Paper Gold Is Legalized Fraud

A lot of questions were raised when it was reported that Deutsche Borse failed to deliver physical gold in exchange for its Xetra-Gold Notes.  But the only real answer to those questions is simple:  the only way you ever own physical gold is if you buy actual physical gold and take possession.

The allegations that Xetra-Gold or Deutsche Bank or Deutsche Borse committed fraud or failed to deliver gold are strictly false.  One thorough reading of the Xetra-Gold prospectus dispels those allegations.  The prospectus little more than a blanket legal disclaimer.   The language is clear.  It says right in the prospectus that the an investment in the Notes “does not constitute a purchase or other acquisition of Gold.”  There is not case for fraud because none of the participants in Deutsche Borse, and Deutsche Borse itself, did not commit any breach of contract per the terms of the prospectus.

The term “economic” in the prospectus is defined (pg 12) to mean that the “bears the market risk associated therewith. If the gold price decreases, provided that all other conditions remain unchanged, such decrease may result in a partial or complete depreciation of the invested capital. If the gold price increases, provided that all other conditions remain unchanged, such increase may result in an increase in the invested capital.

In this latest episode of the Shadow of Truth we discuss why buying paper forms of gold like GLD or Xetra-Gold is nothing more than an investment in a paper claim to the rate of return on gold during the period in which you own the security.  If you don’t hold your gold in your own possession, you don’t own it:

10 thoughts on “Paper Gold Is Legalized Fraud

  1. If they promised delivery of physical gold when demanded and failed, that is already a breach of contract. It matters not whether the ETC does not constitute a purchase of gold.

  2. OT: new Denver QB looks poised, throws a nice spiral, and any Carolina, Arizona or Green Bay loss is good for Seattle home field advantage in playoffs hopes

  3. Legal or not, third parties at tort can claim damages & in the case of Deutsche bank intent.
    The law is an ass yes, but the right target & the right damages claim would have to be paid
    regardless of legal or otherwise. The simple fact is these people have been determining the
    value of some one elses’ assets’ the damages obvious and admissions made. The right claimant
    and its’ over.

    1. Yes but there’s no claim to made against DB for anything. “Intent” of/on/for what? If there’s any claim, it’s against Unicore. But a strict reading of the prospectus will show you that Unicore has an out for not delivering gold. That’s the whole point of my blog post. Read the prospectus and you will see.

  4. Dave, I hear what your saying. But i’m not talking about parties’ that have engaged in a contractual arrangements, i’m talking about “3rd”parties’ that have & are on a continuing basis damaged out side the contractual arrangements of some corporation i.e. anyone who is a stakeholder/physical owner of the said commodities. Corporations cannot underwrite over arching accepted legal concepts/laws or simply try to avoid warranties or otherwise by using some loose language in their own prospectuses. They ultimately have to answer to the legislation Statute/common law precedence. I think we’re talking 2 different issues’ here. Eventually a case will be made against the banks, it will only happen with political will as well, because as we know the judiciary is stacked with the self interest of the polly anna/ sycophants as well. The judiciary believing they have some “social cause/axe” to grind this is now world wide problem. Great show as always by the way 🙂

  5. Also Dave also on the issue of “intent” DB admitted manipulation/intent. Manipulation in and of it self is an admission of intent because there is an intended outcome, otherwise why manipulate.

  6. This is a bit long, 45 minutes or so, and touches on topics most here are familiar with, but I found the discussion on mining stocks particularly interesting.

  7. Off topic Dave,
    I know I’ve been a bit off about Asian markets’ “but” seriously something going on, if you look at the long term chart on the Nikkei its scarier than the triple top on the Dow Jones. If that’s not amplitude wave formation pattern…big moves in these markets coming over the next month me thinks all of this including my last posts’ are JMO…….. of course but that move on the Dow Friday etc very weird. Kinda hope you don’t upload this comment but Monday could be very interesting

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