by Louis Cammarosano, Smaulgld:
Insured Vaulted Gold vs. Gold ETF Shares.
If you are buying gold for insurance against bad outcomes exchange traded funds (ETFs) have three major issues:
1. If the stock market closes or there is a bank holiday you have no access to trade your shares- when the market opens the price of gold could be dramatically higher or lower;
2. You have NO access whatsoever to EVER take physical delivery of ANY gold, unless you buy an inordinately high number of of shares. This may be an advantage in good times as the ETF covers the storage and insurance (in some cases) costs for you. In bad times, it could be a disadvantage;
3. If the ETF is mismanaged and goes bankrupt, you have a claim on the trust NOT a claim an any amount of gold.
If however you, buy allocated, vaulted insured gold and store it outside the banking system in the event of a bank holiday, stock market closure or bankruptcy of the depository, your gold is still available and title resides with you.
If you just want exposure to the price of gold ETFs are fine as trading vehicles.
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