Why mess with gold bullion if you can just buy GLD on paper?

topstuf

Welllllll........................

GLD is simply a number. That's all it is.

From the GLD prospectus: (as of 7/10/08)

The Trust may not have adequate sources of recovery if its gold is lost, damaged,
stolen or destroyed and recovery may be limited, even in the event of fraud, to the market value of the
gold at the time the fraud is discovered.

and

Because neither the Trustee nor the Custodian oversees or monitors the activities of
subcustodians who may temporarily hold the Trust's gold until transported to the Custodian's London
vault, failure by the subcustodians to exercise due care in the safekeeping of the Trust's gold could
result in a loss to the Trust.

and

Gold held in the Trust's unallocated gold account and any Authorized Participant's
unallocated gold account will not be segregated from the Custodian's assets.
If the Custodian becomes insolvent, its assets may not be adequate to satisfy a claim by the Trust or any Authorized Participant. In addition, in the event of the Custodian's insolvency, there may be a delay and costs incurred in identifying the bullion held in the Trust's allocated gold account.

and.... BEST OF ALL:

The sale of gold by the Trust to pay expenses will reduce the amount of gold
represented by each Share on an ongoing basis irrespective of whether the trading price of the Shares
rises or falls in response to changes in the price of gold.

unless this is better:

When the seven year fee reduction period terminates or expires, the estimated ordinary
expenses payable by the Trust may increase, thus reducing the NAV of the Trust more rapidly and
adversely affecting an investment in the Shares.

So...there ya go. Buy it if ya want it.

thefinn

Because I want gold, not paper calling itself gold.
It's like cutting a picture of a new Mustang out of a magazine and saying that I own a Mustang.

Overdate

Offsetting advantages of a gold ETF are instant liquidity, dramatically narrower buy/sell spread, saving of storage and transportation costs (in time, resources and money), lower risk of robbery, lower risk of counterfeiting, and greater simplicity of record keeping.

blitzdude

@Overdate said:
Offsetting advantages of a gold ETF are instant liquidity, dramatically narrower buy/sell spread, saving of storage and transportation costs (in time, resources and money), lower risk of robbery, lower risk of counterfeiting, and greater simplicity of record keeping.

Well yeah except for the fact that it's all just really counterfeit toilet paper. lol

PerryHall

The bottom line is paper ain't gold.

topstuf

May I have a hamburger for which I will gladly give you paper next Tuesday?

blitzdude

@topstuf said:
May I have a hamburger for which I will gladly give you paper next Tuesday?

Street vendors in china will gladly sell you beef bouillon flavored cardboard as a genuine beef eggroll. Of course in merica you can go to macdonalds and clog your arteries with some crap imitation beef burger. It's all relative. lol

Overdate

@blitzdude said:

@Overdate said:
Offsetting advantages of a gold ETF are instant liquidity, dramatically narrower buy/sell spread, saving of storage and transportation costs (in time, resources and money), lower risk of robbery, lower risk of counterfeiting, and greater simplicity of record keeping.

Well yeah except for the fact that it's all just really counterfeit toilet paper. lol

Actually it’s not. ETFs are backed by real gold, and while substantial losses (which so far have not occurred) are certainly possible under extreme circumstances, they are neither counterfeit nor toilet paper. With the advantages I detailed above, ETFs have a legitimate place in the financial universe, as does physical gold.

Timbuk3

Sorry, regardless of what others say, I want the actual possession of my gold. JMHO !!!

ZeppoShanski

LOL.

"You buy them the books ... and all they do is eat the covers off.".

Overdate ... good luck with your attempt.

ricko

I will stay with solid gold....I do understand the advantages and disadvantages of both (nice post @topstuf )....The disadvantages for hard gold (i.e. storage, security) are easily negated by proper methods. Cheers, RickO

MsMorrisine

I like the part where the fund manager has a separate custodian of the gold.

Then, they comingle gold.

multiple layer of bad.

CaptHenway

I have some Russian czarist bonds I would like to sell you.......

topstuf

@CaptHenway said:
I have some Russian czarist bonds I would like to sell you.......

Oh GOODEEE! Will you be putting them on BST?

jmski52

I have some Russian czarist bonds I would like to sell you.......

How much will you take in Weimar notes for them?

ZeppoShanski

Here you go ...

ZeppoShanski

This one costs $30 ...

Ask_the_Coin_Dealer

The problem (s) with GLD are: (1) costs, (2) if the price of gold goes up you only participate to a slight degree and most disturbingly (3) if you want to covert into PHYSICAL Gold you need 100,000 shares of GLD before they would consider coversion for you. That is several million dollars. No thanks. I will take physical Gold every day. No one knows you have it. It can quietly be handed down through generations. No maintenance fee... no management fee. Just keep it safe which is NOT hard to do.

