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Tom Cloud: Wholesale Gold Inventories Evaporating

by John Rubino on November 29, 2012 · 30 comments

In this week’s interview with gold dealer Tom Cloud of National Numismatic Associates, we cover one very timely topic – the sudden decline in gold inventories – and one perennial question – how can an individual put physical precious metals in an IRA.

DollarCollapse: Good to talk to you again Tom. Let’s start with your observation that the major gold wholesalers don’t seem to have their usual level of inventory. Why the sudden tightness?

Tom Cloud: Of the seven or eight major wholesalers that send me price sheets, almost every one is having supply issues. Some [coins and bars] I can get right away, but most take between a few days and two weeks.

The wholesalers don’t necessarily know why this is, but some speculate that the 58 tons that China’s central bank purchased in September was responsible, and that [the Chinese] purchased at least that much more in October. When a big seller elects to sell something they don’t even put it in the market any more, they just call up China’s central bank, and we see the report four weeks later, if we see it at all.

And it’s not just China. Central banks in general are buying. Until 2011 central banks were selling gold but in the last two years hardly any are selling and many are buying. I’ve been doing this for 35 years and last month made my first sale to a central bank.

Another factor is the new Basel III agreement in which gold counts for what it’s worth rather than 50% of what it’s worth, which makes it a more attractive asset for banks.  And the final factor is that more Americans are moving into metals, which is producing more small orders to go with the big orders from central banks. It’s different for each wholesaler, but the overall effect is to tighten inventories.

DC: That’s great news for gold bugs. Now, for those who have money in an IRA and want to convert some of it to bullion, how can they do that?

TC: We’re starting to see people actually move physical gold out of these ETFs. GLD, for instance, has been trading at a big discount. Why would GLD be selling at a discount if there wasn’t anything wrong with the fund? Of course there’s plenty wrong with it, as Andrew McGuire has testified.

Instead of bullion ETFs, a lot of people are choosing to set up self-directed IRAs that can hold bullion directly. The first step is to find a government-approved custodian. There are ten or eleven out there but I find the two most user-friendly to be Sterling Trust and Goldstar Trust. You get an application online, along with a rollover or transfer form, fill these out and submit them, and your existing IRA is transferred to the custodian. Then you use those funds to buy metals and have them stored.

You have two fees per year: a custodian fee of around $75 or $80 annually, in return for which they send you quarterly statements and 1099s for the years when you take a distribution. Then you pay the depository, generally Delaware Depository Service Corporation (DDSC), which  stores the physical metal in your allocated account, with your name on it. Their fee is $125 per year for anything between zero and $100,000. For example, if somebody transferred $20,000 into a precious metals IRA then they’ve got about $200 in fees, or about 1% a year. The more you have the lower the percentage would be. When you get to $100,000 they’ll charge 60 basis points on each dollar after that.

DC: Can you deposit your own bullion in this kind of an account?

TC: Yes, but the amount has to be below what you can put into an IRA in that year. The amounts differ for SEP and traditional IRAs.

DC: What if you want to take possession of your metal?

TC: They’ll deliver it to you. If you’re old enough to take IRA distributions there would be no penalty but it would be taxable and they’d 1099 you. Here’s an interesting point: Many dealers will pay above spot for Gold Eagles and other major coins and bars. So let’s say you want to liquidate five gold eagles. You can ask the custodian to convert them to cash at spot and send you a check. Or you can take delivery and sell them yourself for the extra 2%.

For more information or to place an order, call 800-247-2812 or email Tom Cloud at tgcloud@bellsouth.net. Mention DollarCollapse.com for free shipping and insurance.

  • stonehillady

    That might be fine for short run but, maybe you haven’t been listening to what has been going on behind the doors in Congress & the Federal Reserve. They are planning right now to confiscate your IRA’s, 401k’s & transform then into the SS funds…allowing them ONLY to be invested in Government Bonds paying only 3% & treating them the same as they do SS. Which means if you die they will become the assests of the Government whether you had time to recieve anything or not……! I would tell anyone to cash out those funds & buy phyiscal metals NOW because those in congress are looking at 5.4 trillion with mouth watering Jaws ready to make a kill on them.

    • Tom

      This is hearsay about the govt planning to grab poeple’s IRAs. Provide a link or some proof.

      • Rooster

        It’s true. Harry Reid sponsored. You look it up.

      • stonehillady

        Hi ! I have heard this for about 2 years now but, today on Rush Limbaugh he got hold of a tape of a meeting in the White House of the Obama Administration almost 4 yrs. ago stated this must be done to redistribute the wealth so that those that didn’t save for retirement can be renumerated. Since the major bulk of boomers still haven’t starting to collect SS which I believe now is $900 billion a year in payouts, unless we get about 50 million more paying into the system in the next few years, instead of cutting SS in half they have no choice then to take the 5.4 trillion we have in funds now instead of getting all these people back on the payroll, which we know they will not be able to create these Jobs to come back or create them. Sad but, true ! Do the numbers, I’m not advocating this by NO means, but the money printing & the PNAC Project with the continous state of war has a serious price which the Elites are dead set to continue with…..so it is a Marxist way of life we are headed for & who can really change it ? Dr. Paul had tried to warn us but, he was/is laughed at, not taken seriously enough, we have no balls to end the FED’s… Sincerely,
        Gina D.

