Naturally, the company denies all charges and issued the boilerplate "we will rigorously defend ourselves" press release. All companies, when accused of wrongdoing say the same thing. This statement will not convince gold buyers and customers of Kitco. Kind of like Lehman Brother's CEO Dick Fuld claiming that the firm was solvent and liquid just weeks before the company filed for bankruptcy.
The whole Kitco saga is important to me because until today I had an unallocated gold account with them. After hearing the shocking news on Friday, I immediately closed my account and arranged for Kitco to wire my money back into my account. I just checked my bank account and the wire from Kitco went through with no problems. So at least they are honoring their obligations. This action may seem alarmist, but I am not willing to take any chances regarding fraud, etc. It should be noted that Kitco has not been accused of running a ponzi-scheme or anything like that (which would affect unallocated metal account holders).
However, it is my experience that once a firm is found guilty of one type of misconduct, there is usually more to follow. At this point, I really don't know what to think about Kitco and the safety of doing business with. Kitco announced Friday that they have appointed a receiver to help the company continue normal operations. I am not a bankruptcy expert by any means, but when I hear the word receiver, I get very nervous. I am one of those people who sells first and asks questions later.
Black Swan Insights
The always some kind of scam out their so it seems.
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