“…as with any other ETF, you don‘t really OWN the physical precious metals in storage. You only have a CLAIM to the metals held in storage. Therefore, your investment depends on the financial health of a bank.”
“While I don’t want to make too big a deal about it, there have been clear signs of late that the U.S. government is taking an unhealthy interest in your gold.”
A couple of very informative articles have come my way recently from trusted sources. These help to address the constant questions we get here at Q Wealth about how to invest in gold.
ETFs like the GLD ETF or the ZKB Gold ETF, as well as so-called ‘digital’ gold like GoldMoney and BullionVault, certainly serve a purpose for those who want to speculate in gold, offering easy in and easy out terms.
They are NOT, however, suitable investments for those looking at gold and silver as long term capital preservation hedges. Ask yourself this question: if you are buying gold because you don’t trust the financial system, why would you buy gold within that very same financial system? Or, as our Swiss friend Frank Suess puts it:
How you invest in gold or silver depends very much on your belief system and your objectives. If you are not concerned about the current economic climate and the state of the international financial system, then you may be much less critical of HOW you invest in gold.
Frank, who will be giving a few presentations at our event in Ireland at the end of this month, has written an excellent article on the subject, in his free Mountain Vision newsletter. He specifically gives Ten Reasons Why You Should Avoid the GLD ETF. If you have money in that ETF, you definitely need to read this.
A lot of people apparently trust ZKB’s Swiss gold ETF more, because of its Swiss pedigree and the venerable institution that is backing it. However, Frank has gone through this ETF’s prospectus with a fine tooth comb too, finding a section published only in German that can be summarized as follows:
The fund may be suspended temporarily at the discretion of the fund´s managers if gold trading in New York is interrupted for some reason; if a political, economic, military, monetary or other emergency (this pretty much covers it all) occurs; if a lot of redemptions are placed, which might in turn harm the interests of the other investors in the fund.
Hmmm… not much ‘safe haven’ there then.
If this has got you scared, then Frank has a solution: the Global Gold program that offers real, physical non-bank secure allocated gold storage. Details of it are here, and if you would like further advise on the matter we strongly recommend you get in touch with Global Gold. Contact the Q Wealth offices and we will be happy to refer you through to our personal contact there, Scott Schamber.
I mentioned another source too, and that is Casey Research, one of our own preferred information sources. They get asked every day about gold confiscation rumours. Will the US government confiscate privately owned gold as they did back after the great depression?
David Galland, Managing Director of Casey Research, writes:
While I don’t want to make too big a deal about it, there have been clear signs of late that the U.S. government is taking an unhealthy interest in your gold.
He writes about the possible introduction of a Value Added Tax in the USA, and something even more scary: a regulation slipped quietly into the Obamacare legislation,requiring coin dealers – and all businesses, for that matter – to report any purchases of $600 or more from anyone… including clients selling back their gold.
I also suggest you read David’s article (that you can find by clicking here) because of the point he makes about how some unscrupulous coin dealers are cashing in on the rush to hard money by selling illiquid collectors’ coins instead of the bullion coins, such as those offered by Global Gold, that people should be getting into.
I hope you find these reference sources as useful as I did. If you have any comments or feedback, please remember that you can post comments on this blog. Up until now not many people have used this facility, but we would like to encourage more interaction and feedback. So please tell us what you think!