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Posts Tagged ‘Scotiabank’

On July 17, I wrote about Scotiabank’s near-empty gold vault and gold certificates.

From their 2009 annual report, on page 123, they don’t list gold and silver bullion and certificates separately.

Under “11   Other liabilities” as of October 31, 2009, they list:

Gold and silver certificates and bullion

For 2009, they reported $3.856 billion, and for 2008, $5.619 billion.

From their annual report, there is no way of separately knowing the value of gold bullion, silver bullion, gold certificates and silver certificates held for their customers.

Also, despite them selling platinum and palladium products, they’re not listed on their annual report at all, despite palladium outperforming gold, silver and platinum in 2009, and platinum being the overlooked investment metal and currency.

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Back in April, there was the report that Canada’s largest precious metals bank and member of the London Fix, Scotiabank, had almost no gold in their vault.

From their FAQ:

How secure is a “gold certificate”?

Scotiabank gold certificates are backed by the assets of The Bank of Nova Scotia.

Nowhere do they claim to have any physical gold backing their certificates.

If you buy a certificate, you will see that they are legally required to deliver you the gold within a specified number of days after redemption, not immediately.

Given their membership on the London Fix, and history of precious metals trading, they will likely be able to deliver physical gold to you according to the contract, barring an all-out physical gold redemption bank run.

Even if you don’t get your physical gold, your underlying assets are denominated in USDs, so if the USD plummets, your holdings will be inflation-protected relative to gold, unlike if they were sitting in a savings account.

Given that the Big Five Canadian banks have been consistently paying dividends since the 1800s — 1832 in the case of Scotiabank — I think it highly unlikely that all your assets would go the way of those held in the 5000+ U.S. banks that collapsed from 1929-1932.

But, as they say in investment prospectuses, past performance is no guarantee of future results.

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The Big Five Canadian banks and their stocks: Royal Bank of Canada (RY), Toronto-Dominion (TD), Bank of Nova Scotia (BNS), Bank of Montreal (BMO) and Canadian Imperial Bank of Commerce (CM), have been paying common dividends since the 1800s.

BMO, Scotiabank, TD, CIBC, and RBC haven’t missed paying dividends on common shares since 1829, 1832, 1857, 1868, and 1870, respectively.

That is, through WWI, WWII, the Great Depression, all the U.S. and international financial crises, and with and without a central bank.

As of June 30, 2010 prices on the NYSE, their annual dividends are:
RY 3.80%, TD 3.40%, BNS 3.90%, BMO 4.70%, CM 4.90%

Whereas the big five U.S. banks (JP Morgan, Bank of America, Wells Fargo, Citigroup and Goldman Sachs)  are only paying:
JPM 0.50%, BAC 0.30%, WFC 0.70%, C 0%, GS 1.00%

They are also listed on the Toronto Stock Exchange, so you can buy in Canadian dollars to hedge against a declining USD, when appropriate.

In February 2009, I wrote how the Big Five Canadian banks were on pace to dwarf the five biggest U.S. banks, with the the five biggest U.S. banks having twice the market capitalization of the five biggest Canadian banks, despite the U.S. economy being nine times the size of the Canadian economy.

As of the end of June 2010, the five biggest U.S. banks are still less than three times the market capitalization of the five biggest Canadian banks.

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