They sell paper gold but claim that:
"An essential feature of bullion is that it is not someone else’s liability like a bond or promise of performance like a stock. To maintain this essential characteristic of bullion, the Fund only invests in Good Delivery bars and stores them on a fully allocated, segregated basis. The Fund will not use derivatives or invest in securities or certificates of companies that produce gold, silver or platinum bullion. The Fund does not invest in pooled accounts, futures contracts, futures options or precious metals certificates."
Furthermore, BMG publishes bar lists for bullion stored on their behalf by ScotiaMocatta in Toronto. There are two bullion funds. One invests in a diversified manner in several precious metals. The second one just invests in gold.
Here are the links to the purported bar lists for items stored by ScotiaMocatta (a small excerpt appears below):
BMG Bullion Fund (Gold Bar List): http://www.bmgbullion.com/doc_bin/goldbarlist.pdf
BMG Bullion Fund (Silver Bar List): http://www.bmgbullion.com/doc_bin/silverbarlist.pdf
BMG Bullion Fund (Platinum Bar List): http://www.bmgbullion.com/doc_bin/platinumbarlist.pdf
BMG Gold Bullion Fund (Gold Bar List): http://www.bmgbullion.com/doc_bin/bmg%20gold%20bullion%20fund%20as%20feb%205%202010.pdf
Altogether we see about 107,000 oz of gold and 5.2 million oz. of silver plus about 50,000 oz. of platinum. These statements purport to reflect conditions at March 31, 2010.
Thus, just for one Canadian client fund, the amounts supposedly stored exceed that observed by Lenny Organ on his visit to the vault. In the case of silver, the observed quantity is close to 100 times less than BMG supposedly has stored there on behalf of clients.
While the above is all public information, it may well have escaped the attention of some folks. Maybe someone (Adrian or Harvey or Lenny?) have a view on this.
