Aaaand It's Gone: This Is Why You Always Demand
Submitted by Tyler Durden on
08/14/2012 21:09 -0400
We have said it over and over, we'll say it again. For all those who
for one reason or another would like to boycott the broken markets, yet
trade gold in paper form, please understand that all the
invested capital is at risk of total loss and can and will be lost,
commingled and rehypothecated, not necessarily in that order, with little
to zero recourse and the residual claim on liquidating assets pushed to
the very end of the queue. Because if Lehman, MF Global, Peregrine, and
countless other examples were not enough, here comes Amber Gold: a
gold-based investment ponzi scheme out of Poland, in which it is likely
needless to say that the gullible investors never had actual possession of
the gold. And when they tried, it was gone. All gone.
From the W
This week's collapse of a gold-derivatives business that Polish
regulators say was a Ponzi scheme has hit tens of thousands of customers,
shaken confidence in the effectiveness of the nation's financial
regulation, and is roiling national politics in the European Union's
largest emerging economy.
On Monday, the company, Amber Gold, Sp. z o.o., which sold a
gold-indexed investment of its own design and offered higher interest
rates than banks, said it was halting operations. It pledged eventually to
repay about $24 million it said it owed to roughly 50,000 clients in
Amber Gold's 28-year-old founder, Marcin Plichta, who has publicly
acknowledged past convictions for misappropriating funds, couldn't be
reached to comment. Amber Gold representatives were also unreachable.
Despite three years of warnings by Poland's financial authorities that
the company was operating without a license, it continued expanding and
spent heavily on marketing. Among its businesses, the company launched a
budget airline this year to compete with state-owned LOT Polish Airlines
SA on domestic and European routes.
The airline, OLT Express, ceased flights last month and the gold fund
unraveled this month after renewed government warnings prompted commercial
banks to close Amber Gold's accounts. The company said "the
liquidation process will be spread over time," without specifying when
people might get their money back.
On Tuesday, Prime Minister Donald Tusk referred to Amber Gold as "a
scheme" and said he ordered his finance minister to convene top
financial authorities—including the central bank and consumer
protection office—to discuss the company's demise and the effect on
customers. "All signs on heaven and earth suggest that people who put
their trust in that company have been cheated," Mr. Tusk said. He
said it is the duty of the state "to move fast enough to protect
people from those schemes."
"I'm shocked at this point and I don't know what to do," said
a woman in her 40s, who didn't give her name but said she was an Amber
Gold client. "The boss of this company is a very wealthy man and I
don't know who will have the authority to block his wealth so he doesn't
Amber Gold has said it has $45 million in assets, including 100
kilograms of gold. For years it hasn't issued required financial
statements, a lapse that draws a small penalty.
What can be said here: same sad story, different day. People preying on
the "get rich quick" euphoria (we would call it laziness but the
word is just slightly off color) of others, throwing in a symbol of
stability (gold), and laundering proceeds to "baffle everyone with
bullshit" all the while the regulators confirm that regulation is
meaningless, by not doing their job (and in America would
have likely been part of the ploy - apparently in Poland they are
amateurs). Said prey also thought that if things turned sour they would be
able to pull all their "gold" which just has to exist,
because someone else has certainly checked, right, after all
there are tens of thousands (of confused lambs part of this), ahead of
Alas, as with every Ponzi, this "strategy" never works. It
didn't work for the original Ponzi, it didn't work for Bernie Madoff, and
it won't work for the global capital markets, which are increasingly
perceived by everyone as merely the largest and most comprehensive
thoroughly legitimized by their broke host governments and corrupt
regulators Ponzi scheme ever conceived.
And so, as we said in the beginning, anyone who puts any
amount of money in the market should expect to lose all of it.
The US government and the Fed may believe that have eliminated risk but
instead they have merely magnified it to a point when even a 10 point drop
in the Dow Jones Industrial average feels like the imminent advent of
Want to play in a rigged, broken casino? Go ahead - and but don't expect
to recovery anything.
For everyone else for whom preservation of capital is more important
than gambling, buy precious metals. And get immediate
delivery. Because holding a symbolic representation of a flight to
safety "asset" via Cede & Co is simply said, idiotic.