        • zmzn

          well if drug addict Rush Limbaugh said it’s true, then it must be. I’m sure he didn’t play the tape “that he found” did he?

          • stonehillady

            Yeesss he had a tape….I think it was Harry Reid ?

        • zap

          Gina D, have you ever heard of H. S. Dent? He has a subscription newsletter that oddly enough is founded upon demographics, and “seasons” in our economic cycle. Putting this together, in his analysis spring occurred right after WWII/ depression (winter). Summer began when the Boomers became highly educated and productive citizens. Fall began when Greenspan began blowing bubbles, followed by the outsourcing of our skilled labor force which was accompanied by monetization of debt by an unregulated/unprosecuted financial sector. The first cold blast of winter has arrived with bailouts, loss of much of our Bill of Rights, and a successful media campaign to keep the public polarized in a most hateful manner, the arrival of what can only be described as a police state. I could write a book on our unnecessary and “for profit” foreign wars. I’m glad I’m getting old…this winter is showing signs of being a prolonged and very cold one.

      • Sue
    • zmzn

      You need to do a little research on this and not listen to all the conspiracy theorists. This is NOT True. I’m not going to educate you here, but seriously stop listening to the blogs and search out the truth.

      • stonehillady

        your going to educate ? Well, it is NOT a conspiracy, it is cash ! Who are you that doesn’t see the objective of what those in charge must neutralize. There is a urgent time frame to accomplish a comman goal to the Agenda….you are either in the loop or don’t realise the agenda…….& you say this to keep those invested in these products so the agenda can be achieved or your just plain ignorant.

      • Sue

        so sez the CIA lady out there at that nice new facility in Utah. haha, you suck.

        • zap

          Right on, Sue. Reading through this thread is nothing new to me. There are those with emotional issues attached to what they wish they had started doing years ago, and are now venting because others had more foresight. Being emotional about an investment is a recipe for disaster. Doing anything but admitting they were wrong, they split hairs, demand detailed spreadsheets as proof (even when it’s in front of their face), and usually resort to saying “this will happen, or that will happen, and you’ll be sorry.” LOL. I used to get angry with these types of people years ago…now I just laugh at them.

    • Sue

      Heck, boy, I had mine five years ago. Just a settin’ here n’ a waitin’ fer the fun to begin.

  • John G.

    John, that is great, to hear market conditions from a guy in the marketplace. Thanks for the column.

  • Charles

    Some people who store their own metals will regret it, ordinary theft is why. However, better that risk, than concentrating quantities of bullion in specific depositories. Concentration invites a grab by Uncle Sam. If you have your own safe(s) you can add more protection with two heavy chains around and padlocked. If someone intends to drag your safe away, they will have their own chains, you aren’t helping them by making it take longer to open it. Place chain under the bulge of the hinge, draw tight, padlock http://www.nosilvernationalization.org

    • stonehillady

      please don’t be so dense. just think about stashing in plain site ! A thief thinks a safe.

    • http://www.facebook.com/profile.php?id=100001896748064 Teddy Hunt

      My dad and granfather went through this the last time. Bury the bulk of it. the rest you hide in the walls. Keep an inexpensive safe like i do, full of fake papers and hand full of coins. Let them take it. .
      Put the rest of your coins in the walls. Keep it very very secret and gangs of theives wont take the time to completely deconstruct your house looking for coins.
      Banks were insured then, yes they were. Everything failed. Even in 1933 the gov traced every gold purchase, they came and knocked on your door and asked for last weeks pay (which you took in form of 1 gold eagle) if you didnt have it , you had to tell them who you spent it to. Socialism was in its infancy then (1932) now its globally organized and they have computer records of everything you do. Keep in mind whoever you buy your PM from, hackers will eventually steal that record and sell it to organized crime. Guns and gold. Ammo has increased in value 147% in the last four years. Hows your 401k?

      • Charles

        Strange you’d think I have a 401K. And some people don’t have enough wall space for what you’re talking about. There are many tactics for diversion. Buy cheap synthetic rubies on ebay, create fake appraisals, let them take them thinking they’re naturals. The safe biz will go on regardless of other opinions.

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  • gomeljohn9

    This guy lost credibility with me when he couldn’t even state minor facts as “facts”, but had to hedge them. So … is it seven or is it eight? I GUARANTEE he knows how many wholesalers send him price sheets. If not, he could COUNT them. And then, how many are having trouble? “Almost every one” of them? Is it five having trouble? Is it six? Out of seven, or out of eight?

