See http://bullionstar.com, which I recommend.
In May, 2019, I began to become aware that the Central Fund of Canada (CEF), a precious metals fund that had been acquired by Sprott, Inc., was vaulting bullion with risky government and bullion bank entities. These are the very entities who are depressing and suppressing the price of gold, and whom we expect must default, or fail to deliver gold, in order for gold prices to really go sky high. Storing gold with them makes literally zero sense; it’s worse than putting the rat in charge of the cheese.
I used to recommend this fund, which I now regret.
Bullionvault.com, (not bullionstar.com) is another large bullion storage company, and is also a member of the LBMA; which is to say, the bullion banks.
JP Morgan, who appears as the ringleader of the LBMA, was just caught rigging the gold prices through spoofing, which is posting far more sell orders than they intend to sell, just to drive prices down, and the traders said the executives taught him how to do it!
I wanted to share my concerns directly with Sprott, Inc., first. They never responded.
I also wanted to find a solution to my concerns, before I shared this with you, and I have. After all, I find little point in pointing to problems, unless there is a better solution.
I hereby recommend bullionstar.com if you need someone to vault your metals for you.
Here is the letter I sent to Sprott. They have had more than enough time to address the problems I have pointed out.
To Eric Sprott, and Sprott, Inc., email@example.com on June 10th, 2019
I am assuming the best of Sprott, Inc. I am NOT assuming that Sprott, Inc. is acting in conspiracy with the financial establishment to suppress the silver price or engage in silver fraud, nor am I accusing Sprott of any legal wrongdoing of any kind.
I have concerns about the Central Fund of Canada, a few of which are as follows:
- The custodian who is vaulting CEF bullion is not trustworthy to maintain the bullion for Sprott in the event of government default. Because the custodian is the Royal Canadain Mint. The essential reason for buying silver and gold is for when Western Government paper money fails. The Royal Canadian Mint, as a government run operation, fails the test of being secure, not only for the essential conflict of interest of being a government entity, but for a wide array of other reasons, as follows:
A. The Royal Canadian Mint has MORE than 15 vaulting locations as indicated at their website. This makes auditing CEF silver and gold nearly impossible. Bar lists are no substitute for visual inspection. Even a visual inspection would fail, as the Royal Canadian Mint is vaulting silver for multiple entities, which means the bullion, even if it could be seen across MORE than 15 locations all at once, could be either comingled, or sold to multiple entities.
“A Crown Corporation of the Government of Canada, the Royal Canadian Mint provides secure storage of globally recognized precious metal products in our network of secure vaults at the Mint’s facilities in Ottawa and Winnipeg. We also store precious metal products in gold, silver, platinum and palladium in various forms (coins, bars, wafers, ingots) across our secure network of facilities, which includes more than 15 locations in Canada, the U.S., Europe and Asia.”
If you notice, these are “more than 15” unnamed, and unknown sub custodian locations all over the world. If it’s “more than 15 locations”, there’s really no telling how many locations there are. It could be over 100, too.
B. It’s not actually “secure” at all. The RCM has dealt with employee theft three times recently: $162,000 to $180,000 in 2016, and $110,000 in 2018. And they lost a very large coin worth $5.8 million in 2019. https://www.macleans.ca/economy/money-economy/the-saga-of-canadas-stolen-million-dollar-coin/
C. Silver at the RCM is held in “allocated accounts”. The very name reeks of fraud, because the word “allocated” supposedly means that the silver is segregated and held specifically for Sprott only. This would be in contrast to an unallocated account, which silver could be sold to multiple entities, or leased out, or used up, or not there, or stolen or gone or simply a debt, or a hole that is left after operating losses. Why trust an entity that admits they are stealing, using, or re-loaning, some of the bullion they are holding for others? Then there is the other word in the other part of the phrase. Why call it an “account” instead of the typical language used by an actual storage company, such as Brinks, Inc., which uses the more accurate word: “storage”? An “account” is a reference to an accounging entry or accounting ledger, which is just numbers on paper. An “account” is merely a measure of what is “owed” to another person. It is not evidence of what is being actually stored somewhere. They are basically admitting fraud through the words they are choosing to use, both the term “allocated” and the term “accounts”.
D. Another Mint running an “allocated account” scheme that had much trouble delivering silver to their allocated account holders is Perth Mint. They are also a “Royal” subsidiary of the crown of England. The Pert Mint’s schemes were exposed as frauds in a series of 9 articles that I wrote, where I was asking many hard questions, and exposing their admissions in their own financial reports. Essentially, Perth took over the bankrupt Johnson Matthey refinery, and their multi million debt. The Pert Mint never was able to answer my questions, but they did meet with me in person, at which time they tried very hard to address all of my concerns, with elaborate excuses that were unconvincing, but were never able to accurately address my concerns and questions. They concluded with arrogantly stating that they were a sovereign entity and that nobody could ever prosecute them for any wrongdoing, because the government could not and would not prosecute because they “were” the government. And that the government could print money to cover any losses.
