"His analysis of gold (GLD) and silver are found in the following charts."
I've been trying to do my due diligence into this GLD fund. Anyone know why there is a clause in the GLD prospectus that states GLD has no right to audit subcustodial gold holdings? Why would the organizations behind GLD forfeit this right and create such a glaring audit loophole? I have not heard a single good reason for the existence of this loophole thus far. It also doesn't help that GLD claims to be fully backed by physical gold bullion but yet it refuses to give retail investors the right to redeem for any of these ‘claimed’ gold bullion. There are a number of other red flags as well from what I'm reading:
"Did anyone try calling the GLD hotline at (866) 320 4053 in search of numerical details on GLD's insurance? The prospectus vaguely states "The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody." When I asked about how much of the gold was insured, the representative proceeded to act as if he didn't know and said they were just the "marketing agent" for GLD. What kind of marketing agent would not know such basic information about a product they are marketing? It seems like they are deliberately hiding information from investors.
I remember there was a well documented visit by CNBC's Bob Pisani to GLD's gold vault. This visit was organized by GLD's management to prove the existence of GLD's gold but the gold bar held up by Mr. Pisani had the serial number ZJ6752 which did not appear on the most recent bar list at that time. It was later discovered that this "GLD" bar was actually owned by ETF Securities."
Lots of concerns with SLV too.
The chart wasn't to offer GLD for investment, but to show the path of gold as tracked by this Elliott Wave statistician. Since it tracks almost parallel to gold, and is the vehicle he uses to follow it, it's what I had access to.
Personally, other than for short term trading, I wouldn't hold GLD or SLV, for the reasons you state and more. A few years ago, there were many accusations that SLV was trading far more silver than it actually had access to. I haven't even really checked it out since. For holding, I'd go with PSLV instead, if I wanted an ETF type instrument.
Great article! Thank you for taking the time to write it. Quick question... Do you use physical gold/silver for this strategy? If so, how do you do your swapping? Do you take it to a local dealer and do the swap at once or do you utilize an offshore or onshore vault for the transaction and storage? I really appreciate it!
Great question.
IMO, it's always a great idea to develop a relationship with a local dealer. Even if you just go in and talk, buy a small coin once in a while, bring him coffee or whatever. Stop in to see him at least once a month. I used to go hang out with a buddy who had a coin shop and learned tons just being there. Then he gave me great deals and cut me in on opportunities once in a while.
I prefer physical, for obvious reasons. but for trading, I trust Sprotts ETFs. There are other ways to go to, such as storage services. I've done some work with Hard Assets Alliance and trust them too. They have some nice options, and you can trade online anytime.
Maybe I'll do a post on options for how to hold metals. I wrote one a few years ago, but it's probably a good time to update it.