MsMorrisine

@ZeppoShanski said:
Here you go ...

I like this one a lot.

ZeppoShanski

Ooooopps. ... Sorry, but I've got NO value on that one. Sorry.

JBK

I'll buy all the Czarist bonds you got. Do you have change for a Zimbabwe $100,000,000,000 000 note?

JBK

I never understood owning gold on paper, unless it is a short term play (gamble).

One of the benefits of physical gold is that if the SHTF, you have something of value. In that scenario, paper statements are worthless.

Also, physical gold endures. I have all sorts of neat antique bonds, certificates, checks, etc. that were worth huge money at one point, but today are just collectables.

meluaufeet

Physical bullion is my core position. I use GLD etc, to trade around it. It will work for me until it doesn't.

BillJones

Simple.

There have been too many promises that the gold was there when it wasn’t. This has gone on since owning bullion was made legal in the mid 1970s. I take possession of the gold, or I don’t spend my money. I don’t trust people who offer this service.

Overdate

@Ask_the_Coin_Dealer said:
The problem (s) with GLD are: (1) costs, (2) if the price of gold goes up you only participate to a slight degree and most disturbingly (3) if you want to covert into PHYSICAL Gold you need 100,000 shares of GLD before they would consider coversion for you. That is several million dollars. No thanks. I will take physical Gold every day. No one knows you have it. It can quietly be handed down through generations. No maintenance fee... no management fee. Just keep it safe which is NOT hard to do.

(1) It often costs the same or less to own a gold ETF than to pay the annual rent on a safe deposit box (or buy a safe).
(2) If the price of gold goes up you profit to the same extent that you would owning physical bullion.
(3) If you want to convert to physical gold you can simply sell your shares and buy the equivalent amount of physical gold.
(4) Handing physical gold down through generations depends on future generations having the same enthusiasm for gold that you do. Most people who inherit coin collections sell them for the ready cash (and often get taken in the process). I suspect the same is true for people who inherit gold coins and bullion. Passing on an ETF is much simpler and more straightforward, and dramatically reduces the risk of being cheated.

BAJJERFAN

@ricko said:
I will stay with solid gold....I do understand the advantages and disadvantages of both (nice post @topstuf )....The disadvantages for hard gold (i.e. storage, security) are easily negated by proper methods. Cheers, RickO

Are you gonna write a poem telling us where it's hidden.

Overdate

@JBK said:
I'll buy all the Czarist bonds you got. Do you have change for a Zimbabwe $100,000,000,000 000 note?

Sure, would you like that in ones?

Overdate

@JBK said:
One of the benefits of physical gold is that if the SHTF, you have something of value. In that scenario, paper statements are worthless.

There are a few rare and extreme scenarios, such as widespread social collapse, in which owning physical gold would be the superior option. A much more likely occurrence is a personal or family emergency that might require selling off some gold on short notice to raise cash. In such a case, owning shares in a gold ETF would make the process simpler and less stressful.

meluaufeet

Btw, I do agree with concerns with GLD.

Been thinking about some allocation to Goldmoney. Any thoughts?

jmski52

Been thinking about some allocation to Goldmoney. Any thoughts?

They've been working on making that medium a universal way to make gold liquid and 100% certifiable as a physically verifiable asset, anywhere in the world, correct? The main concern I would have is that the US Gov requires quite a bit of documentation for assets, including gold that are held by US citizens outside the country - primarily for tax purposes but possibly simply for control.

That's my current understanding. What is your take on this topic?

meluaufeet

@jmski52

Yes there is documentation you have to submit to fully open an account. There's people who have them that I respect, and I like their top two exec's. They also run Mene I believe. I know a few people that trade paper gold, and book profits into Goldmoney. They like it. I think they have over 1M accounts now. I'm leaning to put some into it.

Justacommeman

There are obvious advantages to both. I have both. Always will

m

TwoSides2aCoin

Pulp to paper.
My name is mud.

Mud pie, anyone ?

Ask_the_Coin_Dealer

@Overdate said:

@Ask_the_Coin_Dealer said:
The problem (s) with GLD are: (1) costs, (2) if the price of gold goes up you only participate to a slight degree and most disturbingly (3) if you want to covert into PHYSICAL Gold you need 100,000 shares of GLD before they would consider coversion for you. That is several million dollars. No thanks. I will take physical Gold every day. No one knows you have it. It can quietly be handed down through generations. No maintenance fee... no management fee. Just keep it safe which is NOT hard to do.

