Periods of Bullion Shortages Can Upend I.O.U Storage Systems, Make Sure You Are Not Using One

Posted by Vincent Tie on 15 May 2020


The topic of gold and silver shortages used to be regarded as sensationalistic forecasts by gold bugs or relegated as events that are highly unlikely to happen. Acute shortages of precious metals have happened before but they were largely minor and had never been news big enough to be broadly noticed.

Our notions of impossible events were thrown out of the window in 2020 as several seemingly impossible events all happened within a short period of time. In one fell swoop, the pandemic grounded the majority of the aviation industry, decimated global tourism and brought on government-mandated closures of businesses around the world.

Within a few weeks, the word 'unprecedented' probably became one of the most-used words. We witnessed the price of WTI oil go negative for the first time in history, supermarket panic-buying became a global phenomenon and the Federal Reserve injecting 'not-QE' stimulus of 2.56 trillion dollars which was nearly twice the QE1 injection during the 2008 Global Financial Crisis.

As the dominoes fell, the bullion industry was not spared either. Major refineries began to close and less bullion was shipped as the number of cancelled flights increased. As bullion shortages increased, the premiums to buy physical gold and silver skyrocketed as the physical price decoupled from the spot price.

We have warned for years of how I.O.U(I Owe You) bullion storage programs were dangerous in that the real owners of the bullion were not the customers but the dealers or banks. This allowed such storage programs to use bullion sold for storage to customers as inventory to be resold to other customers or leased to third parties. Customers were merely creditors as they were owed ounces of bullion that were not identified by any unique identification numbers.

During normal times, such programs may seem fine as shortfalls in holdings could be easily replenished with new orders from suppliers giving the impression that all bullion owed to customers are allocated fully. It is only during times of severe physical shortages that cracks will begin to appear.

If the bullion paid by customer A was resold to customer B and the dealer was unable to acquire new bullion to cover what was owed to customer A, what happens then?

We live in turbulent times where what we thought to be impossible has happened. This will be the worst time to entrust your gold and silver to such I.O.U storage programs. As we journey deeper into the economic collapse, you want to sleep soundly knowing that your gold and silver are protected in the midst of the storm.

Silver Bullion's S.T.A.R. Storage program emphasizes on customers having full legal ownership of their bullion stored under exclusive Singapore jurisdiction. We have built processes into S.T.A.R. Storage that makes it difficult for us to cheat and even if we did, it will be very evident. Your gold and silver parcels are your private property, uniquely identified by their parcel IDs and we merely act as a custodian to provide storage, liability protection and liquidity as well as ensure bullion genuinity.

Beyond our quarterly vault audits by third-party auditors, customers can also audit their own holdings using the Parcel Ownership List which can be downloaded from their S.T.A.R. Storage accounts. 

Living in unprecedented times require the most secure storage systems to ensure your wealth survives through the unfolding economic crisis.