[bboygravity]

> via a US broker, then they ought to be able to claim legal ownership of those stocks they purchased.

This is a funny sentence if you know how US brokers operate, because: -- The stock is registered at Cede and Co. In your broker's name (not the client's name). -- Most US brokers don't hold all the stock that their clients "have" in their account. They lend out stock with or without the client's approval. -- It has happened that a broker doesn't own the stock that any of their clients bought through them at all. -- Brokers can buy unsettled stock for clients which subsequently "fails to deliver". Meaning: the client gave the broker money to buy a stock, the broker gave nothing in return (but claims that the client has a stock even though it was never delivered). -- In the US it is entirely possible that a company on the stock market offers x amount of stock and market participants short 2x while 3x amount of call options are in the money to be delivered and brokers are on the hook for that. That means that 5*x of stock can "exist" even though that amount was never issued by the company. Source: this is what happened during January 2021 short squeeze.

So yeah, you have legal ownership. Until you suddenly don't at some point in the future.

[chii]

> That means that 5*x of stock can "exist" even though that amount was never issued by the company.

that's totally fine if it was lent and re-lent out and short sold etc.

After all, you don't bat an eye that similar thing happens with cash!

The only problem i have with your explanation, which is also the only part i dont think is true, is that the broker's "fail to deliver" portion. The broker _owes_ the buyer a stock, and there's a clearing house that ensures the broker is good for their money. Which is why Robinhood stopped the purchases of GME at that short squeeze, because they can't place enough deposit to ensure that they _could_ make whole their buyers at the clearinghouse.

[latenightcoding]

Sounds like something cooked up by a fradulent crypto bro who doesn't know anything about law or finance, but it's reality lol.

[bandrami]

Gold exchanges are like that too -- the amount of gold "held" by investors exceeds the world supply.

[panarky]

> exceeds the world supply

People say this as if it's evidence of some dark, fraudulent conspiracy.

But it's simply because the exchange allows traders to sell short. If Alice owns 100 troy ounces of gold held in her name at an exchange, and Bob borrows 50 troy ounces and sells them short to Charlie, then Alice owns 100 and Charlie owns 50 when there are really only 100 in the vault.

People own more shares of Tesla than the company has issued, and there are more dollars in bank accounts than the Treasury has issued, and it's all normal and natural and the way the system is supposed work.

[bandrami]

I get that about dollars and stocks, but people who hold gold out of fear that the music is going to stop don't realize the same musical chairs problem applies to precious metals unless you physically have custody of them.

[chii]

> people who hold gold out of fear that the music is going to stop don't realize [it also applies to them]

that's their own fault and lack of knowledge. Nobody has any responsibility to educate them but themselves.