(1) It often costs the same or less to own a gold ETF than to pay the annual rent on a safe deposit box (or buy a safe).
(2) If the price of gold goes up you profit to the same extent that you would owning physical bullion.
(3) If you want to convert to physical gold you can simply sell your shares and buy the equivalent amount of physical gold.
(4) Handing physical gold down through generations depends on future generations having the same enthusiasm for gold that you do. Most people who inherit coin collections sell them for the ready cash (and often get taken in the process). I suspect the same is true for people who inherit gold coins and bullion. Passing on an ETF is much simpler and more straightforward, and dramatically reduces the risk of being cheated.

1. It ALWAYS costs you MORE to pay ETF management fees than a 1-time purchase of a safe.
2. You do NOT profit to the same extent if Gold actually moves up in price. Your theoretical profit is diluted again by the cut that the manager of the ETF takes for themselves.
3. You are paying a fee to sell your shares and paying another fee to buy them. You cannot convert them directly into physical Gold unless you own 100,000 or more shares.
4. Selling a coin collection with grading and rarity variables is NOTHNG like selling a pile of gold bullion. The spot price is displayed everywhere and you simply call 2 or 3 dealers and choose the best price.

Your arguments only make sense if you ignore ALL of the fees that the ETF managers take. GLD is really for frequent market traders or for lazy people who do not want to learn anything about physical gold. That is why sales of GLD and ALL similar vehicles is a tiny fraction of all physical gold sales.

Overdate

@Ask_the_Coin_Dealer

“SGOL, which was launched on Sept. 9, 2009, has an expense ratio of 0.39% and total net assets of nearly $1.9 billion. Investors can trade SGOL with $0 online commissions at the Schwab ETF OneSource platform.”

https://www.investopedia.com/articles/investing/031913/most-affordable-way-buy-gold-physical-gold-or-etfs.asp

Show me an example of any fee the ETF managers take aside from the stated annual expense ratio.

And good luck finding a dealer with a buy-sell spread anywhere near as low as the bid-ask spread on gold ETFs.

I rest my case.

Ask_the_Coin_Dealer

You might pay $0 online commissions AFTER the Fund Managers have taken their fees out. The value of GLD is already diluted by their fees. The annual expense ratio is only one fee. There are others, taken prior to share valuation, which is how the value per share is determined. That is true whether you believe it or not. I served as a fund manager for an investment vehicle convertible into physical gold, which was approved on the NYSE. You can believe whatever you like. I know the reality of how this works.

"PAPER" gold like GLD is an investment in the fund managers as much as it is in anvestment in Gold. Physical Gold is not an investment in any person or group. In a time of financial crisis see what your paper is worth. I know what my physical gold will be worth.

Good luck!

MsMorrisine

@Ask_the_Coin_Dealer said:
You might pay $0 online commissions AFTER the Fund Managers have taken their fees out. The value of GLD is already diluted by their fees. The annual expense ratio is only one fee. There are others, taken prior to share valuation, which is how the value per share is determined. That is true whether you believe it or not. I served as a fund manager for an investment vehicle convertible into physical gold, which was approved on the NYSE. You can believe whatever you like. I know the reality of how this works.

"PAPER" gold like GLD is an investment in the fund managers as much as it is in anvestment in Gold. Physical Gold is not an investment in any person or group. In a time of financial crisis see what your paper is worth. I know what my physical gold will be worth.

Good luck!

but isn't the expense ratio all inclusive?

if not, can you list some of the other hidden fees?

thanks for any info.

Overdate

@Ask_the_Coin_Dealer said:
I served as a fund manager for an investment vehicle convertible into physical gold, which was approved on the NYSE. You can believe whatever you like. I know the reality of how this works.

Was your "investment vehicle" an ETF? There are plenty of investment vehicles convertible into physical gold that do charge other types of management fees. Exchange traded funds do not.

meluaufeet

Does 2008 qualify as a financial crisis?

Ask_the_Coin_Dealer

Expense ratios do not take into consideration how the managers value the shares in the fund, the actual price of Gold that is used at any point in time. The vehicle was a Gold Redeemable Trust not an ETF but we looked at all types of vehicles, including ETFs, before we created this one and saw what the actual costs to the investors were. It is possible, however unlikely, that given the right set of situations, a paper investment in Gold can lose significant value. Physical Gold, which has been a store of value for more than 5,000 could never be worthless. All paper investments involve an investment in the management of that particular vehicle. Just be careful when you read the hype. Its not written actually for your benefit.

johnny9434

ill keep the gold with me locked up somewhere. with paper it looks good going up in smoke in the woodstove/fireplace, jmo

Kkathyl

Crazy Eddie comes to mind.

Overdate

@Ask_the_Coin_Dealer said:
Expense ratios do not take into consideration how the managers value the shares in the fund, the actual price of Gold that is used at any point in time.

The managers don’t value the shares in the fund, the value is set by buyers and sellers in the marketplace.

