Tuesday, October 26, 2010

Gold- and Silver-denominated Bank Accounts

THIS is what we're talking about, when we say that if Georgia (or any State) passes the Constitutional Tender Act, the banking business would BOOM here, as people from other States rush to open gold- and silver-denominated bank accounts:
The thing that I have seen on the ground, though, is a disproportionate amount of mainlanders in the shops and banks buying physical gold for storage here in Hong Kong.

In Asia, it’s common to use a measurement for gold called a Tael, which is roughly 1.215 troy ounces. They sell locally minted products at 990 fineness at very low premiums: at one of the banks I visited, the premium was only 5 HKD (less than a buck) plus 1% above spot.

9999 fineness (Maple Leaf coins and the like) sell for a bit more, but not much.

This morning I saw mainlanders scooping up these deals like it was the day after Thanksgiving in Wal Mart. They don’t take the gold back to China, they leave it here at a number of banks or facilities. Secure storage is in such high demand, in fact, that there is a 5-year waiting list for larger boxes.

Banks in Hong Kong have responded with some innovative products - they offer deposit accounts that are denominated in gold (taels), and on top of this they also offer a line of credit for up to 70% of the bullion on deposit.
This isn't rocket science, folks. Banks will continue to fail under the current system (Georgia leads the way) - it's time to dump the fiat paper money, and embrace real money that holds real value: Gold and Silver, the only Constitutional Tender allowed to States.

1 comment:

  1. "...they also offer a line of credit up to 70% of the bullion deposit".

    This has been my position on why I'm into Gold and Silver. When the dollar goes to zero, as it's designed to do, in order to bring a new world reserve currency, it will need to be backed by Gold and/or Silver.

    This will be how the wealth transfer takes place, imo, that Mike Maloney talks about.