More GLD Suspicions

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Mike Pilat's picture
Mike Pilat
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More GLD Suspicions

Not sure if anyone saw this, the latest in a string of evidence against the GLD and SLV etfs...Apparently now it looks like GLD is unable to account for the source of 45 tons of reported new gold acquisitions. I invite ideas on a GLD / SLV default, a COMEX default and the like. Does anyone have any more news they can share on this?

http://www.gold-prices.biz/spdr-gold-trust-etf-a-safe-haven/ 

Mike Pilat's picture
Mike Pilat
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Re: More GLD Suspicions

For some reason, this isn't appearing as a link...maybe the ".biz" is not recognized...?

joemanc's picture
joemanc
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Re: More GLD Suspicions

Good link Mike. Here's another one:

http://www.bestwaytoinvest.com/stories/owning-gld-can-be-hazardous-your-wealth

My friend had mentioned to me over the weekend to keep an eye out on the GLD because some of the gold they own is not physical but actually derivatives. I'm not an expert in this stuff. Hopefully a few others might chime in and help us out.

Farmer Brown's picture
Farmer Brown
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Re: More GLD Suspicions

Mike,

This is the straw the breaks my back.  My sell order to GLD is in.  I just cannot take the uncertainty over something that should be a given, and everytime I see ne info on GLD it's the bad kind.

In any case, does anyone know how to invest in ZKB?  They'se a Zurich-based fund that actually does guarantee delivery, but I cannot find it available thorugh my broker (etrade).  Would appreciate any help.

Patrick

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cnbbaldwin
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Re: More GLD Suspicions

 The link to "Risks in owning GLD" certainly got my attention.  For those of us trying to "preserve" wealth in our self directed IRA's or 401K's through the purchase of gold ETF's this is a bit scary, to say the least.  Outside of liquidating these accounts, with the associated tax and penalty hits (if under 59 1/2) and then taking physical possesion of gold, the EFT's seemed like the next best thing.  I would be interested in thoughts regarding the relative safety of using  ZKB instead of GLD for this purpose.  Would ZKB provide a much greater degree of safey over GLD or should neither be thought of as a reasonable alternative to physical possesion of gold? 

I have not been able to find the ZBK ETF through Ameritrade either.

 

gyrogearloose's picture
gyrogearloose
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Re: More GLD Suspicions

Variation on a the theme from elsewhere here

http://www.marketskeptics.com/

 

Cheers Hamish

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Lemonyellowschwin
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Re: More GLD Suspicions

Aren't PM stocks (funds, not individual stocks) a better way to go for people who are worried about whether the ETFs are really what they say they are, and who wish to invest in gold through self-directed retirement accounts?  Yes, they are subject to market fluctuation and different forms of risk.  But the risk that they are not what they purport to be seems minimal.

 GDX and HUI.

Mike Pilat's picture
Mike Pilat
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Re: More GLD Suspicions

I'm grateful I never ended up in those etfs...I think the gold mining stocks make the most sense, but really now I always remind myself that the clowns that are managing the paper are the same ones that are largely responsible for this whole debacle. I trust myself before I trust them, and I trust physcial bullion more than paper promises. It all depends on your position in life and your goals and needs, but that is the choice for me.

Pablo_Eagle's picture
Pablo_Eagle
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Re: More GLD Suspicions

I would like to draw your attention to: www.goldmoney.com.

Here is a way to do what you want. However, I have not done this with gold, for the reason that I do not understand why a person would not want to buy physical gold, since it is so relatively small and light. I bought physical gold, rapped it in paper, tape and wire, gave it a mantle of cement and burried it. My brother knows in case of my death.

Via Goldmoney I invested heavily in silver, because my own country wants VAT on it (which I willingly will not give), and they cannot do that on silver in a goldmoney account. Besides, it is quite a lot of kilo's and I trust Goldmoney with it.

That should solve this whole issue.

P

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suziegruber
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Re: More GLD Suspicions

Also note that there are ways to own physical gold in your IRA and 401K account depending on the level of flexibility you have.  You can google physical gold IRA and find interesting information about it.  If you take physical posession of the gold, it is considered a taxable distribution.  The gold is held in a depository.  I have not done this, so I cannot recommend any particular company to work with.   I cashed out my retirement account 3 years ago and bought a photovoltaic system because based on what I saw, I thought it highly likely that by the time I retire tax rates would be substantially higher and/or retirement accounts would have ceased to exist for some other reason.

 Cheers,

Suzie

Mike Pilat's picture
Mike Pilat
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Re: More GLD Suspicions

Suzie raises a question that I've wondered for a little while now.

How are physical precious metal investments dealt with for tax / capital gains purposes? Are you required to keep a record of purchase / sale price and then report each sale as a capital gain? This seems rather unenforceable to me...

capesurvivor's picture
capesurvivor
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Re: More GLD Suspicions

Not a worry if you pay cash and buy local, Mike.

All private. Worth the slight extra premium, imho.

