
How would you move 211 Tons of Gold? - dfc
http://www.schneier.com/blog/archives/2011/08/moving_211_tons.html
======
idlewords
This discussion reminded me of a wonderful blog comment about accidentally
flushing over a hundred pounds of dissolved gold:

[http://pipeline.corante.com/archives/2007/02/01/how_not_to_d...](http://pipeline.corante.com/archives/2007/02/01/how_not_to_do_it_ruining_stuff.php#418204)

The whole thread is awesome.

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tptacek
Effectively a duplicate of:

<http://news.ycombinator.com/item?id=2915835>

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trafficlight
There's a great passage in Neal Stephenson's Cryptonomicon about the problems
of moving pallets of gold that are sitting undefended in the middle of the
jungle.

~~~
dfc
I dont remember the passage. Care to elaborate or give a page reference?

~~~
shabble
Chapter 59, towards the end, there's a Q&A formatted section. Snippet is
<http://pastebin.com/xNDkDNe8> (hopefully short enough to be fair use)

~~~
dfc
Did you type that in by hand? THanks a lot..

~~~
shabble
No, I pulled it out of a pdf version I have. My physical copy is at the bottom
of a box in one of the cupboards somewhere.

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tokenadult
tptacek has already noted the earlier HN discussion of the problem, kindly
providing a link to the thread. Because there was discussion in that thread
about the price of gold, relative to the United States dollar, I'll just
mention that the latest news is that gold can go down as well as up in price
relative to the dollar.

[http://blogs.barrons.com/focusonfunds/2011/08/25/gold-
points...](http://blogs.barrons.com/focusonfunds/2011/08/25/gold-points-
sharply-down-as-margin-hikes-loom-silver-etfs-pare-earlier-
losses/?mod=BOLBlog)

<http://online.wsj.com/article/BT-CO-20110825-710588.html>

The general advice on investing still stands: "The market can remain
irrational longer than you can remain solvent," so no investment, however
reasonable, is 100 percent sure to be profitable.

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egiva
Fascinating! I certainly like the idea of "crowdsourcing" the gold delivery by
just opening up a window in the Bank of Venezuela in Caracas, and asking that
people turn in gold for a modest bounty (2%). That might be over-estimating
the amount of gold that people in South America have on hand, but it's
certainly creative!

~~~
dfc
The first time I read this suggestion I thought it would be an absolute
nightmare dealing with impurities. When I reread it I realized he suggested
standard gold bars. But this seems even more unrealistic. I either did the
math wrong or the crowdsourcing idea is just ludicrous:

    
    
        Standard bar = 400 troy ounces
        Price per troy ounce = $1700
    
        400 * $1700 = $680,000.00
    

How many people are going to have a gold bar worth $680k lying around in
Venezuela?

~~~
Bud
I think the point is that if you're paying a 2% premium, that being $13,600 in
this case, that makes it worth it to GO to Venezuela and take the gold there,
thus getting a free vacation.

~~~
RodgerTheGreat
Be honest- if you had $680,000, would you be willing to risk it for an
additional $14,000?

~~~
pavel_lishin
Depends on the level of risk. Couldn't I just Fedex the gold - insured for its
value, of course - to a confederate in Venezuela, and split the 2% commission?
Assuming you can trust your partner, the worst case scenario is the gold
getting lost (or "lost") in the mail, and having to wait for the insurance
payout.

~~~
ianferrel
I'm willing to bet that Fedex will not insure a small package for $680k for
anywhere near 2% of the cost.

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dotBen
I don't get how the crowd-source option is at all attractive, though perhaps I
don't understand enough about how the gold markets work.

If I was physically based in Venezuela and owned X gold bars in my physical
possession, why would the same amount of gold bars + 2%, in a foreign distant
country I have no connection with, be preferable?

With gold in my possession I have instant liquidity. Gold in some foreign
country, and in an inaccessible vault to boot, gives me limited liquidity.
Even if gold is a long-term investment, I still want ease of liquidity at the
appropriate time.

Finally, presumably there are fees associated storing your gold in the Bank of
England's vault? Well, as a British citizen I certainly hope so as I'm not
able to store my (theoretical) gold there.

EDIT: So one of the child comments is implying that the way the gold in being
held at the Bank of England means that it is available to be traded on the
London Gold Exchange. I had originally interpreted from the article that the
gold was simply being held in a vault, ie with limited access and
availability.

~~~
gwern
> If I was physically based in Venezuela and owned X gold bars in my physical
> possession, why would the same amount of gold bars + 2%, in a foreign
> distant country I have no connection with, be preferable?

Are you serious? The Venezuelan upperclass _despises_ Chavez and fears him. If
any had those gold bars with them in Venezuela, they would take that offer in
a heart beat! They trust the Bank of England far more than Chavez or local
Venezuelan security, for that matter.

(You can find all this in the media or even ancient books like Chua's _World
on Fire_, but to toss in a personal anecdote - My little sister spent a few
months in Venezuela with members of the lower bits of the upperclass; she
remarked on how fortified and how much razor wire there was on the compounds
there.)

~~~
dotBen
_The Venezuelan upperclass despises Chavez and fears him._

Well in that case, why would they trust him to make right on his promise to
deliver them the gold + 2% in a foreign vault upon the physical surrender of
their own gold? Why would they even want to indicate they had such gold in
their physical possession and thus open up potential further scrutiny to their
affairs and net worth?

You're probably right that they don't trust him, but that just further makes
this idea untenable.

~~~
gwern
It's an iterated prisoner's dilemma. All you need are a few people to turn in
some gold (for any reason, including because they trust Chavez), and then
check with the Bank of England that the appropriate sum has been credited to
their account with the Bank, and you're done. The cycle has been started - if
Chavez really wants the gold physically in Venezuela (as he apparently does if
he's seriously considering the various extremely expensive options available),
at no point does he have incentive to defect except at the very end, where the
reward for defecting is minimal.