E. If the Royal Canadian Mint were to engage in fraud with respect to bullion held for CEF/Sprott, Inc., what would be the legal course of action you would take? Would you complain about the government to the government? Would you complain to another government? Is either a practical solution? If there are no practical solutions in the event of theft or default, then is the bullion safe to be vaulted in its current location with the current government custodian?
F. CEF bullion is insured by Lloyds of London, one of the world’s largest insurance companies. During Gold’s first bull market run, in 2008, another of the world’s largest insurance companies, AIG, was bailed out by the U.S. governemnt because it would have gone bankrupt. Gold itself is the insurance against financial default. It is not the other way around.
G. Vaulting bullion with the government of Canada is an overall bad idea, because the government of Canada has sold all of its gold and has renounced its use, and therefore has an anti gold bias, and is especially vulnerable in the event that governments need to return to using gold as money.
- The 75 million ounces of silver held by CEF would be the second largest silver stash known to exist. The first would be the 130 million ounces held by Warren Buffett, a number similar in size to the offering of the ETF, SIL, which appears to be the very kind of silver scam that CEF supposedly stands in contrast to. Warren Buffett might not ever have even bought physical, and their buyers might not ever have obtained physical. The story came to me from 4 different sources that the establishment bullied Warren out of his silver. The stories matched in the essential natures of their details.
- The valuting space needed for 75 million ounces of silver would be about a 10,000 square feet facility, requiring a minimum of 3900 sq. feet of actual vaulting space. A 2.5 foot square pallet of silver holds 30 bars, and they are stacked 4 pallets high, for 120 bars each stack. 75 million ounces is 75,000 bars. 75k bars / 120 bars = 625 pallet stacks. The square of 625 is 25 stacks by 25 stacks. 25 x 2.5 feet is 62.5 feet wide. 62.5 feet x 62.5 = 3906 square feet of vaulting space, packed to the gills. There is no need to outsource the valuting needs to an unreliable custodian. (The JH MINT, that I ran, that had 10 very primitive minting machines, that held no more than 100,000 oz. of silver in a 24 foot by 24 foot valut,, was a 10,000 sq. foot facility.) There is thus no need for a massive government mint, to have sub custodians of 15+ other valuting locations, as I’m sure their facilities were bigger and more professional than mine were.
- Sub Custodians in 15+ different locations is substantially an insecure vaulting method. I had great difficulty with running 2 bullion shops. One shop revolted, and stole essentially half the inventory, half a million dollars worth. I lost all my attempts at getting police to take the matter seriously. How can “police” reverse theft after it has taken place? They do not have “superhuman” powers to investigate and reobtain metals once they have been lost. All they can do, and only if they choose to, is to prosecute, and jail people. Police almost never put government people in jail for doing what is considered “standard business practice” of rehypothecating silver. Morgan Stanley was caught selling allocated silver that did not exist. Their legal excuse was that this is “standard business practice”. Maybe they ultimately had to pay a small fine.
- The BIS, the Bank of International settlements admitted in their once every 6 months accounting ledgers of all western world banks, that the amount of “other precious metals derivatives” increased by $200 Billion in a 6 month time span back in 2009. This, at the time, was 20 times more than annual world production of silver. “Other precious metals” would be over the counter sales of bullion in allocated accounts, which were exposed as fraud over at Morgan Stanley a few years earlier, with them admitting that was standard business practice, meaning, all the other western bullion banks do the same thing, such as J.P. Morgan, who was probably the ringleader of the practice. The “other precious metals” would be a group of silver, platinum, and palladium, supposedly “vaulted” for customers in those fraudulent allocated accounts. But in the real world, there are extremely few investors who buy platinum and palladium in their stock trading accounts, and those markets are super tiny in comparison to the very tiny silver market anyway. So this category is essentially, at least 90 to 95% of it, all silver. The vague description of “other precious metals” and lack of specificity is just one more way to hide the ongoing fraud in the silver market. When I exposed this number, the BIS actually revised it by $100 billion. But that in no way hides the fact that that would have still been an enormous fraud, only 10 times more silver than the world produces each year, which would have been about 8,500 million ounces of silver. ($100 B / 8.5B = $11.7/oz.) which is still over 100 times more silver supposedly “vaulted” in those “allocated accounts” than exists in the CEF fund.
