Comparing history of GLD to potential spot Bitcoin ETF

https://cryptoslate.com/insights/comparing-history-of-gld-to-potential-spot-bitcoin-etf/

Amazing - GLD ETF Tells Customers You Can’t Have The Gold

Let me blunt in my summary of this interview you are about to read, and forgive me for being redundant, but people don't absorb what they don't want to absorb.

FOR EVERY OUNCE OF PHYSICAL GOLD IN COMEX DEPOSITOR VAULTS, THERE ARE 55 PAPER CLAIMS AGAINST IT.  Which means out of 55 people who believe they own gold, only 1 can take physical delivery of it--if everybody demanded delivery simultaneously.  The other 54 are screwed, in other words.  Small holders of GLD have never been able to take delivery, but now large holders are being denied delivery requests, indicating stress in the physical markets, as more investors are doubting the integrity of the precious metals sector.

This is a result of our fractional reserve gold system, similar to our fractional reserve banking system.  Only with gold, there is re-hypothecation of a physical real asset--namely gold bullion.  With the global banking system, it's leveraged credit on top of credit--another Ponzi scheme of derivatives with a notional value of $1.2 quadrillion.  That's $1,200,000,000,000,000.

Your take-away message is buy physical gold and silver coins and bars.  Avoid futures contracts, ETF's, over-the-counter derivatives, or any paper asset which "represents" precious metals.  It's virtual, and when you need your gold and silver, these paper assets are merely empty claims.

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/9/11_Amazing_-_GLD_ETF_Tells_Customers_You_Cant_Have_The_Gold.html

Decoupling In Precious Metals Markets

http://www.bullionbullscanada.com/gold-commentary/26158-decoupling-in-precious-metals-markets

There Is A Tremendous Shortage Of Physical Gold Out There

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/6/7_There_Is_A_Tremendous_Shortage_Of_Physical_Gold_Out_There.html

Why You Should Avoid GLD and SLV ETP's

Many of you have read my rants on why one should avoid the GLD, SLV and other precious metals ETP's (aka ETF's).  This letter by Kaye to his investors goes into some details on the mechanics of why they're Ponzi schemes.

http://www.gata.org/files/PacificGroupLetter-05-10-2013.pdf

Bottom line:  while GLD and SLV are convenient trading vehicles designed to track spot prices (which they are doing a poor job of, as the ETP prices are below already depressed spot prices relative to physical markets), investors are exposed to counterparty risk and will not be able to redeem their shares for physical precious metals--unless they have significant holdings--and even then there is risk if the ETP's are drained of their physical inventory, as is happening right now.  You can see the relative performances as ETF prices < spot prices < physical prices.   It's simple math and why you should buy physical coins and bars and avoid paper gold and paper silver.  Paper assets were designed by bullion banks to cheat investors out of their physical assets.

By the way, SLW is a silver streaming company, which is entirely different than the SLV ETF.

See disclaimers in the side bar.

Decoupling In Precious Metals Markets

I have blogged numerous times about the decoupling of prices between the paper precious metals markets versus the physical markets.  Folks, it is already here.

http://www.bullionbullscanada.com/gold-commentary/26158-decoupling-in-precious-metals-markets

The Creation of "Paper Gold"

http://video.cnbc.com/gallery/?video=3000149973

Word of the Day: Exchange-Traded Fund (ETF)

http://youtu.be/l36wa9fZEZk

As usual, Suze Orman is an idiot and gives exactly the wrong advice.

How exchange-traded fund GLD lets you pretend to own gold

http://www.gata.org/node/10366

Investors Pick Physical Gold Over ETFs In Q1; Comex Registered Silver Just Hit A Fresh All Time Low

http://www.zerohedge.com/article/investors-pick-physical-gold-over-etfs-q1-comex-registered-silver-just-hit-fresh-all-time-lo

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.

John Embry - Gold Over $2,000, Silver Above $50 in 2011

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/1/5_John_Embry_-_Gold_Over_%242%2C000%2C_Silver_Above_%2450_in_2011.html

China approves gold fund of funds

http://www.marketwatch.com/story/china-approves-gold-fund-of-funds-2010-11-30

China’s securities regulators have given the go ahead for a mutual fund to invest in foreign exchange-traded gold funds, potentially tapping interest among mainland China investors who face negative real interest rates on their bank deposits and want to hedge against inflation.

The state-run China Daily said Tuesday that the new gold fund was the first of it its kind to be available to mainland investors. 

More funds could be on the way soon, as several other fund providers have pending applications for similar products, seeking to tap rising interest among mainland Chinese investors for precious metals, the report said.

Is GLD Overdue To Buy Two Hundred Tons Of Actual Gold?

Is GLD about to buy 200 tons of gold? For the nth time, beware the ides of the GLD ETF. It's potentially a ponzi scheme not backed 100% by gold. The same is true with the SLV ETF. Read the prospectuses. Realize who the custodians are. Do a search on this blog site. I can't spoon feed you every time.

http://www.zerohedge.com/article/gld-overdue-buy-two-hundred-tons-actual-gold

SLV and GLD concerns

Here is another article raising questions regarding the GLD and SLV ETF's.

http://www.theundergroundinvestor.com/2010/10/now-that-the-cftc-has-declared-silver-manipulation-occurs-can-we-get-the-sec%E2%80%99s-mary-shapiro-to-investigate-the-likely-fraudulent-slv-and-gld-etfs/

'Gold is the best asset class to be in'

I generally agree with this article, with the exception of the last sentence, although as usual, the mainstream investment analysts have the price targets all wrong. They will be proven to be conservative--again, in my humble opinion.

