Should Physical Gold/Physical Silver Be In Your Portfolio?
None of what is written below should be taken as financial advice – it is not – this is simply our view and what works for us. If one trust the banking system and the government gold and silver is probably not on the agenda – only the reader can make that decision. Gold is money and every thing else is credit. Silver has been money longer than gold.
In the first paragraph of an article about “gold” published at Yahoo News, we find the paper pushers doing what they do best – pushing paper. Mainstream media loves misinforming people about gold, paper gold and doing their level best to keep people away from physical, real gold. Physical gold and physical silver has been proven to be one of the best, if not the best, assets to hold in times of economic and geopolitical crisis. Full blown economic collapse, or world war, is not necessary for gold to do its job properly. If we simply cast our eyes towards Venezuela in 2016 we would find physical gold would have helped people in ways that would have brought them through the hyperinflation that is ravaging the nation. Paper gold, blips-on-a-screen, would not have helped in the same manner and would not have put much needed food on their table.
Speaking of the current banking system one of the main custodians of this paper charade is HSBC. Just a little history of these bastions of community service –
HSBC is teetering on disaster. Look at the behavior of Britain’s biggest bank and GLD’s custodian over the past two years:
- It was fined $1.9 billion for money laundering and sanctions violations.
- The US Department of Justice said the bank allowed drug traffickers to launder billions of dollars in the US and billions more to be moved across borders to countries facing sanctions, including terror-ridden Libya.
- HSBC admitted to laundering $881 million for two drug cartels in Mexico and Colombia. It also accepted $15 billion in cash across the bank’s counters in Mexico, Russia, and other countries.
- It has set aside $1.3 billion to settle claims that it manipulated foreign exchange rates.
- HSBC faces charges that it used predatory lending practices in the mortgage market. Source
The opening paragraph of Why Gold Does Not Belong in Your Portfolio is littered with information that probably shouldn’t be shared with the masses of people. The only reason this is shared with the masses is to ensnare as many as possible in this dragnet sales pitch.
What should investors do when it comes to gold? SPDR Gold Shares (NYSE:GLD) is the vehicle under which most investors are able to hold gold. The GLD ETF represents fractional, undivided beneficial ownership interests in a trust whose sole assets are gold bullion on and, from time to time, cash. So the GLD ETF is one step removed from actually holding gold in your own vault. The question is whether or not you should own the GLD ETF and, if so, under what parameters?
Sentence by sentence we will demonstrate the problems with this well crafted sales material.
What should investors do when it comes to gold? The answer is quiet simple. How much home owners/renters insurance does one possess? If the answer is based in reality probably slightly more than current valuations of the items being covered by the insurance.
This formulation works for me – how much wealth does my family need in order to arrive on the other side of a sustained crisis? How much wealth do we need once we arrive on the other side of the crisis? That’s how much physical gold and physical silver we need in our vault. Some for the crisis and some for the time immediately following the crisis.
SPDR Gold Shares (NYSE:GLD) is the vehicle under which most investors are able to hold gold. This is the first of many sales pitches for exposure to gold moving higher or lower in the market place. If a person buys into this ETF, which is an investment vehicle not physical gold, they need to read the prospectus as James Turk has on several occasions. Once a person reads the prospectus one quickly realizes there is language within this agreement that doesn’t really favor an investor, especially a small, retail investor. Multiple vaults are used that are not owned or operated by JP Morgan that produced the SPDR/GLD and, according to the prospectus, these vaults are not required to conduct an audit or provide information about an audit if one is conducted. This could be an issue – a very serious issue. Where’s the gold and how much physical gold is in any of these vaults is anyone’s guess. Do the words “…investors are able to hold gold.” truly apply when the gold is not in their hands?
The mainstream media makes it very easy to dismantle their poorly constructed pieces. When one uses inferior building materials, like sand for foundations, nothing is going to stand very long. We have only addressed the first two sentences in this nonsensical piece of garbage and have already conducted more research and provided more reasons to hold physical gold and physical silver than the entirety of the MSM article! – Onward we push!!
The GLD ETF represents fractional, undivided beneficial ownership interests in a trust whose sole assets are gold bullion on and, from time to time, cash. The author is at least letting us know the gold, which may or may not exist based on the auditing terms, is liquidated and turned into cash “from time to time” What does that even mean to someone considering this “gold” option – how is this a benefit to someone looking to get into gold? How often is the “gold” liquidated, how much can be liquidated at any given time and what are the parameters of the liquidation?
What about this part of the sentence – GLD ETF represents fractional, undivided beneficial ownership interests. How can something, anything, be fractional and undivided at the same time? How does that work? Whenever I read/hear the word “fractional” alarm bells begin ringing. Why? Because that means a one ounce gold coin is no longer whole, it has been divided – figuratively speaking – into smaller pieces. How many pieces can only be answered by a full blown, third party audit. Oh, that’s right, not required by the vaults where the “gold” resides.
So the GLD ETF is one step removed from actually holding gold in your own vault. Quite possibly one of the most jaw dropping statements one will ever read regarding an investment vehicle. GLD ETF is more like exposure to the movement of gold, either higher or lower, within the gold market. The odds of a typical retail “gold investor” actually having the ability to take possession of physical gold from their ownership of shares of GLD are very, very slim. Once again, this is spelled out in the prospectus. The author makes it sound as if one could simply call their broker/send them an email and request their shares of GLD ETF be converted into physical gold and VIOLA!! physical gold will suddenly appear at their home in a reasonable amount of time. Nothing could be further from the truth.
Here are the requirements to take delivery of gold from your GLD shares…
- You must own at least 100,000 shares. At the current share price, that’s about $12 million.
- Delivery is 400-ounce bars only. You cannot opt for any other type of product or smaller weight.
- The recipient must pay all settlement charges, delivery fees, and taxes.
- The fund reserves the right to “settle in cash.” Even if you meet all the requirements for delivery, the fund can, for any reason it deems necessary, send you a check instead of bullion. Source
The question is whether or not you should own the GLD ETF and, if so, under what parameters? For me and my family this is not a question at all. It is very simple. Physical gold and physical silver is a hedge against the Federal Reserve Note/US dollar and U.S. government. It really comes down to one question – do you trust the current banking system and the U.S. federal government to do the right thing with your wealth? The GLD ETF is tied up in the current banking system and provides “owners”, according to the prospectus, a series of blips-on-a-screen and little else. Physical gold and physical silver, in ones vault, can not be denied. If you don’t hold it, you don’t own it.