The annual expense ratio is the only fee charged by the ETF. “The expense ratio is the annual fee that all funds or exchange-traded funds charge their shareholders. It expresses the percentage of assets deducted each fiscal year for fund expenses, including 12b-1 fees, management fees, administrative fees, operating costs, and all other asset-based costs incurred by the fund.”

https://www.morningstar.com/InvGlossary/expense_ratio.aspx

The price of a gold ETF during market hours tracks the spot price of gold, after allowing for a tiny fee reflected in the expense ratio. (For GLD, that fee amounts to about one-and-a-half cents per day per ounce.) Arbitrage players are ready to jump in if prices get even slightly out of line.

During market hours the bid-ask spread on GLD is typically 1 or 2 cents per share, equivalent to between 10 and 25 cents per ounce of gold. Compare that to the buy-sell spread on physical gold. It’s no contest.

And to repeat my earlier post, there are a few rare and extreme scenarios, such as widespread social collapse, in which owning physical gold would be the superior option. A much more likely occurrence is a personal or family emergency that might require selling off some gold on short notice to raise cash. In such a case, owning shares in a gold ETF makes the process simpler and less stressful.

MsMorrisine

@Overdate said:

The price of a gold ETF during market hours tracks the spot price of gold, after allowing for a tiny fee reflected in the expense ratio. (For GLD, that fee amounts to about one-and-a-half cents per day per ounce.) Arbitrage players are ready to jump in if prices get even slightly out of line.

that's not totally true.

ETFs can trade at a discount or a premium to NAV.

https://www.cefconnect.com/fund/CEF

metalmeister

Agree. I like both.

Overdate

@MsMorrisine said:

@Overdate said:

The price of a gold ETF during market hours tracks the spot price of gold, after allowing for a tiny fee reflected in the expense ratio. (For GLD, that fee amounts to about one-and-a-half cents per day per ounce.) Arbitrage players are ready to jump in if prices get even slightly out of line.

that's not totally true.

ETFs can trade at a discount or a premium to NAV.

https://www.cefconnect.com/fund/CEF

Your example is a closed end fund, not an exchange traded fund.

“ETFs have a redemption/creation feature, which typically ensures the share price doesn't stray significantly from the net asset value. As a result, an ETF's capital structure is not closed. CEFs do not have such a feature. CEFs are actively managed, whereas most ETFs are designed to track an index's performance. CEFs achieve leverage through issuance of debt and preferred shares, as well as through financial engineering. ETFs are precluded from issuing debt or preferred shares. ETFs are structured to shield investors from capital gains better than CEFs or open-end funds are.”

https://www.fidelity.com/learning-center/investment-products/closed-end-funds/cefs-mutual-funds-etfs

MsMorrisine

@Overdate said:

@MsMorrisine said:

@Overdate said:

The price of a gold ETF during market hours tracks the spot price of gold, after allowing for a tiny fee reflected in the expense ratio. (For GLD, that fee amounts to about one-and-a-half cents per day per ounce.) Arbitrage players are ready to jump in if prices get even slightly out of line.

that's not totally true.

ETFs can trade at a discount or a premium to NAV.

https://www.cefconnect.com/fund/CEF

Your example is a closed end fund, not an exchange traded fund.

it is a closed end ETF.

https://quotes.fidelity.com/webxpress/get_quote?QUOTE_TYPE=D&SID_VALUE_ID=cef&submit=Quote

MsMorrisine

anyway, the way you make it read is that a premium/discount would be attacked on any and all ETFs.

my point is that is not fully true. there are ETF that can have a premium/discount at times.

it can happen:
https://www.proshares.com/tools/premium_discount?ticker=EQRR&quarter=2-2019

Overdate

@MsMorrisine said:

@Overdate said:

@MsMorrisine said:

@Overdate said:

The price of a gold ETF during market hours tracks the spot price of gold, after allowing for a tiny fee reflected in the expense ratio. (For GLD, that fee amounts to about one-and-a-half cents per day per ounce.) Arbitrage players are ready to jump in if prices get even slightly out of line.

that's not totally true.

ETFs can trade at a discount or a premium to NAV.

https://www.cefconnect.com/fund/CEF

Your example is a closed end fund, not an exchange traded fund.

it is a closed end ETF.

https://quotes.fidelity.com/webxpress/get_quote?QUOTE_TYPE=D&SID_VALUE_ID=cef&submit=Quote

I don't see anything on your link that says it is an ETF. Closed end funds are a different animal.

there are ETF that can have a premium/discount at times.

True, but the arbitragers make sure that they don't last very long. Even in your example there were only four days in the latest quarter that the ETF closed more than 1% above or below its net asset value. And the company's Ultra Gold ETF traded in an even tighter range: there were only two days in which it deviated more than 1% from its net asset value.

https://www.proshares.com/tools/premium_discount?ticker=UGL&quarter=2-2019