Deutsche Bank Refuses Delivery Of Physical Gold Upon Demand

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thenews  

While the trading world was focused on the latest news involving Deutsche Bank, namely that the troubled German bank had been contemplating a merger with Germany's other mega-bank, Commerzbank as part of a strategy to sell all or part of a key business to speed up its flagging overhaul, a more troubling report emerged in a German gold analysis website, according to which Deutsche Bank was unable to satisfy a gold delivery request when asked to do so by a client of Germany's Xetra-Gold service.

But first, what is Xetra-Gold?

According to its website, the publicly traded company "provides investors with an efficient instrument to participate in the performance of the gold market. Xetra-Gold’s combination of features – cost-efficient trading and the right for physical delivery of gold - makes it an attractive product."

http://www.zerohedge.com/news/2016-08-31/deutsche-bank-refuses-delivery-physical-gold-upon-demand

Mawreen Lawson
460
Mawreen Lawson  
This is a very bad sign for Deutsche Bank.
thenews
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thenews  

Deutsche Bank Tries To Explain Why It Did Not Deliver Physical Gold, Fails


he unprecedented escalation involving Deutsche Bank's failure to deliver physical gold on demand continues.

As we first reported two days ago, a client of Xetra-Gold, a German Exchange-Traded Commodity fund, tried to get access to the gold he had been promised under the Xetra-Gold prospectus, leading to much confusion about just where the failure to deliver had taken place, at Xetra or at the fund's designated sponsor, and the client's principal bank: Deutsche Bank.

Then, overnight, we presented the just as odd response provided by Deutsche Boerse where the ETC is traded, which sounded as if it was trying to pass the buck onto Deutsche Bank. This is what it said:

Deutsche Börse Commodities GmbH stresses that owners of Xetra Gold units can exercise their right to delivery of securitised gold at any time. The gold is delivered by the bank branch on which the investor has its securities account – on the condition that the branch offers this service, as the gold can only be delivered through the investor's custodian bank.

As we said at the time, the response led to even more questions, and even more public outcry in Germany, which may explain why moments ago none other than the custodian bank, Deutsche Bank, joined the fray, by doing something it has never done before: provide a rationalization for why it failed to deliver gold on demand. Or at least try.

Its response:

As one of the sponsoring financial institutions, Deutsche Bank fulfils the obligations specified in the Xetra-Gold sales prospectus as a matter of course. This includes fulfilling claims to the delivery of physical gold certified by Xetra-Gold. This must take place through the investor’s principal bank where the investor’s securities account is maintained.

Deutsche Bank accepts such orders for delivery from its clients. The investor incurs the costs described in the sales prospectus, for example, for the forming, packaging and the insured transport to the place of delivery.

For this reason, we recommend in each specific case an individual review of the economic efficiency of a physical delivery. Should an investor’s request for the handover of physical gold not have been complied with immediately in individual cases, this will be reviewed and an individual solution will be found with the client.

And so another non-response, because in the same press release Deutsche Bank both admits that it has an obligation to deliver the gold "as a matter of course", and then tacitly confirms that it failed to do so, by first saying that it evaluates the "economic efficiency of physical delivery", something it should have no right to do since the Xetra prospectus explicitly mandates that it should release gold on demand, and then adds that "should an investor’s request for the handover of physical gold not have been complied with immediately in individual cases, this will be reviewed and an individual solution will be found with the client."

As we already know, this handover of physical gold failed on at least one occasion, and while we are comforted that Deutche Bank is reviewing the situation and a "solution will be found with the client", it certainly does not even remotely explain why the situation should have arisen in the first place.

However, what is most notable is how quickly every entity involved in this failure to deliver, from Xetra-Gold, to Deutsche Börse, and ultimately to Deutsche Bank, responded with an attempt to placate public concerns about the availability of physical gold with statements that may have, paradoxically, only raised concerns whether the gold is in fact still there.

It remains to be seen if this one individual case spills over, and leads to more gold redemption requests, first at Xetra-Gold as well as at other similar "gold-backed" ETFs. We will promptly report any notable development in this fascinating escalation of a topic that has been near and dear to many gold bugs' hearts for years.


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myname
3232
myname  
They can not - since they did not get it from the FED
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