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Jessica Kerry

Is GLD ETF still a good investment amid the Covid-19 pandemic?

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Hi Kerry,
So far, a gold downside has seen protection from Central Banks. They wish to avoid a run on currencies replay. As such, bond purchasing, swap lines, and direct financing, among others, will take place to stop a similar dash for currencies seen in March. 
However, should the pandemic healthcare see an alleviation or get resolved, then all bets would be off. In such a scenario, the market would dump gold and rush into risk assets. A remedy, a vaccine, or the mere lack of a major flare-up, would create such a scenario. 
Gold works as an excellent hedge against risks that have beset the market. Gold represents an avenue for purchasing power protection, an erosion of which was triggered by aggressive central bank monetary easing. It also offers protection against risks arising from the pandemic.
Other, but no lesser, market risks include a simmering China-US trade war, and the upcoming US Presidential election, and associated political risks. When all these market risks are viewed collectively, a position in SPDR Gold shares offers a significant degree of reliability.
GLD is a straight forward ETF product. Bullion is safely secured in vaults. Therefore, ETF prices move in step with spot gold prices.
 

 

Edited by Jeremy

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"GLD is a straight forward ETF product. Bullion is safely secured in vault."

This part is extremely questionable. I recommend doing your own due diligence. Paper gold GLD claims to be fully backed by physical gold bullion but yet it refuses to give retail investors the right to redeem for any of these ‘claimed’ gold bullion. This fact alone would mean GLD shares are nothing more than paper at the end of the day. Furthermore, GLD’s prospectus is chalk full of weasel clauses and legal loopholes that allows the fund to get away without the full physical gold backing. One good example of this is the clause that states GLD has no right to audit subcustodial gold holdings. To this day, I have not heard of a single good reason for the existence of this audit loophole. I’ve also verified the following to be true and welcome everyone else to do the same:

"Did anyone try calling the GLD number for general inquiries at (866) 320 4053 in search of numerical details on GLD's insurance? The prospectus vaguely states "The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody." When I asked about how much of the gold was insured, the representative proceeded to act as if he didn't know and said they were just the "marketing agent" for GLD. What kind of marketing agent would not know such basic information about a product they are marketing? It seems like they are deliberately hiding information from investors."

"I remember there was a well documented visit by CNBC's Bob Pisani to GLD's gold vault. This visit was organized by GLD's management to prove the existence of GLD's gold but the gold bar held up by Mr. Pisani had the serial number ZJ6752 which did not appear on the most recent bar list at that time. It was later discovered that this "GLD" bar was actually owned by ETF Securities."

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