Gold-Backed ETF Enters Fray in U.S.

http://online.wsj.com/article/SB125244708801293755.html?ru=yahoo&mod=yahoo_hsThe interest toward physical-commodity ETFs also reflects increased scrutiny by commodity regulators in the U.S. of the heavily leveraged ETFs that hold commodity futures. Regulators worry that excessive speculation might distort commodity prices. ETFs that hold actual gold and silver bars aren't part of this debate

 

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There are many reasons to avoid the funds that purchase futures contracts instead of gold. Just check out the performance of the iPath oil ETF, symbol OIL, compared to the price of oil to see how things can go terribly wrong.

 

I wrote a long rambeling post in response to this articale:desk: and how crappy I think gov regulation of the markets is,But then I deleted it and wrothe this. They are just investment tools. They give every day traders a chance to play markets that historicly have been open to the ultra rich. I mean it cost 6 thousand dollars just to have the right to buy a comodites contract. With OIL or other ETfs if I think the price of oil is going up I can buy them if I think it is going down I can buy etfs that make that play as well. I don't see the problem with them. If one uses them the way they are ment to be. If people want secure long term investments they should buy Coke and disney and then save money to buy zero coupon municiple bonds. or any muniple bonds, but zero coupon seem to be the cheapiset to get into most of the time.


I do like that the share value is meant to be 1/10 of an ounce. i beat one could find arbitarge spots if you follow the trades supper close. the problem is cashing out the shares. I have not read the prospectus, but I bet there are fees to pay and that you have to own massive blocks of shares to cash them out with slv you have to own 50000 shares to cash the silver out.

 

I think the "Jack&Coke" was starting to take hold at the end of this post, but I get the gist...and agree.

 

Aren't GLD and SLV also backed by physical gold and silver? Or am I wrong here.

 

Red: Sir you are correct they both hold the actual bullion.

Yakpoo: I am more a burban and sprite guy myself. Im also glad you agree with me. Now all we have to do is convice ole Jim Pill Feene Craymer of such and the whole world would konw.

 

Scary article on the bullion markets.

Bob Chapman recommends not to be in the ETF's. He thinks they are paper Ponzi schemes.

http://theinternationalforecaster.c...n_Uncertain_Waters_Increases_Risk_of_Drowning

 

Gold in hand is never worth zero but paper may only be worth bathroom material . Just want to see and hold my gold IMHO . ETF`s may be good but I would be afraid of them now .

 

I'm with the folks that need gold in hand. A company can go bankrupt but physical gold will only increase or decrease in value within reason.

 

I understand the Money in Hand logic, but a few things to think about.

1. your gold coins never right you a check for owning them (dividends)

2. your gold coins never split and then go up in value (stock splits)

Think about it this way if you are a buy and hold type of invester why not buy coke or disney. They are not going bankrupt any time soon. I mean Coke has 7.6 billion dollars in cash in the bank. Disney is going to go threw the roof in the next 10 years. China lost a law suite in the wto that will force them to inforce Intelectual Property rights. In the statues quoe chinese citizens spend 5 billion dollars a year on fake poor quality movies how much do you think they will spend on real american movies. Also like Coke dis is amazing at making colturaly specific produts just look at dis india as a perfect example.

I argue with my frinds with masters in economics that buy and hold is better than day tradeing. I could only imagin what they would say about not buying at all!

sure don't buy etfs as long term investmetns, but I think they are great for short term trades. the oil etfs are a great example. as the price of oil doubled so did the stock pries of many of the etfs 100% roi is not a bad investment. People normaly smugle drugs to get returns like that

 

...and judging by your "mood", you're a man who knows what he's talking about! dd:

 

lol thats too funny. My screen name is a referance to widespread panic. I don't know if any one hear is a fan but it noramly brings up many of the same jokes.

 

Outstanding analysis....brilliant commentary..what insight...
Your services as a financial advisor and literary scholar must be in constant demand.

 

Tom: WTF! what is your deal. Everything I said is backed by facts and are sound conclusions. It is true that we are going to win against china in the World trade organization. It is true that dis is great at new markets. It is true that the stock market has out performed gold. It is true that Coke has 7.6 billion dollars in cash. EDITED - we don't call members names

 

Again...fascinating commentary...command of the english language outstanding....grammer, spelling...top notch..thought process simply, the best.

One last comment.
EDITED - and we don't pick on how members spell.

 

i apalajize.

 

Really? Since 2001, gold has moved up from below $300 to $1000, far outpacing stocks. Want a longer time period? In 1965, the Dow was 1,000 and is now about 9,600 -- a respectible 9.6X gain. In 1965, gold was $35 and is now $1,000 -- a more than respectible 28X gain. To anticipate your responses, I know this excludes dividends, but it also excludes the income a gold investor can make from basis trading, which at times has been as high as 20% per year. And I know you can choose a time period to demonstrate the superiority of stocks over gold. My point is only to show that the comparison is not a clear-cut as you make it out to be. No investment is intrinsically good or bad. There is a time and place to own and not own everything.

 

" There is a time and place to own and
not own everything. "

True, Even education which we in america tend to idealize as the highest sort of investment in the future was a death sentence in the Khmer run cambodia, according to the book, "the killing fields" the Khmer Rouge would check the hands of refugees, if they were not calloused they would be marked as enemies of the "people".

 

100% agree that it is not a zero sum game. 10% even 20% if you really like gold would be a great part of a portfolio. Also agree that no investment is intrinsically bad, well I take that back. Buying way out of the money option contracts is probably an easy way to lose money , but your point is well taken that we should not talk in absolutes, and yes finding arbitrage spots is a great way to make a lot of money with any type of trading that one does. That being said I would like investigate a little further one point. while you make a strong point about total gain of gold vs the Dow. I think that ignores the performance of individual stocks. I am also going to concede at the beginning that for every company I list with 30x performance of stock growth there are probably 4 that went bankrupt or barely broke even. That being said I think most people can pick solid companies vrs start ups, and other poorly run institutions, and sense Gold is just one thing it is fair to cheery pick the best stocks. A. My personal Fave and best investment ever! KO the champion Coke. When it hit 37 in march and a member of its board or directors made a 25 million dollar investment sense then it has gone up 36%. Over the life of the stock it has gone up over 3000% a 10 thousand dollar investment in 1979 would be worth over 3 million dollars today cash, and yes that is excluding dividends and the splits just purely the value of 10K shares in 1979 b. Dell: today it is up 16K percent and has split 7 times again if one bought in 10K worth when it first came out in the late 80s millions again c. Disney another one that I think people are crazy not to own. up almost 100% from its march lows this year alone. and over the life of the stock is up a whopping 3K percent. I used the close price on Friday and took the entire life of the stocks exclude dividends and splits. All three out perform gold and are flag ship American companies. Like I said stocks will out perform gold. Not that gold is not great, but to limit ones self to only gold is a mistake. Tom: If you would like to have a debate about 9-11 or any other conspiracy I would love to have a civilized conversation with you. I must warn you that I debated to pay for collage, and was pretty good at it. While I will admit that most 4th graders can spell and write better than I can. I think I make due with what God gave me as far as being able to express ideas and think critically. Dyslexia is a Witch with a B and you got to play the hand your dealt.

 

Please break up your paragraph into multiple paragraphs when posting. Thanks!

PS It just helps the readability.