 

SG

Mike Pilat's picture
Mike Pilat
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Re: More GLD Suspicions

Then it's pretty much the best investment you can make. At marginal tax rates, a ~70% appreciation in the gold price would trump a 100% appreciation in the markets (unless you were in a tax sheltered account, but there's other risks with one of those...). This means the market must outperform precious metals by ~43% in order to be a winner...

I chuckle at any reason that might be put forth for me to put my "long haul" investments in the markets and not in precious metals at a time like this.

Ken C's picture
Ken C
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Re: More GLD Suspicions

Another option is to move you IRA to a firm like Sterling Trust that offers gold bullion accounts. You buy (order) the bullion from a company like APMEX or Kitco and they send it to the IRA firm and they get paid from your account. The physical gold is held for you. If (when) you take possesion of the gold (bullion or coins) it becomes a taxable event.

I looked at this some but have not done it yet myself.

I do have some GLD and SLV in one of my retirement accounts and undoubably these etfs are using Comex and do not take delivery so there is some risk there. I have not deemed it to rise to the level of wanting to liquidate the account at this point.

 

Ken

 

pinecarr's picture
pinecarr
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Re: More GLD Suspicions

The GLD article on Davos' blog today has been moved/archived.  It can now be found at http://www.marketskeptics.com/2009/02/risks-in-owning-gld.html .

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truenorth
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Re: More GLD Suspicions

Regarding the spdr GLD, I came to the same conclusion a couple weeks
ago - it seemed possible that, in the worst case imaginable, GLD might
not have the gold at all.

I researched the possible ways of holding gold and settled on GTU
and CEF.  Seems they take "holding the gold" much more seriously.

http://www.centralfund.com/

http://www.gold-trust.com/

Trustworthy Canadians as well..!

tessieri's picture
tessieri
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Re: More GLD Suspicions

Ran into the same issue of investing in ZKB.  But, I also found GTU.  It is in Canada and makes a big deal about having the bullion behind the EFT.  See http://www.gold-trust.com/.

stpaulmercantile's picture
stpaulmercantile
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Re: More GLD Suspicions

I don't understand how GTU works.  Does it trade like a stock, or does the share price reflect the market value of the amount of gold it represents?  Today, GTU was down 7%, while gold was down only about 2%. 

stpaulmercantile's picture
stpaulmercantile
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Re: More GLD Suspicions

I think the answer to my question is Yes.  It trades like a stock, but stays very close to the value of the amount of metal it represents.  My guess is that the stock price usually has a small premium built into it, but I suppose that premium could be negative at times if people are betting on the price of gold falling.

Anyone who has traded this company - GTU - please add some comments.

 

Thanks.

Denny Johnson's picture
Denny Johnson
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Re: More GLD Suspicions
truenorth wrote:

Regarding the spdr GLD, I came to the same conclusion a couple weeks
ago - it seemed possible that, in the worst case imaginable, GLD might
not have the gold at all.

I researched the possible ways of holding gold and settled on GTU
and CEF.  Seems they take "holding the gold" much more seriously.

http://www.centralfund.com/

http://www.gold-trust.com/

Truenorth..........you saved me some typing............same for me. After being less than comfortable w GLD and SLV for too long, it finally dawned on me that if everything was on the up and up, it would be in their best interest to be much more transparent. 

I also like the miner ETF GTX.

Both GTU and CEF trade at a premium and sometimes it can be negative.

Current premiums here:

http://www.centralfund.com/Nav%20Form.htm

http://www.centralfund.com/Nav%20Form.htm

Historical premiums here:

http://www.etfconnect.com/select/fundpages/sectors.asp?MFID=3653

http://www.etfconnect.com/select/fundpages/sectors.asp?MFID=169250

Seems a big one day premium drop from yesterday: CEF from 13.31 to 8.8, GTU from 22.43 to 13.9

I'm hoping for more as this technical pullback plays out, as the premium has kept me out thus far.

WhoKnew's picture
WhoKnew
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Re: More GLD Suspicions

I've moved in and out of GLD for almost a year. My most recent move out is due to all this negative type news regarding their gold holdings. Its starting to spread and I don’t want to be in if there is a run on GLD.That said Im still long PM's.

 

capesurvivor's picture
capesurvivor
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Re: More GLD Suspicions

You may have the same arguments about trust with this but I am hedging some of my gold with GLL, the ultrashort gold stock. If there is a temporary big bubble...I'm covered.

I am keeping a close eye on it.

 

SG

joemanc's picture
joemanc
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Re: More GLD Suspicions

I ended up selling my GLD a few days ago as well. When I mentioned to an attorney here at work that GLD might have been a Ponzi scheme, he told me to be aware of clawback, where the investors who got out knowing something might be wrong, may have to return funds if the fund were to collapse, ala, Madoff. Something that is very unfair in my view, but something to be aware of.

Brief snippet:

http://blogs.wsj.com/law/2009/01/02/the-clawback-conundrum-a-friday-morning-madoff-roundup/

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