GOLD BREAKING: ‘force majeure’ supplier suffered major sales reverse this year

 MTB recently took on massive premises purchase, followed by huge turnover slump

 Manfra, Tordella and Brookes, the Top 5 New York gold exchange depositor which announced last night it will not be able to deliver metal until further notice due to force majeure, decided to move from renting to the purchase last February of a ritzy condominium in the Extell Development’s new International Gem Tower. But then in May the firm was badly hit by the slump in precious metal sales.

The company claims it is struggling with “operational limitations” following the recent storms. But it’s now nearly a month since Hurricane Sandy.

MTB, one of only five US outfits with a license to deliver gold, holds 29,276 troy ounces of gold according to data from Comex. Comex’s owner CME declared what’s called “force majeure” an act of God (but not Mammon) that frees MTB from liability due to events beyond its control.

The company did post on its website about having “sustained substantial damage” a fortnight ago. And naturally, anyone can still get The Real Thing delivered via Brinks: plus, MTB is responsible for any additional costs incurred by customers who want to use that process.

But this afternoon, I find myself wondering what will happen if (or when) everyone suddenly decides they want their gold right now.

MTB is a privately owned bank still largely under the control of the Tordella banking family. Its chairman is Frederic N. Tordella. It converted to being a retail bank in 1993.

In February of this year, it took on a new not-yet-finished office condominium in the International Gem Tower. There it will buy the condo – and double its premises size to more than 10,000 square feet on the third floor – with another 2,500 square feet of below-grade space – in the now rising 34-story, mid-block tower on West 47th Street. According to Raizy Haas, senior vice president for development at developer Extell, “They were a little nervous about buying space and moving their operations. They took a long term view and became comfortable with the fact that they were going to own rather than rent.”

Nobody was available to comment today about whether the level of comfort had gone up or down. However, what we can be sure about is that MTB President Mike Kramer told the London Financial Times last May, “There are days here where we wonder if the phones are working”. At the time, he estimated that sales of gold, silver coins and small bars had fallen 50% in the previous two months.

File this one under ‘informed speculation’.

Postscript: At 9/11, MTB had its gold stored under the World Trade Center.

48 thoughts on “GOLD BREAKING: ‘force majeure’ supplier suffered major sales reverse this year

  1. It never ceases to amaze me that so called “elites” buy gold (paper gold) and then never take possession of it. One more time for anyone who wasn’t listening:

    IF YOU DONT HAVE IT ON YOUR HAND, YOU DONT ACTUALLY OWN IT!

    Interesting re gold sales decline. Those who I speak to and trade the stuff are having a damn hard time getting hold of the physical stuff. Seems that market remains full of demand.

  2. ‘I find myself wondering what will happen if (or when) everyone suddenly decides they want their gold right now.’
    Ask Germany?
    Personally I would have thought the answer pretty simple. A big fat NO.
    It’s all an illusion, a big fat lie.

  3. It is often said the quantity of gold mined would not fill an Olympic sized swimming pool. The amount of paper shorting it would have you believe there is significantly more than that above ground. When this fiat currency race-to-the-bottom war eventually blows up, this holding physical will be pretty smug, even if they have merely preserved wealth whilst others lost it. IMO public sector liabilities such as social security and pensions will be devalued through inflation as politicians lack the cojones to enforce real cuts, and this is how they will approach the problem. Which is good for hard money.

  4. At the current rate, this is 911 kilos of gold, worth about £32million. It would fit in any decent-sized armoured truck. I could stuff thirty kilos in a backpack with no-one the wiser, due to its’ density. I can’t see how they could fail to be able to deliver it. Am I missing something, or are they missing something…

    • Well, just having a little joke, but that 911 number — did you check your calculations? :)

      Sometime John can seem as though he’s an actual character from a Kurt Vonnegut novel.

      :)

  5. 1980.Soviet Union invades Afghanistan.Gold price rises to $850/ounce.2012,Gold price has doubled,but has paid no income.Think I will stick to holding blue chips yielding 4 percent and granting call options to produce a IRR of 13 percent pa since 2000.

    • …at which point your brokerage pulls an MF Global, and your bag of highly-polished turds is now empty. “…And…it’s gone.” — South Park

  6. I used to buy coins from MTB at Penn Central Station when I was travelling through New York in the 1980s and 90s. Still got them along with the stuff I have accumulated since the 1960s. Pay cash, take your coins, trust nobody. I remember dealing with Deak and Co in the 1980s. Nicolas Deak was shot in unexplained circumstances but as with MTB it appears the company was having difficulties.

    • I was personally aquainted with distinguished and very honorable gentleman in the States who had many diverse interests, including, during the 60′s 70′s and very early 80′s a small set of vending maching ventures. This was before and while silver went Hunt-O-Maniacal. Being a mere helper around the place, as a young’un, I was always curious as to why they kept so much of their vending maching intake in coins — stacked to the rafters. “Why not cash it in and deposit it?” went the feeble tape recording in my mind.