    He states that in a VAGUE way, so that his words can’t be construed as a STATEMENT and be held accountable. If reality is that 2 of 7 are having trouble, it sounds like he is wrong, but he says it this way so he can fudge out of anything if what he says isn’t the turth. Warning: If ANYONE says things in a way so they can fudge OUT of being stated to have said it, then they are NOT WORTH READING. And if he can’t be specific on even this, then you KNOW the rest of what he says is all hedged by ways of saying things that make it mean nothing! And reading the rest of the article? Yep, that’s how he says things.

    NO credibility! No backbone. No solid thoughts. Just things where he can later say “Well, I didn’t really say that” and be accurate. Because he didn’t SAY it.


    • paper is poverty

      Demanding simplicity is not the same as critical thinking. Maybe one of the eight wholesalers has not reliably been sending prices, or they’re late sending him info this time, or maybe one of them sends prices on a different schedule than the other seven and he isn’t sure how to concisely summarize that. Or maybe he’s about to start doing business with another wholesaler but up to now it’s only been 7 of them. Or maybe he thinks he’s about to stop doing business with one of the eight he’s typically worked with. Or maybe he’s worked with one of his eight wholesalers only very rarely and it’s mostly been just the seven.

      It’s a very short interview, don’t assume that trying to be concise is the same as fudging or trying to edge out of statements later. It could be, but you don’t know that.

    • Jim H

      You are very clearly some kind of troll for the status quo… the major, unequivocal point that the dealer made is that after 35 years in the business, he made his first sale to a foreign I assume) central bank…the implication being that this particular central bank was trading dollars for Gold in a way that directly competes with us US retail buyers… the days of highly available, $1800 /0z Gold coins are coming to an end.

    • Bruce C.

      My sense is that you suspect Tom Cloud my be just another snake oil salesman. I honestly don know if he is or not. But as far as buying gold/silver as an investment, hedge, for safe haven or “insurance”, etc. I would say that according to history – the broad record of human events and experiences – gold and silver has ultimately been the default choice of money for thousands of years, as opposed to some new-fangled miracle cure (like fiat money). In any case, Cloud is just a middle man, as I’m sure he would agree, so you could very well know more than him and still use his services.

      The main question is whether or not gold or silver is a good investment at this time: Is it worth its price now, and will its price – or more importantly its purchasing power – hold steady, increase, or decrease in the future? Personally, I would say at best that all of the unprecedented government/central-bank interventions of debt monetization to avoid “deflation” will most probably result in either significant price inflation or – if they fail – price deflation.

      Now, it should be obvious that if everything goes up in price then so does gold and silver so g/s should maintain or probably even increase in value (i.e., purchasing power). (What’s so interesting about that to me is – especially in this current bizarre world of fiscal/monetary extremism and technological advancement – a major paradigm shift in values or clarity or “whatever” always occurs for that to happen. As humanity gets “back to basics” and is reminded of the natural order/value of things g/s becomes the preferred/natural(?) medium of exchange, in which case g/s would increase in purchasing power.)

      However, if “deflation” ultimately prevails then, existentially, money would be worth more because it would be scarce. Well, again, gold and silver have been the traditional/ultimate/default mediums of exchange, so g/s should (along with “dollars”, ironically) also be increasingly valuable, and probably even more than dollars since they won’t be as readily producible.

    • Sue

      Look, folks, Ben Bernanke above, I mean gomeljohn, etc, is right. Nothing to see here, move along now, folks. Let the rich buy their gold at a lower price. Get OUT of the markets.
      Your friend,

  • Walther11

    To those that dismiss the possibility of the Federal government confiscating your retirement funds, hopefully soon, you will realize there is very little difference between the mafia and the Federal government with the possible exception that the mafia generally speaking left the women and the children alone.

    They will change the rules. They will take your IRAs and your SEP accounts. They will do this for the same reason that Willie Sutton robbed banks “because that’s where the money is.”

    Sure they will replace it with some nonnegotiable bond or annuity that pays some amount of debased brightly-colored coupons in the future. However, it will never match the value of your precious metals gone forever into the open maw of government.

  • stymie

    There will be capital controls whether or not it becomes outright confiscation or not. Assuming your retirement funds are there for you, the currency that they’re denominated in will be worthless. If you have a paper promise, you got zip.

  • http://twitter.com/pipefit Jason Emery

    Some of you must not realize the true size of the budget deficit, annually. The headline number for the last five fiscal years has been about $1.3 trillion per year. But using GAAP accounting, the actual deficit, per YEAR, is over $5 trillion, probably closer to $6 trillion, PER YEAR!!!!! You get this amount, per year, if you include things like interest due on unfunded liabilities, off balance sheet spending, and all the money they have stolen from the social security trust fund over the years.

    Running deficits of this magnitude will result in hyper inflation. The trigger will probably be much higher food prices, which will are already rising like crazy. As last Summer’s drought drags on, perhaps into next year, the dollar is going to take a massive hit, right around May or June 2013.

  • Agent P

    What is that old maxim regarding those who think the status quo may ebb & flow, but basically never change…? And when it does so – rather abruptly – even in the face of those institutions advising them to be calm and not worry, these are the same people who receive the brunt of the smack-down…

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