Money for Nothing

[webmaster]

Subject:Money for Nothing
By: Theodore Butler

Overview: I am sure that eventually we will read about the great losses some institutions have suffered from very high silver prices because they sold silver to clients that they never actually purchased. People will scratch their heads and ask how those firms could do something so foolish, just like many today question how big firms could offer mortgages to borrowers of poor quality.

Link: http://news.silverseek.com/TedButler/1193161018.php

[Evan]

The more you think about this story, the more disturbing it gets. Morgan Stanley defrauds 22,000 investors with bogus silver storage accounts, accompanied by real storage and maintenance fees, assumes free use of investors' money for years or decades, and claims it's SOP in the industry!

Does this really mean all stockbrokers do the same? Does this mean maybe that the PM ETFs actually hold no gold or silver, as some have alleged? And hey, while were at it, when I buy stocks in street name for my IRA, how do I know they really hold the shares, or that they don't just put a bunch of fake numbers on my screen. Anyway, these allegations clearly raise the issue of whether we can trust brokers for anything beyond efficient collection of commissions and margin calls.

Not to disparage your excellent work, Ted, but my Google search finds no other reference to this except your article. Is there any indication whether this issue has been studied by anyone else, whether the financial press, federal prosecutors, or the SEC? It should not be that hard to audit for presence of 1000 ounce physical bars! Why is such an important story not even mentioned so far in WSJ, or any other media?

[jwahlgren]

IRAs are particularly vulnerable to 'bucketing' since unless your broker and your custodian are two different entities it is impossible to take delivery of stock certificates, coins, bullion, et cetera. Setting up an IRA custodian is beyond most persons abilities.