storage isn't as lucrative as it may sound. Many vaults are run on thin margins. The Delaware depository, one of the five major ones in the country, charges $6 each month for a 1,000-ounce silver bar and $12 for a 100-ounce gold bar.
HSBC's vaults contain $6 billion of large gold and silver bars, according to records held by Comex, the metals division of CME Group. There are no data for smaller coins and bars held by individuals.
First Eagle Funds, which runs a family of mutual funds, has 2.2 million ounces of gold stored at HSBC's vault, and hasn't been told to vacate the premises. Physical bullion represents "insurance and the safest asset out there," says Rachel Benepe, who runs the First Eagle Gold Fund.
Typically, a vault is protected with a 27-inch thick steel reinforced wall, surrounded with a "man-trap" -- a series of doors, each of which opens only after the previous door is locked, Mr. Coleman says.
>
|
|
|
theo
Penny Hoarding Member
USA
588 Posts |
Posted - 11/26/2009 : 10:45:19
|
It sounds like there is such an expansion of demand they are running out of room and they want to reserve their services for higher paying (institutional) clients.
or
This is all a cover story and they want to get their PMs out of Manhattan while they still can. I'd feel better if there was report of Gold/Silver bars being delivered to the NYC facility. |
 |
|
|
fb101
Administrator
USA
2856 Posts |
Posted - 11/26/2009 : 11:06:32
|
| not interested in small players. No shock there. |
 |
|
|
|
JerrySpringer
Penny Hoarding Member
669 Posts |
Posted - 11/26/2009 : 15:43:57
|
| "This time it's different" is a phrase seems to have some context here. Maybe reaching a blow-off top soon for gold prices? |
|
|
|
Nickelless
Administrator
USA
5580 Posts |
|
|
HoardCopperByTheTon
Administrator
USA
6807 Posts |
Posted - 11/26/2009 : 17:02:54
|
You would think they would just jack up the prices or go to a two-tier pricing system and make a little extra money on the deal.  |
If your percentages are low.. just sort more. If your percentages are high.. just sort more.
Now selling Copper pennies. 1.6x plus shipping. Limited amounts available. |
|
|
|
redneck
1000+ Penny Miser Member
1273 Posts |
Posted - 11/26/2009 : 17:46:25
|
quote:
Originally posted by HoardCopperByTheTon
You would think they would just jack up the prices or go to a two-tier pricing system and make a little extra money on the deal.
Exactly...
quote:
theo Posted - 11/26/2009 : 10:45:19
or
This is all a cover story and they want to get their PMs out of Manhattan while they still can. I'd feel better if there was report of Gold/Silver bars being delivered to the NYC facility.
I agree...
>
|
Edited by - redneck on 11/26/2009 18:12:14 |
|
|
|
Copper Catcher
Administrator
USA
2092 Posts |
Posted - 11/26/2009 : 22:26:36
|
| I can see it now: Realcent Vault Holding Corporation. With all the banks that will be going out of business I am sure we can find some extra vault same somewhere! |
|
|
|
Nickelless
Administrator
USA
5580 Posts |
|
|
oober
1000+ Penny Miser Member
USA
1304 Posts |
Posted - 11/26/2009 : 22:41:47
|
Wow, such a customer oriented company, I may have to help them with mine and close my cash accts, since they don't give a crap about the little guy anymore.
There wouldn't be friggin institutions if there wasn't little guys. |
|
|
|
beauanderos
1000+ Penny Miser Member
USA
2408 Posts |
Posted - 11/28/2009 : 20:44:31
|
| For the life of me, I can't figure out why the bank panicked. I called the manager the other day and told them I wanted to store some of my gold there, and he goes all fritzie "ve'll haf to make vroom, ve'll haf to make vroom." Then he just hung up on me |
Hoard now and hold on!
http://coppermillions.blogspot.com/
http://wherewillyoubein2012.blogspot.com/ |
|
|
| |
Topic |
|
|
|
A Mad Rush as Gold Bugs Get the Boot
Forum Locked
