One of Holland’s largest banks, ABN Amro, has recently released a statement announcing to its customers that it will no longer be delivering physical gold, or any precious metal to its clients. All of the clients’ gold will be translated to their bid price in fiat money as of the announcement.
This sudden and perplexing announcement included no formal explanation. Clients were comforted to stay calm and that everything would be taken care of on their behalf.
But what exactly happened behind the scenes is a point of great interest to gold observers, especially those who have for long claimed that ‘all the gold that is believed to be in the possession of institutions might not really be there’. ABN Amro have long been publicly bearish on the price of gold, which adds another layer of mystery to the proceedings.
Such a decision is one of the first to be publicly declared, and luckily for the ‘gold’ holders at the bank at least gives them time to buy the physical gold at fair prices. Yet, one can only wonder what would have happened if this sort of announcement came during a huge boom in gold, would gold bugs be paid below market prices and be left out in the cold at a time when gold is most difficult to get a hold of?
Regardless of the reasons behind such a move, it is yet another reminder of the advantages of keeping gold in one’s possession and not relying on counter parties.