      When I saw an old college chum fallen on hard times come to visit me in Chelsea, he asked me if I wouldn’t mind accompanying him for a walk to some local trader of metal and coins. “Sure, how far is this going to be, can we walk it?” wondered I and he assured me, correctly as it developed, that it was a mere matter of a few city blocks on foot.

      So I accompanied the lad with his nominal 70cents in American coins to this hole in the wall jeweler/dispensary where they rapidly and without question gave him $85 or so paper money American in exchange.

      WHen I think about the fortunes those other fellows must have made, and of their patience and foresight it makes me feel quite foolish by comaprison and not a litle bit jealous.

      • It was the abandonment of silver in US/ Canadian coinage and the end of the Silver Certificates that first got me interested in investing in precious metals. It’s stayed with me for life.

  7. But what exactly would those clever people holding gold exchange it for if fiat died? Time and time again I ask the question and never get a coherent answer.

    27,000 cabbages for a 2013 0.999 fine gold 1oz Britannia?

    I am not anti-gold as part of a mixed set of investment assets, but I still fail to grasp what the alternative to the current fiat is going to be come ‘the collapse’. Groats on an RFID-chipped forehead?

    • @Cris: There have to be some ‘medium’ for people to barter goods with, where one can’t swap say, some bread for some honey, and at present people have it fixed in their minds that gold will be that ‘medium’ because, previously it has fulfilled that role. Whether that will be the case in the future remains to be seen.

      • Agreed. Central banks are buying it up in a big way and as far as I am still aware, it becomes tier 1 capital in early 2013. Then the CB balance sheets will finally have something other than Greek iou’s and US crap notes. At this point it’s very possible that the long time manipulation of the gold market will go into reverse as they attempt to inflate the value of the one last asset they have and get on top of their otherwise toxic accounts.

        The other side of the coin is that the dollar has never been more vulnerable as the reserve currency. The BRIC nations have been accumulating more AU than most and control a large amount of influence over energy (oil) Gaddafi was summarily assassinated because he proposed the idea of the gold backed dinar. He was one man, could the US really stop Putin and friends if they decided to go with a new reserve currency underpinned by their considerable gold holdings?

        Either way, gold is money.

      • ‘Could the US really stop Putin and friends if they decided to go with a new reserve currency’ That statement Chris IMHO, is the catalyst for wwIII. The US cannot live with the Dollar not being the reserve currency, for them, in that scenario, it’s game over.

      • The land of milk and honey? I am not a religious man per se but, I love honey and it’s sooo good for you, more so than gold if you are hungry…

      • The best currency are bullets and something to fire them from:

        When you have the upper-hand they are a ‘bargaining tool’ with which to acquire goods at zero cost.

        When you dont have the upper-hand they are a tool with which to protect you position and negotiate.

        Gun+bullets > gold + silver

        I know this all sounds over-dramatic but if the wheels were to fall off of the societal cart, there will be those who will do the basest of thing to get their own way. I know, from a past thread on USA gun rights, that some commentators here believe that gun ownership is next only to paedophillia. The truth is thought, that if things go tits even the riteous will have to protect themselves from the criminals.

        I for one am making sure that the playing field is as level as I can make it.

    • You would exchange it for exactly the same stuff you currently exchange fiat paper for..food and essentials. When sellers will not accept paper they will accept precious metals. And you may acquire a lot of property for a small amount of your gold. Fiat currency…’money’…is simply a means of exchange. When fivers become unacceptable, I can assure you PMs will be gratefully exchanged, and hopefully that day will never come!

      • For many that would suck in a monumental way.

        But is the direction the system is going now going to be any better.

        Gold as medium of exchange would damage the value of pensions and savings

        Status quo would do the same damage via printing and inflation.

        By owning PMs you give yourself a shot at maintaining the value of whatever wealth you’ve managed to put together. And maybe make off like a bandit during the big reset!

    • @Cris; you would be unlikely to swap it directly. The idea would be to sell your gold for whatever new currency came into existence after “the big reset”, then use that new currency. The idea of gold is that it will survive that “reset” moment.

      • Thank you for responding OS.

        I suspect that my main concern is that the use of gold as an alternative to fiat could very easily come under scrutiny by TPTB, making it nigh on impossible to use it for trade.

        I completely understand its use as a way of countering the effects of inflation (for this is what we’re all really talking about here), but the fact that it is so transportable and inherently impossible to ‘manage’, is likely to ensure that it attracts unwelcome attention at some point.

      • Correct, gold is both a currency and a store of wealth. They can’t print it, and all the low-hanging fruit has been picked…meaning gold is becoming more expensive to dig out of the ground. Wittwatersrand workers no longer wish to crawl 4 kilometres underground risking their lives for pennies.

