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Must Read Information For Gold & Silver Investors

21 June 2011 11 Comments

If you invest in “paper gold” or “paper silver” a la the GLD and SLV vehicles (which are very big and popular), you should read the following article from Zero Hedge.  Here is an excerpt:

Some very disturbing revelations from CLSA’s Chris Wood who in his latest Greed and Fear note discusses an event that may be all to prevalent within the central banking community: the less than overt lending out of central bank gold to “other entities” in return for picking up nickels in front of a steamroller. In this case, the central bank of governmentless Belgium, which had 41% of its gold out at the end of 2010 on loan. Naturally, the lent out gold is being used by some other key entity, potentially to mask its own inventory deficit, in exchange for the paltry sum of 0.3% on the total loan. Wood’s conclusion: “This is a reminder that the paper gold market is significantly larger than the physical market. Just like a run on a bank in a fractional banking system, GREED & fear suspects it will be very hard to settle all the paper claims to gold physically in a real scramble for the metal. This is why in a parabolic spike physical gold is likely to trade at a significant premium to paper claims.” We couldn’t have said it better ourselves.

If you don’t want to own physical, I recommend GTU & CEF.

11 Comments »

  • Devon said:

    At the risk of sounding ignorant, is the write stating that funds like GLD will trade at say $1,500/oz while physical gold in your hand could be sold for something like $1,550 or even higher at the same time?

  • Kayden said:

    Okay I’m convinced. Let’s put it to aioctn.

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