- J.P. Morgan essentially admitted to not having the silver for their allocated account holders in their open confession that they were “not manipulating the silver market” but only “hedging client long positions” in the silver market. If the clients are long, and if J.P. Morgan is hedging, they are admitting they are taking the opposite side of the trade, being essentially short, what they owe clients, which means they have no silver in their allocated accounts for customers. A few years later, J.P. Morgan was actually prosecuted by the Justice Department for manipulating the silver market, an investigation that was started by my own DOJ complaint pointing at J.P. Morgan. Of course J.P. Morgan is “hedging” client long positions in silver. J.P. Morgan owns $400 trillion worth of interest rate derivitives, which can only be described as a position that requires interest rates to stay low. If silver prices substantially rise, along with gold, interest rates should also ultimately rise, and topple their entire house of cards. It is amazing we had such a bull market run in silver and gold to 2011 that did not topple J.P. Morgan.
- CEF has made complaints of not receiving delivery of silver to their accounts in a timely manner, multiple times over the years. This is another red flag.
- Taking delivery of what might not exist, and storing it in an actually secure facility requires the utmost discretion. Meaning, it would be crucial to get it on an “as you can get it” basis, with the realization that the requested deliveries may very well be large enough to reveal the fraud that is ongoing in the silver market, through the process of causing “failures to deliver”. It may well be more prudent then, to sell the “non existent” silver back to those who are holding the non existent silver, and then take the cash proceeds and purchase the silver from a more reliable source that acutally has the silver, and who actually takes delivery of real silver in an ongoing basis as a real part of their business model.
- A real buyer and seller of silver is a xxxxx company (xxxxxx) that actually holds about half a billion worth of real silver that they use as part of their operations, who is engaged in all sorts of high tech uses of that silver. When I had heard about Sprott not getting timely delivery of silver, I called Sprott a few years ago, and asked a few key questions. Who were they buying silver from? Kitco. Well, of course. And why didn’t they get it from the xxxxxx company? Because Kitco’s silver was cheaper by 3 cents per ounce. This, of course, is how people get defrauded, they go with the lowest price, rather than by reputation. When I was entering the minting business, xxxxxx delivered silver to Brinks, (they opened up their own account for vaulting purposes, and stocked it with 100,000 oz. of silver) for us to order out from in Los Angeles, simply because I requested it, and so that I could get faster delivery. That’s super honorable! Apparently, this large company liked me and my silver advocacy work! Turned out, that helped the other Mint business more than my own, as my mint was 7 hours north in Grass Valley, California.
- The lowest price sellers of silver and gold bullion routinely go bankrupt, or are walking bankrupt entities. The lowest price seller tends to attract the most business and most orders because the people do not have the discernment and discretion to know when they are being defrauded. Sellers in the modern world are simply engaging in “standard business practice” of being in debt to their customers, essentially operating a ponzi scheme, robbing Peter to pay Paul. They are using customer money as free financing, which works even better than free, but has payments attached instead of usury fees, when silver prices are going down. But when silver prices go up, then using new orders to fill prior orders no longer works, because the usury fee vastly increases to match the rate at which silver prices are going up, which can be substantial. Having sold silver at $20, and then covering and having to buy that silver later at $22, months later to deliver to customers, can be a very expensive business model. Paying an extra 10% for silver in a business where margins are often only 1% or less if you are an honest dealer like we were, is very expensive, indeed.
- I am absolutely not accusing Sprott of running any scam. I believe, rather, that Sprott has been taken advantage of and has been defrauded in a way that not one person in a million can detect, perhaps not yet even by Sprott, Inc. Sprott has taken over CEF, that was set up by other men, who I don’t feel were super honorable, as follows: I had a conversation with one of CEF’s key founders and promoters about 14 years ago. I asked him why gold advocates were so convervative about gold’s potential price value. And what would they do with the fund, and how would they protect it in the event of the collapse of the financial system and gold’s price began to really run away to extreme highs. He said he would sell out long before that, by the time gold hit $1000/oz., and retire to the beach, and live a far more anonymous life. His expressed desire to cut and run and avoid responsibility for protecting a large gold/silver hoard astonished me. Also, he never did cut and run, but was bought out by Sprott. So the fund’s inherent problems are now Sprott’s problems.
- Dealing with these kinds of problems can be on the level of “emotionally traumatic”. It was definitely emotionally traumatic for me to deal with employee theft and their corresponding lawsuits and false accusations against me, but I got over it, and I have learned from it. I thought that hiring 3 honorable men who would watch each other’s backs would be sufficient. It was not. They simply plotted against me. It obviously requires more than what I did to keep gold and silver secure.
