![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_zaoz_2.gif)
![[Most Recent Exchange Rate from www.kitco.com]](http://www.weblinks247.com/exrate/24hr-zar-small.gif)
![[Most Recent Exchange Rate from www.kitco.com]](http://www.weblinks247.com/exrate/24hr-euro-small.gif)
The CEO of FNB Mr Michael Jordaan replied to our previous post saying:
Missing the point, we deliver coins too RT @humanactioncoza Did FNB CEO just admit Krugerrand service is a fraud? http://bit.ly/r1hMKA
We know you also deliver the Krugerrands. However, FNB also ‘delivers’ Rands to depositors when they withdraw their money from your bank. Does this mean FNB can afford to settle all claims when all depositors want to withdraw all their Rands at the same time?
The SARB monetary base was R73 billion in May. This includes commercial bank deposits with SARB, plus vault cash of the commercial banks. Actual, physical, paper, Rand note and coin circulating in the economy was only R6 billion in May.
Total deposits at commercial banks in May was R1.99 trillion. The banks cannot possibly make good on these promises. The South African commercial banking system can only make good on 3.6% of total deposits.
The South African banking system is insolvent right now as I write this, but is protected by the SARB and other fiat legislation. ‘Depository institutions’ are the only businesses allowed to embezzle the public like this.
With the point clear, will you apply the same principles to your Krugerrand service, where you sell these gold certificates to clients, take their money up front, but not backing each Rand with an equal amount of actual physical gold?
Let’s take it a little further. Will buying the Krugerrand be a bailment transaction, where the owner has legal claim to the coin by having see-through to the Rand Refinery? What happens when we do have a bankrun and FNB goes belly-up? Who has first claim on the Krugerrands held at the Rand Refinery?
Many gold bulls read this site. We will welcome your response.
If they go belly-up and people claim compensatory damages will the government courts award plaintiffs in “legal tender”, i.e. fiat currency as opposed to what the people actually want: gold?
I prefer to hold my physical bullion. The only time Ill defer is with someone like GoldMoney.com cause I dont feel like storing that amount of silver :) As usual the people who make use of this service will be the public who climb in when the bull market is ending its 3rd (blowoff) phase. Ive advised my clients and friends NOT to use this service
To clarify from FNB Share Investing perspective:
@T-man – yes you are correct. You can take physical possession of your coins.
Every coin purchase involves a coin being transferred to the client. We do not sell “gold certificates” to clients, but rather actual Krugerrand coins. Each client’s coin holdings are kept at Rand Refinery and are kept in the client’s name. A “run” on FNB’s gold business, in which every client requests physical delivery of their coins, will see every client receive their exact holding in coins. If FNB goes belly-up, clients’ coins will still belong to them, as per our arrangement with Rand Refinery, i.e. clients have first claim to their coins at Rand Refinery and FNB is obligated to provide clients with their coins in this instance.