Nick Barisheff: ETFs are just the illusion of owning gold


9:22p ET Tuesday, May 12, 2020

Dear Friend of GATA and Gold:

Exchange-traded funds are emphatically not the way to own the monetary metals, BMG Group founder Nick Barisheff writes in his latest market letter. Rather, Barisheff explains, ETFs supply only "the illusion of owning gold."

Barisheff writes: "What good is it to save money on the storage costs if you don’t have legal title to the gold? Many gold transactions, such as futures contracts, certificates, and ETFs, are nothing more than paper proxies or derivatives of gold. They do not represent legal ownership of gold.

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"These proxies may work as planned during normal market conditions but may fail under stress, when investors need the safe haven of bullion the most. I have always said that if you aren't paying reasonable insured storage fees for allocated bullion, then in all likelihood you don't own any gold at all. ...

"ETFs have significant counterparty risk on many levels."

Barisheff notes that the custodians of the metal purportedly held by the exchange-traded funds GLD and SLV -- HSBC and JPMorganChase, respectively -- have been fined repeatedly for misconduct and have serious lawsuits pending against them. That is, those bullion banks do not share the investment goals of most GLD and SLV investors, who buy the monetary metals in the hope of price appreciation. Rather, those banks long have been trying to keep metals prices down.

Barisheff's analysis is headlined "The Illusion of Owning Gold" and it's posted at BMG Group's internet site here:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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