158 THE BiG DROP
et cetera, which supports the paper transactions. The floating
supply can be leased, it can be in a warehouse and it can be
sold forward on an unallocated basis.
When you take gold from the GLD warehouse and put it in
Shanghai, there’s no impact on the total supply, but you have
shrunk the floating supply. I’ve seen this firsthand.
I was in Switzerland not long ago, and I met with VIA MAT,
which is one of the big four secure logistics firms in the world
— as well as G4S, Brinks and Dunbar.
These are the firms that handle physical gold. They’re not
dealers or bankers. They bring in armored cars and freight planes
and use vaults. These are the people handling the actual stuff.
I met with the head of gold, precious metals and fine art
for VIA MAT outside of Zurich. He told me that they’re building
vaults as fast as they can. They’re actually negotiating with the
Swiss Army. If you know anything about the Swiss Army, it’s as
if behind every rock in Switzerland there’s hidden entrance to a
cave or an artillery piece. The whole country is an armed camp.
Over the years, they’ve hollowed out some of these moun-
tains in the Alps, and built these extensive warehouses, storage
facilities and tunnels. All can withstand nuclear attack. Some of
them are obsolete and they’re getting to the point where they
don’t think they need as many.
So, VIA MAT is in negotiation with the army to lease these
nuclear bomb proofed mountains. He told me that they’re
building vault space as fast as we can because they’re running
out of capacity.
I asked him, “where’s the gold coming from?” to which he
replied, “UBS, Deutsche Bank, Credit Suisse and customers are
taking it out of the banks, and giving it to us.”
Now, there’s another example where the total gold supply is
unchanged. Let’s say, I have four thousand ounces of gold with
UBS, and I them up and say, “please send the gold to VIA MAT”.
In that case you have to send an armored car, pick the gold