Why would one buy actual gold when there are ETFs?
December 22, 2010 by
Filed under Silver Investment FAQ
I’ve got me some investment grade gold coins and since, then I’ve learned that there are ETFs that track the price of gold almost exactly. So lower commission and seemingly very liquid. Now i want to buy some silver. Why would one buy actual silver boulion (or whatever it’s called) vs. a silver ETF such as SLV?
There are a few advantages to the ETF like convenience. However there are many disadvantages to the ETFs. First off the ETFs if held in a non IRA type account will be taxed each year weather or not you sell them. Also the ETFs can be shorted. This allows the gold and silver price to be manipulated. The ETFs also “loan out” their gold and silver to the central banks. This puts downward pressure on the paper price of gold and silver.
Physical gold and silver on the other hand has many advantages. The best way to own gold is to buy and take physical delivery of the gold itself. Silver is also in the gold realm as well, so when talking about gold, silver is included. Gold is money and a store of value. It is the “Currency of last resort” as Greenspan has stated many times through the years. Gold doesnt pay interest, dividends, doesnt restate earnings, has no lawyers, accountants, CEOs or CFOs lying to you on television. Gold doesnt ask for bailouts, doesnt go BK and cannot cook its books. Gold cant be debased or printed at the will of a company or governmetnt and holds its purchasing power.
Gold sits there as a store of value, is labor intensive, and a one ounce coin will not split into a bunch of half ounce coins at the direction of the pin striped bandits on Wall Street.
When you own physical gold AND TAKE DELIVERY you own it. Nobody else has a claim on it. Stay liquid, divisible and keep your wealth out of the hands of the pin striped bandits on Wall Street
Dont do ETFs unless you have a good base of Physical gold and silver. Paper is worth what all paper assets are in an economic crisses…..$0.00. Physical has real value. Hold paper ETFs and hold dont own anything. Try cashing in you silver or gold ETFs if the markets are shut down and see how far you get.
I do like the 1st responders comment “pin stripped bandits” Excellent.