Physical Gold Ownership vs. Gold ETFs

Gold ETFs vs. Physical Gold.

Gold ETF Shares Provide Exposure to the Price of Gold But Not Gold Ownership.

The Lowest Cost. Period.

Insured Vaulted Gold vs. Gold ETF Shares.

If you are buying gold for insurance against bad outcomes exchange traded funds (ETFs) have three major issues:

1. If the stock market closes or there is a bank holiday you have no access to trade your shares- when the market opens the price of gold could be dramatically higher or lower;

2. You have NO access whatsoever to EVER take physical delivery of ANY gold, unless you buy an inordinately high number of of shares. This may be an advantage in good times as the ETF covers the storage and insurance (in some cases) costs for you. In bad times, it could be a disadvantage; and

3. If the ETF is mismanaged and goes bankrupt, you have a claim on the trust NOT a claim an any amount of gold.

If however you, buy allocated, vaulted insured gold and store it outside the banking system in the event of a bank holiday, stock market closure or bankruptcy of the depository, your gold is still available and title resides with you.

If you just want exposure to the price of gold ETFs are fine as trading vehicles.

The Lowest Cost. Period.

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Gold ETF Holdings

gold etf inflows july 8 2016

Inflows to gold ETFs surged in the first half of 2016 as investors sought exposure to the price of gold.

Gold ETFs vs physical

Gold ETFs remain popular and experience increased inflows as the price rise.

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The pithy version is you are not really buying gold when you buy a gold ETF, you are buying exposure to its price fluctuations.

From the GLD and SLV sales material

From GLD

“SPDR Gold Shares are intended to offer investors a means of participating in the gold bullion market without the necessity of taking physical delivery of gold, and to buy and sell that interest through the trading of a security on a regulated stock exchange. The launch of SPDR Gold Shares was intended to lower many of the barriers, such as access, custody, and transaction costs, that had prevented some investors from investing in gold.”

From iShares Silver Trust (SLV)

Why SLV?

Exposure (emphasis added, not ownership) to the day-to-day movement of the price of silver bullion”


The ETF promoters view the ability to ‘own’ gold without actually owning it as a feature, which it is if you are just trading it. It could also be viewed as a flaw if you want ownership/possession of precious metals.

An analogy: Gold ETFs are akin to buying water futures for price exposure. That work’s unless/until you need delivery of the water in case of a drought, then all you have is a claim on water worth an amount specified in a fiat currency, but no actual water to drink.

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You can compare pricing and shipping charges on American Gold Eagles coins of all sizes at these web sites:

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SD Bullion
Money Metals Exchange

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U.S. Mint sales data:

Further Reading:

US Mint Sales (monthly archive)

Canadian Mint Sales (quarterly and annual archives)

Perth Mint Sales (monthly archive)

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