Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Chinese Tech Stocks CCP Paranoia and Best AI Tech Stocks ETF - 26th Oct 21
Food Prices & Farm Inputs Getting Hard to Stomach - 26th Oct 21
Has Zillow’s Collapse Signaled A Warning For The Capital Markets? - 26th Oct 21
Dave Antrobus Welcomes Caribou to Award-Winning Group Inc & Co - 26th Oct 21
Stock Market New Intermediate uptrend - 26th Oct 21
Investing in Crypto Currencies With Both Eyes WIDE OPEN! - 25th Oct 21
Is Bitcoin a Better Inflation Hedge Than Gold? - 25th Oct 21
S&P 500 Stirs the Gold Pot - 25th Oct 21
Stock Market Against Bond Market Odds - 25th Oct 21
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Thinking of Investing in Precious Metal ETF's?

InvestorEducation / Exchange Traded Funds Jun 02, 2009 - 04:05 AM GMT

By: Bob_Coleman


Thinking of precious metal ETF's?
Then you better think again... Can't you see the yellow caution light that is flashing...

I would like to explain the difference between investing in the actual metal versus precious metal ETFs. One should completely realize when buying a precious metal ETF, it is simply a representation of the price in gold or silver. Investing in precious metals entails buying the real metal directly or through a program that offers the right to receive physical metal in deliverable form upon liquidation with no conditions.

What is overlooked by most professionals?

One of the items that I read in the prospectus of the gold and silver ETFs that concerns me relates to the reported expenses of the fund. I am a professional expert in the storage and security of gold and silver. I run a fully segregated and insured storage program that is independent of the financial system. I also run a very unique physical gold and silver bullion fund that takes delivery of all physical metal, as well as, stores and insures the metal outside the financial system in fully segregated and armored vaults. I am very knowledgeable with the cost of insuring and securing physical metal.

The expense ratios for many of the ETFs and other funds are very telling.
Many products want to have the lowest fee to attract today's cost conscious investor. However, there is an old saying, "You get what you pay for". I will take the SPDR Gold Shares "GLD" for example. They claim the custodian charges .10 % or 10 basis point to properly safeguard the gold. A qualified custodian must properly store the physical metal through the use of very specific security controls such as cameras, sensors, armed guards, etc. However just as important is the insurance which would protect the facility and owner of the metal in the event of a breakdown in the security controls of the vault.

What is fascinating is the unbelievably low cost the SPDR Gold Shares pays for this security and insurance. Lets forget about the cost of simply providing a secure facility to store the gold.

At these level of assets, there is only one company in the world that insures physical precious metals in armored vaults. I have been told there is no way this insurance company would charge a meager 10 basis points annually for an "all risk" policy. That is equivalent to insuring a car worth $10,000 and its driver for ten dollars a year. No insurance company could ever make enough money to cover the risk of loss on that policy except maybe AIG. Even some of the largest custodians for valuable assets pay a minimum of 15 to 25 basis points just for an "all risk" insurance policy.

Personally, I question any program that stores their metal at a financial institution. In many cases, the financial institution is internally insuring much of the gold it stores. The problem with that is, if the institution runs into financial trouble the owner of the metal has no protection against the loss or damage to the items being stored. And isn't the idea of owning gold and silver a hedge against a failure in the financial system?

That is why our programs store everything outside the financial system in independently insured vaults.

Bob Coleman

© 2009 Copyright Bob Coleman - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Chuma Mgolodelwa
05 Jul 09, 12:36
Where these fears are coming from

Bob- As much as I hear what you are saying, and not just you alone, many have voiced their concerns and fears around metal etf, but but but I have to say I am not convinced. My problem is most of those who have problems with metal etf are those who have an interest in the metal trade market and stand to and already are on the lossing side. In other words in my mind most of the concern are coming more out of fear of lossing market share due to etf companies growth. Conflict of interest. I doubt if concerns are truely based on flaws on the etf markets, but may actually be a means to preserve their market share.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in