Regarding the last sentence in the article, there are absolutely counterparty risks with owning gold and silver ETF's, specifically GLD and SLV. Read the documents before investing.

http://www.telegraph.co.uk/finance/personalfinance/investing/gold/7995084/Gold-is-the-best-asset-class-to-be-in.html

The trouble with chasing performance is that you often join the party too late. Yet gold continues to defy the odds and if the great and the good of the investment world are to be believed, the gold price has further to go.

Last week, the analyst rated the most accurate forecaster of the gold price said the precious metal would keep rising.

"You can't mine gold," say nervous investors who fear that the massive printing of money by central banks under the guise of quantitative easing can only lead to runaway inflation. Sceptics of gold as an investment point to the costs of owning it and the fact that it produces no income.

Finding an analyst who is bearish on gold is a tough task; most appear to believe that gold is a worthy asset, not least because of the continued economic uncertainty. But four years ago The Sunday Telegraph found one. Nick Goodwin, a much quoted South African mining analyst, warned people against jumping on the bandwagon when the price stood at $600 an ounce.

He said: "I have been following gold for 30 years and gold is a bitch. Why weren't people buying gold when it was $250 but want to buy it at $600? Gold has had a hell of run and it needs to take a breather." Mr Goodwin was proved mightily wrong and today the rationale for investing on gold stands firm.

Mr Hitzfeld said further increases in the price were "preprogrammed". He said factors exerting upward pressure were renewed fears among investors sparked by recent loosening of monetary policy by the US Federal Reserve and reforms in the Chinese market that gave investors there greater access to the metal.

"The Chinese government has encouraged consumers to invest in gold, and with great success. Chinese demand will now increasingly be felt on the global markets," Mr Hitzfeld said.

Although China is now the world's largest gold producer, this production would be insufficient to meet domestic demand, so China would increasingly import gold, draining supply from the rest of the world and putting upward pressure on the price.

The Chinese government's gold reserves have also risen sharply and there is scope for further increases, as they account for just 1.7pc of foreign exchange reserves, Mr Hitzfeld said.

Analysts from ANZ, the Australia and New Zealand banking group, agreed. Describing gold as "the best asset class to be in", the analysts, Mark Pervan, Natalie Robertson and Andrew McManus, said: "Gold has been the strongest performing and least volatile major commodity and financial asset class in the past 10 years – we expect this trend to continue.

"We see more upside for gold prices as the key drivers of a safe-haven and currency-hedge demand are joined by the emergence of strong demand from China and India.

The issue for investors who have yet to invest in gold is whether it is too late. Mr Soros may be a gold bull at the moment, but he still has his reservations. He said in January: "When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment. The ultimate asset bubble is gold."

I left out analyst price targets by design, as they are meaningless. I also left out the vehicles on how to own gold--I highly recommend reading the whole article. The article doesn't mention gold- and silver-related assets like mining shares.

And this is the last sentence I disagree with. Under normal market conditions, ETF's are good for tracking physical spot prices. But when markets aren't properly functioning in an orderly manner (which is one of the primary reasons for possessing physical bullion in the first place), the paper contracts of futures markets and ETF's could decouple from the spot price if there is a run on physical inventory. In other words, there are multiple claims on the same ounce of gold as they are not 100% backed by inventory.

Alternatively, follow Mr Soros and invest via an ETF – "physically backed" ones that own actual gold should be the safest.

See disclaimers in the side bar.

Disclosure: long gold and silver, long gold and silver mining shares.

The potential perils of paper gold and silver ETF's

I've blogged on this topic several times, and it's worth revisiting.

http://dailyreckoning.com/golden-shell-games/

The gist of the article states that the GLD and SLV ETF's are good proxies for the spot price of their respective precious metals, but in the event of "failures to deliver" physical gold and silver, the prices between the ETF's (paper contracts) and the physical prices would decouple, as the physical shortage would cause the prices of the actual metals to soar, while the ETF prices would languish. The reason is the precious metals COMEX futures contracts and ETF's are not backed by allocated bullion. They are derivatives, much like mortgage-backed securities were derivatives of the actual mortgages themselves. Buyers of said derivatives lost everything when subprime home borrowers defaulted on their mortgages. Holders of COMEX precious metals futures contracts, and the GLD and SLV ETF's would be similarly exposed to counterparty risks.

So if you believe you can trade the fluctuations of gold and silver prices, then the GLD and SLV ETF's may be a cost-effective trading vehicle. But if you are looking to hedge against inflation, currency debasement, and/or financial crisis, owning physical gold and silver may be a safer play, despite hefty premiums.

See disclaimers in the side bar.

Disclosure: no position in GLD or SLV.

ETF gold holdings rise

http://www.bloomberg.com/news/2010-06-28/etf-securities-gold-holdings-rise-to-a-record-10-billion-on-haven-demand.html

Rick Santelli says GLD ETF lacks physical backing

It's a sentiment I've warned against for months. The GLD ETF doesn't have enough physical gold in inventory as collateral.



http://www.youtube.com/watch?v=b6d3Oy6YMCI&feature=player_embedded

Doubts about gold and silver ETF's

The takeaway message is this: when in doubt, always choose taking physical possession of gold and silver over paper certificates. Because in a financial crisis (which is a primary reason for buying gold and silver), those certificates are not 100% backed by physical inventory and may end up being claims to nothing. In other words, if you have to stand in line to claim ownership of physical bullion, you may end up being too late and a dollar short.

Also note that the custodians for the GLD and SLV ETF's are HSBC and JPMorgan, respectively, who are also allegedly the two biggest naked short sellers in the gold and silver futures markets. If 100 owners lay claim to each ounce of gold and silver, 99 stakeholders are going to be very disappointed when it's time to take delivery.

http://www.gata.org/node/8649