Why you should buy gold and silver now - Aden sisters

http://www.marketwatch.com/story/going-for-gold-2011-04-06?siteid=nwhpf

I agree with their analysis, with the exception of their recommendation to buy the GLD and SLV ETF's in lieu of physical gold and silver.  Under normal market conditions, these ETF's will indeed track the spot prices of gold and silver, respectively.  But since paper prices of gold and silver are being artificially suppressed by the bullion banks (and indirectly by the Fed), the physical spot price could eventually decouple from the ETF prices in case there is a run on the physical markets.  In other words, since GLD and ETF are not 100% backed by gold and silver, respectively, a default on delivery could cause the prices of physical bullion to soar, while the owners of GLD and SLV could be left holding the bag.

That is the last thing one wants to happen to one's allegedly "safe" investment:  guess correctly on the price direction--and still lose money.  Besides, one of the reasons one should buy gold is protection against financial calamity--protection against abnormal (distressed) market conditions.  There are other ETF funds which are 100% backed by gold and silver, which entail certificates with matching serial numbers.  Unfortunately, because they are backed by the precious metals, and there are physical shortages, the ETF's carry a premium above net asset value, much like there is a premium on coins purchased from a dealer or coin shop.  The premium is a small price to pay for insurance against currency debasement and dislocated financial markets.  Please perform your own due diligence on researching precious metals ETF's 100% backed by gold and silver.

For those who like to touch and feel their gold and silver assets, buying and taking delivery on the physical bullion or coins is the only method with no counterparty risk.  When one takes possession, one owns it unencumbered.

See disclaimer in the side bar.

Disclosure:  no position on GLD or SLV.