Various estimates are that there is a shortfall of 100-150 times the amount of physical gold to pay the claims of gold out there. What happens when even a small percentage of the people want their actual gold?
William Kay said it best:
“When the music stops, what the leverage in the system should tell you is there aren’t going to be enough chairs. So Germany, as a credible country, is saying, ‘We’re reserving our chair.’ Now this is exactly the type of catalyst that, as investors, we look for as owners of fully allocated gold ourselves.
We share many of Germany’s concerns. We want our gold in a safe location, fully allocated, (where) no one else can have a claim on it. We can go and touch it, and we know it’s there. That’s exactly the process that Germany has going on currently, and it’s something that should be getting the attention of every investor.”
Kay, principal sharholder of Pacific Group feels that fund managers like himself are already quietly converting paper claims on gold to physical gold. They are doing what GErmany has done. Germany wants the physical gold instead of a paper claim to gold.
When you think about it most people in the United States are in a similar situation with their dollars. They have their dollars in a bank. But the bank does not have all the paper dollars to pay off if everyone (or even a fraction of people) wanted their claim of dollars they deposited.