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Commodities (Precious Metals, Agriculture)

Staggering Stats About Silver Supply

By: Richard DoughtySLV, the silver Exchange-Traded Fund, could be viewed as the main alternate source of storage for silver, and it accounts for around 50% of world silver inventory. It seems that SLV has been raided heavily over the past seven weeks, Read more

Rob McEwen: Looking Ahead of the Curve

By: Karen RocheRob McEwen, a veteran of the resource industry, is CEO of US Gold Corporation and chairman of its board. He recently sat down with Roche for this exclusive, wide-ranging interview. While hoping to avoid the “darkest hour”, Read more

Gold May Decline 50% Before the World Cup is Over

(And the World Cup May be Won by a Herd of Wild Burundi Elephants)By: Eric JanszenA recent Morgan Stanley analysis predicts that gold will plunge 70%. Read more

Gold Reclaims its Currency Status as the Global System Unravels

By: Ambrose Evans-PritchardThe ECB has revealed that its systemic risk indicator surged to an all-time high on May 7, during the Eurozone money-market meltdown. “The probability of a simultaneous default of two or more euro-area large and complex banking groups rose sharply,” it said. Read more

Don Coxe Dissects Gold

By: Tyler DurdenWhat do you do if you can no longer believe in real estate, bank deposits, the dollar, the yen or the euro? What can you believe in? Gold. So old it’s new again, the yellow metal can’t be synthesized and acts as a store of value for future generations. Read more

So Little Gold

By: Arnold BockThere isn’t much gold around, and this is a key issue for those who invest in precious metals. Bock contends that, given the scarcity of gold and silver bullion supply, prices will go parabolic once governments, institutional and private investors realize supply is alarmingly insignificant. Read more

Will Economic Austerity Kill Gold’s Bull Market?

By: Dominic FrisbyOn 21 June gold broke out to new all-time highs above $1,260 per ounce, but then made a dramatic correction to around $1,190. That's quite a correction and it concerned a lot of people, so Frisby addresses whether this is anything more than a healthy pull-back. Read more

Irrational Gold Selling

The Mogambo GuruThe shrewd, funny and irreverent Mogambo was surprised by gold’s recent dramatic correction, since it indicated gold sales even in the face of the Fed’s dollar destruction through excessive money printing. “Apparently, Read more

Gold is Back as Money

By: Julian PhillipsIn its 2010 annual report, the Bank for International Settlements (BIS) said that “gold, which the bank held in connection with gold swap operations, under which the bank exchanges currencies for physical gold, stands at 8,160.1 million in special drawing rights, Read more

So You Think You Own Gold?

By: Erik TownsendThe principal contention of this article is that most investors who think they own gold or silver bullion really don’t. Most precious metals investments – including many touted as physical – are nothing more than paper promises. Read more

So You Think You Own Gold?

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By: Erik Townsend
The principal contention of this article is that most investors who think they own gold or silver bullion really don’t. Most precious metals investments – including many touted as physical – are nothing more than paper promises.
Townsend discusses the details of counterparty risk in precious metals investing, and evaluates ‘paper’ vs. ‘physical’ bullion investments, as well as allocated vs. unallocated bullion accounts.
The executive summary:
  1. The rationale most commonly cited for investing in precious metals is wealth preservation: precious metals provide a durable store of value that eliminates counterparty risk inherent to other investments;
  2. Counterparty risk is only eliminated if the investor actually owns the precious metals he invests in free and clear of any encumbrances;
  3. Most precious metals investments, including many touted as ‘physical gold’ do not actually convey legal ownership of precious metals to the investor. As a result, the elimination of counterparty risk rationale for the investment is defeated!
  4. You do not own gold unless you have taken delivery of coins or bars personally or have received legally binding documentation showing you to be the legal owner of specific coins or bars (identified by bar serial numbers) stored with a bullion bank in an allocated account that is allocated in your name;
  5. The physical gold vs. paper gold debate is revisited with an emphasis on counterparty risk. It turns out there are many layers of both ‘physical’ gold and ‘paper’ gold and these are explored;
  6. Critics of ‘paper gold’ ETFs are sometimes guilty of scaring investors away from the ‘paper’ aspect of the ETFs, only to go on to sell the investor a competing ‘physical gold’ investment that is really nothing more than another form of paper promise;
  7. The LBMA chain of custody system (and other similar systems worldwide) provides a way to own physical bullion stored in a commercial vault without the need to re-assay the bars each time the bullion changes hands.