- My problems were modest compared to the problems I now see in the Sprott ETF, CEF. People who are under emotional trauma of having to deal with such issues are not generally good decision makers, which makes this problem all the worse. The most successful way that I ended up dealing with my own emotional traumas was through mineral supplementation, especially iodine. But also colloidal gold, and copper supplements. The reason these may work is that stress eats through the mineral stores, and the trace minerals are not easily replaced, except through supplementation.
- As I ran JH Mint, you may well imagine that I had quite a few offers from investors who wanted me to store their bullion for them. This is interesting. Why would they want to do that, and be so eager to trust me? Is it perhaps because they did not feel that the other mints who ran vaulting services were trustworthy enough? And why would I want to take on the liability of vaulting their silver for them? It seemed like a bad deal for me, even if I could use their silver for my minting machines. But my minting machines were never quite up to par. And neither were my employees. I wanted to be absolutely rock solid sure that there would be utterly zero employee theft. And after 5 years in business, I was less sure of that than ever. I can’t tell you how disheartening it was to not be able to expand my business into a vaulting service, because my current employees were not trustworthy enough.
- I would like to help solve Sprott’s problem. I have proven that I have exposed nearly every silver scam known to exist. I have also proven that I can keep my mouth shut, as I have not written any newsletter for the past 5 years. Please hire me to help solve this problem in the most discrete and silent and most effective and efficient way possible. I don’t know of anyone else who would have had both the skills and business experience to both detect and solve this problem.
- The price to sell every bar of silver in the CEF fund, and repurchase it from a reputable seller for 3 cents per ounce more would be about $2.2 million. To protect and insure the overall value of the fund, this is an extraordinarily low cost. Far less would be spent on an appropriate vaulting facility. The JH Mint vaulting facility that I built, a space of 25 x 25 feet, with concrete blocks with rebar and concrete filled walls and concrete ceiling over a concrete slab cost $25,000. The rent on the space was $5000/month, and utilities were minimal. And very little comparatively would be spent on a modest salary for me.
- The biggest secret to success is secrecy of the overall plan, and secrecy of the location. So separating even the bullion loading dock area from the vaulting facility is one way to acheive that. In fact, receiving bullion in a secret way, is a part of that, so that not even the truck delivery drivers know what they are delivering. Heraeus had that figured out, so silver was delivered in steel drums on pallets that were loaded in the back of a semi truck that had a forklift. So no silver is visible to the delivery driver. A second way is that the vaulting facility is only for one customer, Sprott, so there would never be any customers or people visiting the building for any reason. A mint, of course, would ruin that. A third way to prevent theft is to discourage it from the outset with fences, and gates on the outside. A fourth way to prevent theft or confiscation by government is to not own the land in the name of Sprott, Inc., nor even any subsidiary that any government agent could ever find. In the game of protecting gold, discretion is of the utmost importance. A fifth way to prevent theft is multiple 24/7 video cameras producing a live feed of the bullion, via the internet, to a remote location. A rather unhackable video feed would include video feed of another monitor, the contents of which could be changed remotely, to show that it’s a real time video feed that shows real changes. A sixth way to prevent theft is through armed guards, who don’t know what they are guarding. Accounting is not dificult. It’s simply “counting”. The difficulty is in the audit process. Unless all the silver is quickly and easily visible, it’s very difficult to actually audit it. And that’s where people get deceived with things like bar numbers. Bar numbers are not bars. And that increases the necessary space to be able to get a good visual of nearly all the bars.
- While I would not trust the LBMA system, they appear to offer free guidance on best vaulting and transport practices: ” However, with the assistance of the existing London vaults the LBMA has complied some Best Practice Guidelines for opening a new vault for the storage of precious metals. In addition, Best Practice Guidelines for the safe packing, transportation and storage of gold and silver bars has been produced. Both of these Best Practice Guides can be downloaded via the Useful Links section on the right hand side of this page.” http://www.lbma.org.uk/vaulting
- I highly suggest that someone at Sprott, Inc., who has high level decision making, such as Eric Sprott, call me, Jason Hommel. (530) 559-2974. There is a lot more that you can discern about me though a conversation, such as my motives, intentions, desire to help, through tone of voice, and other things I may know that have left unwritten, and how I can fill out details in the above topics. After all, I covered the Perth Mint fraud over 9 articles, but devoted a mere paragraph to it above. I am more interested in being merely a consultant to this project. I am not looking to be directly in charge.
To my readers who have read to the end. I recommend Bullionstar.com Or buying your own vault, and storing your own gold. Gold is light and easy to store. $2 million in gold at $1500/oz. weighs about 100 pounds.