  8. Sorry, but I remain unconvinced about Gold as a good sound investment…..

    If I hold a piece of paper with ‘I Promise to Pay the Bearer on Demand the sum of £20’, I remain reasonably confident that I can trade this for a similar value of goods…Granted it may diminish a bit over time thanks to inflation and QE, but it is highly unlikely to loose Most or ALL of its value. Similarly a deed to my property might change in value up or down, but unless some huge catastrophe hits deepest Surrey, it is very unlikely indeed to become totally valueless.

    However if I hold a piece of paper that says I own this or that Gold Ingot in such and such a vault…..and I had any suspicion whatsoever that a number of other folks around the world might hold a similar piece of paper describing the same Ingot, then I for one would be very worried indeed.

    Luckily apart from a bit of gold in a few family heirlooms and sentimental jewellery, I don’t own any other gold…..and I am afraid that right now, anyone is going to have a very hard time trying to change my mind that Gold is a safe place in 2012 to put my money.

    • You’re describing the exact problem associated with the market in “paper” gold. Nobody knows if what their certs say they own actually exists. The German central bank seems to be having just that situation recently.

      If its in your hand, you own it. If its in a bullion bank then good luck.

      And in 2012, I don’t think there is any such thing as a “safe place” for your money. Other than guns and beans. And maybe gold!

    • I am astonished at your lack of understanding. Your property will always have value; it is not portable, and can be taxed repeatedly and unfairly, and then stolen from you if you refuse to pay, but it will almost certainly be worth a good price in whatever market exists.

      But the £20 note? Diminish “a bit” over time! This has already lost most of it’s value. It used to be worth the same as twenty Sovereigns; now you would have to pay £5400 for those same twenty coins. Look at it the other way; your £20 at the value then is now worth less than a half-penny.

      No-one is suggesting you buy “paper” gold; the counter-party risk of the gold not being there, is exactly what John is talking about. The Germans are, indeed, very worried. At this end of the financial cycle, it’s physical coins, unless you are an expert trader. And it’s “lose” not “loose”.

  9. Pretty easy to carry a few pre-65 dimes for small purchases…. readily identifiable and acceptable. Used to be able to buy a McDonald burger with one of these….still can. Used to be able to buy an oz. of pot for a $5 roll. Still can.
    Gold’s not money. LOL.

  10. When the defecation hits the oscillation gold and currency won’t have any value as neither one can be consumed for caloric energy… farmable land, with water rights, that is isolated or easily defensible…. in stable long lasting society’s… that is the new gold.

    • “farmable land, with water rights, that is isolated or easily defensible…. in stable long lasting society’s… ” see New Zealand and Australia but hurry they have started putting restrictions on foreigners buying farms .

  11. ‘I find myself wondering what will happen if (or when) everyone suddenly decides they want their gold right now.’

    The same thing that would happen if every customer of a bank decided to withdraw their money I imagine :)

  12. From the previous blog:
    “Until then, keep an eye on what gold does at 10 am New York time today:”
    Well I did. What was supposed to happen?

  13. When they finally manage to rewrite the laws of reality (as we know it..) – and they are, let’s face it, getting seriously close now (hey, maybe they’ve already done it, who knows?) – the value of fiat will quadruple over night. I plan to use gold to balance the wheels on my 1929 Model 100.
    (about half a pound should do it..)

    • I beg to differ. On more than one occasion I’ve read of some American official saying that the U.S. could print money forever, without ever causing inflation … because the USD is “the” reserve currency, bla bla bla. If this were in fact true, the Fed would simply print enough money to turn every American taxpayer into a billionaire and every American would live happily ever after. But we know this won’t happen, hyperinflation will happen and is inevitable. Central Bank acquisitions of large quantities of that yellow stuff you can’t eat is for after the party … when the music stops, the BRICS want a seat, preferably a gold one. When America prints dollars, they tax everyone holding dollars. Why should the BRICS or any other country pay an American tax on capital? The U.S. dollar and gold are spring loaded, in opposite directions. And no, you can’t eat gold, but when I hold a 1oz gold Gold coin in the palm of my hand it never ceases to amaze me yhow many hamburgers I could buy with such a small thing.

      You won’t need to balance your wheels because you won’t be able to afford the gas.

  14. At the end of the day,if the defecation colllides with the oscillation ( to plagiarise a previous nugget) the real value will be in food growing land. Self sufficiency ,backed by a shotgun to preserve your castle.
    Gold can not be eaten,bully beef can and be bartered.
    My Argentinian friend reckons when THSF there, the best currency was junk jewelery, rings etc. Small value ,easily traded.

    • Thank you very much for that. I’ve got some junk gold, I was going to melt it, but I think your friend’s idea is better. Can’t confiscate jewellery easily. “Here is a chunky 9ct gold necklace. Is that a nice second-hand laptop you are giving me? How kind…”

  15. I am a fan of both gold and farmland, each has a purpose, gold will preserve wealth and farmland provides annual returns and preserves wealth. Gold could be confiscated where as farmland is essential and needs to be kept in production.

  16. Pingback: Interesting reading | Silver Gold Purchase

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