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MAY 24TH, 2024 | PORTER & CO.
He could have been the richest plumber in London.

But instead, he chose not to crawl through the sewer to rob the Bank of England’s gold vault.

The heist would have been simple enough. It was 1836, and architect Sir John Soane had just redesigned the sprawling bank complex on Threadneedle Street. But he’d cut a few corners in the process. The stately façade of London’s central bank concealed a number of unfinished rooms and hastily sealed-off tunnels.

The architect had also overlooked a man-sized sewer pipe leading directly upwards, through the floor and into the bank’s underground bullion vault.

However, the illiterate sewer-man who discovered the secret entrance (who, legend has it, signed his name “John Smiff,” for John Smith) was just too honest for his own good.

After stumbling on the pipe while working in the nearby Dowgate sewers, “Smiff” crawled back out empty-handed. Instead of pocketing a gold bar or three, he penned a poorly-spelled letter to the directors of the bank, inviting them to meet him downstairs in the bullion vault at a time of their choosing.

Skeptically, the officials agreed to wait in the securely locked room. And at the stroke of midnight, a board moved and John’s head popped through the floor.

The flabbergasted bank dignitaries took stock of all the gold and ensured that none was missing. As a reward for John’s honesty, they gifted him 800 pounds (in bank notes, not gold) – worth around $80,000 in today’s money.

That’s the way the legend goes, anyway. 

The wild tale of John Smiff first appeared in the pulpy London papers a little later in the 19th century, after the rumor mill had had time to churn. There must be at least some truth in it, because the Bank of England mentions John and his 800 pounds on its official website. 

As well, historians have several surviving letters from Bank of England officials in the 1830s, warning about “dangers from the sewers” and strongly recommending that all the plans revealing sewer locations near Threadneedle Street should be confiscated and sent to the bank.

In any event, Sir John Soane’s slapdash vault designs got tightened up… and today, the Bank of England stores around 400,000 gold bars, worth a total of $200 billion, in nine secure underground vaults with walls about eight feet thick (and with no access via sewer pipes, though that has served as a plot point in several heist movies).

Much of the gold is stockpiled on behalf of around 30 other countries, and can be bought and sold by those countries and their central banks and institutions on the over-the-counter London Bullion Market, overseen by the Bank of England. About one-fifth of the total gold held by world governments is stashed under the pavement in London.

To this day (barring the alleged close call in 1836), the gold vault under Threadneedle Street has never been robbed.

However, its supply of 400-ounce gold bars has been shrinking.

A snapshot of the London Bullion Market website in 2011 indicated that the Threadneedle vaults held around 9,000 tons of gold (around 800,000 gold bars). Fast-forward to 2015, and the market mentioned in a presentation that the total was now 6,250 tons (500,000 bars). In 2024, the stockpile of bullion bars now sits at 400,000.

Where has all this gold been going? (We know it’s not down the drainpipe.)

The obvious answer is that, over an extended period of time, someone… or, a number of someones… has been purchasing gold over-the-counter on the London Bullion Market and removing it from England. These purchase records are opaque and hard to get (if you visit bullionstar.com, you’ll see some intriguing detective work on the subject).

The really important thing to note, though, is that this gold… wherever it is… hasn’t gone into general circulation. Especially recently.

The price of gold is up 27% since October, more than both the red-hot S&P 500 (up 25%) and the technology-focused Nasdaq 100 (up 26%) in those seven months. The supply is vanishing… not just from London’s vaults, but from the worldwide markets.

Someone is buying all the gold… and sitting on it. 

Who, and why?

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MAY 17, 2024 | PORTER & CO.
It was a lean Christmas for the Borel family.

In rural 1940s Texas, it cost a lot to feed and clothe six kids. But dad Clarence had landed a modest but steady job installing insulation. And one December night, he brought home a bag full of sparkling “snow” crystals to decorate the family’s meager Christmas tree.

It was asbestos dust from the insulation company where he worked… the closest thing you’d get to snow in Texas.

And there was plenty of the snowy-white material… enough to take to school to dust the trees in the Borel kids’ classrooms, too.  

It was a Christmas “miracle.”

It also killed Clarence Borel – and, ultimately, nearly destroyed one of the most venerable insurance organizations in the world.

Clarence – who later died of pulmonary asbestosis and mesothelioma at age 57 – was one of the first individuals to sue an asbestos company in a landmark 1969 case, Borel v. Fibreboard Paper Products Corporation. He argued, rightly, that the insulation company was aware of the dangers of the toxic flame-retardant, and purposely failed to warn its employees. Clarence testified during his court case that he and his fellow workers thought the dust was harmless and would “dissolve as it hit your lungs.” (Asbestosis, a fatal lung condition, had been medically documented since the 1930s.)

Clarence Borel passed away before the Texas court ruled in his favor and awarded his widow $1 million in damages. But his posthumous victory opened the floodgates…

With Borel v. Fibreboard, the court set a precedent that companies should be held liable for exposing workers to asbestos. Over the next decade, about 25,000 asbestos-related lawsuits swamped the judicial system nationwide, resulting in payouts of about $540 billion between 1970 and 1995.

In mid-20th-century America, asbestos – once hailed as a “miracle” fireproofing substance – was everywhere: insulation, popcorn ceilings, plaster, caulk, vinyl, roof tar, blankets. As a company owner, if you’d used the deadly mineral in any of your products, you could now expect a giant lawsuit from a customer or employee dying of lung disease.

Of course, you likely wouldn’t be paying those damages. Your insurance company would.

And that’s how Lloyd’s of London almost went bankrupt.
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