Let me make this as clear as possible. There are two issues to be resolved here:

1) Is the physical gold in secure possession of the third party custodians that have been paid to hold the bullion?

-and-

2) If every ounce of that bullion is indeed accounted for in a vault somewhere, is there any encumbrance on the bullion in the form of derivitives that have in effect transfered the legal ownership?

The concept of allocated bullion accounts was set up to allow participants to have secure ownership of metal without having to take possession and the responsibility for security of the metal. It was never geared towards any form of leverage, or fractional ownership, and has never been marketed as such. The people who put money into these schemes fully believe and expect that the bullion is there and has not been loaned, or leased, or forward sold to another party that can have a prefered claim on the metal.

If the system is functioning exactly as it has been marketed, then why is there any resistance to the concept of an audit to verify the exact metal ownership? And if there are no derivitives issued against that bullion, then why should the threat of a 'run' represent any issue at all?

The best way to discredit the naysayers is to come out with an independant audit and put an end to the discussion by proving that its all there and accounted for. The very fact that the administration of these ETFs and pooled accounts have refused to allow for an auditing process is in itself damning.

Frankly I do not think Nadler is very credible at all, and would demand more evidence than simply his confidence that all is well. Throughout history, every confidence scheme collapsed as soon as that blind trust in the system was questioned. And every legitimate transaction has been verified by the concept of independant auditing. I would think it is a pretty easy decision on how to reply to the questions if I was in fact a custodian of a legitimate pool account. And I would also understand how the stuttering and indignant twits like Nadler react like they are choking on a chicken bone, if in fact the entire scheme was a scam and the metal is not securely owned by the custodians.

I do not know what the true status of these accounts is, but I am certainly suspiscious just based on how the parties involved have been behaving under the threat of scrutiny.

cheers!

mike