Egon von Greyerz told that clients are having tremendous problems getting their physical gold out of Swiss banks as well as other major banks as the shortage intensifies. Greyerz also discussed the fact that refiners simply cannot keep up with demand, “no matter how much they produce.” Below is what Greyerz, who is founder of Matterhorn Asset Management and board member of Goldbroker.com, had to say in this extraordinary interview :
“This week I want to talk about what we are seeing in the physical gold market, and why there is a disconnect in that market. We transfer a lot of gold from Swiss banks and other banks into private vaults for investors.
More often now, than ever, we are encountering incidents when the banks are putting up all kinds of obstacles for these transfers. The first sign of the potential shortage of physical gold started with ABN AMRO a few weeks (when they) declared that they would renege on their commitment to redeem gold accounts in physical gold….
Instead they would redeem in cash. The custodian for ABN AMRO, for the gold, is UBS, and UBS decides to what extent they hedge the ABN paper gold position.
So as there is no more physical redemption of the ABN AMRO gold accounts, it seems these contracts are no longer backed by physical gold. It’s just backed by paper, and this is of course typical for the paper market, Eric. This paper market, which is 100 times bigger than the physical market, probably has zero percent backing of physical. This is why ABN stopped redeeming in gold.
Then, last week we had an investor being refused to take his physical gold out of a major Swiss bank. They told him that the regulatory authority prevented the bank from giving the client his physical gold. That is of course total nonsense, and eventually we helped the client to get his gold out of the bank.
Another of our clients was told by a major Swiss bank that he can only take out 100,000 Swiss francs of physical gold every six months. They blamed money laundering and terrorist activity for this decision. Yet another client was again told by a major Swiss bank that his storage fees would be going up substantially. When he complained he was told that he should convert to paper gold.
And finally, Eric, another big bank, which has an ETF, told a client who wanted to transfer gold out it that he would have to wait at least two weeks for the transfer. You just wonder why a major bank that is supposed to hold substantial amounts of physical gold needs two weeks of more to transfer gold to a client.
So all of this, Eric, points to the fact that there is a major shortage of physical gold in the banks. These banks obviously don’t want to lose customers, but their behavior and the reluctance to deliver also points to a real shortage in the physical market.
So the disconnect between the paper and the physical market (for gold) is continuing. Refiners still have major production delays and demand continues to be very high, ‘No matter how much they produce,’ as one refiner told me today. And premiums are still high also.”
Source : KWN