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.
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.
"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.
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.
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.
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Why has Wall Street finally jumped on the gold bull?
Because they "know" U.S. debt levels are now so high, they can never be repaid by ANY combination of future growth and taxes.
And that leaves only two options...
Default on the debt, or devalue the dollar.
And Wall Street insiders are placing their bets on the inevitability of a long term, US dollar devaluation.
How much of a devaluation?
How about -50% over the next 10-15 years...
They prefer an orderly and managed descent.
Whether they get one, remains to be seen.
For anyone over 45 years of age, thank Hank Paulson, Tim Geithner, Ben Bernake & Company for just stealing your future, and virtually any potential of a comfortable retirement, let alone the ability to accumulate wealth, because they're going to tax it, faster than you can make it.
Theft via inflation is only half of the equation, predatory taxes will be the other.
Prepare for the greatest tidal wave of confiscatory taxes America has ever seen, because it's coming...
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