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The Big Bailout That Has Already Happened, and the Dangers of Gold ETFs
By admin | September 29, 2008
“What went in got squashed and what came out, certainly did not come out looking the same,” says Jim Sinclair of www.jsmineset.com “Considering the fact that the Fed has lent $1 trillion to banks and the Wall Street gang last week alone, $250 billion for starters and $50 billion in tranches (that in fact might not occur in this administration) is a lot to do about nothing.”
I couldn’t agree more. All this talk about bailouts or no bailouts is a distraction. The US government is bailing out the system. It is not working. Let’s see what happens to the dollar over the coming week :(
Another major concern of mine is Gold ETFs. All that glistens – virtually – IS NOT GOLD. We have seen that this past week. Shareholders in ETF Securities were left high and dry – unable to trade popular commodity securities, due to concerns over the future of their backer, AIG. Overnight, banks and brokerages stopped making markets in the Exchange Traded Commodities (ETCs) backed by the troubled insurer and sold by ETF Securities (ETFS). The price of the stocks also plummeted over 50 percent due to the worries over AIG.
Gold ETFs are vastly different to holding real gold. Turbulence, such as the above in the market, can affect the value of those gold ETFs markedly. When you buy an ETF you are buying electrons on a screen. It is not the same as buying real solid gold.
If you own stock in an ETF, that means you own a stock that depends on the price of gold, rather than gold itself. No matter that corporations such as ETF Securities own gold. How much gold they own is not clearly discernable by the average “Joe Sixpack” who may own ETF stocks.
I’ve already written a permanent article for Q Wealth Report on this subject that will be uploaded over the next few days. In the meantime, look back over the archives of this blog, and you will see that you have been warned. I didn’t heed by own advice and still have some holdings in GLD, but I will be liquidating them on Monday, obtaining cash, and buying real gold with it.
We are living in exciting times, as I am wont to say. There are opportunities for profits here in the short term, but they are not for the faint hearted!
Related posts:
- The Dangers of Investing in GLD
- How to Profit from Gold Price Manipulation by Buying Gold Bullion Offshore
Topics: Currencies and Cash | 1 Comment »
One Response to “The Big Bailout That Has Already Happened, and the Dangers of Gold ETFs”
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December 5th, 2008 at 8:36 pm
[...] seems investors are running scared of gold ETFs as reported on my personal blog overnight, and with good reason. The only real gold is physical [...]