The GLD prospectus states that “GLD represents fractional,. Buy a gold-backed ETF and expose yourself to the price of gold, not to real physical gold. Owning shares in a gold ETF is not the same as owning physical gold, and ETFs cannot reproduce the security offered by physical gold. Bullion ETFs are a good idea, but risks are a very real and current danger.
Worse, the reason you own gold is to protect yourself from financial and economic uncertainty, and you could lose that advantage if you own a form of gold on paper that involves all kinds of counterparty risks. Gold ETFs are safe investments because SEBI regulates gold ETFs and physical gold of equivalent value supports each unit of gold ETFs. In addition, gold funds keep their genuine gold in custody with the gold custodian. When you hear gold ingots, visions of underground bank vaults hermetically sealed and stacked high above with glittering gold bricks come to mind.
If the economy collapses and with it collapses part of the financial system, the trustee will settle your claim in cash, not gold. You can't do these things with a gold ETF, because most don't allow the delivery of ingots to retail investors (and the few that do are expensive and slow). While vaults like this exist, gold bars are much more accessible than the average gold owner can imagine. Since the custodian is tasked with obtaining and storing gold on behalf of the trustee, it is an important counterparty.
In that case, the expenses related to the acquisition and sale of gold ETFs are lower than those of other investments. It's necessary to have a diverse portfolio, and investing in gold ETFs can be a great way to do so if done with thorough research and understanding. Just visit the WealthDesk page, choose all the WealthBaskets you want to buy, fill in the required details, pay a subscription fee, accept the conditions, and you'll have investment options, such as gold ETFs, in your portfolio. There may be more effective ways to buy and hold gold than a gold ETF, ways that don't involve a great deal of counterparty risk and don't operate within the limits of the banking system or the stock market.
In theory, you can receive gold from your ETF stocks, but it's not as simple as buying physical gold directly. Any type of crisis could subject gold ETFs to increasing pressure and make them unable to provide security in the face of the same events from which they are supposed to protect us. While there are still strong inflows of gold ETFs, long-term investors would do well to refrain from using them. More importantly, given the type of crisis Mike Maloney expects in the future, one or more of these counterparty risks will most likely materialize with ingot ETFs.
However, as with any commodity, the price of gold can rise or fall for several reasons in the short term.